102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
SB2247

 

Introduced 2/26/2021, by Sen. David Koehler

 

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 a county in the State with a population of fewer than 40,000 people or a township in the State with a population density of less than 50 households per square mile in a county with a population of less than 300,000 people. Provides that the credit does not apply to equipment and materials placed in service after December 31, 2026. 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 a county in the State with a population of fewer than 40,000 people or a township in the State with a population density of less than 50 households per square mile in a county with a population of less than 300,000 people. Effective immediately.


LRB102 13440 HLH 18787 b

 

 

A BILL FOR

 

SB2247LRB102 13440 HLH 18787 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

 

 

SB2247- 17 -LRB102 13440 HLH 18787 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

 

 

SB2247- 18 -LRB102 13440 HLH 18787 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

 

 

SB2247- 26 -LRB102 13440 HLH 18787 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

 

 

SB2247- 27 -LRB102 13440 HLH 18787 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

 

 

SB2247- 28 -LRB102 13440 HLH 18787 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

 

 

SB2247- 29 -LRB102 13440 HLH 18787 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

 

 

SB2247- 30 -LRB102 13440 HLH 18787 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

 

 

SB2247- 31 -LRB102 13440 HLH 18787 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

 

 

SB2247- 32 -LRB102 13440 HLH 18787 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

 

 

SB2247- 33 -LRB102 13440 HLH 18787 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

 

 

SB2247- 34 -LRB102 13440 HLH 18787 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

 

 

SB2247- 35 -LRB102 13440 HLH 18787 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

 

 

SB2247- 36 -LRB102 13440 HLH 18787 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

 

 

SB2247- 37 -LRB102 13440 HLH 18787 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

 

 

SB2247- 47 -LRB102 13440 HLH 18787 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 a county in the State with a population
12of fewer than 40,000 people or a township in the State with a
13population density of less than 50 households per square mile
14in a county with a population of less than 300,000 people
15during that year. For partners, shareholders of Subchapter S
16corporations, and owners of limited liability companies, if
17the liability company is treated as a partnership for purposes
18of federal and State income taxation, there shall be allowed a
19credit under this subsection (f) to be determined in
20accordance with the determination of income and distributive
21share of income under Sections 702 and 704 and Subchapter S of
22the Internal Revenue Code. Such annual credits shall be
23allowed commencing with the taxable year in which such
24property is placed in service and continue for 9 consecutive
25years thereafter. The aggregate credit established by the
26subsection taken in any one tax year shall not reduce

 

 

SB2247- 50 -LRB102 13440 HLH 18787 b

1taxpayer's tax liability under subsections (a) and (b) of this
2Subsection by more than 50%; provided, however, that any tax
3credit claimed under this subsection but not used in any
4taxable year may be carried forward for 10 consecutive years
5from the close of the tax year in which the credits were
6earned. The maximum aggregate amount of credits that may be
7claimed under this subsection shall not exceed the original
8investment made by the taxpayer in the qualifying equipment.
9    For purposes this subsection: (i) "broadband service"
10means a service provided by wireline or wireless means capable
11of delivering high-speed internet access at speeds of at least
1225 megabits per second of download speed and 3 megabits per
13second of upload speed; and (ii) "equipment, and materials
14incorporated into or used in the business of providing
15broadband services", means all equipment and materials
16machinery, software, or other tangible personal property
17deployed in Illinois on or after January 1, 2022 that is used
18in whole or in part in producing, broadcasting, distributing,
19sending, receiving, storing, transmitting, retransmitting,
20amplifying, switching, or routing broadband services,
21including the monitoring, testing, maintaining, enabling, or
22facilitating of such equipment, machinery, software, or other
23infrastructure. Such property includes, but is not limited to,
24wires, cables including fiber optic cables, antennas, poles,
25switches, routers, amplifiers, rectifiers, repeaters,
26receivers, multiplexers, duplexers, transmitters, power

 

 

SB2247- 51 -LRB102 13440 HLH 18787 b

1equipment, backup power equipment, diagnostic equipment,
2storage devices, modems, and other general central office
3equipment, such as channel cards, frames, and cabinets.
4    The credit under this subsection (p) does not apply for
5property placed in service after December 31, 2026.
6(Source: P.A. 100-22, eff. 7-6-17; 101-9, eff. 6-5-19; 101-31,
7eff. 6-28-19; 101-207, eff. 8-2-19; 101-363, eff. 8-9-19;
8revised 11-18-20.)
 
9    (Text of Section with the changes made by P.A. 101-8,
10which did not take effect (see Section 99 of P.A. 101-8))
11    Sec. 201. Tax imposed.
12    (a) In general. A tax measured by net income is hereby
13imposed on every individual, corporation, trust and estate for
14each taxable year ending after July 31, 1969 on the privilege
15of earning or receiving income in or as a resident of this
16State. Such tax shall be in addition to all other occupation or
17privilege taxes imposed by this State or by any municipal
18corporation or political subdivision thereof.
19    (b) Rates. The tax imposed by subsection (a) of this
20Section shall be determined as follows, except as adjusted by
21subsection (d-1):
22        (1) In the case of an individual, trust or estate, for
23    taxable years ending prior to July 1, 1989, an amount
24    equal to 2 1/2% of the taxpayer's net income for the
25    taxable year.

 

 

SB2247- 52 -LRB102 13440 HLH 18787 b

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

 

 

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1    to January 1, 2015, as calculated under Section 202.5, and
2    (ii) 3.75% of the taxpayer's net income for the period
3    after December 31, 2014, as calculated under Section
4    202.5.
5        (5.2) In the case of an individual, trust, or estate,
6    for taxable years beginning on or after January 1, 2015,
7    and ending prior to July 1, 2017, an amount equal to 3.75%
8    of the taxpayer's net income for the taxable year.
9        (5.3) In the case of an individual, trust, or estate,
10    for taxable years beginning prior to July 1, 2017, and
11    ending after June 30, 2017, an amount equal to the sum of
12    (i) 3.75% of the taxpayer's net income for the period
13    prior to July 1, 2017, as calculated under Section 202.5,
14    and (ii) 4.95% of the taxpayer's net income for the period
15    after June 30, 2017, as calculated under Section 202.5.
16        (5.4) In the case of an individual, trust, or estate,
17    for taxable years beginning on or after July 1, 2017 and
18    beginning prior to January 1, 2021, an amount equal to
19    4.95% of the taxpayer's net income for the taxable year.
20        (5.5) In the case of an individual, trust, or estate,
21    for taxable years beginning on or after January 1, 2021,
22    an amount calculated under the rate structure set forth in
23    Section 201.1.
24        (6) In the case of a corporation, for taxable years
25    ending prior to July 1, 1989, an amount equal to 4% of the
26    taxpayer's net income for the taxable year.

 

 

SB2247- 54 -LRB102 13440 HLH 18787 b

1        (7) In the case of a corporation, for taxable years
2    beginning prior to July 1, 1989 and ending after June 30,
3    1989, an amount equal to the sum of (i) 4% of the
4    taxpayer's net income for the period prior to July 1,
5    1989, as calculated under Section 202.3, and (ii) 4.8% of
6    the taxpayer's net income for the period after June 30,
7    1989, as calculated under Section 202.3.
8        (8) In the case of a corporation, for taxable years
9    beginning after June 30, 1989, and ending prior to January
10    1, 2011, an amount equal to 4.8% of the taxpayer's net
11    income for the taxable year.
12        (9) In the case of a corporation, for taxable years
13    beginning prior to January 1, 2011, and ending after
14    December 31, 2010, an amount equal to the sum of (i) 4.8%
15    of the taxpayer's net income for the period prior to
16    January 1, 2011, as calculated under Section 202.5, and
17    (ii) 7% of the taxpayer's net income for the period after
18    December 31, 2010, as calculated under Section 202.5.
19        (10) In the case of a corporation, for taxable years
20    beginning on or after January 1, 2011, and ending prior to
21    January 1, 2015, an amount equal to 7% of the taxpayer's
22    net income for the taxable year.
23        (11) In the case of a corporation, for taxable years
24    beginning prior to January 1, 2015, and ending after
25    December 31, 2014, an amount equal to the sum of (i) 7% of
26    the taxpayer's net income for the period prior to January

 

 

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1    1, 2015, as calculated under Section 202.5, and (ii) 5.25%
2    of the taxpayer's net income for the period after December
3    31, 2014, as calculated under Section 202.5.
4        (12) In the case of a corporation, for taxable years
5    beginning on or after January 1, 2015, and ending prior to
6    July 1, 2017, an amount equal to 5.25% of the taxpayer's
7    net income for the taxable year.
8        (13) In the case of a corporation, for taxable years
9    beginning prior to July 1, 2017, and ending after June 30,
10    2017, an amount equal to the sum of (i) 5.25% of the
11    taxpayer's net income for the period prior to July 1,
12    2017, as calculated under Section 202.5, and (ii) 7% of
13    the taxpayer's net income for the period after June 30,
14    2017, as calculated under Section 202.5.
15        (14) In the case of a corporation, for taxable years
16    beginning on or after July 1, 2017 and beginning prior to
17    January 1, 2021, an amount equal to 7% of the taxpayer's
18    net income for the taxable year.
19        (15) In the case of a corporation, for taxable years
20    beginning on or after January 1, 2021, an amount equal to
21    7.99% of the taxpayer's net income for the taxable year.
22    The rates under this subsection (b) are subject to the
23provisions of Section 201.5.
24    (b-5) Surcharge; sale or exchange of assets, properties,
25and intangibles of organization gaming licensees. For each of
26taxable years 2019 through 2027, a surcharge is imposed on all

 

 

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1taxpayers on income arising from the sale or exchange of
2capital assets, depreciable business property, real property
3used in the trade or business, and Section 197 intangibles (i)
4of an organization licensee under the Illinois Horse Racing
5Act of 1975 and (ii) of an organization gaming licensee under
6the Illinois Gambling Act. The amount of the surcharge is
7equal to the amount of federal income tax liability for the
8taxable year attributable to those sales and exchanges. The
9surcharge imposed shall not apply if:
10        (1) the organization gaming license, organization
11    license, or racetrack property is transferred as a result
12    of any of the following:
13            (A) bankruptcy, a receivership, or a debt
14        adjustment initiated by or against the initial
15        licensee or the substantial owners of the initial
16        licensee;
17            (B) cancellation, revocation, or termination of
18        any such license by the Illinois Gaming Board or the
19        Illinois Racing Board;
20            (C) a determination by the Illinois Gaming Board
21        that transfer of the license is in the best interests
22        of Illinois gaming;
23            (D) the death of an owner of the equity interest in
24        a licensee;
25            (E) the acquisition of a controlling interest in
26        the stock or substantially all of the assets of a

 

 

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1        publicly traded company;
2            (F) a transfer by a parent company to a wholly
3        owned subsidiary; or
4            (G) the transfer or sale to or by one person to
5        another person where both persons were initial owners
6        of the license when the license was issued; or
7        (2) the controlling interest in the organization
8    gaming license, organization license, or racetrack
9    property is transferred in a transaction to lineal
10    descendants in which no gain or loss is recognized or as a
11    result of a transaction in accordance with Section 351 of
12    the Internal Revenue Code in which no gain or loss is
13    recognized; or
14        (3) live horse racing was not conducted in 2010 at a
15    racetrack located within 3 miles of the Mississippi River
16    under a license issued pursuant to the Illinois Horse
17    Racing Act of 1975.
18    The transfer of an organization gaming license,
19organization license, or racetrack property by a person other
20than the initial licensee to receive the organization gaming
21license is not subject to a surcharge. The Department shall
22adopt rules necessary to implement and administer this
23subsection.
24    (c) Personal Property Tax Replacement Income Tax.
25Beginning on July 1, 1979 and thereafter, in addition to such
26income tax, there is also hereby imposed the Personal Property

 

 

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1Tax Replacement Income Tax measured by net income on every
2corporation (including Subchapter S corporations), partnership
3and trust, for each taxable year ending after June 30, 1979.
4Such taxes are imposed on the privilege of earning or
5receiving income in or as a resident of this State. The
6Personal Property Tax Replacement Income Tax shall be in
7addition to the income tax imposed by subsections (a) and (b)
8of this Section and in addition to all other occupation or
9privilege taxes imposed by this State or by any municipal
10corporation or political subdivision thereof.
11    (d) Additional Personal Property Tax Replacement Income
12Tax Rates. The personal property tax replacement income tax
13imposed by this subsection and subsection (c) of this Section
14in the case of a corporation, other than a Subchapter S
15corporation and except as adjusted by subsection (d-1), shall
16be an additional amount equal to 2.85% of such taxpayer's net
17income for the taxable year, except that beginning on January
181, 1981, and thereafter, the rate of 2.85% specified in this
19subsection shall be reduced to 2.5%, and in the case of a
20partnership, trust or a Subchapter S corporation shall be an
21additional amount equal to 1.5% of such taxpayer's net income
22for the taxable year.
23    (d-1) Rate reduction for certain foreign insurers. In the
24case of a foreign insurer, as defined by Section 35A-5 of the
25Illinois Insurance Code, whose state or country of domicile
26imposes on insurers domiciled in Illinois a retaliatory tax

 

 

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1(excluding any insurer whose premiums from reinsurance assumed
2are 50% or more of its total insurance premiums as determined
3under paragraph (2) of subsection (b) of Section 304, except
4that for purposes of this determination premiums from
5reinsurance do not include premiums from inter-affiliate
6reinsurance arrangements), beginning with taxable years ending
7on or after December 31, 1999, the sum of the rates of tax
8imposed by subsections (b) and (d) shall be reduced (but not
9increased) to the rate at which the total amount of tax imposed
10under this Act, net of all credits allowed under this Act,
11shall equal (i) the total amount of tax that would be imposed
12on the foreign insurer's net income allocable to Illinois for
13the taxable year by such foreign insurer's state or country of
14domicile if that net income were subject to all income taxes
15and taxes measured by net income imposed by such foreign
16insurer's state or country of domicile, net of all credits
17allowed or (ii) a rate of zero if no such tax is imposed on
18such income by the foreign insurer's state of domicile. For
19the purposes of this subsection (d-1), an inter-affiliate
20includes a mutual insurer under common management.
21        (1) For the purposes of subsection (d-1), in no event
22    shall the sum of the rates of tax imposed by subsections
23    (b) and (d) be reduced below the rate at which the sum of:
24            (A) the total amount of tax imposed on such
25        foreign insurer under this Act for a taxable year, net
26        of all credits allowed under this Act, plus

 

 

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1            (B) the privilege tax imposed by Section 409 of
2        the Illinois Insurance Code, the fire insurance
3        company tax imposed by Section 12 of the Fire
4        Investigation Act, and the fire department taxes
5        imposed under Section 11-10-1 of the Illinois
6        Municipal Code,
7    equals 1.25% for taxable years ending prior to December
8    31, 2003, or 1.75% for taxable years ending on or after
9    December 31, 2003, of the net taxable premiums written for
10    the taxable year, as described by subsection (1) of
11    Section 409 of the Illinois Insurance Code. This paragraph
12    will in no event increase the rates imposed under
13    subsections (b) and (d).
14        (2) Any reduction in the rates of tax imposed by this
15    subsection shall be applied first against the rates
16    imposed by subsection (b) and only after the tax imposed
17    by subsection (a) net of all credits allowed under this
18    Section other than the credit allowed under subsection (i)
19    has been reduced to zero, against the rates imposed by
20    subsection (d).
21    This subsection (d-1) is exempt from the provisions of
22Section 250.
23    (e) Investment credit. A taxpayer shall be allowed a
24credit against the Personal Property Tax Replacement Income
25Tax for investment in qualified property.
26        (1) A taxpayer shall be allowed a credit equal to .5%

 

 

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1    of the basis of qualified property placed in service
2    during the taxable year, provided such property is placed
3    in service on or after July 1, 1984. There shall be allowed
4    an additional credit equal to .5% of the basis of
5    qualified property placed in service during the taxable
6    year, provided such property is placed in service on or
7    after July 1, 1986, and the taxpayer's base employment
8    within Illinois has increased by 1% or more over the
9    preceding year as determined by the taxpayer's employment
10    records filed with the Illinois Department of Employment
11    Security. Taxpayers who are new to Illinois shall be
12    deemed to have met the 1% growth in base employment for the
13    first year in which they file employment records with the
14    Illinois Department of Employment Security. The provisions
15    added to this Section by Public Act 85-1200 (and restored
16    by Public Act 87-895) shall be construed as declaratory of
17    existing law and not as a new enactment. If, in any year,
18    the increase in base employment within Illinois over the
19    preceding year is less than 1%, the additional credit
20    shall be limited to that percentage times a fraction, the
21    numerator of which is .5% and the denominator of which is
22    1%, but shall not exceed .5%. The investment credit shall
23    not be allowed to the extent that it would reduce a
24    taxpayer's liability in any tax year below zero, nor may
25    any credit for qualified property be allowed for any year
26    other than the year in which the property was placed in

 

 

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1    service in Illinois. For tax years ending on or after
2    December 31, 1987, and on or before December 31, 1988, the
3    credit shall be allowed for the tax year in which the
4    property is placed in service, or, if the amount of the
5    credit exceeds the tax liability for that year, whether it
6    exceeds the original liability or the liability as later
7    amended, such excess may be carried forward and applied to
8    the tax liability of the 5 taxable years following the
9    excess credit years if the taxpayer (i) makes investments
10    which cause the creation of a minimum of 2,000 full-time
11    equivalent jobs in Illinois, (ii) is located in an
12    enterprise zone established pursuant to the Illinois
13    Enterprise Zone Act and (iii) is certified by the
14    Department of Commerce and Community Affairs (now
15    Department of Commerce and Economic Opportunity) as
16    complying with the requirements specified in clause (i)
17    and (ii) by July 1, 1986. The Department of Commerce and
18    Community Affairs (now Department of Commerce and Economic
19    Opportunity) shall notify the Department of Revenue of all
20    such certifications immediately. For tax years ending
21    after December 31, 1988, the credit shall be allowed for
22    the tax year in which the property is placed in service,
23    or, if the amount of the credit exceeds the tax liability
24    for that year, whether it exceeds the original liability
25    or the liability as later amended, such excess may be
26    carried forward and applied to the tax liability of the 5

 

 

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1    taxable years following the excess credit years. The
2    credit shall be applied to the earliest year for which
3    there is a liability. If there is credit from more than one
4    tax year that is available to offset a liability, earlier
5    credit shall be applied first.
6        (2) The term "qualified property" means property
7    which:
8            (A) is tangible, whether new or used, including
9        buildings and structural components of buildings and
10        signs that are real property, but not including land
11        or improvements to real property that are not a
12        structural component of a building such as
13        landscaping, sewer lines, local access roads, fencing,
14        parking lots, and other appurtenances;
15            (B) is depreciable pursuant to Section 167 of the
16        Internal Revenue Code, except that "3-year property"
17        as defined in Section 168(c)(2)(A) of that Code is not
18        eligible for the credit provided by this subsection
19        (e);
20            (C) is acquired by purchase as defined in Section
21        179(d) of the Internal Revenue Code;
22            (D) is used in Illinois by a taxpayer who is
23        primarily engaged in manufacturing, or in mining coal
24        or fluorite, or in retailing, or was placed in service
25        on or after July 1, 2006 in a River Edge Redevelopment
26        Zone established pursuant to the River Edge

 

 

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1        Redevelopment Zone Act; and
2            (E) has not previously been used in Illinois in
3        such a manner and by such a person as would qualify for
4        the credit provided by this subsection (e) or
5        subsection (f).
6        (3) For purposes of this subsection (e),
7    "manufacturing" means the material staging and production
8    of tangible personal property by procedures commonly
9    regarded as manufacturing, processing, fabrication, or
10    assembling which changes some existing material into new
11    shapes, new qualities, or new combinations. For purposes
12    of this subsection (e) the term "mining" shall have the
13    same meaning as the term "mining" in Section 613(c) of the
14    Internal Revenue Code. For purposes of this subsection
15    (e), the term "retailing" means the sale of tangible
16    personal property for use or consumption and not for
17    resale, or services rendered in conjunction with the sale
18    of tangible personal property for use or consumption and
19    not for resale. For purposes of this subsection (e),
20    "tangible personal property" has the same meaning as when
21    that term is used in the Retailers' Occupation Tax Act,
22    and, for taxable years ending after December 31, 2008,
23    does not include the generation, transmission, or
24    distribution of electricity.
25        (4) The basis of qualified property shall be the basis
26    used to compute the depreciation deduction for federal

 

 

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1    income tax purposes.
2        (5) If the basis of the property for federal income
3    tax depreciation purposes is increased after it has been
4    placed in service in Illinois by the taxpayer, the amount
5    of such increase shall be deemed property placed in
6    service on the date of such increase in basis.
7        (6) The term "placed in service" shall have the same
8    meaning as under Section 46 of the Internal Revenue Code.
9        (7) If during any taxable year, any property ceases to
10    be qualified property in the hands of the taxpayer within
11    48 months after being placed in service, or the situs of
12    any qualified property is moved outside Illinois within 48
13    months after being placed in service, the Personal
14    Property Tax Replacement Income Tax for such taxable year
15    shall be increased. Such increase shall be determined by
16    (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 (7), 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        (8) Unless the investment credit is extended by law,

 

 

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1    the basis of qualified property shall not include costs
2    incurred after December 31, 2018, except for costs
3    incurred pursuant to a binding contract entered into on or
4    before December 31, 2018.
5        (9) Each taxable year ending before December 31, 2000,
6    a partnership may elect to pass through to its partners
7    the credits to which the partnership is entitled under
8    this subsection (e) for the taxable year. A partner may
9    use the credit allocated to him or her under this
10    paragraph only against the tax imposed in subsections (c)
11    and (d) of this Section. If the partnership makes that
12    election, those credits shall be allocated among the
13    partners in the partnership in accordance with the rules
14    set forth in Section 704(b) of the Internal Revenue Code,
15    and the rules promulgated under that Section, and the
16    allocated amount of the credits shall be allowed to the
17    partners for that taxable year. The partnership shall make
18    this election on its Personal Property Tax Replacement
19    Income Tax return for that taxable year. The election to
20    pass through the credits shall be irrevocable.
21        For taxable years ending on or after December 31,
22    2000, a partner that qualifies its partnership for a
23    subtraction under subparagraph (I) of paragraph (2) of
24    subsection (d) of Section 203 or a shareholder that
25    qualifies a Subchapter S corporation for a subtraction
26    under subparagraph (S) of paragraph (2) of subsection (b)

 

 

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1    of Section 203 shall be allowed a credit under this
2    subsection (e) equal to its share of the credit earned
3    under this subsection (e) during the taxable year by the
4    partnership or Subchapter S corporation, determined in
5    accordance with the determination of income and
6    distributive share of income under Sections 702 and 704
7    and Subchapter S of the Internal Revenue Code. This
8    paragraph is exempt from the provisions of Section 250.
9    (f) Investment credit; Enterprise Zone; River Edge
10Redevelopment Zone.
11        (1) A taxpayer shall be allowed a credit against the
12    tax imposed by subsections (a) and (b) of this Section for
13    investment in qualified property which is placed in
14    service in an Enterprise Zone created pursuant to the
15    Illinois Enterprise Zone Act or, for property placed in
16    service on or after July 1, 2006, a River Edge
17    Redevelopment Zone established pursuant to the River Edge
18    Redevelopment Zone Act. For partners, shareholders of
19    Subchapter S corporations, and owners of limited liability
20    companies, if the liability company is treated as a
21    partnership for purposes of federal and State income
22    taxation, there shall be allowed a credit under this
23    subsection (f) to be determined in accordance with the
24    determination of income and distributive share of income
25    under Sections 702 and 704 and Subchapter S of the
26    Internal Revenue Code. The credit shall be .5% of the

 

 

SB2247- 68 -LRB102 13440 HLH 18787 b

1    basis for such property. The credit shall be available
2    only in the taxable year in which the property is placed in
3    service in the Enterprise Zone or River Edge Redevelopment
4    Zone and shall not be allowed to the extent that it would
5    reduce a taxpayer's liability for the tax imposed by
6    subsections (a) and (b) of this Section to below zero. For
7    tax years ending on or after December 31, 1985, the credit
8    shall be allowed for the tax year in which the property is
9    placed in service, or, if the amount of the credit exceeds
10    the tax liability for that year, whether it exceeds the
11    original liability or the liability as later amended, such
12    excess may be carried forward and applied to the tax
13    liability of the 5 taxable years following the excess
14    credit year. The credit shall be applied to the earliest
15    year for which there is a liability. If there is credit
16    from more than one tax year that is available to offset a
17    liability, the credit accruing first in time shall be
18    applied first.
19        (2) The term qualified property means property which:
20            (A) is tangible, whether new or used, including
21        buildings and structural components of buildings;
22            (B) is depreciable pursuant to Section 167 of the
23        Internal Revenue Code, except that "3-year property"
24        as defined in Section 168(c)(2)(A) of that Code is not
25        eligible for the credit provided by this subsection
26        (f);

 

 

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1            (C) is acquired by purchase as defined in Section
2        179(d) of the Internal Revenue Code;
3            (D) is used in the Enterprise Zone or River Edge
4        Redevelopment Zone by the taxpayer; and
5            (E) has not been previously used in Illinois in
6        such a manner and by such a person as would qualify for
7        the credit provided by this subsection (f) or
8        subsection (e).
9        (3) The basis of qualified property shall be the basis
10    used to compute the depreciation deduction for federal
11    income tax purposes.
12        (4) If the basis of the property for federal income
13    tax depreciation purposes is increased after it has been
14    placed in service in the Enterprise Zone or River Edge
15    Redevelopment Zone by the taxpayer, the amount of such
16    increase shall be deemed property placed in service on the
17    date of such increase in basis.
18        (5) The term "placed in service" shall have the same
19    meaning as under Section 46 of the Internal Revenue Code.
20        (6) If during any taxable year, any property ceases to
21    be qualified property in the hands of the taxpayer within
22    48 months after being placed in service, or the situs of
23    any qualified property is moved outside the Enterprise
24    Zone or River Edge Redevelopment Zone within 48 months
25    after being placed in service, the tax imposed under
26    subsections (a) and (b) of this Section for such taxable

 

 

SB2247- 70 -LRB102 13440 HLH 18787 b

1    year shall be increased. Such increase shall be determined
2    by (i) recomputing the investment credit which would have
3    been allowed for the year in which credit for such
4    property was originally allowed by eliminating such
5    property from such computation, and (ii) subtracting such
6    recomputed credit from the amount of credit previously
7    allowed. For the purposes of this paragraph (6), a
8    reduction of the basis of qualified property resulting
9    from a redetermination of the purchase price shall be
10    deemed a disposition of qualified property to the extent
11    of such reduction.
12        (7) There shall be allowed an additional credit equal
13    to 0.5% of the basis of qualified property placed in
14    service during the taxable year in a River Edge
15    Redevelopment Zone, provided such property is placed in
16    service on or after July 1, 2006, and the taxpayer's base
17    employment within Illinois has increased by 1% or more
18    over the preceding year as determined by the taxpayer's
19    employment records filed with the Illinois Department of
20    Employment Security. Taxpayers who are new to Illinois
21    shall be deemed to have met the 1% growth in base
22    employment for the first year in which they file
23    employment records with the Illinois Department of
24    Employment Security. If, in any year, the increase in base
25    employment within Illinois over the preceding year is less
26    than 1%, the additional credit shall be limited to that

 

 

SB2247- 71 -LRB102 13440 HLH 18787 b

1    percentage times a fraction, the numerator of which is
2    0.5% and the denominator of which is 1%, but shall not
3    exceed 0.5%.
4        (8) For taxable years beginning on or after January 1,
5    2021, there shall be allowed an Enterprise Zone
6    construction jobs credit against the taxes imposed under
7    subsections (a) and (b) of this Section as provided in
8    Section 13 of the Illinois Enterprise Zone Act.
9        The credit or credits may not reduce the taxpayer's
10    liability to less than zero. If the amount of the credit or
11    credits exceeds the taxpayer's liability, the excess may
12    be carried forward and applied against the taxpayer's
13    liability in succeeding calendar years in the same manner
14    provided under paragraph (4) of Section 211 of this Act.
15    The credit or credits shall be applied to the earliest
16    year for which there is a tax liability. If there are
17    credits from more than one taxable year that are available
18    to offset a liability, the earlier credit shall be applied
19    first.
20        For partners, shareholders of Subchapter S
21    corporations, and owners of limited liability companies,
22    if the liability company is treated as a partnership for
23    the purposes of federal and State income taxation, there
24    shall be allowed a credit under this Section to be
25    determined in accordance with the determination of income
26    and distributive share of income under Sections 702 and

 

 

SB2247- 72 -LRB102 13440 HLH 18787 b

1    704 and Subchapter S of the Internal Revenue Code.
2        The total aggregate amount of credits awarded under
3    the Blue Collar Jobs Act (Article 20 of Public Act 101-9
4    this amendatory Act of the 101st General Assembly) shall
5    not exceed $20,000,000 in any State fiscal year.
6        This paragraph (8) is exempt from the provisions of
7    Section 250.
8    (g) (Blank).
9    (h) Investment credit; High Impact Business.
10        (1) Subject to subsections (b) and (b-5) of Section
11    5.5 of the Illinois Enterprise Zone Act, a taxpayer shall
12    be allowed a credit against the tax imposed by subsections
13    (a) and (b) of this Section for investment in qualified
14    property which is placed in service by a Department of
15    Commerce and Economic Opportunity designated High Impact
16    Business. The credit shall be .5% of the basis for such
17    property. The credit shall not be available (i) until the
18    minimum investments in qualified property set forth in
19    subdivision (a)(3)(A) of Section 5.5 of the Illinois
20    Enterprise Zone Act have been satisfied or (ii) until the
21    time authorized in subsection (b-5) of the Illinois
22    Enterprise Zone Act for entities designated as High Impact
23    Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
24    (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
25    Act, and shall not be allowed to the extent that it would
26    reduce a taxpayer's liability for the tax imposed by

 

 

SB2247- 73 -LRB102 13440 HLH 18787 b

1    subsections (a) and (b) of this Section to below zero. The
2    credit applicable to such investments shall be taken in
3    the taxable year in which such investments have been
4    completed. The credit for additional investments beyond
5    the minimum investment by a designated high impact
6    business authorized under subdivision (a)(3)(A) of Section
7    5.5 of the Illinois Enterprise Zone Act shall be available
8    only in the taxable year in which the property is placed in
9    service and shall not be allowed to the extent that it
10    would reduce a taxpayer's liability for the tax imposed by
11    subsections (a) and (b) of this Section to below zero. For
12    tax years ending on or after December 31, 1987, the credit
13    shall be allowed for the tax year in which the property is
14    placed in service, or, if the amount of the credit exceeds
15    the tax liability for that year, whether it exceeds the
16    original liability or the liability as later amended, such
17    excess may be carried forward and applied to the tax
18    liability of the 5 taxable years following the excess
19    credit year. The credit shall be applied to the earliest
20    year for which there is a liability. If there is credit
21    from more than one tax year that is available to offset a
22    liability, the credit accruing first in time shall be
23    applied first.
24        Changes made in this subdivision (h)(1) by Public Act
25    88-670 restore changes made by Public Act 85-1182 and
26    reflect existing law.

 

 

SB2247- 74 -LRB102 13440 HLH 18787 b

1        (2) The term qualified property means property which:
2            (A) is tangible, whether new or used, including
3        buildings and structural components of buildings;
4            (B) is depreciable pursuant to Section 167 of the
5        Internal Revenue Code, except that "3-year property"
6        as defined in Section 168(c)(2)(A) of that Code is not
7        eligible for the credit provided by this subsection
8        (h);
9            (C) is acquired by purchase as defined in Section
10        179(d) of the Internal Revenue Code; and
11            (D) is not eligible for the Enterprise Zone
12        Investment Credit provided by subsection (f) of this
13        Section.
14        (3) The basis of qualified property shall be the basis
15    used to compute the depreciation deduction for federal
16    income tax purposes.
17        (4) If the basis of the property for federal income
18    tax depreciation purposes is increased after it has been
19    placed in service in a federally designated Foreign Trade
20    Zone or Sub-Zone located in Illinois by the taxpayer, the
21    amount of such increase shall be deemed property placed in
22    service on the date of such increase in basis.
23        (5) The term "placed in service" shall have the same
24    meaning as under Section 46 of the Internal Revenue Code.
25        (6) If during any taxable year ending on or before
26    December 31, 1996, any property ceases to be qualified

 

 

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1    property in the hands of the taxpayer within 48 months
2    after being placed in service, or the situs of any
3    qualified property is moved outside Illinois within 48
4    months after being placed in service, the tax imposed
5    under subsections (a) and (b) of this Section for such
6    taxable year shall be increased. Such increase shall be
7    determined by (i) recomputing the investment credit which
8    would have been allowed for the year in which credit for
9    such property was originally allowed by eliminating such
10    property from such computation, and (ii) subtracting such
11    recomputed credit from the amount of credit previously
12    allowed. For the purposes of this paragraph (6), a
13    reduction of the basis of qualified property resulting
14    from a redetermination of the purchase price shall be
15    deemed a disposition of qualified property to the extent
16    of such reduction.
17        (7) Beginning with tax years ending after December 31,
18    1996, if a taxpayer qualifies for the credit under this
19    subsection (h) and thereby is granted a tax abatement and
20    the taxpayer relocates its entire facility in violation of
21    the explicit terms and length of the contract under
22    Section 18-183 of the Property Tax Code, the tax imposed
23    under subsections (a) and (b) of this Section shall be
24    increased for the taxable year in which the taxpayer
25    relocated its facility by an amount equal to the amount of
26    credit received by the taxpayer under this subsection (h).

 

 

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1    (h-5) High Impact Business construction constructions jobs
2credit. For taxable years beginning on or after January 1,
32021, there shall also be allowed a High Impact Business
4construction jobs credit against the tax imposed under
5subsections (a) and (b) of this Section as provided in
6subsections (i) and (j) of Section 5.5 of the Illinois
7Enterprise Zone Act.
8    The credit or credits may not reduce the taxpayer's
9liability to less than zero. If the amount of the credit or
10credits exceeds the taxpayer's liability, the excess may be
11carried forward and applied against the taxpayer's liability
12in succeeding calendar years in the manner provided under
13paragraph (4) of Section 211 of this Act. The credit or credits
14shall be applied to the earliest year for which there is a tax
15liability. If there are credits from more than one taxable
16year that are available to offset a liability, the earlier
17credit shall be applied first.
18    For partners, shareholders of Subchapter S corporations,
19and owners of limited liability companies, if the liability
20company is treated as a partnership for the purposes of
21federal and State income taxation, there shall be allowed a
22credit under this Section to be determined in accordance with
23the determination of income and distributive share of income
24under Sections 702 and 704 and Subchapter S of the Internal
25Revenue Code.
26    The total aggregate amount of credits awarded under the

 

 

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1Blue Collar Jobs Act (Article 20 of Public Act 101-9 this
2amendatory Act of the 101st General Assembly) shall not exceed
3$20,000,000 in any State fiscal year.
4    This subsection (h-5) is exempt from the provisions of
5Section 250.
6    (i) Credit for Personal Property Tax Replacement Income
7Tax. For tax years ending prior to December 31, 2003, a credit
8shall be allowed against the tax imposed by subsections (a)
9and (b) of this Section for the tax imposed by subsections (c)
10and (d) of this Section. This credit shall be computed by
11multiplying the tax imposed by subsections (c) and (d) of this
12Section by a fraction, the numerator of which is base income
13allocable to Illinois and the denominator of which is Illinois
14base income, and further multiplying the product by the tax
15rate imposed by subsections (a) and (b) of this Section.
16    Any credit earned on or after December 31, 1986 under this
17subsection which is unused in the year the credit is computed
18because it exceeds the tax liability imposed by subsections
19(a) and (b) for that year (whether it exceeds the original
20liability or the liability as later amended) may be carried
21forward and applied to the tax liability imposed by
22subsections (a) and (b) of the 5 taxable years following the
23excess credit year, provided that no credit may be carried
24forward to any year ending on or after December 31, 2003. This
25credit shall be applied first to the earliest year for which
26there is a liability. If there is a credit under this

 

 

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1subsection from more than one tax year that is available to
2offset a liability the earliest credit arising under this
3subsection shall be applied first.
4    If, during any taxable year ending on or after December
531, 1986, the tax imposed by subsections (c) and (d) of this
6Section for which a taxpayer has claimed a credit under this
7subsection (i) is reduced, the amount of credit for such tax
8shall also be reduced. Such reduction shall be determined by
9recomputing the credit to take into account the reduced tax
10imposed by subsections (c) and (d). If any portion of the
11reduced amount of credit has been carried to a different
12taxable year, an amended return shall be filed for such
13taxable year to reduce the amount of credit claimed.
14    (j) Training expense credit. Beginning with tax years
15ending on or after December 31, 1986 and prior to December 31,
162003, a taxpayer shall be allowed a credit against the tax
17imposed by subsections (a) and (b) under this Section for all
18amounts paid or accrued, on behalf of all persons employed by
19the taxpayer in Illinois or Illinois residents employed
20outside of Illinois by a taxpayer, for educational or
21vocational training in semi-technical or technical fields or
22semi-skilled or skilled fields, which were deducted from gross
23income in the computation of taxable income. The credit
24against the tax imposed by subsections (a) and (b) shall be
251.6% of such training expenses. For partners, shareholders of
26subchapter S corporations, and owners of limited liability

 

 

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1companies, if the liability company is treated as a
2partnership for purposes of federal and State income taxation,
3there shall be allowed a credit under this subsection (j) to be
4determined in accordance with the determination of income and
5distributive share of income under Sections 702 and 704 and
6subchapter S of the Internal Revenue Code.
7    Any credit allowed under this subsection which is unused
8in the year the credit is earned may be carried forward to each
9of the 5 taxable years following the year for which the credit
10is first computed until it is used. This credit shall be
11applied first to the earliest year for which there is a
12liability. If there is a credit under this subsection from
13more than one tax year that is available to offset a liability,
14the earliest credit arising under this subsection shall be
15applied first. No carryforward credit may be claimed in any
16tax year ending on or after December 31, 2003.
17    (k) Research and development credit. For tax years ending
18after July 1, 1990 and prior to December 31, 2003, and
19beginning again for tax years ending on or after December 31,
202004, and ending prior to January 1, 2027, a taxpayer shall be
21allowed a credit against the tax imposed by subsections (a)
22and (b) of this Section for increasing research activities in
23this State. The credit allowed against the tax imposed by
24subsections (a) and (b) shall be equal to 6 1/2% of the
25qualifying expenditures for increasing research activities in
26this State. For partners, shareholders of subchapter S

 

 

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1corporations, and owners of limited liability companies, if
2the liability company is treated as a partnership for purposes
3of federal and State income taxation, there shall be allowed a
4credit under this subsection to be determined in accordance
5with the determination of income and distributive share of
6income under Sections 702 and 704 and subchapter S of the
7Internal Revenue Code.
8    For purposes of this subsection, "qualifying expenditures"
9means the qualifying expenditures as defined for the federal
10credit for increasing research activities which would be
11allowable under Section 41 of the Internal Revenue Code and
12which are conducted in this State, "qualifying expenditures
13for increasing research activities in this State" means the
14excess of qualifying expenditures for the taxable year in
15which incurred over qualifying expenditures for the base
16period, "qualifying expenditures for the base period" means
17the average of the qualifying expenditures for each year in
18the base period, and "base period" means the 3 taxable years
19immediately preceding the taxable year for which the
20determination is being made.
21    Any credit in excess of the tax liability for the taxable
22year may be carried forward. A taxpayer may elect to have the
23unused credit shown on its final completed return carried over
24as a credit against the tax liability for the following 5
25taxable years or until it has been fully used, whichever
26occurs first; provided that no credit earned in a tax year

 

 

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1ending prior to December 31, 2003 may be carried forward to any
2year ending on or after December 31, 2003.
3    If an unused credit is carried forward to a given year from
42 or more earlier years, that credit arising in the earliest
5year will be applied first against the tax liability for the
6given year. If a tax liability for the given year still
7remains, the credit from the next earliest year will then be
8applied, and so on, until all credits have been used or no tax
9liability for the given year remains. Any remaining unused
10credit or credits then will be carried forward to the next
11following year in which a tax liability is incurred, except
12that no credit can be carried forward to a year which is more
13than 5 years after the year in which the expense for which the
14credit is given was incurred.
15    No inference shall be drawn from Public Act 91-644 this
16amendatory Act of the 91st General Assembly in construing this
17Section for taxable years beginning before January 1, 1999.
18    It is the intent of the General Assembly that the research
19and development credit under this subsection (k) shall apply
20continuously for all tax years ending on or after December 31,
212004 and ending prior to January 1, 2027, including, but not
22limited to, the period beginning on January 1, 2016 and ending
23on July 6, 2017 (the effective date of Public Act 100-22) this
24amendatory Act of the 100th General Assembly. All actions
25taken in reliance on the continuation of the credit under this
26subsection (k) by any taxpayer are hereby validated.

 

 

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1    (l) Environmental Remediation Tax Credit.
2        (i) For tax years ending after December 31, 1997 and
3    on or before December 31, 2001, a taxpayer shall be
4    allowed a credit against the tax imposed by subsections
5    (a) and (b) of this Section for certain amounts paid for
6    unreimbursed eligible remediation costs, as specified in
7    this subsection. For purposes of this Section,
8    "unreimbursed eligible remediation costs" means costs
9    approved by the Illinois Environmental Protection Agency
10    ("Agency") under Section 58.14 of the Environmental
11    Protection Act that were paid in performing environmental
12    remediation at a site for which a No Further Remediation
13    Letter was issued by the Agency and recorded under Section
14    58.10 of the Environmental Protection Act. The credit must
15    be claimed for the taxable year in which Agency approval
16    of the eligible remediation costs is granted. The credit
17    is not available to any taxpayer if the taxpayer or any
18    related party caused or contributed to, in any material
19    respect, a release of regulated substances on, in, or
20    under the site that was identified and addressed by the
21    remedial action pursuant to the Site Remediation Program
22    of the Environmental Protection Act. After the Pollution
23    Control Board rules are adopted pursuant to the Illinois
24    Administrative Procedure Act for the administration and
25    enforcement of Section 58.9 of the Environmental
26    Protection Act, determinations as to credit availability

 

 

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1    for purposes of this Section shall be made consistent with
2    those rules. For purposes of this Section, "taxpayer"
3    includes a person whose tax attributes the taxpayer has
4    succeeded to under Section 381 of the Internal Revenue
5    Code and "related party" includes the persons disallowed a
6    deduction for losses by paragraphs (b), (c), and (f)(1) of
7    Section 267 of the Internal Revenue Code by virtue of
8    being a related taxpayer, as well as any of its partners.
9    The credit allowed against the tax imposed by subsections
10    (a) and (b) shall be equal to 25% of the unreimbursed
11    eligible remediation costs in excess of $100,000 per site,
12    except that the $100,000 threshold shall not apply to any
13    site contained in an enterprise zone as determined by the
14    Department of Commerce and Community Affairs (now
15    Department of Commerce and Economic Opportunity). The
16    total credit allowed shall not exceed $40,000 per year
17    with a maximum total of $150,000 per site. For partners
18    and shareholders of subchapter S corporations, there shall
19    be allowed a credit under this subsection to be determined
20    in accordance with the determination of income and
21    distributive share of income under Sections 702 and 704
22    and subchapter S of the Internal Revenue Code.
23        (ii) A credit allowed under this subsection that is
24    unused in the year the credit is earned may be carried
25    forward to each of the 5 taxable years following the year
26    for which the credit is first earned until it is used. The

 

 

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1    term "unused credit" does not include any amounts of
2    unreimbursed eligible remediation costs in excess of the
3    maximum credit per site authorized under paragraph (i).
4    This credit shall be applied first to the earliest year
5    for which there is a liability. If there is a credit under
6    this subsection from more than one tax year that is
7    available to offset a liability, the earliest credit
8    arising under this subsection shall be applied first. A
9    credit allowed under this subsection may be sold to a
10    buyer as part of a sale of all or part of the remediation
11    site for which the credit was granted. The purchaser of a
12    remediation site and the tax credit shall succeed to the
13    unused credit and remaining carry-forward period of the
14    seller. To perfect the transfer, the assignor shall record
15    the transfer in the chain of title for the site and provide
16    written notice to the Director of the Illinois Department
17    of Revenue of the assignor's intent to sell the
18    remediation site and the amount of the tax credit to be
19    transferred as a portion of the sale. In no event may a
20    credit be transferred to any taxpayer if the taxpayer or a
21    related party would not be eligible under the provisions
22    of subsection (i).
23        (iii) For purposes of this Section, the term "site"
24    shall have the same meaning as under Section 58.2 of the
25    Environmental Protection Act.
26    (m) Education expense credit. Beginning with tax years

 

 

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1ending after December 31, 1999, a taxpayer who is the
2custodian of one or more qualifying pupils shall be allowed a
3credit against the tax imposed by subsections (a) and (b) of
4this Section for qualified education expenses incurred on
5behalf of the qualifying pupils. The credit shall be equal to
625% of qualified education expenses, but in no event may the
7total credit under this subsection claimed by a family that is
8the custodian of qualifying pupils exceed (i) $500 for tax
9years ending prior to December 31, 2017, and (ii) $750 for tax
10years ending on or after December 31, 2017. In no event shall a
11credit under this subsection reduce the taxpayer's liability
12under this Act to less than zero. Notwithstanding any other
13provision of law, for taxable years beginning on or after
14January 1, 2017, no taxpayer may claim a credit under this
15subsection (m) if the taxpayer's adjusted gross income for the
16taxable year exceeds (i) $500,000, in the case of spouses
17filing a joint federal tax return or (ii) $250,000, in the case
18of all other taxpayers. This subsection is exempt from the
19provisions of Section 250 of this Act.
20    For purposes of this subsection:
21    "Qualifying pupils" means individuals who (i) are
22residents of the State of Illinois, (ii) are under the age of
2321 at the close of the school year for which a credit is
24sought, and (iii) during the school year for which a credit is
25sought were full-time pupils enrolled in a kindergarten
26through twelfth grade education program at any school, as

 

 

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1defined in this subsection.
2    "Qualified education expense" means the amount incurred on
3behalf of a qualifying pupil in excess of $250 for tuition,
4book fees, and lab fees at the school in which the pupil is
5enrolled during the regular school year.
6    "School" means any public or nonpublic elementary or
7secondary school in Illinois that is in compliance with Title
8VI of the Civil Rights Act of 1964 and attendance at which
9satisfies the requirements of Section 26-1 of the School Code,
10except that nothing shall be construed to require a child to
11attend any particular public or nonpublic school to qualify
12for the credit under this Section.
13    "Custodian" means, with respect to qualifying pupils, an
14Illinois resident who is a parent, the parents, a legal
15guardian, or the legal guardians of the qualifying pupils.
16    (n) River Edge Redevelopment Zone site remediation tax
17credit.
18        (i) For tax years ending on or after December 31,
19    2006, a taxpayer shall be allowed a credit against the tax
20    imposed by subsections (a) and (b) of this Section for
21    certain amounts paid for unreimbursed eligible remediation
22    costs, as specified in this subsection. For purposes of
23    this Section, "unreimbursed eligible remediation costs"
24    means costs approved by the Illinois Environmental
25    Protection Agency ("Agency") under Section 58.14a of the
26    Environmental Protection Act that were paid in performing

 

 

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1    environmental remediation at a site within a River Edge
2    Redevelopment Zone for which a No Further Remediation
3    Letter was issued by the Agency and recorded under Section
4    58.10 of the Environmental Protection Act. The credit must
5    be claimed for the taxable year in which Agency approval
6    of the eligible remediation costs is granted. The credit
7    is not available to any taxpayer if the taxpayer or any
8    related party caused or contributed to, in any material
9    respect, a release of regulated substances on, in, or
10    under the site that was identified and addressed by the
11    remedial action pursuant to the Site Remediation Program
12    of the Environmental Protection Act. Determinations as to
13    credit availability for purposes of this Section shall be
14    made consistent with rules adopted by the Pollution
15    Control Board pursuant to the Illinois Administrative
16    Procedure Act for the administration and enforcement of
17    Section 58.9 of the Environmental Protection Act. For
18    purposes of this Section, "taxpayer" includes a person
19    whose tax attributes the taxpayer has succeeded to under
20    Section 381 of the Internal Revenue Code and "related
21    party" includes the persons disallowed a deduction for
22    losses by paragraphs (b), (c), and (f)(1) of Section 267
23    of the Internal Revenue Code by virtue of being a related
24    taxpayer, as well as any of its partners. The credit
25    allowed against the tax imposed by subsections (a) and (b)
26    shall be equal to 25% of the unreimbursed eligible

 

 

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1    remediation costs in excess of $100,000 per site.
2        (ii) A credit allowed under this subsection that is
3    unused in the year the credit is earned may be carried
4    forward to each of the 5 taxable years following the year
5    for which the credit is first earned until it is used. This
6    credit shall be applied first to the earliest year for
7    which there is a liability. If there is a credit under this
8    subsection from more than one tax year that is available
9    to offset a liability, the earliest credit arising under
10    this subsection shall be applied first. A credit allowed
11    under this subsection may be sold to a buyer as part of a
12    sale of all or part of the remediation site for which the
13    credit was granted. The purchaser of a remediation site
14    and the tax credit shall succeed to the unused credit and
15    remaining carry-forward period of the seller. To perfect
16    the transfer, the assignor shall record the transfer in
17    the chain of title for the site and provide written notice
18    to the Director of the Illinois Department of Revenue of
19    the assignor's intent to sell the remediation site and the
20    amount of the tax credit to be transferred as a portion of
21    the sale. In no event may a credit be transferred to any
22    taxpayer if the taxpayer or a related party would not be
23    eligible under the provisions of subsection (i).
24        (iii) For purposes of this Section, the term "site"
25    shall have the same meaning as under Section 58.2 of the
26    Environmental Protection Act.

 

 

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1    (o) For each of taxable years during the Compassionate Use
2of Medical Cannabis Program, a surcharge is imposed on all
3taxpayers on income arising from the sale or exchange of
4capital assets, depreciable business property, real property
5used in the trade or business, and Section 197 intangibles of
6an organization registrant under the Compassionate Use of
7Medical Cannabis Program Act. The amount of the surcharge is
8equal to the amount of federal income tax liability for the
9taxable year attributable to those sales and exchanges. The
10surcharge imposed does not apply if:
11        (1) the medical cannabis cultivation center
12    registration, medical cannabis dispensary registration, or
13    the property of a registration is transferred as a result
14    of any of the following:
15            (A) bankruptcy, a receivership, or a debt
16        adjustment initiated by or against the initial
17        registration or the substantial owners of the initial
18        registration;
19            (B) cancellation, revocation, or termination of
20        any registration by the Illinois Department of Public
21        Health;
22            (C) a determination by the Illinois Department of
23        Public Health that transfer of the registration is in
24        the best interests of Illinois qualifying patients as
25        defined by the Compassionate Use of Medical Cannabis
26        Program Act;

 

 

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1            (D) the death of an owner of the equity interest in
2        a registrant;
3            (E) the acquisition of a controlling interest in
4        the stock or substantially all of the assets of a
5        publicly traded company;
6            (F) a transfer by a parent company to a wholly
7        owned subsidiary; or
8            (G) the transfer or sale to or by one person to
9        another person where both persons were initial owners
10        of the registration when the registration was issued;
11        or
12        (2) the cannabis cultivation center registration,
13    medical cannabis dispensary registration, or the
14    controlling interest in a registrant's property is
15    transferred in a transaction to lineal descendants in
16    which no gain or loss is recognized or as a result of a
17    transaction in accordance with Section 351 of the Internal
18    Revenue Code in which no gain or loss is recognized.
19    (p) A taxpayer shall be allowed an annual credit against
20the tax imposed by subsections (a) and (b) of this Section of
21an amount equal to 15% of the cost of equipment and materials
22incorporated into or used in the business of providing
23broadband services in a county in the State with a population
24of fewer than 40,000 people or a township in the State with a
25population density of less than 50 households per square mile
26in a county with a population of less than 300,000 people

 

 

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1during that year. For partners, shareholders of Subchapter S
2corporations, and owners of limited liability companies, if
3the liability company is treated as a partnership for purposes
4of federal and State income taxation, there shall be allowed a
5credit under this subsection (f) to be determined in
6accordance with the determination of income and distributive
7share of income under Sections 702 and 704 and Subchapter S of
8the Internal Revenue Code. Such annual credits shall be
9allowed commencing with the taxable year in which such
10property is placed in service and continue for 9 consecutive
11years thereafter. The aggregate credit established by the
12subsection taken in any one tax year shall not reduce
13taxpayer's tax liability under subsections (a) and (b) of this
14Subsection by more than 50%; provided, however, that any tax
15credit claimed under this subsection but not used in any
16taxable year may be carried forward for 10 consecutive years
17from the close of the tax year in which the credits were
18earned. The maximum aggregate amount of credits that may be
19claimed under this subsection shall not exceed the original
20investment made by the taxpayer in the qualifying equipment.
21    For purposes this subsection: (i) "broadband service"
22means a service provided by wireline or wireless means capable
23of delivering high-speed internet access at speeds of at least
2425 megabits per second of download speed and 3 megabits per
25second of upload speed; and (ii) "equipment, and materials
26incorporated into or used in the business of providing

 

 

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1broadband services", means all equipment and materials
2machinery, software, or other tangible personal property
3deployed in Illinois on or after January 1, 2022 that is used
4in whole or in part in producing, broadcasting, distributing,
5sending, receiving, storing, transmitting, retransmitting,
6amplifying, switching, or routing broadband services,
7including the monitoring, testing, maintaining, enabling, or
8facilitating of such equipment, machinery, software, or other
9infrastructure. Such property includes, but is not limited to,
10wires, cables including fiber optic cables, antennas, poles,
11switches, routers, amplifiers, rectifiers, repeaters,
12receivers, multiplexers, duplexers, transmitters, power
13equipment, backup power equipment, diagnostic equipment,
14storage devices, modems, and other general central office
15equipment, such as channel cards, frames, and cabinets.
16    The credit under this subsection (p) does not apply for
17property placed in service after December 31, 2026.
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 25 megabits per second of download
4speed and 3 megabits 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

 

 

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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, 2025, equipment and material
23deployed after January 1, 2021 in a county in the State with a
24population of fewer than 40,000 people or a township in the
25State with a population density of less than 50 households per
26square mile in a county with a population of less than 300,000

 

 

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1people during that year that is incorporated into or used in
2the business of providing broadband services, including all
3equipment and material, machinery, software, or other tangible
4personal property that is used in whole or in part in
5producing, broadcasting, distributing, sending, receiving,
6storing, transmitting, retransmitting, amplifying, switching,
7or routing broadband services, including the monitoring,
8testing, maintaining, enabling, or facilitating of such
9equipment, machinery, software, or other infrastructure. Such
10property includes, but is not limited to, wires, cables
11including fiber optic cables, antennas, poles, switches,
12routers, amplifiers, rectifiers, repeaters, receivers,
13multiplexers, duplexers, transmitters, power equipment, backup
14power equipment, diagnostic equipment, storage devices,
15modems, and other general central office equipment, such as
16channel cards, frames, and cabinets.
17(Source: P.A. 100-22, eff. 7-6-17; 100-437, eff. 1-1-18;
18100-594, eff. 6-29-18; 100-863, eff. 8-14-18; 100-1171, eff.
191-4-19; 101-9, eff. 6-5-19; 101-31, eff. 6-28-19; 101-81, eff.
207-12-19; 101-629, eff. 2-5-20.)
 
21    Section 15. The Service Use Tax Act is amended by changing
22Sections 2 and 3-5 as follows:
 
23    (35 ILCS 110/2)  (from Ch. 120, par. 439.32)
24    Sec. 2. Definitions. In this Act:

 

 

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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 25 megabits per second of download
4speed and 3 megabits 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, but does not include the sale or
8use for demonstration by him of that property in any form as
9tangible personal property in the regular course of business.
10"Use" does not mean the interim use of tangible personal
11property nor the physical incorporation of tangible personal
12property, as an ingredient or constituent, into other tangible
13personal property, (a) which is sold in the regular course of
14business or (b) which the person incorporating such ingredient
15or constituent therein has undertaken at the time of such
16purchase to cause to be transported in interstate commerce to
17destinations outside the State of Illinois.
18    "Purchased from a serviceman" means the acquisition of the
19ownership of, or title to, tangible personal property through
20a sale of service.
21    "Purchaser" means any person who, through a sale of
22service, acquires the ownership of, or title to, any tangible
23personal property.
24    "Cost price" means the consideration paid by the
25serviceman for a purchase valued in money, whether paid in
26money or otherwise, including cash, credits and services, and

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1    outside Illinois.
2        (6) until July 1, 2003, a sale or transfer of
3    distillation machinery and equipment, sold as a unit or
4    kit and assembled or installed by the retailer, which
5    machinery and equipment is certified by the user to be
6    used only for the production of ethyl alcohol that will be
7    used for consumption as motor fuel or as a component of
8    motor fuel for the personal use of such user and not
9    subject to sale or resale.
10        (7) at the election of any serviceman not required to
11    be otherwise registered as a retailer under Section 2a of
12    the Retailers' Occupation Tax Act, made for each fiscal
13    year sales of service in which the aggregate annual cost
14    price of tangible personal property transferred as an
15    incident to the sales of service is less than 35%, or 75%
16    in the case of servicemen transferring prescription drugs
17    or servicemen engaged in graphic arts production, of the
18    aggregate annual total gross receipts from all sales of
19    service. The purchase of such tangible personal property
20    by the serviceman shall be subject to tax under the
21    Retailers' Occupation Tax Act and the Use Tax Act.
22    However, if a primary serviceman who has made the election
23    described in this paragraph subcontracts service work to a
24    secondary serviceman who has also made the election
25    described in this paragraph, the primary serviceman does
26    not incur a Use Tax liability if the secondary serviceman

 

 

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1    (i) has paid or will pay Use Tax on his or her cost price
2    of any tangible personal property transferred to the
3    primary serviceman and (ii) certifies that fact in writing
4    to the primary serviceman.
5    Tangible personal property transferred incident to the
6completion of a maintenance agreement is exempt from the tax
7imposed pursuant to this Act.
8    Exemption (5) also includes machinery and equipment used
9in the general maintenance or repair of such exempt machinery
10and equipment or for in-house manufacture of exempt machinery
11and equipment. On and after July 1, 2017, exemption (5) also
12includes graphic arts machinery and equipment, as defined in
13paragraph (5) of Section 3-5. The machinery and equipment
14exemption does not include machinery and equipment used in (i)
15the generation of electricity for wholesale or retail sale;
16(ii) the generation or treatment of natural or artificial gas
17for wholesale 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. For the purposes of
23exemption (5), each of these terms shall have the following
24meanings: (1) "manufacturing process" shall mean the
25production of any article of tangible personal property,
26whether such article is a finished product or an article for

 

 

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

 

 

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1integrated manufacturing or assembly process; including
2computers used primarily in a manufacturer's computer assisted
3design, computer assisted manufacturing (CAD/CAM) system; or
4any subunit or assembly comprising a component of any
5machinery or auxiliary, adjunct or attachment parts of
6machinery, such as tools, dies, jigs, fixtures, patterns and
7molds; or any parts which require periodic replacement in the
8course of normal operation; but shall not include hand tools.
9Equipment includes chemicals or chemicals acting as catalysts
10but only if the chemicals or chemicals acting as catalysts
11effect a direct and immediate change upon a product being
12manufactured or assembled for wholesale or retail sale or
13lease. The purchaser of such machinery and equipment who has
14an active resale registration number shall furnish such number
15to the seller at the time of purchase. The purchaser of such
16machinery and equipment and tools without an active resale
17registration number shall prepare a certificate of exemption
18stating facts establishing the exemption, which certificate
19shall be available to the Department for inspection or audit.
20The Department shall prescribe the form of the certificate.
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 (5) 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 (3) of this Section shall make tax-free
10purchases unless it has an active exemption identification
11number issued by the Department.
12    The purchase, employment and transfer of such tangible
13personal property as newsprint and ink for the primary purpose
14of conveying news (with or without other information) is not a
15purchase, use or sale of service or of tangible personal
16property within the meaning of this Act.
17    "Serviceman" means any person who is engaged in the
18occupation of making sales of service.
19    "Sale at retail" means "sale at retail" as defined in the
20Retailers' Occupation Tax Act.
21    "Supplier" means any person who makes sales of tangible
22personal property to servicemen for the purpose of resale as
23an incident to a sale of service.
24    "Serviceman maintaining a place of business in this
25State", or any like term, means and includes any serviceman:
26        (1) having or maintaining within this State, directly

 

 

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

 

 

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1    preceding 4 quarterly periods ending on the last day of
2    March, June, September, and December; a serviceman meeting
3    the requirements of this paragraph (1.1) shall be presumed
4    to be maintaining a place of business in this State but may
5    rebut this presumption by submitting proof that the
6    referrals or other activities pursued within this State by
7    such persons were not sufficient to meet the nexus
8    standards of the United States Constitution during the
9    preceding 4 quarterly periods;
10        (1.2) beginning July 1, 2011, having a contract with a
11    person located in this State under which:
12            (A) the serviceman sells the same or substantially
13        similar line of services as the person located in this
14        State and does so using an identical or substantially
15        similar name, trade name, or trademark as the person
16        located in this State; and
17            (B) the serviceman provides a commission or other
18        consideration to the person located in this State
19        based upon the sale of services by the serviceman.
20    The provisions of this paragraph (1.2) shall apply only if
21    the cumulative gross receipts from sales of service by the
22    serviceman to customers in this State under all such
23    contracts exceed $10,000 during the preceding 4 quarterly
24    periods ending on the last day of March, June, September,
25    and December;
26        (2) soliciting orders for tangible personal property

 

 

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

 

 

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

 

 

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

 

 

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1100-587, eff. 6-4-18; 100-863, eff. 8-14-18; 101-9, Article
210, Section 10-15, eff. 6-5-19; 101-9, Article 25, Section
325-10, eff. 6-5-19; 101-604, eff. 12-13-19.)
 
4    (35 ILCS 110/3-5)
5    Sec. 3-5. Exemptions. Use of the following tangible
6personal property is exempt from the tax imposed by this Act:
7    (1) Personal property purchased from a corporation,
8society, association, foundation, institution, or
9organization, other than a limited liability company, that is
10organized and operated as a not-for-profit service enterprise
11for the benefit of persons 65 years of age or older if the
12personal property was not purchased by the enterprise for the
13purpose of resale by the enterprise.
14    (2) Personal property purchased by a non-profit Illinois
15county fair association for use in conducting, operating, or
16promoting the county fair.
17    (3) Personal property purchased by a not-for-profit arts
18or cultural organization that establishes, by proof required
19by the Department by rule, that it has received an exemption
20under Section 501(c)(3) of the Internal Revenue Code and that
21is organized and operated primarily for the presentation or
22support of arts or cultural programming, activities, or
23services. These organizations include, but are not limited to,
24music and dramatic arts organizations such as symphony
25orchestras and theatrical groups, arts and cultural service

 

 

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1organizations, local arts councils, visual arts organizations,
2and media arts organizations. On and after July 1, 2001 (the
3effective date of Public Act 92-35), however, an entity
4otherwise eligible for this exemption shall not make tax-free
5purchases unless it has an active identification number issued
6by the Department.
7    (4) Legal tender, currency, medallions, or gold or silver
8coinage issued by the State of Illinois, the government of the
9United States of America, or the government of any foreign
10country, and bullion.
11    (5) Until July 1, 2003 and beginning again on September 1,
122004 through August 30, 2014, graphic arts machinery and
13equipment, including repair and replacement parts, both new
14and used, and including that manufactured on special order or
15purchased for lease, certified by the purchaser to be used
16primarily for graphic arts production. Equipment includes
17chemicals or chemicals acting as catalysts but only if the
18chemicals or chemicals acting as catalysts effect a direct and
19immediate change upon a graphic arts product. Beginning on
20July 1, 2017, graphic arts machinery and equipment is included
21in the manufacturing and assembling machinery and equipment
22exemption under Section 2 of this Act.
23    (6) Personal property purchased from a teacher-sponsored
24student organization affiliated with an elementary or
25secondary school located in Illinois.
26    (7) Farm machinery and equipment, both new and used,

 

 

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

 

 

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

 

 

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

 

 

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1reclamation equipment, including replacement parts and
2equipment, and including equipment purchased for lease, but
3excluding motor vehicles required to be registered under the
4Illinois Vehicle Code. The changes made to this Section by
5Public Act 97-767 apply on and after July 1, 2003, but no claim
6for credit or refund is allowed on or after August 16, 2013
7(the effective date of Public Act 98-456) for such taxes paid
8during the period beginning July 1, 2003 and ending on August
916, 2013 (the effective date of Public Act 98-456).
10    (13) Semen used for artificial insemination of livestock
11for direct agricultural production.
12    (14) Horses, or interests in horses, registered with and
13meeting the requirements of any of the Arabian Horse Club
14Registry of America, Appaloosa Horse Club, American Quarter
15Horse Association, United States Trotting Association, or
16Jockey Club, as appropriate, used for purposes of breeding or
17racing for prizes. This item (14) is exempt from the
18provisions of Section 3-75, and the exemption provided for
19under this item (14) applies for all periods beginning May 30,
201995, but no claim for credit or refund is allowed on or after
21January 1, 2008 (the effective date of Public Act 95-88) for
22such taxes paid during the period beginning May 30, 2000 and
23ending on January 1, 2008 (the effective date of Public Act
2495-88).
25    (15) Computers and communications equipment utilized for
26any hospital purpose and equipment used in the diagnosis,

 

 

SB2247- 152 -LRB102 13440 HLH 18787 b

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

 

 

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1the Department under Section 1g of the Retailers' Occupation
2Tax Act. If the property is leased in a manner that does not
3qualify for this exemption or is used in any other non-exempt
4manner, the lessor shall be liable for the tax imposed under
5this Act or the Use Tax Act, as the case may be, based on the
6fair market value of the property at the time the
7non-qualifying use occurs. No lessor shall collect or attempt
8to collect an amount (however designated) that purports to
9reimburse that lessor for the tax imposed by this Act or the
10Use Tax Act, as the case may be, if the tax has not been paid
11by the lessor. If a lessor improperly collects any such amount
12from the lessee, the lessee shall have a legal right to claim a
13refund of that amount from the lessor. If, however, that
14amount is not refunded to the lessee for any reason, the lessor
15is liable to pay that amount to the Department.
16    (17) 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    (18) 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    (19) Beginning July 1, 1999, game or game birds purchased
14at a "game breeding and hunting preserve area" as that term is
15used in the Wildlife Code. This paragraph is exempt from the
16provisions of Section 3-75.
17    (20) 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    (21) 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 3-75.
24    (22) 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 3-75.
8    (23) Beginning August 23, 2001 and through June 30, 2016,
9food for human consumption that is to be consumed off the
10premises where it is sold (other than alcoholic beverages,
11soft drinks, and food that has been prepared for immediate
12consumption) and prescription and nonprescription medicines,
13drugs, medical appliances, and insulin, urine testing
14materials, syringes, and needles used by diabetics, for human
15use, when purchased for use by a person receiving medical
16assistance under Article V of the Illinois Public Aid Code who
17resides in a licensed long-term care facility, as defined in
18the Nursing Home Care Act, or in a licensed facility as defined
19in the ID/DD Community Care Act, the MC/DD Act, or the
20Specialized Mental Health Rehabilitation Act of 2013.
21    (24) Beginning on August 2, 2001 (the effective date of
22Public Act 92-227), computers and communications equipment
23utilized for any hospital purpose and equipment used in the
24diagnosis, analysis, or treatment of hospital patients
25purchased by a lessor who leases the equipment, under a lease
26of one year or longer executed or in effect at the time the

 

 

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

 

 

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1Occupation Tax Act. If the property is leased in a manner that
2does not qualify for this exemption or is used in any other
3nonexempt manner, the lessor shall be liable for the tax
4imposed under this Act or the Use Tax Act, as the case may be,
5based on the fair market value of the property at the time the
6nonqualifying use occurs. No lessor shall collect or attempt
7to collect an amount (however designated) that purports to
8reimburse that lessor for the tax imposed by this Act or the
9Use Tax Act, as the case may be, if the tax has not been paid
10by the lessor. If a lessor improperly collects any such amount
11from the lessee, the lessee shall have a legal right to claim a
12refund of that amount from the lessor. If, however, that
13amount is not refunded to the lessee for any reason, the lessor
14is liable to pay that amount to the Department. This paragraph
15is exempt from the provisions of Section 3-75.
16    (26) Beginning January 1, 2008, tangible personal property
17used in the construction or maintenance of a community water
18supply, as defined under Section 3.145 of the Environmental
19Protection Act, that is operated by a not-for-profit
20corporation that holds a valid water supply permit issued
21under Title IV of the Environmental Protection Act. This
22paragraph is exempt from the provisions of Section 3-75.
23    (27) Beginning January 1, 2010 and continuing through
24December 31, 2024, materials, parts, equipment, components,
25and furnishings incorporated into or upon an aircraft as part
26of the modification, refurbishment, completion, replacement,

 

 

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1repair, or maintenance of the aircraft. This exemption
2includes consumable supplies used in the modification,
3refurbishment, completion, replacement, repair, and
4maintenance of aircraft, but excludes any materials, parts,
5equipment, components, and consumable supplies used in the
6modification, replacement, repair, and maintenance of aircraft
7engines or power plants, whether such engines or power plants
8are installed or uninstalled upon any such aircraft.
9"Consumable supplies" include, but are not limited to,
10adhesive, tape, sandpaper, general purpose lubricants,
11cleaning solution, latex gloves, and protective films. This
12exemption applies only to the use of qualifying tangible
13personal property transferred incident to the modification,
14refurbishment, completion, replacement, repair, or maintenance
15of aircraft by persons who (i) hold an Air Agency Certificate
16and are empowered to operate an approved repair station by the
17Federal Aviation Administration, (ii) have a Class IV Rating,
18and (iii) conduct operations in accordance with Part 145 of
19the Federal Aviation Regulations. The exemption does not
20include aircraft operated by a commercial air carrier
21providing scheduled passenger air service pursuant to
22authority issued under Part 121 or Part 129 of the Federal
23Aviation Regulations. The changes made to this paragraph (27)
24by Public Act 98-534 are declarative of existing law. It is the
25intent of the General Assembly that the exemption under this
26paragraph (27) applies continuously from January 1, 2010

 

 

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1through December 31, 2024; however, no claim for credit or
2refund is allowed for taxes paid as a result of the
3disallowance of this exemption on or after January 1, 2015 and
4prior to the effective date of this amendatory Act of the 101st
5General Assembly.
6    (28) Tangible personal property purchased by a
7public-facilities corporation, as described in Section
811-65-10 of the Illinois Municipal Code, for purposes of
9constructing or furnishing a municipal convention hall, but
10only if the legal title to the municipal convention hall is
11transferred to the municipality without any further
12consideration by or on behalf of the municipality at the time
13of the completion of the municipal convention hall or upon the
14retirement or redemption of any bonds or other debt
15instruments issued by the public-facilities corporation in
16connection with the development of the municipal convention
17hall. This exemption includes existing public-facilities
18corporations as provided in Section 11-65-25 of the Illinois
19Municipal Code. This paragraph is exempt from the provisions
20of Section 3-75.
21    (29) Beginning January 1, 2017, menstrual pads, tampons,
22and menstrual cups.
23    (30) Tangible personal property transferred to a purchaser
24who is exempt from the tax imposed by this Act by operation of
25federal law. This paragraph is exempt from the provisions of
26Section 3-75.

 

 

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1    (31) Qualified tangible personal property used in the
2construction or operation of a data center that has been
3granted a certificate of exemption by the Department of
4Commerce and Economic Opportunity, whether that tangible
5personal property is purchased by the owner, operator, or
6tenant of the data center or by a contractor or subcontractor
7of the owner, operator, or tenant. Data centers that would
8have qualified for a certificate of exemption prior to January
91, 2020 had this amendatory Act of the 101st General Assembly
10been in effect, may apply for and obtain an exemption for
11subsequent purchases of computer equipment or enabling
12software purchased or leased to upgrade, supplement, or
13replace computer equipment or enabling software purchased or
14leased in the original investment that would have qualified.
15    The Department of Commerce and Economic Opportunity shall
16grant a certificate of exemption under this item (31) to
17qualified data centers as defined by Section 605-1025 of the
18Department of Commerce and Economic Opportunity Law of the
19Civil Administrative Code of Illinois.
20    For the purposes of this item (31):
21        "Data center" means a building or a series of
22    buildings rehabilitated or constructed to house working
23    servers in one physical location or multiple sites within
24    the State of Illinois.
25        "Qualified tangible personal property" means:
26    electrical systems and equipment; climate control and

 

 

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1    chilling equipment and systems; mechanical systems and
2    equipment; monitoring and secure systems; emergency
3    generators; hardware; computers; servers; data storage
4    devices; network connectivity equipment; racks; cabinets;
5    telecommunications cabling infrastructure; raised floor
6    systems; peripheral components or systems; software;
7    mechanical, electrical, or plumbing systems; battery
8    systems; cooling systems and towers; temperature control
9    systems; other cabling; and other data center
10    infrastructure equipment and systems necessary to operate
11    qualified tangible personal property, including fixtures;
12    and component parts of any of the foregoing, including
13    installation, maintenance, repair, refurbishment, and
14    replacement of qualified tangible personal property to
15    generate, transform, transmit, distribute, or manage
16    electricity necessary to operate qualified tangible
17    personal property; and all other tangible personal
18    property that is essential to the operations of a computer
19    data center. The term "qualified tangible personal
20    property" also includes building materials physically
21    incorporated in to the qualifying data center. To document
22    the exemption allowed under this Section, the retailer
23    must obtain from the purchaser a copy of the certificate
24    of eligibility issued by the Department of Commerce and
25    Economic Opportunity.
26    This item (31) is exempt from the provisions of Section

 

 

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13-75.
2    (32) Until December 31, 2025, equipment and material
3deployed on or after January 1, 2021 in a county in the State
4with a population of fewer than 40,000 people or a township in
5the State with a population density of less than 50 households
6per square mile in a county with a population of less than
7300,000 people that is incorporated into or used in the
8business of providing broadband services, including all
9equipment and material, machinery, software, or other tangible
10personal property that is used in whole or in part in
11producing, broadcasting, distributing, sending, receiving,
12storing, transmitting, retransmitting, amplifying, switching,
13or routing broadband services, including the monitoring,
14testing, maintaining, enabling, or facilitating of such
15equipment, machinery, software, or other infrastructure. Such
16property includes, but is not limited to, wires, cables
17including fiber optic cables, antennas, poles, switches,
18routers, amplifiers, rectifiers, repeaters, receivers,
19multiplexers, duplexers, transmitters, power equipment, backup
20power equipment, diagnostic equipment, storage devices,
21modems, and other general central office equipment, such as
22channel cards, frames, and cabinets.
23(Source: P.A. 100-22, eff. 7-6-17; 100-594, eff. 6-29-18;
24100-1171, eff. 1-4-19; 101-31, eff. 6-28-19; 101-81, eff.
257-12-19; 101-629, eff. 2-5-20.)
 

 

 

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1    Section 20. The Service Occupation Tax Act is amended by
2changing Sections 2 and 3-5 as follows:
 
3    (35 ILCS 115/2)  (from Ch. 120, par. 439.102)
4    Sec. 2. 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 25 megabits per second of download
8speed and 3 megabits per second of upload speed.
9    "Transfer" means any transfer of the title to property or
10of the ownership of property whether or not the transferor
11retains title as security for the payment of amounts due him
12from the transferee.
13    "Cost Price" means the consideration paid by the
14serviceman for a purchase valued in money, whether paid in
15money or otherwise, including cash, credits and services, and
16shall be determined without any deduction on account of the
17supplier's cost of the property sold or on account of any other
18expense incurred by the supplier. When a serviceman contracts
19out part or all of the services required in his sale of
20service, it shall be presumed that the cost price to the
21serviceman of the property transferred to him by his or her
22subcontractor is equal to 50% of the subcontractor's charges
23to the serviceman in the absence of proof of the consideration
24paid by the subcontractor for the purchase of such property.
25    "Department" means the Department of Revenue.

 

 

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1    "Person" means any natural individual, firm, partnership,
2association, joint stock company, joint venture, public or
3private corporation, limited liability company, and any
4receiver, executor, trustee, guardian or other representative
5appointed by order of any court.
6    "Sale of Service" means any transaction except:
7    (a) A retail sale of tangible personal property taxable
8under the Retailers' Occupation Tax Act or under the Use Tax
9Act.
10    (b) A sale of tangible personal property for the purpose
11of resale made in compliance with Section 2c of the Retailers'
12Occupation Tax Act.
13    (c) Except as hereinafter provided, a sale or transfer of
14tangible personal property as an incident to the rendering of
15service for or by any governmental body or for or by any
16corporation, society, association, foundation or institution
17organized and operated exclusively for charitable, religious
18or educational purposes or any not-for-profit corporation,
19society, association, foundation, institution or organization
20which has no compensated officers or employees and which is
21organized and operated primarily for the recreation of persons
2255 years of age or older. A limited liability company may
23qualify for the exemption under this paragraph only if the
24limited liability company is organized and operated
25exclusively for educational purposes.
26    (d) (Blank).

 

 

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1    (d-1) A sale or transfer of tangible personal property as
2an incident to the rendering of service for owners, lessors or
3shippers of tangible personal property which is utilized by
4interstate carriers for hire for use as rolling stock moving
5in interstate commerce, and equipment operated by a
6telecommunications provider, licensed as a common carrier by
7the Federal Communications Commission, which is permanently
8installed in or affixed to aircraft moving in interstate
9commerce.
10    (d-1.1) On and after July 1, 2003 and through June 30,
112004, a sale or transfer of a motor vehicle of the second
12division with a gross vehicle weight in excess of 8,000 pounds
13as an incident to the rendering of service if that motor
14vehicle is subject to the commercial distribution fee imposed
15under Section 3-815.1 of the Illinois Vehicle Code. Beginning
16on July 1, 2004 and through June 30, 2005, the use in this
17State of motor vehicles of the second division: (i) with a
18gross vehicle weight rating in excess of 8,000 pounds; (ii)
19that are subject to the commercial distribution fee imposed
20under Section 3-815.1 of the Illinois Vehicle Code; and (iii)
21that are primarily used for commercial purposes. Through June
2230, 2005, this exemption applies to repair and replacement
23parts added after the initial purchase of such a motor vehicle
24if that motor vehicle is used in a manner that would qualify
25for the rolling stock exemption otherwise provided for in this
26Act. For purposes of this paragraph, "used for commercial

 

 

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1purposes" means the transportation of persons or property in
2furtherance of any commercial or industrial enterprise whether
3for-hire or not.
4    (d-2) The repairing, reconditioning or remodeling, for a
5common carrier by rail, of tangible personal property which
6belongs to such carrier for hire, and as to which such carrier
7receives the physical possession of the repaired,
8reconditioned or remodeled item of tangible personal property
9in Illinois, and which such carrier transports, or shares with
10another common carrier in the transportation of such property,
11out of Illinois on a standard uniform bill of lading showing
12the person who repaired, reconditioned or remodeled the
13property as the shipper or consignor of such property to a
14destination outside Illinois, for use outside Illinois.
15    (d-3) A sale or transfer of tangible personal property
16which is produced by the seller thereof on special order in
17such a way as to have made the applicable tax the Service
18Occupation Tax or the Service Use Tax, rather than the
19Retailers' Occupation Tax or the Use Tax, for an interstate
20carrier by rail which receives the physical possession of such
21property in Illinois, and which transports such property, or
22shares with another common carrier in the transportation of
23such property, out of Illinois on a standard uniform bill of
24lading showing the seller of the property as the shipper or
25consignor of such property to a destination outside Illinois,
26for use outside Illinois.

 

 

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1    (d-4) Until January 1, 1997, a sale, by a registered
2serviceman paying tax under this Act to the Department, of
3special order printed materials delivered outside Illinois and
4which are not returned to this State, if delivery is made by
5the seller or agent of the seller, including an agent who
6causes the product to be delivered outside Illinois by a
7common carrier or the U.S. postal service.
8    (e) A sale or transfer of machinery and equipment used
9primarily in the process of the manufacturing or assembling,
10either in an existing, an expanded or a new manufacturing
11facility, of tangible personal property for wholesale or
12retail sale or lease, whether such sale or lease is made
13directly by the manufacturer or by some other person, whether
14the materials used in the process are owned by the
15manufacturer or some other person, or whether such sale or
16lease is made apart from or as an incident to the seller's
17engaging in a service occupation and the applicable tax is a
18Service Occupation Tax or Service Use Tax, rather than
19Retailers' Occupation Tax or Use Tax. The exemption provided
20by this paragraph (e) includes production related tangible
21personal property, as defined in Section 3-50 of the Use Tax
22Act, purchased on or after July 1, 2019. The exemption
23provided by this paragraph (e) does not include machinery and
24equipment used in (i) the generation of electricity for
25wholesale or retail sale; (ii) the generation or treatment of
26natural or artificial gas for wholesale or retail sale that is

 

 

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1delivered to customers through pipes, pipelines, or mains; or
2(iii) the treatment of water for wholesale or retail sale that
3is delivered to customers through pipes, pipelines, or mains.
4The provisions of Public Act 98-583 are declaratory of
5existing law as to the meaning and scope of this exemption. The
6exemption under this subsection (e) is exempt from the
7provisions of Section 3-75.
8    (f) Until July 1, 2003, the sale or transfer of
9distillation machinery and equipment, sold as a unit or kit
10and assembled or installed by the retailer, which machinery
11and equipment is certified by the user to be used only for the
12production of ethyl alcohol that will be used for consumption
13as motor fuel or as a component of motor fuel for the personal
14use of such user and not subject to sale or resale.
15    (g) At the election of any serviceman not required to be
16otherwise registered as a retailer under Section 2a of the
17Retailers' Occupation Tax Act, made for each fiscal year sales
18of service in which the aggregate annual cost price of
19tangible personal property transferred as an incident to the
20sales of service is less than 35% (75% in the case of
21servicemen transferring prescription drugs or servicemen
22engaged in graphic arts production) of the aggregate annual
23total gross receipts from all sales of service. The purchase
24of such tangible personal property by the serviceman shall be
25subject to tax under the Retailers' Occupation Tax Act and the
26Use Tax Act. However, if a primary serviceman who has made the

 

 

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1election described in this paragraph subcontracts service work
2to a secondary serviceman who has also made the election
3described in this paragraph, the primary serviceman does not
4incur a Use Tax liability if the secondary serviceman (i) has
5paid or will pay Use Tax on his or her cost price of any
6tangible personal property transferred to the primary
7serviceman and (ii) certifies that fact in writing to the
8primary serviceman.
9    Tangible personal property transferred incident to the
10completion of a maintenance agreement is exempt from the tax
11imposed pursuant to this Act.
12    Exemption (e) also includes machinery and equipment used
13in the general maintenance or repair of such exempt machinery
14and equipment or for in-house manufacture of exempt machinery
15and equipment. On and after July 1, 2017, exemption (e) also
16includes graphic arts machinery and equipment, as defined in
17paragraph (5) of Section 3-5. The machinery and equipment
18exemption does not include machinery and equipment used in (i)
19the generation of electricity for wholesale or retail sale;
20(ii) the generation or treatment of natural or artificial gas
21for wholesale or retail sale that is delivered to customers
22through pipes, pipelines, or mains; or (iii) the treatment of
23water for wholesale or retail sale that is delivered to
24customers through pipes, pipelines, or mains. The provisions
25of Public Act 98-583 are declaratory of existing law as to the
26meaning and scope of this exemption. For the purposes of

 

 

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

 

 

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1shall mean major mechanical machines or major components of
2such machines contributing to a manufacturing or assembling
3process; and (4) "equipment" shall include any independent
4device or tool separate from any machinery but essential to an
5integrated manufacturing or assembly process; including
6computers used primarily in a manufacturer's computer assisted
7design, computer assisted manufacturing (CAD/CAM) system; or
8any subunit or assembly comprising a component of any
9machinery or auxiliary, adjunct or attachment parts of
10machinery, such as tools, dies, jigs, fixtures, patterns and
11molds; or any parts which require periodic replacement in the
12course of normal operation; but shall not include hand tools.
13Equipment includes chemicals or chemicals acting as catalysts
14but only if the chemicals or chemicals acting as catalysts
15effect a direct and immediate change upon a product being
16manufactured or assembled for wholesale or retail sale or
17lease. The purchaser of such machinery and equipment who has
18an active resale registration number shall furnish such number
19to the seller at the time of purchase. The purchaser of such
20machinery and equipment and tools without an active resale
21registration number shall furnish to the seller a certificate
22of exemption stating facts establishing the exemption, which
23certificate shall be available to the Department for
24inspection or audit.
25    Except as provided in Section 2d of this Act, the rolling
26stock exemption applies to rolling stock used by an interstate

 

 

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

 

 

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1personal property to servicemen for the purpose of resale as
2an incident to a sale of service.
3(Source: P.A. 100-22, eff. 7-6-17; 100-321, eff. 8-24-17;
4100-863, eff. 8-14-18; 101-9, eff. 6-5-19; 101-604, eff.
512-13-19.)
 
6    (35 ILCS 115/3-5)
7    Sec. 3-5. Exemptions. The following tangible personal
8property is exempt from the tax imposed by this Act:
9    (1) Personal property sold by a corporation, society,
10association, foundation, institution, or organization, other
11than a limited liability company, that is organized and
12operated as a not-for-profit service enterprise for the
13benefit of persons 65 years of age or older if the personal
14property was not purchased by the enterprise for the purpose
15of resale by the enterprise.
16    (2) Personal property purchased by a not-for-profit
17Illinois county fair association for use in conducting,
18operating, or promoting the county fair.
19    (3) Personal property purchased by any not-for-profit arts
20or cultural organization that establishes, by proof required
21by the Department by rule, that it has received an exemption
22under Section 501(c)(3) of the Internal Revenue Code and that
23is organized and operated primarily for the presentation or
24support of arts or cultural programming, activities, or
25services. These organizations include, but are not limited to,

 

 

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1music and dramatic arts organizations such as symphony
2orchestras and theatrical groups, arts and cultural service
3organizations, local arts councils, visual arts organizations,
4and media arts organizations. On and after July 1, 2001 (the
5effective date of Public Act 92-35), however, an entity
6otherwise eligible for this exemption shall not make tax-free
7purchases unless it has an active identification number issued
8by the Department.
9    (4) Legal tender, currency, medallions, or gold or silver
10coinage issued by the State of Illinois, the government of the
11United States of America, or the government of any foreign
12country, and bullion.
13    (5) Until July 1, 2003 and beginning again on September 1,
142004 through August 30, 2014, graphic arts machinery and
15equipment, including repair and replacement parts, both new
16and used, and including that manufactured on special order or
17purchased for lease, certified by the purchaser to be used
18primarily for graphic arts production. Equipment includes
19chemicals or chemicals acting as catalysts but only if the
20chemicals or chemicals acting as catalysts effect a direct and
21immediate change upon a graphic arts product. Beginning on
22July 1, 2017, graphic arts machinery and equipment is included
23in the manufacturing and assembling machinery and equipment
24exemption under Section 2 of this Act.
25    (6) Personal property sold by a teacher-sponsored student
26organization affiliated with an elementary or secondary school

 

 

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

 

 

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1software, global positioning and mapping systems, and other
2such equipment.
3    Farm machinery and equipment also includes computers,
4sensors, software, and related equipment used primarily in the
5computer-assisted operation of production agriculture
6facilities, equipment, and activities such as, but not limited
7to, the collection, monitoring, and correlation of animal and
8crop data for the purpose of formulating animal diets and
9agricultural chemicals. This item (7) is exempt from the
10provisions of Section 3-55.
11    (8) Until June 30, 2013, fuel and petroleum products sold
12to or used by an air common carrier, certified by the carrier
13to be used for consumption, shipment, or storage in the
14conduct of its business as an air common carrier, for a flight
15destined for or returning from a location or locations outside
16the United States without regard to previous or subsequent
17domestic stopovers.
18    Beginning July 1, 2013, fuel and petroleum products sold
19to or used by an air carrier, certified by the carrier to be
20used for consumption, shipment, or storage in the conduct of
21its business as an air common carrier, for a flight that (i) is
22engaged in foreign trade or is engaged in trade between the
23United States and any of its possessions and (ii) transports
24at least one individual or package for hire from the city of
25origination to the city of final destination on the same
26aircraft, without regard to a change in the flight number of

 

 

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

 

 

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1reclamation equipment, including replacement parts and
2equipment, and including equipment purchased for lease, but
3excluding motor vehicles required to be registered under the
4Illinois Vehicle Code. The changes made to this Section by
5Public Act 97-767 apply on and after July 1, 2003, but no claim
6for credit or refund is allowed on or after August 16, 2013
7(the effective date of Public Act 98-456) for such taxes paid
8during the period beginning July 1, 2003 and ending on August
916, 2013 (the effective date of Public Act 98-456).
10    (13) Beginning January 1, 1992 and through June 30, 2016,
11food for human consumption that is to be consumed off the
12premises where it is sold (other than alcoholic beverages,
13soft drinks and food that has been prepared for immediate
14consumption) and prescription and non-prescription medicines,
15drugs, medical appliances, and insulin, urine testing
16materials, syringes, and needles used by diabetics, for human
17use, when purchased for use by a person receiving medical
18assistance under Article V of the Illinois Public Aid Code who
19resides in a licensed long-term care facility, as defined in
20the Nursing Home Care Act, or in a licensed facility as defined
21in the ID/DD Community Care Act, the MC/DD Act, or the
22Specialized Mental Health Rehabilitation Act of 2013.
23    (14) Semen used for artificial insemination of livestock
24for direct agricultural production.
25    (15) Horses, or interests in horses, registered with and
26meeting the requirements of any of the Arabian Horse Club

 

 

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1Registry of America, Appaloosa Horse Club, American Quarter
2Horse Association, United States Trotting Association, or
3Jockey Club, as appropriate, used for purposes of breeding or
4racing for prizes. This item (15) is exempt from the
5provisions of Section 3-55, and the exemption provided for
6under this item (15) applies for all periods beginning May 30,
71995, but no claim for credit or refund is allowed on or after
8January 1, 2008 (the effective date of Public Act 95-88) for
9such taxes paid during the period beginning May 30, 2000 and
10ending on January 1, 2008 (the effective date of Public Act
1195-88).
12    (16) Computers and communications equipment utilized for
13any hospital purpose and equipment used in the diagnosis,
14analysis, or treatment of hospital patients sold to a lessor
15who leases the equipment, under a lease of one year or longer
16executed or in effect at the time of the purchase, to a
17hospital that has been issued an active tax exemption
18identification number by the Department under Section 1g of
19the Retailers' Occupation Tax Act.
20    (17) Personal property sold to a lessor who leases the
21property, under a lease of one year or longer executed or in
22effect at the time of the purchase, to a governmental body that
23has been issued an active tax exemption identification number
24by the Department under Section 1g of the Retailers'
25Occupation Tax Act.
26    (18) 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 donated
3for disaster relief to be used in a State or federally declared
4disaster area in Illinois or bordering Illinois by a
5manufacturer or retailer that is registered in this State to a
6corporation, society, association, foundation, or institution
7that has been issued a sales tax exemption identification
8number by the Department that assists victims of the disaster
9who reside within the declared disaster area.
10    (19) 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 used in
13the performance of infrastructure repairs in this State,
14including but not limited to municipal roads and streets,
15access roads, bridges, sidewalks, waste disposal systems,
16water and sewer line extensions, water distribution and
17purification facilities, storm water drainage and retention
18facilities, and sewage treatment facilities, resulting from a
19State or federally declared disaster in Illinois or bordering
20Illinois when such repairs are initiated on facilities located
21in the declared disaster area within 6 months after the
22disaster.
23    (20) Beginning July 1, 1999, game or game birds sold at a
24"game breeding and hunting preserve area" as that term is used
25in the Wildlife Code. This paragraph is exempt from the
26provisions of Section 3-55.

 

 

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1    (21) A motor vehicle, as that term is defined in Section
21-146 of the Illinois Vehicle Code, that is donated to a
3corporation, limited liability company, society, association,
4foundation, or institution that is determined by the
5Department to be organized and operated exclusively for
6educational purposes. For purposes of this exemption, "a
7corporation, limited liability company, society, association,
8foundation, or institution organized and operated exclusively
9for educational purposes" means all tax-supported public
10schools, private schools that offer systematic instruction in
11useful branches of learning by methods common to public
12schools and that compare favorably in their scope and
13intensity with the course of study presented in tax-supported
14schools, and vocational or technical schools or institutes
15organized and operated exclusively to provide a course of
16study of not less than 6 weeks duration and designed to prepare
17individuals to follow a trade or to pursue a manual,
18technical, mechanical, industrial, business, or commercial
19occupation.
20    (22) Beginning January 1, 2000, personal property,
21including food, purchased through fundraising events for the
22benefit of a public or private elementary or secondary school,
23a group of those schools, or one or more school districts if
24the events are sponsored by an entity recognized by the school
25district that consists primarily of volunteers and includes
26parents and teachers of the school children. This paragraph

 

 

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1does not apply to fundraising events (i) for the benefit of
2private home instruction or (ii) for which the fundraising
3entity purchases the personal property sold at the events from
4another individual or entity that sold the property for the
5purpose of resale by the fundraising entity and that profits
6from the sale to the fundraising entity. This paragraph is
7exempt from the provisions of Section 3-55.
8    (23) Beginning January 1, 2000 and through December 31,
92001, new or used automatic vending machines that prepare and
10serve hot food and beverages, including coffee, soup, and
11other items, and replacement parts for these machines.
12Beginning January 1, 2002 and through June 30, 2003, machines
13and parts for machines used in commercial, coin-operated
14amusement and vending business if a use or occupation tax is
15paid on the gross receipts derived from the use of the
16commercial, coin-operated amusement and vending machines. This
17paragraph is exempt from the provisions of Section 3-55.
18    (24) Beginning on August 2, 2001 (the effective date of
19Public Act 92-227), computers and communications equipment
20utilized for any hospital purpose and equipment used in the
21diagnosis, analysis, or treatment of hospital patients sold to
22a lessor who leases the equipment, under a lease of one year or
23longer executed or in effect at the time of the purchase, 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. This paragraph is exempt

 

 

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1from the provisions of Section 3-55.
2    (25) Beginning on August 2, 2001 (the effective date of
3Public Act 92-227), personal property sold to a lessor who
4leases the property, under a lease of one year or longer
5executed or in effect at the time of the purchase, to a
6governmental body that has been issued an active tax exemption
7identification number by the Department under Section 1g of
8the Retailers' Occupation Tax Act. This paragraph is exempt
9from the provisions of Section 3-55.
10    (26) Beginning on January 1, 2002 and through June 30,
112016, tangible personal property purchased from an Illinois
12retailer by a taxpayer engaged in centralized purchasing
13activities in Illinois who will, upon receipt of the property
14in Illinois, temporarily store the property in Illinois (i)
15for the purpose of subsequently transporting it outside this
16State for use or consumption thereafter solely outside this
17State or (ii) for the purpose of being processed, fabricated,
18or manufactured into, attached to, or incorporated into other
19tangible personal property to be transported outside this
20State and thereafter used or consumed solely outside this
21State. The Director of Revenue shall, pursuant to rules
22adopted in accordance with the Illinois Administrative
23Procedure Act, issue a permit to any taxpayer in good standing
24with the Department who is eligible for the exemption under
25this paragraph (26). The permit issued under this paragraph
26(26) shall authorize the holder, to the extent and in the

 

 

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1manner specified in the rules adopted under this Act, to
2purchase tangible personal property from a retailer exempt
3from the taxes imposed by this Act. Taxpayers shall maintain
4all necessary books and records to substantiate the use and
5consumption of all such tangible personal property outside of
6the State of Illinois.
7    (27) Beginning January 1, 2008, tangible personal property
8used in the construction or maintenance of a community water
9supply, as defined under Section 3.145 of the Environmental
10Protection Act, that is operated by a not-for-profit
11corporation that holds a valid water supply permit issued
12under Title IV of the Environmental Protection Act. This
13paragraph is exempt from the provisions of Section 3-55.
14    (28) Tangible personal property sold to a
15public-facilities corporation, as described in Section
1611-65-10 of the Illinois Municipal Code, for purposes of
17constructing or furnishing a municipal convention hall, but
18only if the legal title to the municipal convention hall is
19transferred to the municipality without any further
20consideration by or on behalf of the municipality at the time
21of the completion of the municipal convention hall or upon the
22retirement or redemption of any bonds or other debt
23instruments issued by the public-facilities corporation in
24connection with the development of the municipal convention
25hall. This exemption includes existing public-facilities
26corporations as provided in Section 11-65-25 of the Illinois

 

 

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1Municipal Code. This paragraph is exempt from the provisions
2of Section 3-55.
3    (29) Beginning January 1, 2010 and continuing through
4December 31, 2024, materials, parts, equipment, components,
5and furnishings incorporated into or upon an aircraft as part
6of the modification, refurbishment, completion, replacement,
7repair, or maintenance of the aircraft. This exemption
8includes consumable supplies used in the modification,
9refurbishment, completion, replacement, repair, and
10maintenance of aircraft, but excludes any materials, parts,
11equipment, components, and consumable supplies used in the
12modification, replacement, repair, and maintenance of aircraft
13engines or power plants, whether such engines or power plants
14are installed or uninstalled upon any such aircraft.
15"Consumable supplies" include, but are not limited to,
16adhesive, tape, sandpaper, general purpose lubricants,
17cleaning solution, latex gloves, and protective films. This
18exemption applies only to the transfer of qualifying tangible
19personal property incident to the modification, refurbishment,
20completion, replacement, repair, or maintenance of an aircraft
21by persons who (i) hold an Air Agency Certificate and are
22empowered to operate an approved repair station by the Federal
23Aviation Administration, (ii) have a Class IV Rating, and
24(iii) conduct operations in accordance with Part 145 of the
25Federal Aviation Regulations. The exemption does not include
26aircraft operated by a commercial air carrier providing

 

 

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1scheduled passenger air service pursuant to authority issued
2under Part 121 or Part 129 of the Federal Aviation
3Regulations. The changes made to this paragraph (29) by Public
4Act 98-534 are declarative of existing law. It is the intent of
5the General Assembly that the exemption under this paragraph
6(29) applies continuously from January 1, 2010 through
7December 31, 2024; however, no claim for credit or refund is
8allowed for taxes paid as a result of the disallowance of this
9exemption on or after January 1, 2015 and prior to the
10effective date of this amendatory Act of the 101st General
11Assembly.
12    (30) Beginning January 1, 2017, menstrual pads, tampons,
13and menstrual cups.
14    (31) Tangible personal property transferred to a purchaser
15who is exempt from tax by operation of federal law. This
16paragraph is exempt from the provisions of Section 3-55.
17    (32) Qualified tangible personal property used in the
18construction or operation of a data center that has been
19granted a certificate of exemption by the Department of
20Commerce and Economic Opportunity, whether that tangible
21personal property is purchased by the owner, operator, or
22tenant of the data center or by a contractor or subcontractor
23of the owner, operator, or tenant. Data centers that would
24have qualified for a certificate of exemption prior to January
251, 2020 had this amendatory Act of the 101st General Assembly
26been in effect, may apply for and obtain an exemption for

 

 

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1subsequent purchases of computer equipment or enabling
2software purchased or leased to upgrade, supplement, or
3replace computer equipment or enabling software purchased or
4leased in the original investment that would have qualified.
5    The Department of Commerce and Economic Opportunity shall
6grant a certificate of exemption under this item (32) to
7qualified data centers as defined by Section 605-1025 of the
8Department of Commerce and Economic Opportunity Law of the
9Civil Administrative Code of Illinois.
10    For the purposes of this item (32):
11        "Data center" means a building or a series of
12    buildings rehabilitated or constructed to house working
13    servers in one physical location or multiple sites within
14    the State of Illinois.
15        "Qualified tangible personal property" means:
16    electrical systems and equipment; climate control and
17    chilling equipment and systems; mechanical systems and
18    equipment; monitoring and secure systems; emergency
19    generators; hardware; computers; servers; data storage
20    devices; network connectivity equipment; racks; cabinets;
21    telecommunications cabling infrastructure; raised floor
22    systems; peripheral components or systems; software;
23    mechanical, electrical, or plumbing systems; battery
24    systems; cooling systems and towers; temperature control
25    systems; other cabling; and other data center
26    infrastructure equipment and systems necessary to operate

 

 

SB2247- 189 -LRB102 13440 HLH 18787 b

1    qualified tangible personal property, including fixtures;
2    and component parts of any of the foregoing, including
3    installation, maintenance, repair, refurbishment, and
4    replacement of qualified tangible personal property to
5    generate, transform, transmit, distribute, or manage
6    electricity necessary to operate qualified tangible
7    personal property; and all other tangible personal
8    property that is essential to the operations of a computer
9    data center. The term "qualified tangible personal
10    property" also includes building materials physically
11    incorporated in to the qualifying data center. To document
12    the exemption allowed under this Section, the retailer
13    must obtain from the purchaser a copy of the certificate
14    of eligibility issued by the Department of Commerce and
15    Economic Opportunity.
16    This item (32) is exempt from the provisions of Section
173-55.
18    (33) Until December 31, 2025, equipment and material
19deployed on or after January 1, 2021 in a county in the State
20with a population of fewer than 40,000 people or a township in
21the State with a population density of less than 50 households
22per square mile in a county with a population of less than
23300,000 people that is incorporated into or used in the
24business of providing broadband services, including all
25equipment and material, machinery, software, or other tangible
26personal property that is used in whole or in part in

 

 

SB2247- 190 -LRB102 13440 HLH 18787 b

1producing, broadcasting, distributing, sending, receiving,
2storing, transmitting, retransmitting, amplifying, switching,
3or routing broadband services, including the monitoring,
4testing, maintaining, enabling, or facilitating of such
5equipment, machinery, software, or other infrastructure. Such
6property includes, but is not limited to, wires, cables
7including fiber optic cables, antennas, poles, switches,
8routers, amplifiers, rectifiers, repeaters, receivers,
9multiplexers, duplexers, transmitters, power equipment, backup
10power equipment, diagnostic equipment, storage devices,
11modems, and other general central office equipment, such as
12channel 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 25. The Retailers' Occupation Tax Act is amended
17by changing Sections 1 and 2-5 as follows:
 
18    (35 ILCS 120/1)  (from Ch. 120, par. 440)
19    Sec. 1. Definitions. As used 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 25 megabits per second of download
23speed and 3 megabits per second of upload speed.
24"Sale at retail" means any transfer of the ownership of or

 

 

SB2247- 191 -LRB102 13440 HLH 18787 b

1title to tangible personal property to a purchaser, for the
2purpose of use or consumption, and not for the purpose of
3resale in any form as tangible personal property to the extent
4not first subjected to a use for which it was purchased, for a
5valuable consideration: Provided that the property purchased
6is deemed to be purchased for the purpose of resale, despite
7first being used, to the extent to which it is resold as an
8ingredient of an intentionally produced product or byproduct
9of manufacturing. For this purpose, slag produced as an
10incident to manufacturing pig iron or steel and sold is
11considered to be an intentionally produced byproduct of
12manufacturing. Transactions whereby the possession of the
13property is transferred but the seller retains the title as
14security for payment of the selling price shall be deemed to be
15sales.
16    "Sale at retail" shall be construed to include any
17transfer of the ownership of or title to tangible personal
18property to a purchaser, for use or consumption by any other
19person to whom such purchaser may transfer the tangible
20personal property without a valuable consideration, and to
21include any transfer, whether made for or without a valuable
22consideration, for resale in any form as tangible personal
23property unless made in compliance with Section 2c of this
24Act.
25    Sales of tangible personal property, which property, to
26the extent not first subjected to a use for which it was

 

 

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1purchased, as an ingredient or constituent, goes into and
2forms a part of tangible personal property subsequently the
3subject of a "Sale at retail", are not sales at retail as
4defined in this Act: Provided that the property purchased is
5deemed to be purchased for the purpose of resale, despite
6first being used, to the extent to which it is resold as an
7ingredient of an intentionally produced product or byproduct
8of manufacturing.
9    "Sale at retail" shall be construed to include any
10Illinois florist's sales transaction in which the purchase
11order is received in Illinois by a florist and the sale is for
12use or consumption, but the Illinois florist has a florist in
13another state deliver the property to the purchaser or the
14purchaser's donee in such other state.
15    Nonreusable tangible personal property that is used by
16persons engaged in the business of operating a restaurant,
17cafeteria, or drive-in is a sale for resale when it is
18transferred to customers in the ordinary course of business as
19part of the sale of food or beverages and is used to deliver,
20package, or consume food or beverages, regardless of where
21consumption of the food or beverages occurs. Examples of those
22items include, but are not limited to nonreusable, paper and
23plastic cups, plates, baskets, boxes, sleeves, buckets or
24other containers, utensils, straws, placemats, napkins, doggie
25bags, and wrapping or packaging materials that are transferred
26to customers as part of the sale of food or beverages in the

 

 

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1ordinary course of business.
2    The purchase, employment and transfer of such tangible
3personal property as newsprint and ink for the primary purpose
4of conveying news (with or without other information) is not a
5purchase, use or sale of tangible personal property.
6    A person whose activities are organized and conducted
7primarily as a not-for-profit service enterprise, and who
8engages in selling tangible personal property at retail
9(whether to the public or merely to members and their guests)
10is engaged in the business of selling tangible personal
11property at retail with respect to such transactions,
12excepting only a person organized and operated exclusively for
13charitable, religious or educational purposes either (1), to
14the extent of sales by such person to its members, students,
15patients or inmates of tangible personal property to be used
16primarily for the purposes of such person, or (2), to the
17extent of sales by such person of tangible personal property
18which is not sold or offered for sale by persons organized for
19profit. The selling of school books and school supplies by
20schools at retail to students is not "primarily for the
21purposes of" the school which does such selling. The
22provisions of this paragraph shall not apply to nor subject to
23taxation occasional dinners, socials or similar activities of
24a person organized and operated exclusively for charitable,
25religious or educational purposes, whether or not such
26activities are open to the public.

 

 

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1    A person who is the recipient of a grant or contract under
2Title VII of the Older Americans Act of 1965 (P.L. 92-258) and
3serves meals to participants in the federal Nutrition Program
4for the Elderly in return for contributions established in
5amount by the individual participant pursuant to a schedule of
6suggested fees as provided for in the federal Act is not
7engaged in the business of selling tangible personal property
8at retail with respect to such transactions.
9    "Purchaser" means anyone who, through a sale at retail,
10acquires the ownership of or title to tangible personal
11property for a valuable consideration.
12    "Reseller of motor fuel" means any person engaged in the
13business of selling or delivering or transferring title of
14motor fuel to another person other than for use or
15consumption. No person shall act as a reseller of motor fuel
16within this State without first being registered as a reseller
17pursuant to Section 2c or a retailer pursuant to Section 2a.
18    "Selling price" or the "amount of sale" means the
19consideration for a sale valued in money whether received in
20money or otherwise, including cash, credits, property, other
21than as hereinafter provided, and services, but, prior to
22January 1, 2020, not including the value of or credit given for
23traded-in tangible personal property where the item that is
24traded-in is of like kind and character as that which is being
25sold; beginning January 1, 2020, "selling price" includes the
26portion of the value of or credit given for traded-in motor

 

 

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1vehicles of the First Division as defined in Section 1-146 of
2the Illinois Vehicle Code of like kind and character as that
3which is being sold that exceeds $10,000. "Selling price"
4shall be determined without any deduction on account of the
5cost of the property sold, the cost of materials used, labor or
6service cost or any other expense whatsoever, but does not
7include charges that are added to prices by sellers on account
8of the seller's tax liability under this Act, or on account of
9the seller's duty to collect, from the purchaser, the tax that
10is imposed by the Use Tax Act, or, except as otherwise provided
11with respect to any cigarette tax imposed by a home rule unit,
12on account of the seller's tax liability under any local
13occupation tax administered by the Department, or, except as
14otherwise provided with respect to any cigarette tax imposed
15by a home rule unit on account of the seller's duty to collect,
16from the purchasers, the tax that is imposed under any local
17use tax administered by the Department. Effective December 1,
181985, "selling price" shall include charges that are added to
19prices by sellers on account of the seller's tax liability
20under the Cigarette Tax Act, on account of the sellers' duty to
21collect, from the purchaser, the tax imposed under the
22Cigarette Use Tax Act, and on account of the seller's duty to
23collect, from the purchaser, any cigarette tax imposed by a
24home rule unit.
25    Notwithstanding any law to the contrary, for any motor
26vehicle, as defined in Section 1-146 of the Vehicle Code, that

 

 

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1is sold on or after January 1, 2015 for the purpose of leasing
2the vehicle for a defined period that is longer than one year
3and (1) is a motor vehicle of the second division that: (A) is
4a self-contained motor vehicle designed or permanently
5converted to provide living quarters for recreational,
6camping, or travel use, with direct walk through access to the
7living quarters from the driver's seat; (B) is of the van
8configuration designed for the transportation of not less than
97 nor more than 16 passengers; or (C) has a gross vehicle
10weight rating of 8,000 pounds or less or (2) is a motor vehicle
11of the first division, "selling price" or "amount of sale"
12means the consideration received by the lessor pursuant to the
13lease contract, including amounts due at lease signing and all
14monthly or other regular payments charged over the term of the
15lease. Also included in the selling price is any amount
16received by the lessor from the lessee for the leased vehicle
17that is not calculated at the time the lease is executed,
18including, but not limited to, excess mileage charges and
19charges for excess wear and tear. For sales that occur in
20Illinois, with respect to any amount received by the lessor
21from the lessee for the leased vehicle that is not calculated
22at the time the lease is executed, the lessor who purchased the
23motor vehicle does not incur the tax imposed by the Use Tax Act
24on those amounts, and the retailer who makes the retail sale of
25the motor vehicle to the lessor is not required to collect the
26tax imposed by the Use Tax Act or to pay the tax imposed by

 

 

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1this Act on those amounts. However, the lessor who purchased
2the motor vehicle assumes the liability for reporting and
3paying the tax on those amounts directly to the Department in
4the same form (Illinois Retailers' Occupation Tax, and local
5retailers' occupation taxes, if applicable) in which the
6retailer would have reported and paid such tax if the retailer
7had accounted for the tax to the Department. For amounts
8received by the lessor from the lessee that are not calculated
9at the time the lease is executed, the lessor must file the
10return and pay the tax to the Department by the due date
11otherwise required by this Act for returns other than
12transaction returns. If the retailer is entitled under this
13Act to a discount for collecting and remitting the tax imposed
14under this Act to the Department with respect to the sale of
15the motor vehicle to the lessor, then the right to the discount
16provided in this Act shall be transferred to the lessor with
17respect to the tax paid by the lessor for any amount received
18by the lessor from the lessee for the leased vehicle that is
19not calculated at the time the lease is executed; provided
20that the discount is only allowed if the return is timely filed
21and for amounts timely paid. The "selling price" of a motor
22vehicle that is sold on or after January 1, 2015 for the
23purpose of leasing for a defined period of longer than one year
24shall not be reduced by the value of or credit given for
25traded-in tangible personal property owned by the lessor, nor
26shall it be reduced by the value of or credit given for

 

 

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1traded-in tangible personal property owned by the lessee,
2regardless of whether the trade-in value thereof is assigned
3by the lessee to the lessor. In the case of a motor vehicle
4that is sold for the purpose of leasing for a defined period of
5longer than one year, the sale occurs at the time of the
6delivery of the vehicle, regardless of the due date of any
7lease payments. A lessor who incurs a Retailers' Occupation
8Tax liability on the sale of a motor vehicle coming off lease
9may not take a credit against that liability for the Use Tax
10the lessor paid upon the purchase of the motor vehicle (or for
11any tax the lessor paid with respect to any amount received by
12the lessor from the lessee for the leased vehicle that was not
13calculated at the time the lease was executed) if the selling
14price of the motor vehicle at the time of purchase was
15calculated using the definition of "selling price" as defined
16in this paragraph. Notwithstanding any other provision of this
17Act to the contrary, lessors shall file all returns and make
18all payments required under this paragraph to the Department
19by electronic means in the manner and form as required by the
20Department. This paragraph does not apply to leases of motor
21vehicles for which, at the time the lease is entered into, the
22term of the lease is not a defined period, including leases
23with a defined initial period with the option to continue the
24lease on a month-to-month or other basis beyond the initial
25defined period.
26    The phrase "like kind and character" shall be liberally

 

 

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1construed (including but not limited to any form of motor
2vehicle for any form of motor vehicle, or any kind of farm or
3agricultural implement for any other kind of farm or
4agricultural implement), while not including a kind of item
5which, if sold at retail by that retailer, would be exempt from
6retailers' occupation tax and use tax as an isolated or
7occasional sale.
8    "Gross receipts" from the sales of tangible personal
9property at retail means the total selling price or the amount
10of such sales, as hereinbefore defined. In the case of charge
11and time sales, the amount thereof shall be included only as
12and when payments are received by the seller. Receipts or
13other consideration derived by a seller from the sale,
14transfer or assignment of accounts receivable to a wholly
15owned subsidiary will not be deemed payments prior to the time
16the purchaser makes payment on such accounts.
17    "Department" means the Department of Revenue.
18    "Person" means any natural individual, firm, partnership,
19association, joint stock company, joint adventure, public or
20private corporation, limited liability company, or a receiver,
21executor, trustee, guardian or other representative appointed
22by order of any court.
23    The isolated or occasional sale of tangible personal
24property at retail by a person who does not hold himself out as
25being engaged (or who does not habitually engage) in selling
26such tangible personal property at retail, or a sale through a

 

 

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1bulk vending machine, does not constitute engaging in a
2business of selling such tangible personal property at retail
3within the meaning of this Act; provided that any person who is
4engaged in a business which is not subject to the tax imposed
5by this Act because of involving the sale of or a contract to
6sell real estate or a construction contract to improve real
7estate or a construction contract to engineer, install, and
8maintain an integrated system of products, but who, in the
9course of conducting such business, transfers tangible
10personal property to users or consumers in the finished form
11in which it was purchased, and which does not become real
12estate or was not engineered and installed, under any
13provision of a construction contract or real estate sale or
14real estate sales agreement entered into with some other
15person arising out of or because of such nontaxable business,
16is engaged in the business of selling tangible personal
17property at retail to the extent of the value of the tangible
18personal property so transferred. If, in such a transaction, a
19separate charge is made for the tangible personal property so
20transferred, the value of such property, for the purpose of
21this Act, shall be the amount so separately charged, but not
22less than the cost of such property to the transferor; if no
23separate charge is made, the value of such property, for the
24purposes of this Act, is the cost to the transferor of such
25tangible personal property. Construction contracts for the
26improvement of real estate consisting of engineering,

 

 

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1installation, and maintenance of voice, data, video, security,
2and all telecommunication systems do not constitute engaging
3in a business of selling tangible personal property at retail
4within the meaning of this Act if they are sold at one
5specified contract price.
6    A person who holds himself or herself out as being engaged
7(or who habitually engages) in selling tangible personal
8property at retail is a person engaged in the business of
9selling tangible personal property at retail hereunder with
10respect to such sales (and not primarily in a service
11occupation) notwithstanding the fact that such person designs
12and produces such tangible personal property on special order
13for the purchaser and in such a way as to render the property
14of value only to such purchaser, if such tangible personal
15property so produced on special order serves substantially the
16same function as stock or standard items of tangible personal
17property that are sold at retail.
18    Persons who engage in the business of transferring
19tangible personal property upon the redemption of trading
20stamps are engaged in the business of selling such property at
21retail and shall be liable for and shall pay the tax imposed by
22this Act on the basis of the retail value of the property
23transferred upon redemption of such stamps.
24    "Bulk vending machine" means a vending machine, containing
25unsorted confections, nuts, toys, or other items designed
26primarily to be used or played with by children which, when a

 

 

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1coin or coins of a denomination not larger than $0.50 are
2inserted, are dispensed in equal portions, at random and
3without selection by the customer.
4    "Remote retailer" means a retailer that does not maintain
5within this State, directly or by a subsidiary, an office,
6distribution house, sales house, warehouse or other place of
7business, or any agent or other representative operating
8within this State under the authority of the retailer or its
9subsidiary, irrespective of whether such place of business or
10agent is located here permanently or temporarily or whether
11such retailer or subsidiary is licensed to do business in this
12State.
13    "Marketplace" means a physical or electronic place, forum,
14platform, application, or other method by which a marketplace
15seller sells or offers to sell items.
16    "Marketplace facilitator" means a person who, pursuant to
17an agreement with an unrelated third-party marketplace seller,
18directly or indirectly through one or more affiliates
19facilitates a retail sale by an unrelated third party
20marketplace seller by:
21        (1) listing or advertising for sale by the marketplace
22    seller in a marketplace, tangible personal property that
23    is subject to tax under this Act; and
24        (2) either directly or indirectly, through agreements
25    or arrangements with third parties, collecting payment
26    from the customer and transmitting that payment to the

 

 

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1    marketplace seller regardless of whether the marketplace
2    facilitator receives compensation or other consideration
3    in exchange for its services.
4    A person who provides advertising services, including
5listing products for sale, is not considered a marketplace
6facilitator, so long as the advertising service platform or
7forum does not engage, directly or indirectly through one or
8more affiliated persons, in the activities described in
9paragraph (2) of this definition of "marketplace facilitator".
10    "Marketplace seller" means a person that makes sales
11through a marketplace operated by an unrelated third party
12marketplace facilitator.
13(Source: P.A. 101-31, eff. 6-28-19; 101-604, eff. 1-1-20.)
 
14    (35 ILCS 120/2-5)
15    Sec. 2-5. Exemptions. Gross receipts from proceeds from
16the sale of the following tangible personal property are
17exempt from the tax imposed by this Act:
18        (1) Farm chemicals.
19        (2) Farm machinery and equipment, both new and used,
20    including that manufactured on special order, certified by
21    the purchaser to be used primarily for production
22    agriculture or State or federal agricultural programs,
23    including individual replacement parts for the machinery
24    and equipment, including machinery and equipment purchased
25    for lease, and including implements of husbandry defined

 

 

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

 

 

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

 

 

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1    and Use Tax Act. This paragraph is exempt from the
2    provisions of Section 2-70.
3        (6) Personal property sold by a teacher-sponsored
4    student organization affiliated with an elementary or
5    secondary school located in Illinois.
6        (7) Until July 1, 2003, proceeds of that portion of
7    the selling price of a passenger car the sale of which is
8    subject to the Replacement Vehicle Tax.
9        (8) Personal property sold to an Illinois county fair
10    association for use in conducting, operating, or promoting
11    the county fair.
12        (9) Personal property sold to a not-for-profit arts or
13    cultural organization that establishes, by proof required
14    by the Department by rule, that it has received an
15    exemption under Section 501(c)(3) of the Internal Revenue
16    Code and that is organized and operated primarily for the
17    presentation or support of arts or cultural programming,
18    activities, or services. These organizations include, but
19    are not limited to, music and dramatic arts organizations
20    such as symphony orchestras and theatrical groups, arts
21    and cultural service organizations, local arts councils,
22    visual arts organizations, and media arts organizations.
23    On and after July 1, 2001 (the effective date of Public Act
24    92-35), however, an entity otherwise eligible for this
25    exemption shall not make tax-free purchases unless it has
26    an active identification number issued by the Department.

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1    rigs, (ii) pipe and tubular goods, including casing and
2    drill strings, (iii) pumps and pump-jack units, (iv)
3    storage tanks and flow lines, (v) any individual
4    replacement part for oil field exploration, drilling, and
5    production equipment, and (vi) machinery and equipment
6    purchased for lease; but excluding motor vehicles required
7    to be registered under the Illinois Vehicle Code.
8        (20) Photoprocessing machinery and equipment,
9    including repair and replacement parts, both new and used,
10    including that manufactured on special order, certified by
11    the purchaser to be used primarily for photoprocessing,
12    and including photoprocessing machinery and equipment
13    purchased for lease.
14        (21) Until July 1, 2023, coal and aggregate
15    exploration, mining, off-highway hauling, processing,
16    maintenance, and reclamation equipment, including
17    replacement parts and equipment, and including equipment
18    purchased for lease, but excluding motor vehicles required
19    to be registered under the Illinois Vehicle Code. The
20    changes made to this Section by Public Act 97-767 apply on
21    and after July 1, 2003, but no claim for credit or refund
22    is allowed on or after August 16, 2013 (the effective date
23    of Public Act 98-456) for such taxes paid during the
24    period beginning July 1, 2003 and ending on August 16,
25    2013 (the effective date of Public Act 98-456).
26        (22) Until June 30, 2013, fuel and petroleum products

 

 

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

 

 

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

 

 

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

 

 

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1        test flight and ground test for inspection, as
2        required by 14 C.F.R. 91.407;
3            (2) the aircraft is not based or registered in
4        this State after the sale of the aircraft; and
5            (3) the seller retains in his or her books and
6        records and provides to the Department a signed and
7        dated certification from the purchaser, on a form
8        prescribed by the Department, certifying that the
9        requirements of this item (25-7) are met. The
10        certificate must also include the name and address of
11        the purchaser, the address of the location where the
12        aircraft is to be titled or registered, the address of
13        the primary physical location of the aircraft, and
14        other information that the Department may reasonably
15        require.
16