Rep. Barbara Flynn Currie

Filed: 5/25/2011

 

 


 

 


 
09700SB0397ham001LRB097 04209 HLH 56200 a

1
AMENDMENT TO SENATE BILL 397

2    AMENDMENT NO. ______. Amend Senate Bill 397 by replacing
3everything after the enacting clause with the following:
 
4    "Section 5. The Retailers' Occupation Tax Act is amended by
5adding Section 2-1 as follows:
 
6    (35 ILCS 120/2-1 new)
7    Sec. 2-1. Local sourcing.
8    (a) The provisions of this Section apply exclusively for
9the purpose of sourcing sales of tangible personal property.
10The tax imposed under this Act is imposed upon persons engaged
11in the business of selling tangible personal property at retail
12in this State. For a seller to incur a retailers' occupation
13tax liability at a given location, the seller must be engaged
14in the business of selling tangible personal property at retail
15at that location. In allocating or sourcing the local share of
16the State tax imposed under this Act or any municipal, county,

 

 

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1or special district retailers' occupation taxes administered
2by the Department of Revenue, the sourcing rules in this
3Section apply to determine where a sale occurs. The provisions
4of subsections (b) through (g) apply to specific types of
5sales. If a sale does not fall within the activities described
6in subsections (b) through (g) of this Section, then the
7provisions of subsection (h) of this Section apply.
8    (b) Over-the-counter sales. When a person makes an
9over-the-counter sale of tangible personal property at a retail
10location and either (i) the purchaser takes possession of that
11property at that retail location or (ii) the seller ships that
12property to the purchaser from that location to a location in
13Illinois or arranges for delivery from another location to a
14location in Illinois, then the sale occurs at that retail
15location regardless of the method of payment for that sale.
16    (c) Prior shipments. If the tangible personal property
17ordered by the purchaser is shipped or delivered to, or
18installed for, the purchaser before the performance of 3 of the
195 activities listed in paragraphs (A) through (E) of item (1)
20of subsection (h) of this Section by the retailer or its
21authorized representative, then the Illinois location from
22which the tangible personal property was shipped or delivered,
23or from which it was removed before installation, is deemed to
24be the location of the sale.
25    (d) Out-of-State sales. If at least 3 of the 5 activities
26listed in paragraphs (A) through (E) of item (1) of subsection

 

 

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1(h) of this Section occur outside of Illinois, or if the sale
2is made through contact centers as described in subsection (g)
3that are located outside of Illinois, but the tangible personal
4property being sold is in the inventory of the seller at a
5location within Illinois at the time of sale (or is
6subsequently produced by the seller at a location in Illinois),
7then the inventory location is deemed to be the location of the
8sale.
9    (e) Coal and other minerals. For sales to end users by a
10producer of coal or other minerals mined in this State, the
11sale is deemed to occur at the place where the coal or other
12minerals mined in this State are extracted from the earth. With
13respect to minerals, (i) the term "extracted from the earth"
14means the location at which the coal or other mineral is
15extracted from the mouth of the mine and (ii) a "mineral"
16includes not only coal, but also oil, sand, stone taken from a
17quarry, gravel, and any other thing commonly regarded as a
18mineral and extracted from the earth.
19    (f) Long-term blanket or master contracts. Under a
20long-term blanket or master contract that (although it may be
21definite as to price, quantity, or both) must be implemented by
22the purchaser's placing of specific orders when goods are
23wanted, the seller is deemed to be engaged in the business of
24selling for any specific orders placed under that contract at
25an office location determined in accordance with subsection (h)
26of this Section.

 

 

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1    (g) Sales made from orders placed through contact centers.
2        (1) A sale of tangible personal property made from an
3    order placed through a contact center is not subject to tax
4    under this Act, provided that the retailer's only activity
5    in this State with respect to that sale is the maintenance
6    of a contact center that is a centralized office used
7    exclusively for receiving customer orders by means of
8    telephone or Internet and recording the following: name and
9    address of purchaser; price, type, and quantity of items;
10    and method of payment and delivery. Under these conditions,
11    those sales are subject to tax under the Use Tax Act.
12    However, those sales are subject to Retailers' Occupation
13    Tax if the tangible personal property that is sold is in an
14    inventory of the retailer located in Illinois at the time
15    of its sale (or is subsequently produced in this State) and
16    is then delivered in Illinois to a purchaser. Such sales
17    must be sourced to the location of the inventory or the
18    location from which the item is subsequently produced. This
19    item (1) does not apply to over-the-counter sales made at a
20    retail location in Illinois by means of telephone or
21    Internet. Those sales must be sourced as provided in
22    subsection (b) of this Section.
23        (2) If the retailer maintains any other location in
24    Illinois at which any of the activities listed in
25    paragraphs (A) through (D) of item (1) of subsection (h) of
26    this Section occur, or if the contact center performs any

 

 

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1    of the activities listed in paragraphs (A) through (D) of
2    item (1) subsection (h) of this Section, the provisions of
3    item (1) of this subsection (g) do not apply and the sale
4    must be sourced according to the provisions of subsection
5    (h).
6    (h) All other sales. For all sales other than those listed
7in subsections (b) through (g) of this Section, when sourcing
8the local share of the State tax imposed under this Act or any
9municipal, county, or special district retailers' occupation
10taxes administered by the Department of Revenue, enough of the
11selling activity must occur at a given office location to
12justify concluding that the seller is engaged in the business
13of selling at that office location.
14        (1) A seller is deemed to be engaged in the business of
15    selling at an office location for purchase orders received
16    there by means, including, but not limited to, mail,
17    telephone, e-mail, or facsimile transmission, if there is
18    present at that office location one or more individuals who
19    are exclusively employees of the retailer or its authorized
20    representative and who continuously perform, for all
21    sales, at least 3 of the activities listed in paragraphs
22    (A) through (E) of this item (1) on behalf of the retailer.
23    An employee or an authorized representative may perform
24    these activities on behalf of only one retailer.
25            (A) Determination of appropriate pricing of the
26        item, taking into account various factors such as, but

 

 

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1        not limited to, application of discounts, surcharges,
2        shipping costs, and calculation of whether the high or
3        low rate of tax applies to items purchased.
4            (B) Determination of whether sufficient inventory
5        exists, or can be obtained consistent with customer
6        requirements, to fill the order.
7            (C) Determination of whether the order can be
8        shipped and delivered in the manner and within the
9        timeframes required by the customer.
10            (D) Determination of the creditworthiness of the
11        purchaser, including bankruptcy screening.
12            (E) Processing of the order.
13        (2) If a retailer has no single Illinois location that
14    meets the requirements of item (1) of subsection (h) of
15    this Section, it is presumed that the retailer's principal
16    Illinois office location is the location at which the
17    retailer is engaged in the business of selling. This
18    presumption may be rebutted if the Department or the
19    retailer clearly proves that another location is the
20    location at which enough selling activities occur to
21    justify concluding that the seller is engaged in the
22    business of selling at that other location. The activities
23    listed in paragraphs (A) through (E) of item (1) of
24    subsection (h) of this Section shall be considered in
25    rebutting the presumption created in this item (2).
26    (i) The Department of Revenue is authorized to promulgate

 

 

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1rules to implement the provisions of this Section.
 
2    Section 99. Effective date. This Act takes effect January
31, 2012.".