99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
HB3092

 

Introduced , by Rep. Tom Demmer

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 105/2  from Ch. 120, par. 439.2
35 ILCS 110/2  from Ch. 120, par. 439.32
35 ILCS 115/2  from Ch. 120, par. 439.102
35 ILCS 120/1  from Ch. 120, par. 440

    Amends the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, and the Retailers' Occupation Tax Act. Provides that a not-for-profit organization that (i) has received an exemption under Section 501(c)(3) of the Internal Revenue Code, (ii) has gross receipts of no more than $10,000 per year, and (iii) is organized and operated exclusively for charitable, religious, or educational purposes is not considered a retailer or a serviceman. Effective immediately.


LRB099 08119 HLH 28268 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB3092LRB099 08119 HLH 28268 b

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

 

 

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1retailers' original cost price the tax imposed by this Act, and
2no credit for that tax is permitted if the watercraft or
3aircraft is subsequently sold by the retailer. "Use" does not
4mean the physical incorporation of tangible personal property,
5to the extent not first subjected to a use for which it was
6purchased, as an ingredient or constituent, into other tangible
7personal property (a) which is sold in the regular course of
8business or (b) which the person incorporating such ingredient
9or constituent therein has undertaken at the time of such
10purchase to cause to be transported in interstate commerce to
11destinations outside the State of Illinois: Provided that the
12property purchased is deemed to be purchased for the purpose of
13resale, despite first being used, to the extent to which it is
14resold as an ingredient of an intentionally produced product or
15by-product of manufacturing.
16    "Watercraft" means a Class 2, Class 3, or Class 4
17watercraft as defined in Section 3-2 of the Boat Registration
18and Safety Act, a personal watercraft, or any boat equipped
19with an inboard motor.
20    "Purchase at retail" means the acquisition of the ownership
21of or title to tangible personal property through a sale at
22retail.
23    "Purchaser" means anyone who, through a sale at retail,
24acquires the ownership of tangible personal property for a
25valuable consideration.
26    "Sale at retail" means any transfer of the ownership of or

 

 

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1title to tangible personal property to a purchaser, for the
2purpose of use, and not for the purpose of resale in any form
3as tangible personal property to the extent not first subjected
4to a use for which it was purchased, for a valuable
5consideration: Provided that the property purchased is deemed
6to be purchased for the purpose of resale, despite first being
7used, to the extent to which it is resold as an ingredient of
8an intentionally produced product or by-product of
9manufacturing. For this purpose, slag produced as an incident
10to manufacturing pig iron or steel and sold is considered to be
11an intentionally produced by-product of manufacturing. "Sale
12at retail" includes any such transfer made for resale unless
13made in compliance with Section 2c of the Retailers' Occupation
14Tax Act, as incorporated by reference into Section 12 of this
15Act. Transactions whereby the possession of the property is
16transferred but the seller retains the title as security for
17payment of the selling price are sales.
18    "Sale at retail" shall also be construed to include any
19Illinois florist's sales transaction in which the purchase
20order is received in Illinois by a florist and the sale is for
21use or consumption, but the Illinois florist has a florist in
22another state deliver the property to the purchaser or the
23purchaser's donee in such other state.
24    Nonreusable tangible personal property that is used by
25persons engaged in the business of operating a restaurant,
26cafeteria, or drive-in is a sale for resale when it is

 

 

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1transferred to customers in the ordinary course of business as
2part of the sale of food or beverages and is used to deliver,
3package, or consume food or beverages, regardless of where
4consumption of the food or beverages occurs. Examples of those
5items include, but are not limited to nonreusable, paper and
6plastic cups, plates, baskets, boxes, sleeves, buckets or other
7containers, utensils, straws, placemats, napkins, doggie bags,
8and wrapping or packaging materials that are transferred to
9customers as part of the sale of food or beverages in the
10ordinary course of business.
11    The purchase, employment and transfer of such tangible
12personal property as newsprint and ink for the primary purpose
13of conveying news (with or without other information) is not a
14purchase, use or sale of tangible personal property.
15    "Selling price" means the consideration for a sale valued
16in money whether received in money or otherwise, including
17cash, credits, property other than as hereinafter provided, and
18services, but not including the value of or credit given for
19traded-in tangible personal property where the item that is
20traded-in is of like kind and character as that which is being
21sold, and shall be determined without any deduction on account
22of the cost of the property sold, the cost of materials used,
23labor or service cost or any other expense whatsoever, but does
24not include interest or finance charges which appear as
25separate items on the bill of sale or sales contract nor
26charges that are added to prices by sellers on account of the

 

 

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1seller's tax liability under the "Retailers' Occupation Tax
2Act", or on account of the seller's duty to collect, from the
3purchaser, the tax that is imposed by this Act, or, except as
4otherwise provided with respect to any cigarette tax imposed by
5a home rule unit, on account of the seller's tax liability
6under any local occupation tax administered by the Department,
7or, except as otherwise provided with respect to any cigarette
8tax imposed by a home rule unit on account of the seller's duty
9to collect, from the purchasers, the tax that is imposed under
10any local use tax administered by the Department. Effective
11December 1, 1985, "selling price" shall include charges that
12are added to prices by sellers on account of the seller's tax
13liability under the Cigarette Tax Act, on account of the
14seller's duty to collect, from the purchaser, the tax imposed
15under the Cigarette Use Tax Act, and on account of the seller's
16duty to collect, from the purchaser, any cigarette tax imposed
17by 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' Occupation
24Tax, and local retailers' occupation taxes, if applicable) in
25which the retailer would have reported and paid such tax if the
26retailer had accounted for the tax to the Department. For

 

 

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

 

 

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1sale of a motor vehicle coming off lease may not take a credit
2against that liability for the Use Tax the lessor paid upon the
3purchase of the motor vehicle (or for any tax the lessor paid
4with respect to any amount received by the lessor from the
5lessee for the leased vehicle that was not calculated at the
6time the lease was executed) if the selling price of the motor
7vehicle at the time of purchase was calculated using the
8definition of "selling price" as defined in this paragraph.
9Notwithstanding any other provision of this Act to the
10contrary, lessors shall file all returns and make all payments
11required under this paragraph to the Department by electronic
12means in the manner and form as required by the Department.
13This paragraph does not apply to leases of motor vehicles for
14which, at the time the lease is entered into, the term of the
15lease is not a defined period, including leases with a defined
16initial period with the option to continue the lease on a
17month-to-month or other basis beyond the initial defined
18period.
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 such
12sales (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 only
25a person organized and operated exclusively for charitable,
26religious or educational purposes either (1), to the extent of

 

 

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1sales by such person to its members, students, patients or
2inmates of tangible personal property to be used primarily for
3the purposes of such person, or (2), to the extent of sales by
4such person of tangible personal property which is not sold or
5offered for sale by persons organized for profit. The selling
6of school books and school supplies by schools at retail to
7students is not "primarily for the purposes of" the school
8which does such selling. This paragraph does not apply to nor
9subject to taxation occasional dinners, social or similar
10activities of a person organized and operated exclusively for
11charitable, religious or educational purposes, whether or not
12such activities are open to the public.
13    A person who is the recipient of a grant or contract under
14Title VII of the Older Americans Act of 1965 (P.L. 92-258) and
15serves meals to participants in the federal Nutrition Program
16for the Elderly in return for contributions established in
17amount by the individual participant pursuant to a schedule of
18suggested fees as provided for in the federal Act is not a
19retailer under this Act with respect to such transactions.
20    Persons who engage in the business of transferring tangible
21personal property upon the redemption of trading stamps are
22retailers hereunder when engaged in such business.
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 make such person a retailer
2hereunder. However, any person who is engaged in a business
3which is not subject to the tax imposed by the "Retailers'
4Occupation Tax Act" because of involving the sale of or a
5contract to sell real estate or a construction contract to
6improve real estate, but who, in the course of conducting such
7business, transfers tangible personal property to users or
8consumers in the finished form in which it was purchased, and
9which does not become real estate, under any provision of a
10construction contract or real estate sale or real estate sales
11agreement entered into with some other person arising out of or
12because of such nontaxable business, is a retailer to the
13extent of the value of the tangible personal property so
14transferred. If, in such transaction, a separate charge is made
15for the tangible personal property so transferred, the value of
16such property, for the purposes of this Act, is the amount so
17separately charged, but not less than the cost of such property
18to the transferor; if no separate charge is made, the value of
19such property, for the purposes of this Act, is the cost to the
20transferor of such tangible personal property.
21    Notwithstanding any other provision of law, a
22not-for-profit organization that (i) has received an exemption
23under Section 501(c)(3) of the Internal Revenue Code, (ii) has
24gross receipts of no more than $10,000 per year, and (iii) is
25organized and operated exclusively for charitable, religious,
26or educational purposes is not considered a retailer for the

 

 

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

 

 

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

 

 

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1        State and does so using an identical or substantially
2        similar name, trade name, or trademark as the person
3        located in this State; and
4            B. the retailer provides a commission or other
5        consideration to the person located in this State based
6        upon the sale of tangible personal property by the
7        retailer.
8    The provisions of this paragraph 1.2 shall apply only if
9    the cumulative gross receipts from sales of tangible
10    personal property by the retailer to customers in this
11    State under all such contracts exceed $10,000 during the
12    preceding 4 quarterly periods ending on the last day of
13    March, June, September, and December.
14        2. A retailer soliciting orders for tangible personal
15    property by means of a telecommunication or television
16    shopping system (which utilizes toll free numbers) which is
17    intended by the retailer to be broadcast by cable
18    television or other means of broadcasting, to consumers
19    located in this State.
20        3. A retailer, pursuant to a contract with a
21    broadcaster or publisher located in this State, soliciting
22    orders for tangible personal property by means of
23    advertising which is disseminated primarily to consumers
24    located in this State and only secondarily to bordering
25    jurisdictions.
26        4. A retailer soliciting orders for tangible personal

 

 

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1    property by mail if the solicitations are substantial and
2    recurring and if the retailer benefits from any banking,
3    financing, debt collection, telecommunication, or
4    marketing activities occurring in this State or benefits
5    from the location in this State of authorized installation,
6    servicing, or repair facilities.
7        5. A retailer that is owned or controlled by the same
8    interests that own or control any retailer engaging in
9    business in the same or similar line of business in this
10    State.
11        6. A retailer having a franchisee or licensee operating
12    under its trade name if the franchisee or licensee is
13    required to collect the tax under this Section.
14        7. A retailer, pursuant to a contract with a cable
15    television operator located in this State, soliciting
16    orders for tangible personal property by means of
17    advertising which is transmitted or distributed over a
18    cable television system in this State.
19        8. A retailer engaging in activities in Illinois, which
20    activities in the state in which the retail business
21    engaging in such activities is located would constitute
22    maintaining a place of business in that state.
23    "Bulk vending machine" means a vending machine, containing
24unsorted confections, nuts, toys, or other items designed
25primarily to be used or played with by children which, when a
26coin or coins of a denomination not larger than $0.50 are

 

 

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1inserted, are dispensed in equal portions, at random and
2without selection by the customer.
3(Source: P.A. 98-628, eff. 1-1-15; 98-1080, eff. 8-26-14;
498-1089, eff. 1-1-15; revised 10-1-14.)
 
5    Section 10. The Service Use Tax Act is amended by changing
6Section 2 as follows:
 
7    (35 ILCS 110/2)  (from Ch. 120, par. 439.32)
8    Sec. 2. Definitions.
9    "Use" means the exercise by any person of any right or
10power over tangible personal property incident to the ownership
11of that property, but does not include the sale or use for
12demonstration by him of that property in any form as tangible
13personal property in the regular course of business. "Use" does
14not mean the interim use of tangible personal property nor the
15physical incorporation of tangible personal property, as an
16ingredient or constituent, into other tangible personal
17property, (a) which is sold in the regular course of business
18or (b) which the person incorporating such ingredient or
19constituent therein has undertaken at the time of such purchase
20to cause to be transported in interstate commerce to
21destinations outside the State of Illinois.
22    "Purchased from a serviceman" means the acquisition of the
23ownership of, or title to, tangible personal property through a
24sale of service.

 

 

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1    "Purchaser" means any person who, through a sale of
2service, acquires the ownership of, or title to, any tangible
3personal property.
4    "Cost price" means the consideration paid by the serviceman
5for a purchase valued in money, whether paid in money or
6otherwise, including cash, credits and services, and shall be
7determined without any deduction on account of the supplier's
8cost of the property sold or on account of any other expense
9incurred by the supplier. When a serviceman contracts out part
10or all of the services required in his sale of service, it
11shall be presumed that the cost price to the serviceman of the
12property transferred to him or her by his or her subcontractor
13is equal to 50% of the subcontractor's charges to the
14serviceman in the absence of proof of the consideration paid by
15the subcontractor for the purchase of such property.
16    "Selling price" means the consideration for a sale valued
17in money whether received in money or otherwise, including
18cash, credits and service, and shall be determined without any
19deduction on account of the serviceman's cost of the property
20sold, the cost of materials used, labor or service cost or any
21other expense whatsoever, but does not include interest or
22finance charges which appear as separate items on the bill of
23sale or sales contract nor charges that are added to prices by
24sellers on account of the seller's duty to collect, from the
25purchaser, the tax that is imposed by this Act.
26    "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        (1) a retail sale of tangible personal property taxable
8    under the Retailers' Occupation Tax Act or under the Use
9    Tax Act.
10        (2) a sale of tangible personal property for the
11    purpose of resale made in compliance with Section 2c of the
12    Retailers' Occupation Tax Act.
13        (3) except as hereinafter provided, a sale or transfer
14    of tangible personal property as an incident to the
15    rendering of service for or by any governmental body, or
16    for or by any corporation, society, association,
17    foundation or institution organized and operated
18    exclusively for charitable, religious or educational
19    purposes or any not-for-profit corporation, society,
20    association, foundation, institution or organization which
21    has no compensated officers or employees and which is
22    organized and operated primarily for the recreation of
23    persons 55 years of age or older. A limited liability
24    company may qualify for the exemption under this paragraph
25    only if the limited liability company is organized and
26    operated exclusively for educational purposes.

 

 

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1        (4) a sale or transfer of tangible personal property as
2    an incident to the rendering of service for interstate
3    carriers for hire for use as rolling stock moving in
4    interstate commerce or by lessors under a lease of one year
5    or longer, executed or in effect at the time of purchase of
6    personal property, to interstate carriers for hire for use
7    as rolling stock moving in interstate commerce so long as
8    so used by such interstate carriers for hire, and equipment
9    operated by a telecommunications provider, licensed as a
10    common carrier by the Federal Communications Commission,
11    which is permanently installed in or affixed to aircraft
12    moving in interstate commerce.
13        (4a) a sale or transfer of tangible personal property
14    as an incident to the rendering of service for owners,
15    lessors, or shippers of tangible personal property which is
16    utilized by interstate carriers for hire for use as rolling
17    stock moving in interstate commerce so long as so used by
18    interstate carriers for hire, and equipment operated by a
19    telecommunications provider, licensed as a common carrier
20    by the Federal Communications Commission, which is
21    permanently installed in or affixed to aircraft moving in
22    interstate commerce.
23        (4a-5) on and after July 1, 2003 and through June 30,
24    2004, a sale or transfer of a motor vehicle of the second
25    division with a gross vehicle weight in excess of 8,000
26    pounds as an incident to the rendering of service if that

 

 

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

 

 

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1    seller's engaging in a service occupation and the
2    applicable tax is a Service Use Tax or Service Occupation
3    Tax, rather than Use Tax or Retailers' Occupation Tax. The
4    exemption provided by this paragraph (5) does not include
5    machinery and equipment used in (i) the generation of
6    electricity for wholesale or retail sale; (ii) the
7    generation or treatment of natural or artificial gas for
8    wholesale or retail sale that is delivered to customers
9    through pipes, pipelines, or mains; or (iii) the treatment
10    of water for wholesale or retail sale that is delivered to
11    customers through pipes, pipelines, or mains. The
12    provisions of this amendatory Act of the 98th General
13    Assembly are declaratory of existing law as to the meaning
14    and scope of this exemption.
15        (5a) the repairing, reconditioning or remodeling, for
16    a common carrier by rail, of tangible personal property
17    which belongs to such carrier for hire, and as to which
18    such carrier receives the physical possession of the
19    repaired, reconditioned or remodeled item of tangible
20    personal property in Illinois, and which such carrier
21    transports, or shares with another common carrier in the
22    transportation of such property, out of Illinois on a
23    standard uniform bill of lading showing the person who
24    repaired, reconditioned or remodeled the property to a
25    destination outside Illinois, for use outside Illinois.
26        (5b) a sale or transfer of tangible personal property

 

 

HB3092- 22 -LRB099 08119 HLH 28268 b

1    which is produced by the seller thereof on special order in
2    such a way as to have made the applicable tax the Service
3    Occupation Tax or the Service Use Tax, rather than the
4    Retailers' Occupation Tax or the Use Tax, for an interstate
5    carrier by rail which receives the physical possession of
6    such property in Illinois, and which transports such
7    property, or shares with another common carrier in the
8    transportation of such property, out of Illinois on a
9    standard uniform bill of lading showing the seller of the
10    property as the shipper or consignor of such property to a
11    destination outside Illinois, for use outside Illinois.
12        (6) until July 1, 2003, a sale or transfer of
13    distillation machinery and equipment, sold as a unit or kit
14    and assembled or installed by the retailer, which machinery
15    and equipment is certified by the user to be used only for
16    the production of ethyl alcohol that will be used for
17    consumption as motor fuel or as a component of motor fuel
18    for the personal use of such user and not subject to sale
19    or resale.
20        (7) at the election of any serviceman not required to
21    be otherwise registered as a retailer under Section 2a of
22    the Retailers' Occupation Tax Act, made for each fiscal
23    year sales of service in which the aggregate annual cost
24    price of tangible personal property transferred as an
25    incident to the sales of service is less than 35%, or 75%
26    in the case of servicemen transferring prescription drugs

 

 

HB3092- 23 -LRB099 08119 HLH 28268 b

1    or servicemen engaged in graphic arts production, of the
2    aggregate annual total gross receipts from all sales of
3    service. The purchase of such tangible personal property by
4    the serviceman shall be subject to tax under the Retailers'
5    Occupation Tax Act and the Use Tax Act. However, if a
6    primary serviceman who has made the election described in
7    this paragraph subcontracts service work to a secondary
8    serviceman who has also made the election described in this
9    paragraph, the primary serviceman does not incur a Use Tax
10    liability if the secondary serviceman (i) has paid or will
11    pay Use Tax on his or her cost price of any tangible
12    personal property transferred to the primary serviceman
13    and (ii) certifies that fact in writing to the primary
14    serviceman.
15    Tangible personal property transferred incident to the
16completion of a maintenance agreement is exempt from the tax
17imposed pursuant to this Act.
18    Exemption (5) also includes machinery and equipment used in
19the general maintenance or repair of such exempt machinery and
20equipment or for in-house manufacture of exempt machinery and
21equipment. The machinery and equipment exemption does not
22include machinery and equipment used in (i) the generation of
23electricity for wholesale or retail sale; (ii) the generation
24or treatment of natural or artificial gas for wholesale or
25retail sale that is delivered to customers through pipes,
26pipelines, or mains; or (iii) the treatment of water for

 

 

HB3092- 24 -LRB099 08119 HLH 28268 b

1wholesale or retail sale that is delivered to customers through
2pipes, pipelines, or mains. The provisions of this amendatory
3Act of the 98th General Assembly are declaratory of existing
4law as to the meaning and scope of this exemption. For the
5purposes of exemption (5), each of these terms shall have the
6following meanings: (1) "manufacturing process" shall mean the
7production of any article of tangible personal property,
8whether such article is a finished product or an article for
9use in the process of manufacturing or assembling a different
10article of tangible personal property, by procedures commonly
11regarded as manufacturing, processing, fabricating, or
12refining which changes some existing material or materials into
13a material with a different form, use or name. In relation to a
14recognized integrated business composed of a series of
15operations which collectively constitute manufacturing, or
16individually constitute manufacturing operations, the
17manufacturing process shall be deemed to commence with the
18first operation or stage of production in the series, and shall
19not be deemed to end until the completion of the final product
20in the last operation or stage of production in the series; and
21further, for purposes of exemption (5), photoprocessing is
22deemed to be a manufacturing process of tangible personal
23property for wholesale or retail sale; (2) "assembling process"
24shall mean the production of any article of tangible personal
25property, whether such article is a finished product or an
26article for use in the process of manufacturing or assembling a

 

 

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1different article of tangible personal property, by the
2combination of existing materials in a manner commonly regarded
3as assembling which results in a material of a different form,
4use or name; (3) "machinery" shall mean major mechanical
5machines or major components of such machines contributing to a
6manufacturing or assembling process; and (4) "equipment" shall
7include any independent device or tool separate from any
8machinery but essential to an integrated manufacturing or
9assembly process; including computers used primarily in a
10manufacturer's computer assisted design, computer assisted
11manufacturing (CAD/CAM) system; or any subunit or assembly
12comprising a component of any machinery or auxiliary, adjunct
13or attachment parts of machinery, such as tools, dies, jigs,
14fixtures, patterns and molds; or any parts which require
15periodic replacement in the course of normal operation; but
16shall not include hand tools. Equipment includes chemicals or
17chemicals acting as catalysts but only if the chemicals or
18chemicals acting as catalysts effect a direct and immediate
19change upon a product being manufactured or assembled for
20wholesale or retail sale or lease. The purchaser of such
21machinery and equipment who has an active resale registration
22number shall furnish such number to the seller at the time of
23purchase. The user of such machinery and equipment and tools
24without an active resale registration number shall prepare a
25certificate of exemption for each transaction stating facts
26establishing the exemption for that transaction, which

 

 

HB3092- 26 -LRB099 08119 HLH 28268 b

1certificate shall be available to the Department for inspection
2or audit. The Department shall prescribe the form of the
3certificate.
4    Any informal rulings, opinions or letters issued by the
5Department in response to an inquiry or request for any opinion
6from any person regarding the coverage and applicability of
7exemption (5) to specific devices shall be published,
8maintained as a public record, and made available for public
9inspection and copying. If the informal ruling, opinion or
10letter contains trade secrets or other confidential
11information, where possible the Department shall delete such
12information prior to publication. Whenever such informal
13rulings, opinions, or letters contain any policy of general
14applicability, the Department shall formulate and adopt such
15policy as a rule in accordance with the provisions of the
16Illinois Administrative Procedure Act.
17    On and after July 1, 1987, no entity otherwise eligible
18under exemption (3) of this Section shall make tax free
19purchases unless it has an active exemption identification
20number issued by the Department.
21    The purchase, employment and transfer of such tangible
22personal property as newsprint and ink for the primary purpose
23of conveying news (with or without other information) is not a
24purchase, use or sale of service or of tangible personal
25property within the meaning of this Act.
26    "Serviceman" means any person who is engaged in the

 

 

HB3092- 27 -LRB099 08119 HLH 28268 b

1occupation of making sales of service.
2    Notwithstanding any other provision of law, a
3not-for-profit organization that (i) has received an exemption
4under Section 501(c)(3) of the Internal Revenue Code, (ii) has
5gross receipts of no more than $10,000 per year, and (iii) is
6organized and operated exclusively for charitable, religious,
7or educational purposes is not considered a serviceman for the
8purposes of this Act.
9    "Sale at retail" means "sale at retail" as defined in the
10Retailers' Occupation Tax Act.
11    "Supplier" means any person who makes sales of tangible
12personal property to servicemen for the purpose of resale as an
13incident to a sale of service.
14    "Serviceman maintaining a place of business in this State",
15or any like term, means and includes any serviceman:
16        1. having or maintaining within this State, directly or
17    by a subsidiary, an office, distribution house, sales
18    house, warehouse or other place of business, or any agent
19    or other representative operating within this State under
20    the authority of the serviceman or its subsidiary,
21    irrespective of whether such place of business or agent or
22    other representative is located here permanently or
23    temporarily, or whether such serviceman or subsidiary is
24    licensed to do business in this State;
25        1.1. having a contract with a person located in this
26    State under which the person, for a commission or other

 

 

HB3092- 28 -LRB099 08119 HLH 28268 b

1    consideration based on the sale of service by the
2    serviceman, directly or indirectly refers potential
3    customers to the serviceman by providing to the potential
4    customers a promotional code or other mechanism that allows
5    the serviceman to track purchases referred by such persons.
6    Examples of mechanisms that allow the serviceman to track
7    purchases referred by such persons include but are not
8    limited to the use of a link on the person's Internet
9    website, promotional codes distributed through the
10    person's hand-delivered or mailed material, and
11    promotional codes distributed by the person through radio
12    or other broadcast media. The provisions of this paragraph
13    1.1 shall apply only if the cumulative gross receipts from
14    sales of service by the serviceman to customers who are
15    referred to the serviceman by all persons in this State
16    under such contracts exceed $10,000 during the preceding 4
17    quarterly periods ending on the last day of March, June,
18    September, and December; a serviceman meeting the
19    requirements of this paragraph 1.1 shall be presumed to be
20    maintaining a place of business in this State but may rebut
21    this presumption by submitting proof that the referrals or
22    other activities pursued within this State by such persons
23    were not sufficient to meet the nexus standards of the
24    United States Constitution during the preceding 4
25    quarterly periods;
26        1.2. beginning July 1, 2011, having a contract with a

 

 

HB3092- 29 -LRB099 08119 HLH 28268 b

1    person located in this State under which:
2            A. the serviceman sells the same or substantially
3        similar line of services as the person located in this
4        State and does so using an identical or substantially
5        similar name, trade name, or trademark as the person
6        located in this State; and
7            B. the serviceman provides a commission or other
8        consideration to the person located in this State based
9        upon the sale of services by the serviceman.
10    The provisions of this paragraph 1.2 shall apply only if
11    the cumulative gross receipts from sales of service by the
12    serviceman to customers in this State under all such
13    contracts exceed $10,000 during the preceding 4 quarterly
14    periods ending on the last day of March, June, September,
15    and December;
16        2. soliciting orders for tangible personal property by
17    means of a telecommunication or television shopping system
18    (which utilizes toll free numbers) which is intended by the
19    retailer to be broadcast by cable television or other means
20    of broadcasting, to consumers located in this State;
21        3. pursuant to a contract with a broadcaster or
22    publisher located in this State, soliciting orders for
23    tangible personal property by means of advertising which is
24    disseminated primarily to consumers located in this State
25    and only secondarily to bordering jurisdictions;
26        4. soliciting orders for tangible personal property by

 

 

HB3092- 30 -LRB099 08119 HLH 28268 b

1    mail if the solicitations are substantial and recurring and
2    if the retailer benefits from any banking, financing, debt
3    collection, telecommunication, or marketing activities
4    occurring in this State or benefits from the location in
5    this State of authorized installation, servicing, or
6    repair facilities;
7        5. being owned or controlled by the same interests
8    which own or control any retailer engaging in business in
9    the same or similar line of business in this State;
10        6. having a franchisee or licensee operating under its
11    trade name if the franchisee or licensee is required to
12    collect the tax under this Section;
13        7. pursuant to a contract with a cable television
14    operator located in this State, soliciting orders for
15    tangible personal property by means of advertising which is
16    transmitted or distributed over a cable television system
17    in this State; or
18        8. engaging in activities in Illinois, which
19    activities in the state in which the supply business
20    engaging in such activities is located would constitute
21    maintaining a place of business in that state.
22(Source: P.A. 98-583, eff. 1-1-14; 98-1089, eff. 1-1-15.)
 
23    Section 15. The Service Occupation Tax Act is amended by
24changing Section 2 as follows:
 

 

 

HB3092- 31 -LRB099 08119 HLH 28268 b

1    (35 ILCS 115/2)  (from Ch. 120, par. 439.102)
2    Sec. 2. "Transfer" means any transfer of the title to
3property or of the ownership of property whether or not the
4transferor retains title as security for the payment of amounts
5due him from the transferee.
6    "Cost Price" means the consideration paid by the serviceman
7for a purchase valued in money, whether paid in money or
8otherwise, including cash, credits and services, and shall be
9determined without any deduction on account of the supplier's
10cost of the property sold or on account of any other expense
11incurred by the supplier. When a serviceman contracts out part
12or all of the services required in his sale of service, it
13shall be presumed that the cost price to the serviceman of the
14property transferred to him by his or her subcontractor is
15equal to 50% of the subcontractor's charges to the serviceman
16in the absence of proof of the consideration paid by the
17subcontractor for the purchase of such property.
18    "Department" means the Department of Revenue.
19    "Person" means any natural individual, firm, partnership,
20association, joint stock company, joint venture, public or
21private corporation, limited liability company, and any
22receiver, executor, trustee, guardian or other representative
23appointed by order of any court.
24    "Sale of Service" means any transaction except:
25    (a) A retail sale of tangible personal property taxable
26under the Retailers' Occupation Tax Act or under the Use Tax

 

 

HB3092- 32 -LRB099 08119 HLH 28268 b

1Act.
2    (b) A sale of tangible personal property for the purpose of
3resale made in compliance with Section 2c of the Retailers'
4Occupation Tax Act.
5    (c) Except as hereinafter provided, a sale or transfer of
6tangible personal property as an incident to the rendering of
7service for or by any governmental body or for or by any
8corporation, society, association, foundation or institution
9organized and operated exclusively for charitable, religious
10or educational purposes or any not-for-profit corporation,
11society, association, foundation, institution or organization
12which has no compensated officers or employees and which is
13organized and operated primarily for the recreation of persons
1455 years of age or older. A limited liability company may
15qualify for the exemption under this paragraph only if the
16limited liability company is organized and operated
17exclusively for educational purposes.
18    (d) A sale or transfer of tangible personal property as an
19incident to the rendering of service for interstate carriers
20for hire for use as rolling stock moving in interstate commerce
21or lessors under leases of one year or longer, executed or in
22effect at the time of purchase, to interstate carriers for hire
23for use as rolling stock moving in interstate commerce, and
24equipment operated by a telecommunications provider, licensed
25as a common carrier by the Federal Communications Commission,
26which is permanently installed in or affixed to aircraft moving

 

 

HB3092- 33 -LRB099 08119 HLH 28268 b

1in interstate commerce.
2    (d-1) A sale or transfer of tangible personal property as
3an incident to the rendering of service for owners, lessors or
4shippers of tangible personal property which is utilized by
5interstate carriers for hire for use as rolling stock moving in
6interstate commerce, and equipment operated by a
7telecommunications provider, licensed as a common carrier by
8the Federal Communications Commission, which is permanently
9installed in or affixed to aircraft moving in interstate
10commerce.
11    (d-1.1) On and after July 1, 2003 and through June 30,
122004, a sale or transfer of a motor vehicle of the second
13division with a gross vehicle weight in excess of 8,000 pounds
14as an incident to the rendering of service if that motor
15vehicle is subject to the commercial distribution fee imposed
16under Section 3-815.1 of the Illinois Vehicle Code. Beginning
17on July 1, 2004 and through June 30, 2005, the use in this
18State of motor vehicles of the second division: (i) with a
19gross vehicle weight rating in excess of 8,000 pounds; (ii)
20that are subject to the commercial distribution fee imposed
21under Section 3-815.1 of the Illinois Vehicle Code; and (iii)
22that are primarily used for commercial purposes. Through June
2330, 2005, this exemption applies to repair and replacement
24parts added after the initial purchase of such a motor vehicle
25if that motor vehicle is used in a manner that would qualify
26for the rolling stock exemption otherwise provided for in this

 

 

HB3092- 34 -LRB099 08119 HLH 28268 b

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

 

 

HB3092- 35 -LRB099 08119 HLH 28268 b

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

 

 

HB3092- 36 -LRB099 08119 HLH 28268 b

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

 

 

HB3092- 37 -LRB099 08119 HLH 28268 b

1pay Use Tax on his or her cost price of any tangible personal
2property transferred to the primary serviceman and (ii)
3certifies that fact in writing to the primary serviceman.
4    Tangible personal property transferred incident to the
5completion of a maintenance agreement is exempt from the tax
6imposed pursuant to this Act.
7    Exemption (e) also includes machinery and equipment used in
8the general maintenance or repair of such exempt machinery and
9equipment or for in-house manufacture of exempt machinery and
10equipment. The machinery and equipment exemption does not
11include machinery and equipment used in (i) the generation of
12electricity for wholesale or retail sale; (ii) the generation
13or treatment of natural or artificial gas for wholesale or
14retail sale that is delivered to customers through pipes,
15pipelines, or mains; or (iii) the treatment of water for
16wholesale or retail sale that is delivered to customers through
17pipes, pipelines, or mains. The provisions of this amendatory
18Act of the 98th General Assembly are declaratory of existing
19law as to the meaning and scope of this exemption. For the
20purposes of exemption (e), each of these terms shall have the
21following meanings: (1) "manufacturing process" shall mean the
22production of any article of tangible personal property,
23whether such article is a finished product or an article for
24use in the process of manufacturing or assembling a different
25article of tangible personal property, by procedures commonly
26regarded as manufacturing, processing, fabricating, or

 

 

HB3092- 38 -LRB099 08119 HLH 28268 b

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

 

 

HB3092- 39 -LRB099 08119 HLH 28268 b

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

 

 

HB3092- 40 -LRB099 08119 HLH 28268 b

1exemption (e) to specific devices shall be published,
2maintained as a public record, and made available for public
3inspection and copying. If the informal ruling, opinion or
4letter contains trade secrets or other confidential
5information, where possible the Department shall delete such
6information prior to publication. Whenever such informal
7rulings, opinions, or letters contain any policy of general
8applicability, the Department shall formulate and adopt such
9policy as a rule in accordance with the provisions of the
10Illinois Administrative Procedure Act.
11    On and after July 1, 1987, no entity otherwise eligible
12under exemption (c) of this Section shall make tax free
13purchases unless it has an active exemption identification
14number issued by the Department.
15    "Serviceman" means any person who is engaged in the
16occupation of making sales of service.
17    Notwithstanding any other provision of law, a
18not-for-profit organization that (i) has received an exemption
19under Section 501(c)(3) of the Internal Revenue Code, (ii) has
20gross receipts of no more than $10,000 per year, and (iii) is
21organized and operated exclusively for charitable, religious,
22or educational purposes is not considered a serviceman for the
23purposes of this Act.
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 an
2incident to a sale of service.
3(Source: P.A. 98-583, eff. 1-1-14.)
 
4    Section 20. The Retailers' Occupation Tax Act is amended by
5changing Section 1 as follows:
 
6    (35 ILCS 120/1)  (from Ch. 120, par. 440)
7    Sec. 1. Definitions. "Sale at retail" means any transfer of
8the ownership of or title to tangible personal property to a
9purchaser, for the purpose of use or consumption, and not for
10the purpose of resale in any form as tangible personal property
11to the extent not first subjected to a use for which it was
12purchased, for a valuable consideration: Provided that the
13property purchased is deemed to be purchased for the purpose of
14resale, despite first being used, to the extent to which it is
15resold as an ingredient of an intentionally produced product or
16byproduct of manufacturing. For this purpose, slag produced as
17an incident to manufacturing pig iron or steel and sold is
18considered to be an intentionally produced byproduct of
19manufacturing. Transactions whereby the possession of the
20property is transferred but the seller retains the title as
21security for payment of the selling price shall be deemed to be
22sales.
23    "Sale at retail" shall be construed to include any transfer
24of the ownership of or title to tangible personal property to a

 

 

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

 

 

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

 

 

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1schools at retail to students is not "primarily for the
2purposes of" the school which does such selling. The provisions
3of this paragraph shall not apply to nor subject to taxation
4occasional dinners, socials or similar activities of a person
5organized and operated exclusively for charitable, religious
6or educational purposes, whether or not such activities are
7open to the public.
8    A person who is the recipient of a grant or contract under
9Title VII of the Older Americans Act of 1965 (P.L. 92-258) and
10serves meals to participants in the federal Nutrition Program
11for the Elderly in return for contributions established in
12amount by the individual participant pursuant to a schedule of
13suggested fees as provided for in the federal Act is not
14engaged in the business of selling tangible personal property
15at retail with respect to such transactions.
16    "Purchaser" means anyone who, through a sale at retail,
17acquires the ownership of or title to tangible personal
18property for a valuable consideration.
19    "Reseller of motor fuel" means any person engaged in the
20business of selling or delivering or transferring title of
21motor fuel to another person other than for use or consumption.
22No person shall act as a reseller of motor fuel within this
23State without first being registered as a reseller pursuant to
24Section 2c or a retailer pursuant to Section 2a.
25    "Selling price" or the "amount of sale" means the
26consideration for a sale valued in money whether received in

 

 

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1money or otherwise, including cash, credits, property, other
2than as hereinafter provided, and services, but not including
3the value of or credit given for traded-in tangible personal
4property where the item that is traded-in is of like kind and
5character as that which is being sold, and shall be determined
6without any deduction on account of the cost of the property
7sold, the cost of materials used, labor or service cost or any
8other expense whatsoever, but does not include charges that are
9added to prices by sellers on account of the seller's tax
10liability under this Act, or on account of the seller's duty to
11collect, from the purchaser, the tax that is imposed by the Use
12Tax Act, or, except as otherwise provided with respect to any
13cigarette tax imposed by a home rule unit, on account of the
14seller's tax liability under any local occupation tax
15administered by the Department, or, except as otherwise
16provided with respect to any cigarette tax imposed by a home
17rule unit on account of the seller's duty to collect, from the
18purchasers, the tax that is imposed under any local use tax
19administered by the Department. Effective December 1, 1985,
20"selling price" shall include charges that are added to prices
21by sellers on account of the seller's tax liability under the
22Cigarette Tax Act, on account of the sellers' duty to collect,
23from the purchaser, the tax imposed under the Cigarette Use Tax
24Act, and on account of the seller's duty to collect, from the
25purchaser, any cigarette tax imposed by a home rule unit.
26    Notwithstanding any law to the contrary, for any motor

 

 

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1vehicle, as defined in Section 1-146 of the Vehicle Code, that
2is sold on or after January 1, 2015 for the purpose of leasing
3the vehicle for a defined period that is longer than one year
4and (1) is a motor vehicle of the second division that: (A) is
5a self-contained motor vehicle designed or permanently
6converted to provide living quarters for recreational,
7camping, or travel use, with direct walk through access to the
8living quarters from the driver's seat; (B) is of the van
9configuration designed for the transportation of not less than
107 nor more than 16 passengers; or (C) has a gross vehicle
11weight rating of 8,000 pounds or less or (2) is a motor vehicle
12of the first division, "selling price" or "amount of sale"
13means the consideration received by the lessor pursuant to the
14lease contract, including amounts due at lease signing and all
15monthly or other regular payments charged over the term of the
16lease. Also included in the selling price is any amount
17received by the lessor from the lessee for the leased vehicle
18that is not calculated at the time the lease is executed,
19including, but not limited to, excess mileage charges and
20charges for excess wear and tear. For sales that occur in
21Illinois, with respect to any amount received by the lessor
22from the lessee for the leased vehicle that is not calculated
23at the time the lease is executed, the lessor who purchased the
24motor vehicle does not incur the tax imposed by the Use Tax Act
25on those amounts, and the retailer who makes the retail sale of
26the motor vehicle to the lessor is not required to collect the

 

 

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

 

 

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

 

 

HB3092- 49 -LRB099 08119 HLH 28268 b

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 other
13consideration derived by a seller from the sale, transfer or
14assignment of accounts receivable to a wholly owned subsidiary
15will not be deemed payments prior to the time the purchaser
16makes 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    Notwithstanding any other provision of law, a
24not-for-profit organization that (i) has received an exemption
25under Section 501(c)(3) of the Internal Revenue Code, (ii) has
26gross receipts of no more than $10,000 per year, and (iii) is

 

 

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

 

 

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

 

 

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1shall be liable for and shall pay the tax imposed by this Act
2on the basis of the retail value of the property transferred
3upon redemption of such stamps.
4    "Bulk vending machine" means a vending machine, containing
5unsorted confections, nuts, toys, or other items designed
6primarily to be used or played with by children which, when a
7coin or coins of a denomination not larger than $0.50 are
8inserted, are dispensed in equal portions, at random and
9without selection by the customer.
10(Source: P.A. 98-628, eff. 1-1-15; 98-1080, eff. 8-26-14.)
 
11    Section 99. Effective date. This Act takes effect upon
12becoming law.