Full Text of HB3659 96th General Assembly
HB3659enr 96TH GENERAL ASSEMBLY |
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| 1 | | AN ACT concerning revenue.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 5. The Use Tax Act is amended by changing Section 2 | 5 | | as follows:
| 6 | | (35 ILCS 105/2) (from Ch. 120, par. 439.2)
| 7 | | Sec. 2. "Use" means the exercise by any person of any right | 8 | | or power over
tangible personal property incident to the | 9 | | ownership of that property,
except that it does not include the | 10 | | sale of such property in any form as
tangible personal property | 11 | | in the regular course of business to the extent
that such | 12 | | property is not first subjected to a use for which it was
| 13 | | purchased, and does not include the use of such property by its | 14 | | owner for
demonstration purposes: Provided that the property | 15 | | purchased is deemed to
be purchased for the purpose of resale, | 16 | | despite first being used, to the
extent to which it is resold | 17 | | as an ingredient of an intentionally produced
product or | 18 | | by-product of manufacturing. "Use" does not mean the | 19 | | demonstration
use or interim use of tangible personal property | 20 | | by a retailer before he sells
that tangible personal property. | 21 | | For watercraft or aircraft, if the period of
demonstration use | 22 | | or interim use by the retailer exceeds 18 months,
the retailer
| 23 | | shall pay on the retailers' original cost price the tax imposed |
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| 1 | | by this Act,
and no credit for that tax is permitted if the | 2 | | watercraft or aircraft is
subsequently sold by the retailer. | 3 | | "Use" does not mean the physical
incorporation of tangible | 4 | | personal property, to the extent not first subjected
to a use | 5 | | for which it was purchased, as an ingredient or constituent, | 6 | | into
other tangible personal property (a) which is sold in the | 7 | | regular course of
business or (b) which the person | 8 | | incorporating such ingredient or constituent
therein has | 9 | | undertaken at the time of such purchase to cause to be | 10 | | transported
in interstate commerce to destinations outside the | 11 | | State of Illinois: Provided
that the property purchased is | 12 | | deemed to be purchased for the purpose of
resale, despite first | 13 | | being used, to the extent to which it is resold as an
| 14 | | ingredient of an intentionally produced product or by-product | 15 | | of manufacturing.
| 16 | | "Watercraft" means a Class 2, Class 3, or Class 4 | 17 | | watercraft as defined in
Section 3-2 of the Boat Registration | 18 | | and Safety Act, a personal watercraft, or
any boat equipped | 19 | | with an inboard motor.
| 20 | | "Purchase at retail" means the acquisition of the ownership | 21 | | of or title
to tangible personal property through a sale at | 22 | | retail.
| 23 | | "Purchaser" means anyone who, through a sale at retail, | 24 | | acquires the
ownership of tangible personal property for a | 25 | | valuable consideration.
| 26 | | "Sale at retail" means any transfer of the ownership of or |
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| 1 | | title to
tangible personal property to a purchaser, for the | 2 | | purpose of use, and not
for the purpose of resale in any form | 3 | | as tangible personal property to the
extent not first subjected | 4 | | to a use for which it was purchased, for a
valuable | 5 | | consideration: Provided that the property purchased is deemed | 6 | | to
be purchased for the purpose of resale, despite first being | 7 | | used, to the
extent to which it is resold as an ingredient of | 8 | | an intentionally produced
product or by-product of | 9 | | manufacturing. For this purpose, slag produced as
an incident | 10 | | to manufacturing pig iron or steel and sold is considered to be
| 11 | | an intentionally produced by-product of manufacturing. "Sale | 12 | | at retail"
includes any such transfer made for resale unless | 13 | | made in compliance with
Section 2c of the Retailers' Occupation | 14 | | Tax Act, as incorporated by
reference into Section 12 of this | 15 | | Act. Transactions whereby the possession
of the property is | 16 | | transferred but the seller retains the title as security
for | 17 | | payment of the selling price are sales.
| 18 | | "Sale at retail" shall also be construed to include any | 19 | | Illinois
florist's sales transaction in which the purchase | 20 | | order is received in
Illinois by a florist and the sale is for | 21 | | use or consumption, but the
Illinois florist has a florist in | 22 | | another state deliver the property to the
purchaser or the | 23 | | purchaser's donee in such other state.
| 24 | | Nonreusable tangible personal property that is used by | 25 | | persons engaged in
the business of operating a restaurant, | 26 | | cafeteria, or drive-in is a sale for
resale when it is |
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| 1 | | transferred to customers in the ordinary course of business
as | 2 | | part of the sale of food or beverages and is used to deliver, | 3 | | package, or
consume food or beverages, regardless of where | 4 | | consumption of the food or
beverages occurs. Examples of those | 5 | | items include, but are not limited to
nonreusable, paper and | 6 | | plastic cups, plates, baskets, boxes, sleeves, buckets
or other | 7 | | containers, utensils, straws, placemats, napkins, doggie bags, | 8 | | and
wrapping or packaging
materials that are transferred to | 9 | | customers as part of the sale of food or
beverages in the | 10 | | ordinary course of business.
| 11 | | The purchase, employment and transfer of such tangible | 12 | | personal property
as newsprint and ink for the primary purpose | 13 | | of conveying news (with or
without other information) is not a | 14 | | purchase, use or sale of tangible
personal property.
| 15 | | "Selling price" means the consideration for a sale valued | 16 | | in money
whether received in money or otherwise, including | 17 | | cash, credits, property
other than as hereinafter provided, and | 18 | | services, but not including the
value of or credit given for | 19 | | traded-in tangible personal property where the
item that is | 20 | | traded-in is of like kind and character as that which is being
| 21 | | sold, and shall be determined without any deduction on account | 22 | | of the cost
of the property sold, the cost of materials used, | 23 | | labor or service cost or
any other expense whatsoever, but does | 24 | | not include interest or finance
charges which appear as | 25 | | separate items on the bill of sale or sales
contract nor | 26 | | charges that are added to prices by sellers on account of the
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| 1 | | seller's tax liability under the "Retailers' Occupation Tax | 2 | | Act", or on
account of the seller's duty to collect, from the | 3 | | purchaser, the tax that
is imposed by this Act, or, except as | 4 | | otherwise provided with respect to any cigarette tax imposed by | 5 | | a home rule unit, on account of the seller's tax liability | 6 | | under any local occupation tax administered by the Department, | 7 | | or, except as otherwise provided with respect to any cigarette | 8 | | tax imposed by a home rule unit on account of the seller's duty | 9 | | to collect, from the purchasers, the tax that is imposed under | 10 | | any local use tax administered by the Department. Effective | 11 | | December 1, 1985, "selling price"
shall include charges that | 12 | | are added to prices by sellers on account of the
seller's tax | 13 | | liability under the Cigarette Tax Act, on account of the | 14 | | seller's
duty to collect, from the purchaser, the tax imposed | 15 | | under the Cigarette Use
Tax Act, and on account of the seller's | 16 | | duty to collect, from the purchaser,
any cigarette tax imposed | 17 | | by a home rule unit.
| 18 | | The phrase "like kind and character" shall be liberally | 19 | | construed
(including but not limited to any form of motor | 20 | | vehicle for any form of
motor vehicle, or any kind of farm or | 21 | | agricultural implement for any other
kind of farm or | 22 | | agricultural implement), while not including a kind of item
| 23 | | which, if sold at retail by that retailer, would be exempt from | 24 | | retailers'
occupation tax and use tax as an isolated or | 25 | | occasional sale.
| 26 | | "Department" means the Department of Revenue.
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| 1 | | "Person" means any natural individual, firm, partnership, | 2 | | association,
joint stock company, joint adventure, public or | 3 | | private corporation, limited
liability company, or a
receiver, | 4 | | executor, trustee, guardian or other representative appointed
| 5 | | by order of any court.
| 6 | | "Retailer" means and includes every person engaged in the | 7 | | business of
making sales at retail as defined in this Section.
| 8 | | A person who holds himself or herself out as being engaged | 9 | | (or who habitually
engages) in selling tangible personal | 10 | | property at retail is a retailer
hereunder with respect to such | 11 | | sales (and not primarily in a service
occupation) | 12 | | notwithstanding the fact that such person designs and produces
| 13 | | such tangible personal property on special order for the | 14 | | purchaser and in
such a way as to render the property of value | 15 | | only to such purchaser, if
such tangible personal property so | 16 | | produced on special order serves
substantially the same | 17 | | function as stock or standard items of tangible
personal | 18 | | property that are sold at retail.
| 19 | | A person whose activities are organized and conducted | 20 | | primarily as a
not-for-profit service enterprise, and who | 21 | | engages in selling tangible
personal property at retail | 22 | | (whether to the public or merely to members and
their guests) | 23 | | is a retailer with respect to such transactions, excepting
only | 24 | | a person organized and operated exclusively for charitable, | 25 | | religious
or educational purposes either (1), to the extent of | 26 | | sales by such person
to its members, students, patients or |
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| 1 | | inmates of tangible personal property
to be used primarily for | 2 | | the purposes of such person, or (2), to the extent
of sales by | 3 | | such person of tangible personal property which is not sold or
| 4 | | offered for sale by persons organized for profit. The selling | 5 | | of school
books and school supplies by schools at retail to | 6 | | students is not
"primarily for the purposes of" the school | 7 | | which does such selling. This
paragraph does not apply to nor | 8 | | subject to taxation occasional dinners,
social or similar | 9 | | activities of a person organized and operated exclusively
for | 10 | | charitable, religious or educational purposes, whether or not | 11 | | such
activities are open to the public.
| 12 | | A person who is the recipient of a grant or contract under | 13 | | Title VII of
the Older Americans Act of 1965 (P.L. 92-258) and | 14 | | serves meals to
participants in the federal Nutrition Program | 15 | | for the Elderly in return for
contributions established in | 16 | | amount by the individual participant pursuant
to a schedule of | 17 | | suggested fees as provided for in the federal Act is not a
| 18 | | retailer under this Act with respect to such transactions.
| 19 | | Persons who engage in the business of transferring tangible | 20 | | personal
property upon the redemption of trading stamps are | 21 | | retailers hereunder when
engaged in such business.
| 22 | | The isolated or occasional sale of tangible personal | 23 | | property at retail
by a person who does not hold himself out as | 24 | | being engaged (or who does not
habitually engage) in selling | 25 | | such tangible personal property at retail or
a sale through a | 26 | | bulk vending machine does not make such person a retailer
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| 1 | | hereunder. However, any person who is engaged in a business | 2 | | which is not
subject to the tax imposed by the "Retailers' | 3 | | Occupation Tax Act" because
of involving the sale of or a | 4 | | contract to sell real estate or a
construction contract to | 5 | | improve real estate, but who, in the course of
conducting such | 6 | | business, transfers tangible personal property to users or
| 7 | | consumers in the finished form in which it was purchased, and | 8 | | which does
not become real estate, under any provision of a | 9 | | construction contract or
real estate sale or real estate sales | 10 | | agreement entered into with some
other person arising out of or | 11 | | because of such nontaxable business, is a
retailer to the | 12 | | extent of the value of the tangible personal property so
| 13 | | transferred. If, in such transaction, a separate charge is made | 14 | | for the
tangible personal property so transferred, the value of | 15 | | such property, for
the purposes of this Act, is the amount so | 16 | | separately charged, but not less
than the cost of such property | 17 | | to the transferor; if no separate charge is
made, the value of | 18 | | such property, for the purposes of this Act, is the cost
to the | 19 | | transferor of such tangible personal property.
| 20 | | "Retailer maintaining a place of business in this State", | 21 | | or any like
term, means and includes any of the following | 22 | | retailers:
| 23 | | 1. A retailer having or maintaining within this State, | 24 | | directly or by
a subsidiary, an office, distribution house, | 25 | | sales house, warehouse or other
place of business, or any | 26 | | agent or other representative operating within this
State |
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| 1 | | under the authority of the retailer or its subsidiary, | 2 | | irrespective of
whether such place of business or agent or | 3 | | other representative is located here
permanently or | 4 | | temporarily, or whether such retailer or subsidiary is | 5 | | licensed
to do business in this State. However, the | 6 | | ownership of property that is
located at the premises of a | 7 | | printer with which the retailer has contracted for
printing | 8 | | and that consists of the final printed product, property | 9 | | that becomes
a part of the final printed product, or copy | 10 | | from which the printed product is
produced shall not result | 11 | | in the retailer being deemed to have or maintain an
office, | 12 | | distribution house, sales house, warehouse, or other place | 13 | | of business
within this State. | 14 | | 1.1. Beginning July 1, 2011, a retailer having a | 15 | | contract with a person located in this State under which | 16 | | the person, for a commission or other consideration based | 17 | | upon the sale of tangible personal property by the | 18 | | retailer, directly or indirectly refers potential | 19 | | customers to the retailer by a link on the person's | 20 | | Internet website. The provisions of this paragraph 1.1 | 21 | | shall apply only if the cumulative gross receipts from | 22 | | sales of tangible personal property by the retailer to | 23 | | customers who are referred to the retailer by all persons | 24 | | in this State under such contracts exceed $10,000 during | 25 | | the preceding 4 quarterly periods ending on the last day of | 26 | | March, June, September, and December. |
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| 1 | | 1.2. Beginning July 1, 2011, a retailer having a | 2 | | contract with a person located in this State under which: | 3 | | A. the retailer sells the same or substantially | 4 | | similar line of products as the person located in this | 5 | | State and does so using an identical or substantially | 6 | | similar name, trade name, or trademark as the person | 7 | | located in this State; and | 8 | | B. the retailer provides a commission or other | 9 | | consideration to the person located in this State based | 10 | | upon the sale of tangible personal property by the | 11 | | retailer. | 12 | | The provisions of this paragraph 1.2 shall apply only if | 13 | | the cumulative gross receipts from sales of tangible | 14 | | personal property by the retailer to customers in this | 15 | | State under all such contracts exceed $10,000 during the | 16 | | preceding 4 quarterly periods ending on the last day of | 17 | | March, June, September, and December.
| 18 | | 2. A retailer soliciting orders for tangible personal | 19 | | property by
means of a telecommunication or television | 20 | | shopping system (which utilizes toll
free numbers) which is | 21 | | intended by the retailer to be broadcast by cable
| 22 | | television or other means of broadcasting, to consumers | 23 | | located in this State.
| 24 | | 3. A retailer, pursuant to a contract with a | 25 | | broadcaster or publisher
located in this State, soliciting | 26 | | orders for tangible personal property by
means of |
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| 1 | | advertising which is disseminated primarily to consumers | 2 | | located in
this State and only secondarily to bordering | 3 | | jurisdictions.
| 4 | | 4. A retailer soliciting orders for tangible personal | 5 | | property by mail
if the solicitations are substantial and | 6 | | recurring and if the retailer benefits
from any banking, | 7 | | financing, debt collection, telecommunication, or | 8 | | marketing
activities occurring in this State or benefits | 9 | | from the location in this State
of authorized installation, | 10 | | servicing, or repair facilities.
| 11 | | 5. A retailer that is owned or controlled by the same | 12 | | interests that own
or control any retailer engaging in | 13 | | business in the same or similar line of
business in this | 14 | | State.
| 15 | | 6. A retailer having a franchisee or licensee operating | 16 | | under its trade
name if the franchisee or licensee is | 17 | | required to collect the tax under this
Section.
| 18 | | 7. A retailer, pursuant to a contract with a cable | 19 | | television operator
located in this State, soliciting | 20 | | orders for tangible personal property by
means of | 21 | | advertising which is transmitted or distributed over a | 22 | | cable
television system in this State.
| 23 | | 8. A retailer engaging in activities in Illinois, which | 24 | | activities in
the state in which the retail business | 25 | | engaging in such activities is located
would constitute | 26 | | maintaining a place of business in that state.
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| 1 | | "Bulk vending machine" means a vending machine,
containing | 2 | | unsorted confections, nuts, toys, or other items designed
| 3 | | primarily to be used or played with by children
which, when a | 4 | | coin or coins of a denomination not larger than $0.50 are | 5 | | inserted, are dispensed in equal portions, at random and
| 6 | | without selection by the customer.
| 7 | | (Source: P.A. 94-1074, eff. 12-26-06; 95-723, eff. 6-23-08.)
| 8 | | Section 10. The Service Use Tax Act is amended by changing | 9 | | Section 2 as follows:
| 10 | | (35 ILCS 110/2) (from Ch. 120, par. 439.32)
| 11 | | Sec. 2. "Use" means the exercise by any person of any right | 12 | | or power
over tangible personal property incident to the | 13 | | ownership of that
property, but does not include the sale or | 14 | | use for demonstration by him
of that property in any form as | 15 | | tangible personal property in the
regular course of business.
| 16 | | "Use" does not mean the interim
use of
tangible personal | 17 | | property nor the physical incorporation of tangible
personal | 18 | | property, as an ingredient or constituent, into other tangible
| 19 | | personal property, (a) which is sold in the regular course of | 20 | | business
or (b) which the person incorporating such ingredient | 21 | | or constituent
therein has undertaken at the time of such | 22 | | purchase to cause to be
transported in interstate commerce to | 23 | | destinations outside the State of
Illinois.
| 24 | | "Purchased from a serviceman" means the acquisition of the |
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| 1 | | ownership
of, or title to, tangible personal property through a | 2 | | sale of service.
| 3 | | "Purchaser" means any person who, through a sale of | 4 | | service, acquires
the ownership of, or title to, any tangible | 5 | | personal property.
| 6 | | "Cost price" means the consideration paid by the serviceman | 7 | | for a
purchase valued in money, whether paid in money or | 8 | | otherwise, including
cash, credits and services, and shall be | 9 | | determined without any
deduction on account of the supplier's | 10 | | cost of the property sold or on
account of any other expense | 11 | | incurred by the supplier. When a serviceman
contracts out part | 12 | | or all of the services required in his sale of service,
it | 13 | | shall be presumed that the cost price to the serviceman of the | 14 | | property
transferred to him or her by his or her subcontractor | 15 | | is equal to 50% of
the subcontractor's charges to the | 16 | | serviceman in the absence of proof of
the consideration paid by | 17 | | the subcontractor for the purchase of such property.
| 18 | | "Selling price" means the consideration for a sale valued | 19 | | in money
whether received in money or otherwise, including | 20 | | cash, credits and
service, and shall be determined without any | 21 | | deduction on account of the
serviceman's cost of the property | 22 | | sold, the cost of materials used,
labor or service cost or any | 23 | | other expense whatsoever, but does not
include interest or | 24 | | finance charges which appear as separate items on
the bill of | 25 | | sale or sales contract nor charges that are added to prices
by | 26 | | sellers on account of the seller's duty to collect, from the
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| 1 | | purchaser, the tax that is imposed by this Act.
| 2 | | "Department" means the Department of Revenue.
| 3 | | "Person" means any natural individual, firm, partnership,
| 4 | | association, joint stock company, joint venture, public or | 5 | | private
corporation, limited liability company, and any | 6 | | receiver, executor, trustee,
guardian or other representative | 7 | | appointed by order of any court.
| 8 | | "Sale of service" means any transaction except:
| 9 | | (1) a retail sale of tangible personal property taxable | 10 | | under the
Retailers' Occupation Tax Act or under the Use | 11 | | Tax Act.
| 12 | | (2) a sale of tangible personal property for the | 13 | | purpose of resale
made in compliance with Section 2c of the | 14 | | Retailers' Occupation Tax Act.
| 15 | | (3) except as hereinafter provided, a sale or transfer | 16 | | of tangible
personal property as an incident to the | 17 | | rendering of service for or by
any governmental body, or | 18 | | for or by any corporation, society,
association, | 19 | | foundation or institution organized and operated
| 20 | | exclusively for charitable, religious or educational | 21 | | purposes or any
not-for-profit corporation, society, | 22 | | association, foundation,
institution or organization which | 23 | | has no compensated officers or
employees and which is | 24 | | organized and operated primarily for the
recreation of | 25 | | persons 55 years of age or older. A limited liability | 26 | | company
may qualify for the exemption under this paragraph |
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| 1 | | only if the limited
liability company is organized and | 2 | | operated exclusively for educational
purposes.
| 3 | | (4) a sale or transfer of tangible personal
property as | 4 | | an incident to the
rendering of service for interstate | 5 | | carriers for hire for use as rolling stock
moving in | 6 | | interstate commerce or by lessors under a lease of one year | 7 | | or
longer, executed or in effect at the time of purchase of | 8 | | personal property, to
interstate carriers for hire for use | 9 | | as rolling stock moving in interstate
commerce so long as | 10 | | so used by such interstate carriers for hire, and equipment
| 11 | | operated by a telecommunications provider, licensed as a | 12 | | common carrier by the
Federal Communications Commission, | 13 | | which is permanently installed in or affixed
to aircraft | 14 | | moving in interstate commerce.
| 15 | | (4a) a sale or transfer of tangible personal
property | 16 | | as an incident
to the rendering of service for owners, | 17 | | lessors, or shippers of tangible
personal property which is | 18 | | utilized by interstate carriers for hire for
use as rolling | 19 | | stock moving in interstate commerce so long as so used by
| 20 | | interstate carriers for hire, and equipment operated by a
| 21 | | telecommunications provider, licensed as a common carrier | 22 | | by the Federal
Communications Commission, which is | 23 | | permanently installed in or affixed to
aircraft moving in | 24 | | interstate commerce.
| 25 | | (4a-5) on and after July 1, 2003 and through June 30, | 26 | | 2004, a sale or transfer of a motor vehicle
of
the
second |
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| 1 | | division with a gross vehicle weight in excess of 8,000 | 2 | | pounds as an
incident to the rendering of service if that | 3 | | motor
vehicle is subject
to the commercial distribution fee | 4 | | imposed under Section 3-815.1 of the
Illinois Vehicle
Code. | 5 | | Beginning on July 1, 2004 and through June 30, 2005, the | 6 | | use in this State of motor vehicles of the second division: | 7 | | (i) with a gross vehicle weight rating in excess of 8,000 | 8 | | pounds; (ii) that are subject to the commercial | 9 | | distribution fee imposed under Section 3-815.1 of the | 10 | | Illinois Vehicle Code; and (iii) that are primarily used | 11 | | for commercial purposes. Through June 30, 2005, this
| 12 | | exemption applies to repair and replacement parts added | 13 | | after the
initial
purchase of such a motor vehicle if that | 14 | | motor vehicle is used in a manner that
would
qualify for | 15 | | the rolling stock exemption otherwise provided for in this | 16 | | Act. For purposes of this paragraph, "used for commercial | 17 | | purposes" means the transportation of persons or property | 18 | | in furtherance of any commercial or industrial enterprise | 19 | | whether for-hire or not.
| 20 | | (5) a sale or transfer of machinery and equipment used | 21 | | primarily in the
process of the manufacturing or | 22 | | assembling, either in an existing, an expanded
or a new | 23 | | manufacturing facility, of tangible personal property for | 24 | | wholesale or
retail sale or lease, whether such sale or | 25 | | lease is made directly by the
manufacturer or by some other | 26 | | person, whether the materials used in the process
are owned |
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| 1 | | by the manufacturer or some other person, or whether such | 2 | | sale or
lease is made apart from or as an incident to the | 3 | | seller's engaging in a
service occupation and the | 4 | | applicable tax is a Service Use Tax or Service
Occupation | 5 | | Tax, rather than Use Tax or Retailers' Occupation Tax.
| 6 | | (5a) the repairing, reconditioning or remodeling, for | 7 | | a
common carrier by rail, of tangible personal property | 8 | | which belongs to such
carrier for hire, and as to which | 9 | | such carrier receives the physical possession
of the | 10 | | repaired, reconditioned or remodeled item of tangible | 11 | | personal property
in Illinois, and which such carrier | 12 | | transports, or shares with another common
carrier in the | 13 | | transportation of such property, out of Illinois on a | 14 | | standard
uniform bill of lading showing the person who | 15 | | repaired, reconditioned or
remodeled the property to a | 16 | | destination outside Illinois, for use outside
Illinois.
| 17 | | (5b) a sale or transfer of tangible personal property | 18 | | which is produced by
the seller thereof on special order in | 19 | | such a way as to have made the
applicable tax the Service | 20 | | Occupation Tax or the Service Use Tax, rather than
the | 21 | | Retailers' Occupation Tax or the Use Tax, for an interstate | 22 | | carrier by rail
which receives the physical possession of | 23 | | such property in Illinois, and which
transports such | 24 | | property, or shares with another common carrier in the
| 25 | | transportation of such property, out of Illinois on a | 26 | | standard uniform bill of
lading showing the seller of the |
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| 1 | | property as the shipper or consignor of such
property to a | 2 | | destination outside Illinois, for use outside Illinois.
| 3 | | (6) until July 1, 2003, a sale or transfer of | 4 | | distillation machinery
and equipment, sold
as a unit or kit | 5 | | and assembled or installed by the retailer, which
machinery | 6 | | and equipment is certified by the user to be used only for | 7 | | the
production of ethyl alcohol that will be used for | 8 | | consumption as motor fuel
or as a component of motor fuel | 9 | | for the personal use of such user and not
subject to sale | 10 | | or resale.
| 11 | | (7) at the election of any serviceman not required to | 12 | | be
otherwise registered as a retailer under Section 2a of | 13 | | the Retailers'
Occupation Tax Act, made for each fiscal | 14 | | year sales
of service in which the aggregate annual cost | 15 | | price of tangible
personal property transferred as an | 16 | | incident to the sales of service is
less than 35%, or 75% | 17 | | in the case of servicemen transferring prescription
drugs | 18 | | or servicemen engaged in graphic arts production, of the | 19 | | aggregate
annual total gross receipts from all sales of | 20 | | service. The purchase of
such tangible personal property by | 21 | | the serviceman shall be subject to tax
under the Retailers' | 22 | | Occupation Tax Act and the Use Tax Act.
However, if a
| 23 | | primary serviceman who has made the election described in | 24 | | this paragraph
subcontracts service work to a secondary | 25 | | serviceman who has also made the
election described in this | 26 | | paragraph, the primary serviceman does not
incur a Use Tax |
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| 1 | | liability if the secondary serviceman (i) has paid or will | 2 | | pay
Use
Tax on his or her cost price of any tangible | 3 | | personal property transferred
to the primary serviceman | 4 | | and (ii) certifies that fact in writing to the
primary
| 5 | | serviceman.
| 6 | | Tangible personal property transferred incident to the | 7 | | completion of a
maintenance agreement is exempt from the tax | 8 | | imposed pursuant to this Act.
| 9 | | Exemption (5) also includes machinery and equipment used in | 10 | | the general
maintenance or repair of such exempt machinery and | 11 | | equipment or for in-house
manufacture of exempt machinery and | 12 | | equipment. For the purposes of exemption
(5), each of these | 13 | | terms shall have the following meanings: (1) "manufacturing
| 14 | | process" shall mean the production of any article of tangible | 15 | | personal
property, whether such article is a finished product | 16 | | or an article for use in
the process of manufacturing or | 17 | | assembling a different article of tangible
personal property, | 18 | | by procedures commonly regarded as manufacturing,
processing, | 19 | | fabricating, or refining which changes some existing
material | 20 | | or materials into a material with a different form, use or
| 21 | | name. In relation to a recognized integrated business composed | 22 | | of a
series of operations which collectively constitute | 23 | | manufacturing, or
individually constitute manufacturing | 24 | | operations, the manufacturing
process shall be deemed to | 25 | | commence with the first operation or stage of
production in the | 26 | | series, and shall not be deemed to end until the
completion of |
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| 1 | | the final product in the last operation or stage of
production | 2 | | in the series; and further, for purposes of exemption (5),
| 3 | | photoprocessing is deemed to be a manufacturing process of | 4 | | tangible
personal property for wholesale or retail sale; (2) | 5 | | "assembling process" shall
mean the production of any article | 6 | | of tangible personal property, whether such
article is a | 7 | | finished product or an article for use in the process of
| 8 | | manufacturing or assembling a different article of tangible | 9 | | personal
property, by the combination of existing materials in | 10 | | a manner commonly
regarded as assembling which results in a | 11 | | material of a different form,
use or name; (3) "machinery" | 12 | | shall mean major mechanical machines or
major components of | 13 | | such machines contributing to a manufacturing or
assembling | 14 | | process; and (4) "equipment" shall include any independent
| 15 | | device or tool separate from any machinery but essential to an
| 16 | | integrated manufacturing or assembly process; including | 17 | | computers
used primarily in a manufacturer's computer
assisted | 18 | | design, computer assisted manufacturing (CAD/CAM) system;
or | 19 | | any subunit or assembly comprising a component of any machinery | 20 | | or
auxiliary, adjunct or attachment parts of machinery, such as | 21 | | tools, dies,
jigs, fixtures, patterns and molds; or any parts | 22 | | which require periodic
replacement in the course of normal | 23 | | operation; but shall not include hand
tools.
Equipment includes | 24 | | chemicals or chemicals acting as catalysts but only if the
| 25 | | chemicals or chemicals acting as catalysts effect a direct and | 26 | | immediate change
upon a
product being manufactured or assembled |
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| 1 | | for wholesale or retail sale or
lease.
The purchaser of such | 2 | | machinery and equipment who has an active
resale registration | 3 | | number shall furnish such number to the seller at the
time of | 4 | | purchase. The user of such machinery and equipment and tools
| 5 | | without an active resale registration number shall prepare a | 6 | | certificate of
exemption for each transaction stating facts | 7 | | establishing the exemption for
that transaction, which | 8 | | certificate shall be available to the Department
for inspection | 9 | | or audit. The Department shall prescribe the form of the
| 10 | | certificate.
| 11 | | Any informal rulings, opinions or letters issued by the | 12 | | Department in
response to an inquiry or request for any opinion | 13 | | from any person
regarding the coverage and applicability of | 14 | | exemption (5) to specific
devices shall be published, | 15 | | maintained as a public record, and made
available for public | 16 | | inspection and copying. If the informal ruling,
opinion or | 17 | | letter contains trade secrets or other confidential
| 18 | | information, where possible the Department shall delete such | 19 | | information
prior to publication. Whenever such informal | 20 | | rulings, opinions, or
letters contain any policy of general | 21 | | applicability, the Department
shall formulate and adopt such | 22 | | policy as a rule in accordance with the
provisions of the | 23 | | Illinois Administrative Procedure Act.
| 24 | | On and after July 1, 1987, no entity otherwise eligible | 25 | | under exemption
(3) of this Section shall make tax free | 26 | | purchases unless it has an active
exemption identification |
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| 1 | | number issued by the Department.
| 2 | | The purchase, employment and transfer of such tangible | 3 | | personal
property as newsprint and ink for the primary purpose | 4 | | of conveying news
(with or without other information) is not a | 5 | | purchase, use or sale of
service or of tangible personal | 6 | | property within the meaning of this Act.
| 7 | | "Serviceman" means any person who is engaged in the | 8 | | occupation of
making sales of service.
| 9 | | "Sale at retail" means "sale at retail" as defined in the | 10 | | Retailers'
Occupation Tax Act.
| 11 | | "Supplier" means any person who makes sales of tangible | 12 | | personal
property to servicemen for the purpose of resale as an | 13 | | incident to a
sale of service.
| 14 | | "Serviceman maintaining a place of business in this State", | 15 | | or 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. beginning July 1, 2011, having a contract with a | 26 | | person located in this State under which the person, for a |
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| 1 | | commission or other consideration based on the sale of | 2 | | service by the serviceman, directly or indirectly refers | 3 | | potential customers to the serviceman by a link on the | 4 | | person's Internet website. The provisions of this | 5 | | paragraph 1.1 shall apply only if the cumulative gross | 6 | | receipts from sales of service by the serviceman to | 7 | | customers who are referred to the serviceman by all persons | 8 | | in this State under such contracts exceed $10,000 during | 9 | | the preceding 4 quarterly periods ending on the last day of | 10 | | March, June, September, and December; | 11 | | 1.2. beginning July 1, 2011, having a contract with a | 12 | | person located in this State under which: | 13 | | A. the serviceman sells the same or substantially | 14 | | similar line of services as the person located in this | 15 | | State and does so using an identical or substantially | 16 | | similar name, trade name, or trademark as the person | 17 | | located in this State; and | 18 | | B. the serviceman provides a commission or other | 19 | | consideration to the person located in this State based | 20 | | upon the sale of services by the serviceman. | 21 | | The provisions of this paragraph 1.2 shall apply only if | 22 | | the cumulative gross receipts from sales of service by the | 23 | | serviceman to customers in this State under all such | 24 | | contracts exceed $10,000 during the preceding 4 quarterly | 25 | | periods ending on the last day of March, June, September, | 26 | | and December;
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| 1 | | 2. soliciting orders for tangible personal property by | 2 | | means of a
telecommunication or television shopping system | 3 | | (which utilizes toll free
numbers) which is intended by the | 4 | | retailer to be broadcast by cable
television or other means | 5 | | of broadcasting, to consumers located in this State;
| 6 | | 3. pursuant to a contract with a broadcaster or | 7 | | publisher located in this
State, soliciting orders for | 8 | | tangible personal property by means of advertising
which is | 9 | | disseminated primarily to consumers located in this State | 10 | | and only
secondarily to bordering jurisdictions;
| 11 | | 4. soliciting orders for tangible personal property by | 12 | | mail if the
solicitations are substantial and recurring and | 13 | | if the retailer benefits
from any banking, financing, debt | 14 | | collection, telecommunication, or
marketing activities | 15 | | occurring in this State or benefits from the location
in | 16 | | this State of authorized installation, servicing, or | 17 | | repair facilities;
| 18 | | 5. being owned or controlled by the same interests | 19 | | which own or
control any retailer engaging in business in | 20 | | the same or similar line of
business in this State;
| 21 | | 6. having a franchisee or licensee operating under its | 22 | | trade name if
the franchisee or licensee is required to | 23 | | collect the tax under this Section;
| 24 | | 7. pursuant to a contract with a cable television | 25 | | operator located in
this State, soliciting orders for | 26 | | tangible personal property by means of
advertising which is |
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| 1 | | transmitted or distributed over a cable television
system | 2 | | in this State; or
| 3 | | 8. engaging in activities in Illinois, which | 4 | | activities in the
state in which the supply business | 5 | | engaging in such activities is located
would constitute | 6 | | maintaining a place of business in that state.
| 7 | | (Source: P.A. 92-484, eff. 8-23-01; 93-23, eff. 6-20-03; 93-24, | 8 | | eff. 6-20-03; 93-1033, eff. 9-3-04.)
| 9 | | Section 97. Severability. The provisions of this Act are | 10 | | severable under Section 1.31 of the Statute on Statutes.
| 11 | | Section 99. Effective date. This Act takes effect upon | 12 | | becoming law.
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