Illinois General Assembly - Full Text of SB2668
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Full Text of SB2668  100th General Assembly



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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 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
23    "Sale at retail" shall be construed to include any transfer



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



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



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



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



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1from the purchaser, the tax imposed under the Cigarette Use Tax
2Act, and on account of the seller's duty to collect, from the
3purchaser, any cigarette tax imposed by a home rule unit.
4    Notwithstanding any law to the contrary, for any motor
5vehicle, as defined in Section 1-146 of the Vehicle Code, that
6is sold on or after January 1, 2015 for the purpose of leasing
7the vehicle for a defined period that is longer than one year
8and (1) is a motor vehicle of the second division that: (A) is
9a self-contained motor vehicle designed or permanently
10converted to provide living quarters for recreational,
11camping, or travel use, with direct walk through access to the
12living quarters from the driver's seat; (B) is of the van
13configuration designed for the transportation of not less than
147 nor more than 16 passengers; or (C) has a gross vehicle
15weight rating of 8,000 pounds or less or (2) is a motor vehicle
16of the first division, "selling price" or "amount of sale"
17means the consideration received by the lessor pursuant to the
18lease contract, including amounts due at lease signing and all
19monthly or other regular payments charged over the term of the
20lease. Also included in the selling price is any amount
21received by the lessor from the lessee for the leased vehicle
22that is not calculated at the time the lease is executed,
23including, but not limited to, excess mileage charges and
24charges for excess wear and tear. For sales that occur in
25Illinois, with respect to any amount received by the lessor
26from the lessee for the leased vehicle that is not calculated



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



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1after January 1, 2015 for the purpose of leasing for a defined
2period of longer than one year shall not be reduced by the
3value of or credit given for traded-in tangible personal
4property owned by the lessor, nor shall it be reduced by the
5value of or credit given for traded-in tangible personal
6property owned by the lessee, regardless of whether the
7trade-in value thereof is assigned by the lessee to the lessor.
8In the case of a motor vehicle that is sold for the purpose of
9leasing for a defined period of longer than one year, the sale
10occurs at the time of the delivery of the vehicle, regardless
11of the due date of any lease payments. A lessor who incurs a
12Retailers' Occupation Tax liability on the sale of a motor
13vehicle coming off lease may not take a credit against that
14liability for the Use Tax the lessor paid upon the purchase of
15the motor vehicle (or for any tax the lessor paid with respect
16to any amount received by the lessor from the lessee for the
17leased vehicle that was not calculated at the time the lease
18was executed) if the selling price of the motor vehicle at the
19time of purchase was calculated using the definition of
20"selling price" as defined in this paragraph. Notwithstanding
21any other provision of this Act to the contrary, lessors shall
22file all returns and make all payments required under this
23paragraph to the Department by electronic means in the manner
24and form as required by the Department. This paragraph does not
25apply to leases of motor vehicles for which, at the time the
26lease is entered into, the term of the lease is not a defined



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



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



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1such property, for the purposes of this Act, is the cost to the
2transferor of such tangible personal property. Construction
3contracts for the improvement of real estate consisting of
4engineering, installation, and maintenance of voice, data,
5video, security, and all telecommunication systems do not
6constitute engaging in a business of selling tangible personal
7property at retail within the meaning of this Act if they are
8sold at one specified contract price.
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 person engaged in the business of
12selling tangible personal property at retail hereunder with
13respect to such sales (and not primarily in a service
14occupation) notwithstanding the fact that such person designs
15and produces such tangible personal property on special order
16for the purchaser and in such a way as to render the property
17of value only to such purchaser, if such tangible personal
18property so produced on special order serves substantially the
19same function as stock or standard items of tangible personal
20property that are sold at retail.
21    Persons who engage in the business of transferring tangible
22personal property upon the redemption of trading stamps are
23engaged in the business of selling such property at retail and
24shall be liable for and shall pay the tax imposed by this Act
25on the basis of the retail value of the property transferred
26upon redemption of such stamps.



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1    "Bulk vending machine" means a vending machine, containing
2unsorted confections, nuts, toys, or other items designed
3primarily to be used or played with by children which, when a
4coin or coins of a denomination not larger than $0.50 are
5inserted, are dispensed in equal portions, at random and
6without selection by the customer.
7(Source: P.A. 98-628, eff. 1-1-15; 98-1080, eff. 8-26-14.)