HB0714enr 93RD GENERAL ASSEMBLY

HB0714 Enrolled LRB093 05817 DRH 05910 b

AN ACT in relation to vehicles.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

4		(35 ILCS 5/215 rep.)
5		Section 5. The Illinois Income Tax Act is amended by
6		repealing Section 215.

7		Section 10. The Use Tax Act is amended by changing Sections
8		3-5 and 3-61 as follows:
9		(35 ILCS 105/3-5) (from Ch. 120, par. 439.3-5)
10		Sec. 3-5. Exemptions. Use of the following tangible
11		personal property is exempt from the tax imposed by this Act:
12		(1) Personal property purchased from a corporation,
13		society, association, foundation, institution, or
14		organization, other than a limited liability company, that is
15		organized and operated as a not-for-profit service enterprise
16		for the benefit of persons 65 years of age or older if the
17		personal property was not purchased by the enterprise for the
18		purpose of resale by the enterprise.
19		(2) Personal property purchased by a not-for-profit
20		Illinois county fair association for use in conducting,
21		operating, or promoting the county fair.
22		(3) Personal property purchased by a not-for-profit arts or
23		cultural organization that establishes, by proof required by
24		the Department by rule, that it has received an exemption under
25		Section 501(c)(3) of the Internal Revenue Code and that is
26		organized and operated primarily for the presentation or
27		support of arts or cultural programming, activities, or
28		services. These organizations include, but are not limited to,
29		music and dramatic arts organizations such as symphony
30		orchestras and theatrical groups, arts and cultural service
31		organizations, local arts councils, visual arts organizations,

1		and media arts organizations. On and after the effective date
2		of this amendatory Act of the 92nd General Assembly, however,
3		an entity otherwise eligible for this exemption shall not make
4		tax-free purchases unless it has an active identification
5		number issued by the Department.
6		(4) Personal property purchased by a governmental body, by
7		a corporation, society, association, foundation, or
8		institution organized and operated exclusively for charitable,
9		religious, or educational purposes, or by a not-for-profit
10		corporation, society, association, foundation, institution, or
11		organization that has no compensated officers or employees and
12		that is organized and operated primarily for the recreation of
13		persons 55 years of age or older. A limited liability company
14		may qualify for the exemption under this paragraph only if the
15		limited liability company is organized and operated
16		exclusively for educational purposes. On and after July 1,
17		1987, however, no entity otherwise eligible for this exemption
18		shall make tax-free purchases unless it has an active exemption
19		identification number issued by the Department.
20		(5) Until July 1, 2003, a passenger car that is a
21		replacement vehicle to the extent that the purchase price of
22		the car is subject to the Replacement Vehicle Tax.
23		(6) Until July 1, 2003, graphic arts machinery and
24		equipment, including repair and replacement parts, both new and
25		used, and including that manufactured on special order,
26		certified by the purchaser to be used primarily for graphic
27		arts production, and including machinery and equipment
28		purchased for lease. Equipment includes chemicals or chemicals
29		acting as catalysts but only if the chemicals or chemicals
30		acting as catalysts effect a direct and immediate change upon a
31		graphic arts product.
32		(7) Farm chemicals.
33		(8) Legal tender, currency, medallions, or gold or silver
34		coinage issued by the State of Illinois, the government of the
35		United States of America, or the government of any foreign
36		country, and bullion.

1		(9) Personal property purchased from a teacher-sponsored
2		student organization affiliated with an elementary or
3		secondary school located in Illinois.
4		(10) A motor vehicle of the first division, a motor vehicle
5		of the second division that is a self-contained motor vehicle
6		designed or permanently converted to provide living quarters
7		for recreational, camping, or travel use, with direct walk
8		through to the living quarters from the driver's seat, or a
9		motor vehicle of the second division that is of the van
10		configuration designed for the transportation of not less than
11		7 nor more than 16 passengers, as defined in Section 1-146 of
12		the Illinois Vehicle Code, that is used for automobile renting,
13		as defined in the Automobile Renting Occupation and Use Tax
14		Act.
15		(11) Farm machinery and equipment, both new and used,
16		including that manufactured on special order, certified by the
17		purchaser to be used primarily for production agriculture or
18		State or federal agricultural programs, including individual
19		replacement parts for the machinery and equipment, including
20		machinery and equipment purchased for lease, and including
21		implements of husbandry defined in Section 1-130 of the
22		Illinois Vehicle Code, farm machinery and agricultural
23		chemical and fertilizer spreaders, and nurse wagons required to
24		be registered under Section 3-809 of the Illinois Vehicle Code,
25		but excluding other motor vehicles required to be registered
26		under the Illinois Vehicle Code. Horticultural polyhouses or
27		hoop houses used for propagating, growing, or overwintering
28		plants shall be considered farm machinery and equipment under
29		this item (11). Agricultural chemical tender tanks and dry
30		boxes shall include units sold separately from a motor vehicle
31		required to be licensed and units sold mounted on a motor
32		vehicle required to be licensed if the selling price of the
33		tender is separately stated.
34		Farm machinery and equipment shall include precision
35		farming equipment that is installed or purchased to be
36		installed on farm machinery and equipment including, but not

1		limited to, tractors, harvesters, sprayers, planters, seeders,
2		or spreaders. Precision farming equipment includes, but is not
3		limited to, soil testing sensors, computers, monitors,
4		software, global positioning and mapping systems, and other
5		such equipment.
6		Farm machinery and equipment also includes computers,
7		sensors, software, and related equipment used primarily in the
8		computer-assisted operation of production agriculture
9		facilities, equipment, and activities such as, but not limited
10		to, the collection, monitoring, and correlation of animal and
11		crop data for the purpose of formulating animal diets and
12		agricultural chemicals. This item (11) is exempt from the
13		provisions of Section 3-90.
14		(12) Fuel and petroleum products sold to or used by an air
15		common carrier, certified by the carrier to be used for
16		consumption, shipment, or storage in the conduct of its
17		business as an air common carrier, for a flight destined for or
18		returning from a location or locations outside the United
19		States without regard to previous or subsequent domestic
20		stopovers.
21		(13) Proceeds of mandatory service charges separately
22		stated on customers' bills for the purchase and consumption of
23		food and beverages purchased at retail from a retailer, to the
24		extent that the proceeds of the service charge are in fact
25		turned over as tips or as a substitute for tips to the
26		employees who participate directly in preparing, serving,
27		hosting or cleaning up the food or beverage function with
28		respect to which the service charge is imposed.
29		(14) Until July 1, 2003, oil field exploration, drilling,
30		and production equipment, including (i) rigs and parts of rigs,
31		rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
32		tubular goods, including casing and drill strings, (iii) pumps
33		and pump-jack units, (iv) storage tanks and flow lines, (v) any
34		individual replacement part for oil field exploration,
35		drilling, and production equipment, and (vi) machinery and
36		equipment purchased for lease; but excluding motor vehicles

1		required to be registered under the Illinois Vehicle Code.
2		(15) Photoprocessing machinery and equipment, including
3		repair and replacement parts, both new and used, including that
4		manufactured on special order, certified by the purchaser to be
5		used primarily for photoprocessing, and including
6		photoprocessing machinery and equipment purchased for lease.
7		(16) Until July 1, 2003, coal exploration, mining,
8		offhighway hauling, processing, maintenance, and reclamation
9		equipment, including replacement parts and equipment, and
10		including equipment purchased for lease, but excluding motor
11		vehicles required to be registered under the Illinois Vehicle
12		Code.
13		(17) Until July 1, 2003, distillation machinery and
14		equipment, sold as a unit or kit, assembled or installed by the
15		retailer, certified by the user to be used only for the
16		production of ethyl alcohol that will be used for consumption
17		as motor fuel or as a component of motor fuel for the personal
18		use of the user, and not subject to sale or resale.
19		(18) Manufacturing and assembling machinery and equipment
20		used primarily in the process of manufacturing or assembling
21		tangible personal property for wholesale or retail sale or
22		lease, whether that sale or lease is made directly by the
23		manufacturer or by some other person, whether the materials
24		used in the process are owned by the manufacturer or some other
25		person, or whether that sale or lease is made apart from or as
26		an incident to the seller's engaging in the service occupation
27		of producing machines, tools, dies, jigs, patterns, gauges, or
28		other similar items of no commercial value on special order for
29		a particular purchaser.
30		(19) Personal property delivered to a purchaser or
31		purchaser's donee inside Illinois when the purchase order for
32		that personal property was received by a florist located
33		outside Illinois who has a florist located inside Illinois
34		deliver the personal property.
35		(20) Semen used for artificial insemination of livestock
36		for direct agricultural production.

1		(21) Horses, or interests in horses, registered with and
2		meeting the requirements of any of the Arabian Horse Club
3		Registry of America, Appaloosa Horse Club, American Quarter
4		Horse Association, United States Trotting Association, or
5		Jockey Club, as appropriate, used for purposes of breeding or
6		racing for prizes.
7		(22) Computers and communications equipment utilized for
8		any hospital purpose and equipment used in the diagnosis,
9		analysis, or treatment of hospital patients purchased by a
10		lessor who leases the equipment, under a lease of one year or
11		longer executed or in effect at the time the lessor would
12		otherwise be subject to the tax imposed by this Act, to a
13		hospital that has been issued an active tax exemption
14		identification number by the Department under Section 1g of the
15		Retailers' Occupation Tax Act. If the equipment is leased in a
16		manner that does not qualify for this exemption or is used in
17		any other non-exempt manner, the lessor shall be liable for the
18		tax imposed under this Act or the Service Use Tax Act, as the
19		case may be, based on the fair market value of the property at
20		the time the non-qualifying use occurs. No lessor shall collect
21		or attempt to collect an amount (however designated) that
22		purports to reimburse that lessor for the tax imposed by this
23		Act or the Service Use Tax Act, as the case may be, if the tax
24		has not been paid by the lessor. If a lessor improperly
25		collects any such amount from the lessee, the lessee shall have
26		a legal right to claim a refund of that amount from the lessor.
27		If, however, that amount is not refunded to the lessee for any
28		reason, the lessor is liable to pay that amount to the
29		Department.
30		(23) Personal property purchased by a lessor who leases the
31		property, under a lease of one year or longer executed or in
32		effect at the time the lessor would otherwise be subject to the
33		tax imposed by this Act, to a governmental body that has been
34		issued an active sales tax exemption identification number by
35		the Department under Section 1g of the Retailers' Occupation
36		Tax Act. If the property is leased in a manner that does not

1		qualify for this exemption or used in any other non-exempt
2		manner, the lessor shall be liable for the tax imposed under
3		this Act or the Service Use Tax Act, as the case may be, based
4		on the fair market value of the property at the time the
5		non-qualifying use occurs. No lessor shall collect or attempt
6		to collect an amount (however designated) that purports to
7		reimburse that lessor for the tax imposed by this Act or the
8		Service Use Tax Act, as the case may be, if the tax has not been
9		paid by the lessor. If a lessor improperly collects any such
10		amount from the lessee, the lessee shall have a legal right to
11		claim a refund of that amount from the lessor. If, however,
12		that amount is not refunded to the lessee for any reason, the
13		lessor is liable to pay that amount to the Department.
14		(24) Beginning with taxable years ending on or after
15		December 31, 1995 and ending with taxable years ending on or
16		before December 31, 2004, personal property that is donated for
17		disaster relief to be used in a State or federally declared
18		disaster area in Illinois or bordering Illinois by a
19		manufacturer or retailer that is registered in this State to a
20		corporation, society, association, foundation, or institution
21		that has been issued a sales tax exemption identification
22		number by the Department that assists victims of the disaster
23		who reside within the declared disaster area.
24		(25) Beginning with taxable years ending on or after
25		December 31, 1995 and ending with taxable years ending on or
26		before December 31, 2004, personal property that is used in the
27		performance of infrastructure repairs in this State, including
28		but not limited to municipal roads and streets, access roads,
29		bridges, sidewalks, waste disposal systems, water and sewer
30		line extensions, water distribution and purification
31		facilities, storm water drainage and retention facilities, and
32		sewage treatment facilities, resulting from a State or
33		federally declared disaster in Illinois or bordering Illinois
34		when such repairs are initiated on facilities located in the
35		declared disaster area within 6 months after the disaster.
36		(26) Beginning July 1, 1999, game or game birds purchased

1		at a "game breeding and hunting preserve area" or an "exotic
2		game hunting area" as those terms are used in the Wildlife Code
3		or at a hunting enclosure approved through rules adopted by the
4		Department of Natural Resources. This paragraph is exempt from
5		the provisions of Section 3-90.
6		(27) A motor vehicle, as that term is defined in Section
7		1-146 of the Illinois Vehicle Code, that is donated to a
8		corporation, limited liability company, society, association,
9		foundation, or institution that is determined by the Department
10		to be organized and operated exclusively for educational
11		purposes. For purposes of this exemption, "a corporation,
12		limited liability company, society, association, foundation,
13		or institution organized and operated exclusively for
14		educational purposes" means all tax-supported public schools,
15		private schools that offer systematic instruction in useful
16		branches of learning by methods common to public schools and
17		that compare favorably in their scope and intensity with the
18		course of study presented in tax-supported schools, and
19		vocational or technical schools or institutes organized and
20		operated exclusively to provide a course of study of not less
21		than 6 weeks duration and designed to prepare individuals to
22		follow a trade or to pursue a manual, technical, mechanical,
23		industrial, business, or commercial occupation.
24		(28) Beginning January 1, 2000, personal property,
25		including food, purchased through fundraising events for the
26		benefit of a public or private elementary or secondary school,
27		a group of those schools, or one or more school districts if
28		the events are sponsored by an entity recognized by the school
29		district that consists primarily of volunteers and includes
30		parents and teachers of the school children. This paragraph
31		does not apply to fundraising events (i) for the benefit of
32		private home instruction or (ii) for which the fundraising
33		entity purchases the personal property sold at the events from
34		another individual or entity that sold the property for the
35		purpose of resale by the fundraising entity and that profits
36		from the sale to the fundraising entity. This paragraph is

1		exempt from the provisions of Section 3-90.
2		(29) Beginning January 1, 2000 and through December 31,
3		2001, new or used automatic vending machines that prepare and
4		serve hot food and beverages, including coffee, soup, and other
5		items, and replacement parts for these machines. Beginning
6		January 1, 2002 and through June 30, 2003, machines and parts
7		for machines used in commercial, coin-operated amusement and
8		vending business if a use or occupation tax is paid on the
9		gross receipts derived from the use of the commercial,
10		coin-operated amusement and vending machines. This paragraph
11		is exempt from the provisions of Section 3-90.
12		(30) Food for human consumption that is to be consumed off
13		the premises where it is sold (other than alcoholic beverages,
14		soft drinks, and food that has been prepared for immediate
15		consumption) and prescription and nonprescription medicines,
16		drugs, medical appliances, and insulin, urine testing
17		materials, syringes, and needles used by diabetics, for human
18		use, when purchased for use by a person receiving medical
19		assistance under Article 5 of the Illinois Public Aid Code who
20		resides in a licensed long-term care facility, as defined in
21		the Nursing Home Care Act.
22		(31) Beginning on the effective date of this amendatory Act
23		of the 92nd General Assembly, computers and communications
24		equipment utilized for any hospital purpose and equipment used
25		in the diagnosis, analysis, or treatment of hospital patients
26		purchased by a lessor who leases the equipment, under a lease
27		of one year or longer executed or in effect at the time the
28		lessor would otherwise be subject to the tax imposed by this
29		Act, to a hospital that has been issued an active tax exemption
30		identification number by the Department under Section 1g of the
31		Retailers' Occupation Tax Act. If the equipment is leased in a
32		manner that does not qualify for this exemption or is used in
33		any other nonexempt manner, the lessor shall be liable for the
34		tax imposed under this Act or the Service Use Tax Act, as the
35		case may be, based on the fair market value of the property at
36		the time the nonqualifying use occurs. No lessor shall collect

1		or attempt to collect an amount (however designated) that
2		purports to reimburse that lessor for the tax imposed by this
3		Act or the Service Use Tax Act, as the case may be, if the tax
4		has not been paid by the lessor. If a lessor improperly
5		collects any such amount from the lessee, the lessee shall have
6		a legal right to claim a refund of that amount from the lessor.
7		If, however, that amount is not refunded to the lessee for any
8		reason, the lessor is liable to pay that amount to the
9		Department. This paragraph is exempt from the provisions of
10		Section 3-90.
11		(32) Beginning on the effective date of this amendatory Act
12		of the 92nd General Assembly, personal property purchased by a
13		lessor who leases the property, under a lease of one year or
14		longer executed or in effect at the time the lessor would
15		otherwise be subject to the tax imposed by this Act, to a
16		governmental body that has been issued an active sales tax
17		exemption identification number by the Department under
18		Section 1g of the Retailers' Occupation Tax Act. If the
19		property is leased in a manner that does not qualify for this
20		exemption or used in any other nonexempt manner, the lessor
21		shall be liable for the tax imposed under this Act or the
22		Service Use Tax Act, as the case may be, based on the fair
23		market value of the property at the time the nonqualifying use
24		occurs. No lessor shall collect or attempt to collect an amount
25		(however designated) that purports to reimburse that lessor for
26		the tax imposed by this Act or the Service Use Tax Act, as the
27		case may be, if the tax has not been paid by the lessor. If a
28		lessor improperly collects any such amount from the lessee, the
29		lessee shall have a legal right to claim a refund of that
30		amount from the lessor. If, however, that amount is not
31		refunded to the lessee for any reason, the lessor is liable to
32		pay that amount to the Department. This paragraph is exempt
33		from the provisions of Section 3-90.
34		(33) On and after July 1, 2003 and through June 30, 2004,
35		the use in this State of motor vehicles of the second division
36		with a gross vehicle weight in excess of 8,000 pounds and that

1		are subject to the commercial distribution fee imposed under
2		Section 3-815.1 of the Illinois Vehicle Code. Beginning on July
3		1, 2004 and through June 30, 2005, the use in this State of
4		motor vehicles of the second division: (i) with a gross vehicle
5		weight rating in excess of 8,000 pounds; (ii) that are subject
6		to the commercial distribution fee imposed under Section
7		3-815.1 of the Illinois Vehicle Code; and (iii) that are
8		primarily used for commercial purposes. Through June 30, 2005,
9		this This exemption applies to repair and replacement parts
10		added after the initial purchase of such a motor vehicle if
11		that motor vehicle is used in a manner that would qualify for
12		the rolling stock exemption otherwise provided for in this Act.
13		For purposes of this paragraph, the term "used for commercial
14		purposes" means the transportation of persons or property in
15		furtherance of any commercial or industrial enterprise,
16		whether for-hire or not.
17		(Source: P.A. 92-35, eff. 7-1-01; 92-227, eff. 8-2-01; 92-337,
18		eff. 8-10-01; 92-484, eff. 8-23-01; 92-651, eff. 7-11-02;
19		93-23, eff. 6-20-03; 93-24, eff. 6-20-03; revised 9-11-03.)
20		(35 ILCS 105/3-61)
21		Sec. 3-61. Motor vehicles; trailers; use as rolling stock
22		definition.
23		(a) Through June 30, 2003, "use as rolling stock moving in
24		interstate commerce" in subsections (b) and (c) of Section 3-55
25		means for motor vehicles, as defined in Section 1-146 of the
26		Illinois Vehicle Code, and trailers, as defined in Section
27		1-209 of the Illinois Vehicle Code, when on 15 or more
28		occasions in a 12-month period the motor vehicle and trailer
29		has carried persons or property for hire in interstate
30		commerce, even just between points in Illinois, if the motor
31		vehicle and trailer transports persons whose journeys or
32		property whose shipments originate or terminate outside
33		Illinois. This definition applies to all property purchased for
34		the purpose of being attached to those motor vehicles or
35		trailers as a part thereof.

1		(b) On and after July 1, 2003 and through June 30, 2004,
2		"use as rolling stock moving in interstate commerce" in
3		paragraphs (b) and (c) of Section 3-55 occurs for motor
4		vehicles, as defined in Section 1-146 of the Illinois Vehicle
5		Code, when during a 12-month period the rolling stock has
6		carried persons or property for hire in interstate commerce for
7		51% of its total trips and transports persons whose journeys or
8		property whose shipments originate or terminate outside
9		Illinois. Trips that are only between points in Illinois shall
10		not be counted as interstate trips when calculating whether the
11		tangible personal property qualifies for the exemption but such
12		trips shall be included in total trips taken.
13		(c) Beginning July 1, 2004, "use as rolling stock moving in
14		interstate commerce" in paragraphs (b) and (c) of Section 3-55
15		occurs for motor vehicles, as defined in Section 1-146 of the
16		Illinois Vehicle Code, when during a 12-month period the
17		rolling stock has carried persons or property for hire in
18		interstate commerce for greater than 50% of its total trips for
19		that period or for greater than 50% of its total miles for that
20		period. The person claiming the exemption shall make an
21		election at the time of purchase to use either the trips or
22		mileage method. Persons who purchased motor vehicles prior to
23		July 1, 2004 shall make an election to use either the trips or
24		mileage method and document that election in their books and
25		records. If no election is made under this subsection to use
26		the trips or mileage method, the person shall be deemed to have
27		chosen the mileage method. Any election to use either the trips
28		or mileage method will remain in effect for that motor vehicle
29		for any period for which the Department may issue a notice of
30		tax liability under this Act.
31		For purposes of determining qualifying trips or miles,
32		motor vehicles that carry persons or property for hire, even
33		just between points in Illinois, will be considered used for
34		hire in interstate commerce if the motor vehicle transports
35		persons whose journeys or property whose shipments originate or
36		terminate outside Illinois. The exemption for motor vehicles

1		used as rolling stock moving in interstate commerce may be
2		claimed only for motor vehicles whose gross vehicle weight
3		rating exceeds 16,000 pounds. This definition applies to all
4		property purchased for the purpose of being attached to those
5		motor vehicles as a part thereof.
6		(d) Beginning July 1, 2004, "use as rolling stock moving in
7		interstate commerce" in paragraphs (b) and (c) of Section 3-55
8		occurs for trailers, as defined in Section 1-209 of the
9		Illinois Vehicle Code, semitrailers as defined in Section 1-187
10		of the Illinois Vehicle Code, and pole trailers as defined in
11		Section 1-161 of the Illinois Vehicle Code, when during a
12		12-month period the rolling stock has carried persons or
13		property for hire in interstate commerce for greater than 50%
14		of its total trips for that period or for greater than 50% of
15		its total miles for that period. The person claiming the
16		exemption for a trailer or trailers that will not be dedicated
17		to a motor vehicle or group of motor vehicles shall make an
18		election at the time of purchase to use either the trips or
19		mileage method. Persons who purchased trailers prior to July 1,
20		2004 that are not dedicated to a motor vehicle or group of
21		motor vehicles shall make an election to use either the trips
22		or mileage method and document that election in their books and
23		records. If no election is made under this subsection to use
24		the trips or mileage method, the person shall be deemed to have
25		chosen the mileage method. Any election to use either the trips
26		or mileage method will remain in effect for that trailer for
27		any period for which the Department may issue a notice of tax
28		liability under this Act.
29		For purposes of determining qualifying trips or miles,
30		trailers, semitrailers, or pole trailers that carry property
31		for hire, even just between points in Illinois, will be
32		considered used for hire in interstate commerce if the
33		trailers, semitrailers, or pole trailers transport property
34		whose shipments originate or terminate outside Illinois. This
35		definition applies to all property purchased for the purpose of
36		being attached to those trailers, semitrailers, or pole

1		trailers as a part thereof. In lieu of a person providing
2		documentation regarding the qualifying use of each individual
3		trailer, semitrailer, or pole trailer, that person may document
4		such qualifying use by providing documentation of the
5		following:
6		(1) If a trailer, semitrailer, or pole trailer is
7		dedicated to a motor vehicle that qualifies as rolling
8		stock moving in interstate commerce under subsection (c) of
9		this Section, then that trailer, semitrailer, or pole
10		trailer qualifies as rolling stock moving in interstate
11		commerce under this subsection.
12		(2) If a trailer, semitrailer, or pole trailer is
13		dedicated to a group of motor vehicles that all qualify as
14		rolling stock moving in interstate commerce under
15		subsection (c) of this Section, then that trailer,
16		semitrailer, or pole trailer qualifies as rolling stock
17		moving in interstate commerce under this subsection.
18		(3) If one or more trailers, semitrailers, or pole
19		trailers are dedicated to a group of motor vehicles and not
20		all of those motor vehicles in that group qualify as
21		rolling stock moving in interstate commerce under
22		subsection (c) of this Section, then the percentage of
23		those trailers, semitrailers, or pole trailers that
24		qualifies as rolling stock moving in interstate commerce
25		under this subsection is equal to the percentage of those
26		motor vehicles in that group that qualify as rolling stock
27		moving in interstate commerce under subsection (c) of this
28		Section to which those trailers, semitrailers, or pole
29		trailers are dedicated. However, to determine the
30		qualification for the exemption provided under this item
31		(3), the mathematical application of the qualifying
32		percentage to one or more trailers, semitrailers, or pole
33		trailers under this subpart shall not be allowed as to any
34		fraction of a trailer, semitrailer, or pole trailer.
35		(Source: P.A. 93-23, eff. 6-20-03.)

1		Section 15. The Service Use Tax Act is amended by changing
2		Sections 2 and 3-51 as follows:
3		(35 ILCS 110/2) (from Ch. 120, par. 439.32)
4		Sec. 2. "Use" means the exercise by any person of any right
5		or power over tangible personal property incident to the
6		ownership of that property, but does not include the sale or
7		use for demonstration by him of that property in any form as
8		tangible personal property in the regular course of business.
9		"Use" does not mean the interim use of tangible personal
10		property nor the physical incorporation of tangible personal
11		property, as an ingredient or constituent, into other tangible
12		personal property, (a) which is sold in the regular course of
13		business or (b) which the person incorporating such ingredient
14		or constituent therein has undertaken at the time of such
15		purchase to cause to be transported in interstate commerce to
16		destinations outside the State of Illinois.
17		"Purchased from a serviceman" means the acquisition of the
18		ownership of, or title to, tangible personal property through a
19		sale of service.
20		"Purchaser" means any person who, through a sale of
21		service, acquires the ownership of, or title to, any tangible
22		personal property.
23		"Cost price" means the consideration paid by the serviceman
24		for a purchase valued in money, whether paid in money or
25		otherwise, including cash, credits and services, and shall be
26		determined without any deduction on account of the supplier's
27		cost of the property sold or on account of any other expense
28		incurred by the supplier. When a serviceman contracts out part
29		or all of the services required in his sale of service, it
30		shall be presumed that the cost price to the serviceman of the
31		property transferred to him or her by his or her subcontractor
32		is equal to 50% of the subcontractor's charges to the
33		serviceman in the absence of proof of the consideration paid by
34		the subcontractor for the purchase of such property.
35		"Selling price" means the consideration for a sale valued

1		in money whether received in money or otherwise, including
2		cash, credits and service, and shall be determined without any
3		deduction on account of the serviceman's cost of the property
4		sold, the cost of materials used, labor or service cost or any
5		other expense whatsoever, but does not include interest or
6		finance charges which appear as separate items on the bill of
7		sale or sales contract nor charges that are added to prices by
8		sellers on account of the seller's duty to collect, from the
9		purchaser, the tax that is imposed by this Act.
10		"Department" means the Department of Revenue.
11		"Person" means any natural individual, firm, partnership,
12		association, joint stock company, joint venture, public or
13		private corporation, limited liability company, and any
14		receiver, executor, trustee, guardian or other representative
15		appointed by order of any court.
16		"Sale of service" means any transaction except:
17		(1) a retail sale of tangible personal property taxable
18		under the Retailers' Occupation Tax Act or under the Use
19		Tax Act.
20		(2) a sale of tangible personal property for the
21		purpose of resale made in compliance with Section 2c of the
22		Retailers' Occupation Tax Act.
23		(3) except as hereinafter provided, a sale or transfer
24		of tangible personal property as an incident to the
25		rendering of service for or by any governmental body, or
26		for or by any corporation, society, association,
27		foundation or institution organized and operated
28		exclusively for charitable, religious or educational
29		purposes or any not-for-profit corporation, society,
30		association, foundation, institution or organization which
31		has no compensated officers or employees and which is
32		organized and operated primarily for the recreation of
33		persons 55 years of age or older. A limited liability
34		company may qualify for the exemption under this paragraph
35		only if the limited liability company is organized and
36		operated exclusively for educational purposes.

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
27		motor vehicle is subject to the commercial distribution fee
28		imposed under Section 3-815.1 of the Illinois Vehicle Code.
29		Beginning on July 1, 2004 and through June 30, 2005, the
30		use in this State of motor vehicles of the second division:
31		(i) with a gross vehicle weight rating in excess of 8,000
32		pounds; (ii) that are subject to the commercial
33		distribution fee imposed under Section 3-815.1 of the
34		Illinois Vehicle Code; and (iii) that are primarily used
35		for commercial purposes. Through June 30, 2005, this This
36		exemption applies to repair and replacement parts added

1		after the initial purchase of such a motor vehicle if that
2		motor vehicle is used in a manner that would qualify for
3		the rolling stock exemption otherwise provided for in this
4		Act. For purposes of this paragraph, "used for commercial
5		purposes" means the transportation of persons or property
6		in furtherance of any commercial or industrial enterprise
7		whether for-hire or not.
8		(5) a sale or transfer of machinery and equipment used
9		primarily in the process of the manufacturing or
10		assembling, either in an existing, an expanded or a new
11		manufacturing facility, of tangible personal property for
12		wholesale or retail sale or lease, whether such sale or
13		lease is made directly by the manufacturer or by some other
14		person, whether the materials used in the process are owned
15		by the manufacturer or some other person, or whether such
16		sale or lease is made apart from or as an incident to the
17		seller's engaging in a service occupation and the
18		applicable tax is a Service Use Tax or Service Occupation
19		Tax, rather than Use Tax or Retailers' Occupation Tax.
20		(5a) the repairing, reconditioning or remodeling, for
21		a common carrier by rail, of tangible personal property
22		which belongs to such carrier for hire, and as to which
23		such carrier receives the physical possession of the
24		repaired, reconditioned or remodeled item of tangible
25		personal property in Illinois, and which such carrier
26		transports, or shares with another common carrier in the
27		transportation of such property, out of Illinois on a
28		standard uniform bill of lading showing the person who
29		repaired, reconditioned or remodeled the property to a
30		destination outside Illinois, for use outside Illinois.
31		(5b) a sale or transfer of tangible personal property
32		which is produced by the seller thereof on special order in
33		such a way as to have made the applicable tax the Service
34		Occupation Tax or the Service Use Tax, rather than the
35		Retailers' Occupation Tax or the Use Tax, for an interstate
36		carrier by rail which receives the physical possession of

1		such property in Illinois, and which transports such
2		property, or shares with another common carrier in the
3		transportation of such property, out of Illinois on a
4		standard uniform bill of lading showing the seller of the
5		property as the shipper or consignor of such property to a
6		destination outside Illinois, for use outside Illinois.
7		(6) until July 1, 2003, a sale or transfer of
8		distillation machinery and equipment, sold as a unit or kit
9		and assembled or installed by the retailer, which machinery
10		and equipment is certified by the user to be used only for
11		the production of ethyl alcohol that will be used for
12		consumption as motor fuel or as a component of motor fuel
13		for the personal use of such user and not subject to sale
14		or resale.
15		(7) at the election of any serviceman not required to
16		be otherwise registered as a retailer under Section 2a of
17		the Retailers' Occupation Tax Act, made for each fiscal
18		year sales of service in which the aggregate annual cost
19		price of tangible personal property transferred as an
20		incident to the sales of service is less than 35%, or 75%
21		in the case of servicemen transferring prescription drugs
22		or servicemen engaged in graphic arts production, of the
23		aggregate annual total gross receipts from all sales of
24		service. The purchase of such tangible personal property by
25		the serviceman shall be subject to tax under the Retailers'
26		Occupation Tax Act and the Use Tax Act. However, if a
27		primary serviceman who has made the election described in
28		this paragraph subcontracts service work to a secondary
29		serviceman who has also made the election described in this
30		paragraph, the primary serviceman does not incur a Use Tax
31		liability if the secondary serviceman (i) has paid or will
32		pay Use Tax on his or her cost price of any tangible
33		personal property transferred to the primary serviceman
34		and (ii) certifies that fact in writing to the primary
35		serviceman.
36		Tangible personal property transferred incident to the

1		completion of a maintenance agreement is exempt from the tax
2		imposed pursuant to this Act.
3		Exemption (5) also includes machinery and equipment used in
4		the general maintenance or repair of such exempt machinery and
5		equipment or for in-house manufacture of exempt machinery and
6		equipment. For the purposes of exemption (5), each of these
7		terms shall have the following meanings: (1) "manufacturing
8		process" shall mean the production of any article of tangible
9		personal property, whether such article is a finished product
10		or an article for use in the process of manufacturing or
11		assembling a different article of tangible personal property,
12		by procedures commonly regarded as manufacturing, processing,
13		fabricating, or refining which changes some existing material
14		or materials into a material with a different form, use or
15		name. In relation to a recognized integrated business composed
16		of a series of operations which collectively constitute
17		manufacturing, or individually constitute manufacturing
18		operations, the manufacturing process shall be deemed to
19		commence with the first operation or stage of production in the
20		series, and shall not be deemed to end until the completion of
21		the final product in the last operation or stage of production
22		in the series; and further, for purposes of exemption (5),
23		photoprocessing is deemed to be a manufacturing process of
24		tangible personal property for wholesale or retail sale; (2)
25		"assembling process" shall mean the production of any article
26		of tangible personal property, whether such article is a
27		finished product or an article for use in the process of
28		manufacturing or assembling a different article of tangible
29		personal property, by the combination of existing materials in
30		a manner commonly regarded as assembling which results in a
31		material of a different form, use or name; (3) "machinery"
32		shall mean major mechanical machines or major components of
33		such machines contributing to a manufacturing or assembling
34		process; and (4) "equipment" shall include any independent
35		device or tool separate from any machinery but essential to an
36		integrated manufacturing or assembly process; including

1		computers used primarily in a manufacturer's computer assisted
2		design, computer assisted manufacturing (CAD/CAM) system; or
3		any subunit or assembly comprising a component of any machinery
4		or auxiliary, adjunct or attachment parts of machinery, such as
5		tools, dies, jigs, fixtures, patterns and molds; or any parts
6		which require periodic replacement in the course of normal
7		operation; but shall not include hand tools. Equipment includes
8		chemicals or chemicals acting as catalysts but only if the
9		chemicals or chemicals acting as catalysts effect a direct and
10		immediate change upon a product being manufactured or assembled
11		for wholesale or retail sale or lease. The purchaser of such
12		machinery and equipment who has an active resale registration
13		number shall furnish such number to the seller at the time of
14		purchase. The user of such machinery and equipment and tools
15		without an active resale registration number shall prepare a
16		certificate of exemption for each transaction stating facts
17		establishing the exemption for that transaction, which
18		certificate shall be available to the Department for inspection
19		or audit. The Department shall prescribe the form of the
20		certificate.
21		Any informal rulings, opinions or letters issued by the
22		Department in response to an inquiry or request for any opinion
23		from any person regarding the coverage and applicability of
24		exemption (5) to specific devices shall be published,
25		maintained as a public record, and made available for public
26		inspection and copying. If the informal ruling, opinion or
27		letter contains trade secrets or other confidential
28		information, where possible the Department shall delete such
29		information prior to publication. Whenever such informal
30		rulings, opinions, or letters contain any policy of general
31		applicability, the Department shall formulate and adopt such
32		policy as a rule in accordance with the provisions of the
33		Illinois Administrative Procedure Act.
34		On and after July 1, 1987, no entity otherwise eligible
35		under exemption (3) of this Section shall make tax free
36		purchases unless it has an active exemption identification

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		2. soliciting orders for tangible personal property by
26		means of a telecommunication or television shopping system
27		(which utilizes toll free numbers) which is intended by the
28		retailer to be broadcast by cable television or other means
29		of broadcasting, to consumers located in this State;
30		3. pursuant to a contract with a broadcaster or
31		publisher located in this State, soliciting orders for
32		tangible personal property by means of advertising which is
33		disseminated primarily to consumers located in this State
34		and only secondarily to bordering jurisdictions;
35		4. soliciting orders for tangible personal property by
36		mail if the solicitations are substantial and recurring and

1		if the retailer benefits from any banking, financing, debt
2		collection, telecommunication, or marketing activities
3		occurring in this State or benefits from the location in
4		this State of authorized installation, servicing, or
5		repair facilities;
6		5. being owned or controlled by the same interests
7		which own or control any retailer engaging in business in
8		the same or similar line of business in this State;
9		6. having a franchisee or licensee operating under its
10		trade name if the franchisee or licensee is required to
11		collect the tax under this Section;
12		7. pursuant to a contract with a cable television
13		operator located in this State, soliciting orders for
14		tangible personal property by means of advertising which is
15		transmitted or distributed over a cable television system
16		in this State; or
17		8. engaging in activities in Illinois, which
18		activities in the state in which the supply business
19		engaging in such activities is located would constitute
20		maintaining a place of business in that state.
21		(Source: P.A. 92-484, eff. 8-23-01; 93-23, eff. 6-20-03; 93-24,
22		eff. 6-20-03; revised 8-21-03.)
23		(35 ILCS 110/3-51)
24		Sec. 3-51. Motor vehicles; trailers; use as rolling stock
25		definition.
26		(a) Through June 30, 2003, "use as rolling stock moving in
27		interstate commerce" in subsection (b) of Section 3-45 means
28		for motor vehicles, as defined in Section 1-46 of the Illinois
29		Vehicle Code, and trailers, as defined in Section 1-209 of the
30		Illinois Vehicle Code, when on 15 or more occasions in a
31		12-month period the motor vehicle and trailer has carried
32		persons or property for hire in interstate commerce, even just
33		between points in Illinois, if the motor vehicle and trailer
34		transports persons whose journeys or property whose shipments
35		originate or terminate outside Illinois. This definition

1		applies to all property purchased for the purpose of being
2		attached to those motor vehicles or trailers as a part thereof.
3		(b) On and after July 1, 2003 and through June 30, 2004,
4		"use as rolling stock moving in interstate commerce" in
5		paragraphs (4) and (4a) of the definition of "sale of service"
6		in Section 2 and subsection (b) of Section 3-45 occurs for
7		motor vehicles, as defined in Section 1-146 of the Illinois
8		Vehicle Code, when during a 12-month period the rolling stock
9		has carried persons or property for hire in interstate commerce
10		for 51% of its total trips and transports persons whose
11		journeys or property whose shipments originate or terminate
12		outside Illinois. Trips that are only between points in
13		Illinois shall not be counted as interstate trips when
14		calculating whether the tangible personal property qualifies
15		for the exemption but such trips shall be included in total
16		trips taken.
17		(c) Beginning July 1, 2004, "use as rolling stock moving in
18		interstate commerce" in paragraphs (4) and (4a) of the
19		definition of "sale of service" in Section 2 and subsection (b)
20		of Section 3-45 occurs for motor vehicles, as defined in
21		Section 1-146 of the Illinois Vehicle Code, when during a
22		12-month period the rolling stock has carried persons or
23		property for hire in interstate commerce for greater than 50%
24		of its total trips for that period or for greater than 50% of
25		its total miles for that period. The person claiming the
26		exemption shall make an election at the time of purchase to use
27		either the trips or mileage method. Persons who purchased motor
28		vehicles prior to July 1, 2004 shall make an election to use
29		either the trips or mileage method and document that election
30		in their books and records. If no election is made under this
31		subsection to use the trips or mileage method, the person shall
32		be deemed to have chosen the mileage method. Any election to
33		use either the trips or mileage method will remain in effect
34		for that motor vehicle for any period for which the Department
35		may issue a notice of tax liability under this Act.
36		For purposes of determining qualifying trips or miles,

1		motor vehicles that carry persons or property for hire, even
2		just between points in Illinois, will be considered used for
3		hire in interstate commerce if the motor vehicle transports
4		persons whose journeys or property whose shipments originate or
5		terminate outside Illinois. The exemption for motor vehicles
6		used as rolling stock moving in interstate commerce may be
7		claimed only for motor vehicles whose gross vehicle weight
8		rating exceeds 16,000 pounds. This definition applies to all
9		property purchased for the purpose of being attached to those
10		motor vehicles as a part thereof.
11		(d) Beginning July 1, 2004, "use as rolling stock moving in
12		interstate commerce" in paragraphs (4) and (4a) of the
13		definition of "sale of service" in Section 2 and subsection (b)
14		of Section 3-45 occurs for trailers, as defined in Section
15		1-209 of the Illinois Vehicle Code, semitrailers as defined in
16		Section 1-187 of the Illinois Vehicle Code, and pole trailers
17		as defined in Section 1-161 of the Illinois Vehicle Code, when
18		during a 12-month period the rolling stock has carried persons
19		or property for hire in interstate commerce for greater than
20		50% of its total trips for that period or for greater than 50%
21		of its total miles for that period. The person claiming the
22		exemption for a trailer or trailers that will not be dedicated
23		to a motor vehicle or group of motor vehicles shall make an
24		election at the time of purchase to use either the trips or
25		mileage method. Persons who purchased trailers prior to July 1,
26		2004 that are not dedicated to a motor vehicle or group of
27		motor vehicles shall make an election to use either the trips
28		or mileage method and document that election in their books and
29		records. If no election is made under this subsection to use
30		the trips or mileage method, the person shall be deemed to have
31		chosen the mileage method. Any election to use either the trips
32		or mileage method will remain in effect for that trailer for
33		any period for which the Department may issue a notice of tax
34		liability under this Act.
35		For purposes of determining qualifying trips or miles,
36		trailers, semitrailers, or pole trailers that carry property

1		for hire, even just between points in Illinois, will be
2		considered used for hire in interstate commerce if the
3		trailers, semitrailers, or pole trailers transport property
4		whose shipments originate or terminate outside Illinois. This
5		definition applies to all property purchased for the purpose of
6		being attached to those trailers, semitrailers, or pole
7		trailers as a part thereof. In lieu of a person providing
8		documentation regarding the qualifying use of each individual
9		trailer, semitrailer, or pole trailer, that person may document
10		such qualifying use by providing documentation of the
11		following:
12		(1) If a trailer, semitrailer, or pole trailer is
13		dedicated to a motor vehicle that qualifies as rolling
14		stock moving in interstate commerce under subsection (c) of
15		this Section, then that trailer, semitrailer, or pole
16		trailer qualifies as rolling stock moving in interstate
17		commerce under this subsection.
18		(2) If a trailer, semitrailer, or pole trailer is
19		dedicated to a group of motor vehicles that all qualify as
20		rolling stock moving in interstate commerce under
21		subsection (c) of this Section, then that trailer,
22		semitrailer, or pole trailer qualifies as rolling stock
23		moving in interstate commerce under this subsection.
24		(3) If one or more trailers, semitrailers, or pole
25		trailers are dedicated to a group of motor vehicles and not
26		all of those motor vehicles in that group qualify as
27		rolling stock moving in interstate commerce under
28		subsection (c) of this Section, then the percentage of
29		those trailers, semitrailers, or pole trailers that
30		qualifies as rolling stock moving in interstate commerce
31		under this subsection is equal to the percentage of those
32		motor vehicles in that group that qualify as rolling stock
33		moving in interstate commerce under subsection (c) of this
34		Section to which those trailers, semitrailers, or pole
35		trailers are dedicated. However, to determine the
36		qualification for the exemption provided under this item

1		(3), the mathematical application of the qualifying
2		percentage to one or more trailers, semitrailers, or pole
3		trailers under this subpart shall not be allowed as to any
4		fraction of a trailer, semitrailer, or pole trailer.
5		(Source: P.A. 93-23, eff. 6-20-03.)

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

1		(b) A sale of tangible personal property for the purpose of
2		resale made in compliance with Section 2c of the Retailers'
3		Occupation Tax Act.
4		(c) Except as hereinafter provided, a sale or transfer of
5		tangible personal property as an incident to the rendering of
6		service for or by any governmental body or for or by any
7		corporation, society, association, foundation or institution
8		organized and operated exclusively for charitable, religious
9		or educational purposes or any not-for-profit corporation,
10		society, association, foundation, institution or organization
11		which has no compensated officers or employees and which is
12		organized and operated primarily for the recreation of persons
13		55 years of age or older. A limited liability company may
14		qualify for the exemption under this paragraph only if the
15		limited liability company is organized and operated
16		exclusively for educational purposes.
17		(d) A sale or transfer of tangible personal property as an
18		incident to the rendering of service for interstate carriers
19		for hire for use as rolling stock moving in interstate commerce
20		or lessors under leases of one year or longer, executed or in
21		effect at the time of purchase, to interstate carriers for hire
22		for use as rolling stock moving in interstate commerce, and
23		equipment operated by a telecommunications provider, licensed
24		as a common carrier by the Federal Communications Commission,
25		which is permanently installed in or affixed to aircraft moving
26		in interstate commerce.
27		(d-1) A sale or transfer of tangible personal property as
28		an incident to the rendering of service for owners, lessors or
29		shippers of tangible personal property which is utilized by
30		interstate carriers for hire for use as rolling stock moving in
31		interstate commerce, and equipment operated by a
32		telecommunications provider, licensed as a common carrier by
33		the Federal Communications Commission, which is permanently
34		installed in or affixed to aircraft moving in interstate
35		commerce.
36		(d-1.1) On and after July 1, 2003 and through June 30,

1		2004, a sale or transfer of a motor vehicle of the second
2		division with a gross vehicle weight in excess of 8,000 pounds
3		as an incident to the rendering of service if that motor
4		vehicle is subject to the commercial distribution fee imposed
5		under Section 3-815.1 of the Illinois Vehicle Code. Beginning
6		on July 1, 2004 and through June 30, 2005, the use in this
7		State of motor vehicles of the second division: (i) with a
8		gross vehicle weight rating in excess of 8,000 pounds; (ii)
9		that are subject to the commercial distribution fee imposed
10		under Section 3-815.1 of the Illinois Vehicle Code; and (iii)
11		that are primarily used for commercial purposes. Through June
12		30, 2005, this This exemption applies to repair and replacement
13		parts added after the initial purchase of such a motor vehicle
14		if that motor vehicle is used in a manner that would qualify
15		for 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 in
18		furtherance of any commercial or industrial enterprise whether
19		for-hire or not.
20		(d-2) The repairing, reconditioning or remodeling, for a
21		common carrier by rail, of tangible personal property which
22		belongs to such carrier for hire, and as to which such carrier
23		receives the physical possession of the repaired,
24		reconditioned or remodeled item of tangible personal property
25		in Illinois, and which such carrier transports, or shares with
26		another common carrier in the transportation of such property,
27		out of Illinois on a standard uniform bill of lading showing
28		the person who repaired, reconditioned or remodeled the
29		property as the shipper or consignor of such property to a
30		destination outside Illinois, for use outside Illinois.
31		(d-3) A sale or transfer of tangible personal property
32		which is produced by the seller thereof on special order in
33		such a way as to have made the applicable tax the Service
34		Occupation Tax or the Service Use Tax, rather than the
35		Retailers' Occupation Tax or the Use Tax, for an interstate
36		carrier by rail which receives the physical possession of such

1		property in Illinois, and which transports such property, or
2		shares with another common carrier in the transportation of
3		such property, out of Illinois on a standard uniform bill of
4		lading showing the seller of the property as the shipper or
5		consignor of such property to a destination outside Illinois,
6		for use outside Illinois.
7		(d-4) Until January 1, 1997, a sale, by a registered
8		serviceman paying tax under this Act to the Department, of
9		special order printed materials delivered outside Illinois and
10		which are not returned to this State, if delivery is made by
11		the seller or agent of the seller, including an agent who
12		causes the product to be delivered outside Illinois by a common
13		carrier or the U.S. postal service.
14		(e) A sale or transfer of machinery and equipment used
15		primarily in the process of the manufacturing or assembling,
16		either in an existing, an expanded or a new manufacturing
17		facility, of tangible personal property for wholesale or retail
18		sale or lease, whether such sale or lease is made directly by
19		the manufacturer or by some other person, whether the materials
20		used in the process are owned by the manufacturer or some other
21		person, or whether such sale or lease is made apart from or as
22		an incident to the seller's engaging in a service occupation
23		and the applicable tax is a Service Occupation Tax or Service
24		Use Tax, rather than Retailers' Occupation Tax or Use Tax.
25		(f) Until July 1, 2003, the sale or transfer of
26		distillation machinery and equipment, sold as a unit or kit and
27		assembled or installed by the retailer, which machinery and
28		equipment is certified by the user to be used only for the
29		production of ethyl alcohol that will be used for consumption
30		as motor fuel or as a component of motor fuel for the personal
31		use of such user and not subject to sale or resale.
32		(g) At the election of any serviceman not required to be
33		otherwise registered as a retailer under Section 2a of the
34		Retailers' Occupation Tax Act, made for each fiscal year sales
35		of service in which the aggregate annual cost price of tangible
36		personal property transferred as an incident to the sales of

1		service is less than 35% (75% in the case of servicemen
2		transferring prescription drugs or servicemen engaged in
3		graphic arts production) of the aggregate annual total gross
4		receipts from all sales of service. The purchase of such
5		tangible personal property by the serviceman shall be subject
6		to tax under the Retailers' Occupation Tax Act and the Use Tax
7		Act. However, if a primary serviceman who has made the election
8		described in this paragraph subcontracts service work to a
9		secondary serviceman who has also made the election described
10		in this paragraph, the primary serviceman does not incur a Use
11		Tax liability if the secondary serviceman (i) has paid or will
12		pay Use Tax on his or her cost price of any tangible personal
13		property transferred to the primary serviceman and (ii)
14		certifies that fact in writing to the primary serviceman.
15		Tangible personal property transferred incident to the
16		completion of a maintenance agreement is exempt from the tax
17		imposed pursuant to this Act.
18		Exemption (e) also includes machinery and equipment used in
19		the general maintenance or repair of such exempt machinery and
20		equipment or for in-house manufacture of exempt machinery and
21		equipment. For the purposes of exemption (e), each of these
22		terms shall have the following meanings: (1) "manufacturing
23		process" shall mean the production of any article of tangible
24		personal property, whether such article is a finished product
25		or an article for use in the process of manufacturing or
26		assembling a different article of tangible personal property,
27		by procedures commonly regarded as manufacturing, processing,
28		fabricating, or refining which changes some existing material
29		or materials into a material with a different form, use or
30		name. In relation to a recognized integrated business composed
31		of a series of operations which collectively constitute
32		manufacturing, or individually constitute manufacturing
33		operations, the manufacturing process shall be deemed to
34		commence with the first operation or stage of production in the
35		series, and shall not be deemed to end until the completion of
36		the final product in the last operation or stage of production

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

1		carrier for hire, even just between points in Illinois, if such
2		rolling stock transports, for hire, persons whose journeys or
3		property whose shipments originate or terminate outside
4		Illinois.
5		Any informal rulings, opinions or letters issued by the
6		Department in response to an inquiry or request for any opinion
7		from any person regarding the coverage and applicability of
8		exemption (e) to specific devices shall be published,
9		maintained as a public record, and made available for public
10		inspection and copying. If the informal ruling, opinion or
11		letter contains trade secrets or other confidential
12		information, where possible the Department shall delete such
13		information prior to publication. Whenever such informal
14		rulings, opinions, or letters contain any policy of general
15		applicability, the Department shall formulate and adopt such
16		policy as a rule in accordance with the provisions of the
17		Illinois Administrative Procedure Act.
18		On and after July 1, 1987, no entity otherwise eligible
19		under exemption (c) of this Section shall make tax free
20		purchases unless it has an active exemption identification
21		number issued by the Department.
22		"Serviceman" means any person who is engaged in the
23		occupation of making sales of service.
24		"Sale at Retail" means "sale at retail" as defined in the
25		Retailers' Occupation Tax Act.
26		"Supplier" means any person who makes sales of tangible
27		personal property to servicemen for the purpose of resale as an
28		incident to a sale of service.
29		(Source: P.A. 92-484, eff. 8-23-01; 93-23, eff. 6-20-03; 93-24,
30		eff. 6-20-03; revised 8-21-03.)
31		(35 ILCS 115/2d)
32		Sec. 2d. Motor vehicles; trailers; use as rolling stock
33		definition.
34		(a) Through June 30, 2003, "use as rolling stock moving in
35		interstate commerce" in subsections (d) and (d-1) of the

1		definition of "sale of service" in Section 2 means for motor
2		vehicles, as defined in Section 1-146 of the Illinois Vehicle
3		Code, and trailers, as defined in Section 1-209 of the Illinois
4		Vehicle Code, when on 15 or more occasions in a 12-month period
5		the motor vehicle and trailer has carried persons or property
6		for hire in interstate commerce, even just between points in
7		Illinois, if the motor vehicle and trailer transports persons
8		whose journeys or property whose shipments originate or
9		terminate outside Illinois. This definition applies to all
10		property purchased for the purpose of being attached to those
11		motor vehicles or trailers as a part thereof.
12		(b) On and after July 1, 2003 and through June 30, 2004,
13		"use as rolling stock moving in interstate commerce" in
14		paragraphs (d) and (d-1) of the definition of "sale of service"
15		in Section 2 occurs for motor vehicles, as defined in Section
16		1-146 of the Illinois Vehicle Code, when during a 12-month
17		period the rolling stock has carried persons or property for
18		hire in interstate commerce for 51% of its total trips and
19		transports persons whose journeys or property whose shipments
20		originate or terminate outside Illinois. Trips that are only
21		between points in Illinois will not be counted as interstate
22		trips when calculating whether the tangible personal property
23		qualifies for the exemption but such trips will be included in
24		total trips taken.
25		(c) Beginning July 1, 2004, "use as rolling stock moving in
26		interstate commerce" in paragraphs (d) and (d-1) of the
27		definition of "sale of service" in Section 2 occurs for motor
28		vehicles, as defined in Section 1-146 of the Illinois Vehicle
29		Code, when during a 12-month period the rolling stock has
30		carried persons or property for hire in interstate commerce for
31		greater than 50% of its total trips for that period or for
32		greater than 50% of its total miles for that period. The person
33		claiming the exemption shall make an election at the time of
34		purchase to use either the trips or mileage method. Persons who
35		purchased motor vehicles prior to July 1, 2004 shall make an
36		election to use either the trips or mileage method and document

1		that election in their books and records. If no election is
2		made under this subsection to use the trips or mileage method,
3		the person shall be deemed to have chosen the mileage method.
4		Any election to use either the trips or mileage method will
5		remain in effect for that motor vehicle for any period for
6		which the Department may issue a notice of tax liability under
7		this Act.
8		For purposes of determining qualifying trips or miles,
9		motor vehicles that carry persons or property for hire, even
10		just between points in Illinois, will be considered used for
11		hire in interstate commerce if the motor vehicle transports
12		persons whose journeys or property whose shipments originate or
13		terminate outside Illinois. The exemption for motor vehicles
14		used as rolling stock moving in interstate commerce may be
15		claimed only for motor vehicles whose gross vehicle weight
16		rating exceeds 16,000 pounds. This definition applies to all
17		property purchased for the purpose of being attached to those
18		motor vehicles as a part thereof.
19		(d) Beginning July 1, 2004, "use as rolling stock moving in
20		interstate commerce" in paragraphs (d) and (d-1) of the
21		definition of "sale of service" in Section 2 occurs for
22		trailers, as defined in Section 1-209 of the Illinois Vehicle
23		Code, semitrailers as defined in Section 1-187 of the Illinois
24		Vehicle Code, and pole trailers as defined in Section 1-161 of
25		the Illinois Vehicle Code, when during a 12-month period the
26		rolling stock has carried persons or property for hire in
27		interstate commerce for greater than 50% of its total trips for
28		that period or for greater than 50% of its total miles for that
29		period. The person claiming the exemption for a trailer or
30		trailers that will not be dedicated to a motor vehicle or group
31		of motor vehicles shall make an election at the time of
32		purchase to use either the trips or mileage method. Persons who
33		purchased trailers prior to July 1, 2004 that are not dedicated
34		to a motor vehicle or group of motor vehicles shall make an
35		election to use either the trips or mileage method and document
36		that election in their books and records. If no election is

1		made under this subsection to use the trips or mileage method,
2		the person shall be deemed to have chosen the mileage method.
3		Any election to use either the trips or mileage method will
4		remain in effect for that trailer for any period for which the
5		Department may issue a notice of tax liability under this Act.
6		For purposes of determining qualifying trips or miles,
7		trailers, semitrailers, or pole trailers that carry property
8		for hire, even just between points in Illinois, will be
9		considered used for hire in interstate commerce if the
10		trailers, semitrailers, or pole trailers transport property
11		whose shipments originate or terminate outside Illinois. This
12		definition applies to all property purchased for the purpose of
13		being attached to those trailers, semitrailers, or pole
14		trailers as a part thereof. In lieu of a person providing
15		documentation regarding the qualifying use of each individual
16		trailer, semitrailer, or pole trailer, that person may document
17		such qualifying use by providing documentation of the
18		following:
19		(1) If a trailer, semitrailer, or pole trailer is
20		dedicated to a motor vehicle that qualifies as rolling
21		stock moving in interstate commerce under subsection (c) of
22		this Section, then that trailer, semitrailer, or pole
23		trailer qualifies as rolling stock moving in interstate
24		commerce under this subsection.
25		(2) If a trailer, semitrailer, or pole trailer is
26		dedicated to a group of motor vehicles that all qualify as
27		rolling stock moving in interstate commerce under
28		subsection (c) of this Section, then that trailer,
29		semitrailer, or pole trailer qualifies as rolling stock
30		moving in interstate commerce under this subsection.
31		(3) If one or more trailers, semitrailers, or pole
32		trailers are dedicated to a group of motor vehicles and not
33		all of those motor vehicles in that group qualify as
34		rolling stock moving in interstate commerce under
35		subsection (c) of this Section, then the percentage of
36		those trailers, semitrailers, or pole trailers that

1		qualifies as rolling stock moving in interstate commerce
2		under this subsection is equal to the percentage of those
3		motor vehicles in that group that qualify as rolling stock
4		moving in interstate commerce under subsection (c) of this
5		Section to which those trailers, semitrailers, or pole
6		trailers are dedicated. However, to determine the
7		qualification for the exemption provided under this item
8		(3), the mathematical application of the qualifying
9		percentage to one or more trailers, semitrailers, or pole
10		trailers under this subpart shall not be allowed as to any
11		fraction of a trailer, semitrailer, or pole trailer.
12		(Source: P.A. 93-23, eff. 6-20-03.)

13		Section 25. The Retailers' Occupation Tax Act is amended by
14		changing Sections 2-5 and 2-51 as follows:
15		(35 ILCS 120/2-5) (from Ch. 120, par. 441-5)
16		Sec. 2-5. Exemptions. Gross receipts from proceeds from the
17		sale of the following tangible personal property are exempt
18		from the tax imposed by this Act:
19		(1) Farm chemicals.
20		(2) Farm machinery and equipment, both new and used,
21		including that manufactured on special order, certified by the
22		purchaser to be used primarily for production agriculture or
23		State or federal agricultural programs, including individual
24		replacement parts for the machinery and equipment, including
25		machinery and equipment purchased for lease, and including
26		implements of husbandry defined in Section 1-130 of the
27		Illinois Vehicle Code, farm machinery and agricultural
28		chemical and fertilizer spreaders, and nurse wagons required to
29		be registered under Section 3-809 of the Illinois Vehicle Code,
30		but excluding other motor vehicles required to be registered
31		under the Illinois Vehicle Code. Horticultural polyhouses or
32		hoop houses used for propagating, growing, or overwintering
33		plants shall be considered farm machinery and equipment under
34		this item (2). Agricultural chemical tender tanks and dry boxes

1		shall include units sold separately from a motor vehicle
2		required to be licensed and units sold mounted on a motor
3		vehicle required to be licensed, if the selling price of the
4		tender is separately stated.
5		Farm machinery and equipment shall include precision
6		farming equipment that is installed or purchased to be
7		installed on farm machinery and equipment including, but not
8		limited to, tractors, harvesters, sprayers, planters, seeders,
9		or spreaders. Precision farming equipment includes, but is not
10		limited to, soil testing sensors, computers, monitors,
11		software, global positioning and mapping systems, and other
12		such equipment.
13		Farm machinery and equipment also includes computers,
14		sensors, software, and related equipment used primarily in the
15		computer-assisted operation of production agriculture
16		facilities, equipment, and activities such as, but not limited
17		to, the collection, monitoring, and correlation of animal and
18		crop data for the purpose of formulating animal diets and
19		agricultural chemicals. This item (7) is exempt from the
20		provisions of Section 2-70.
21		(3) Until July 1, 2003, distillation machinery and
22		equipment, sold as a unit or kit, assembled or installed by the
23		retailer, certified by the user to be used only for the
24		production of ethyl alcohol that will be used for consumption
25		as motor fuel or as a component of motor fuel for the personal
26		use of the user, and not subject to sale or resale.
27		(4) Until July 1, 2003, graphic arts machinery and
28		equipment, including repair and replacement parts, both new and
29		used, and including that manufactured on special order or
30		purchased for lease, certified by the purchaser to be used
31		primarily for graphic arts production. Equipment includes
32		chemicals or chemicals acting as catalysts but only if the
33		chemicals or chemicals acting as catalysts effect a direct and
34		immediate change upon a graphic arts product.
35		(5) A motor vehicle of the first division, a motor vehicle
36		of the second division that is a self-contained motor vehicle

1		designed or permanently converted to provide living quarters
2		for recreational, camping, or travel use, with direct walk
3		through access to the living quarters from the driver's seat,
4		or a motor vehicle of the second division that is of the van
5		configuration designed for the transportation of not less than
6		7 nor more than 16 passengers, as defined in Section 1-146 of
7		the Illinois Vehicle Code, that is used for automobile renting,
8		as defined in the Automobile Renting Occupation and Use Tax
9		Act.
10		(6) Personal property sold by a teacher-sponsored student
11		organization affiliated with an elementary or secondary school
12		located in Illinois.
13		(7) Until July 1, 2003, proceeds of that portion of the
14		selling price of a passenger car the sale of which is subject
15		to the Replacement Vehicle Tax.
16		(8) Personal property sold to an Illinois county fair
17		association for use in conducting, operating, or promoting the
18		county fair.
19		(9) Personal property sold to a not-for-profit arts or
20		cultural organization that establishes, by proof required by
21		the Department by rule, that it has received an exemption under
22		Section 501(c)(3) of the Internal Revenue Code and that is
23		organized and operated primarily for the presentation or
24		support of arts or cultural programming, activities, or
25		services. These organizations include, but are not limited to,
26		music and dramatic arts organizations such as symphony
27		orchestras and theatrical groups, arts and cultural service
28		organizations, local arts councils, visual arts organizations,
29		and media arts organizations. On and after the effective date
30		of this amendatory Act of the 92nd General Assembly, however,
31		an entity otherwise eligible for this exemption shall not make
32		tax-free purchases unless it has an active identification
33		number issued by the Department.
34		(10) Personal property sold by a corporation, society,
35		association, foundation, institution, or organization, other
36		than a limited liability company, that is organized and

1		operated as a not-for-profit service enterprise for the benefit
2		of persons 65 years of age or older if the personal property
3		was not purchased by the enterprise for the purpose of resale
4		by the enterprise.
5		(11) Personal property sold to a governmental body, to a
6		corporation, society, association, foundation, or institution
7		organized and operated exclusively for charitable, religious,
8		or educational purposes, or to a not-for-profit corporation,
9		society, association, foundation, institution, or organization
10		that has no compensated officers or employees and that is
11		organized and operated primarily for the recreation of persons
12		55 years of age or older. A limited liability company may
13		qualify for the exemption under this paragraph only if the
14		limited liability company is organized and operated
15		exclusively for educational purposes. On and after July 1,
16		1987, however, no entity otherwise eligible for this exemption
17		shall make tax-free purchases unless it has an active
18		identification number issued by the Department.
19		(12) Tangible personal property sold to interstate
20		carriers for hire for use as rolling stock moving in interstate
21		commerce or to lessors under leases of one year or longer
22		executed or in effect at the time of purchase by interstate
23		carriers for hire for use as rolling stock moving in interstate
24		commerce and equipment operated by a telecommunications
25		provider, licensed as a common carrier by the Federal
26		Communications Commission, which is permanently installed in
27		or affixed to aircraft moving in interstate commerce.
28		(12-5) On and after July 1, 2003 and through June 30, 2004,
29		motor vehicles of the second division with a gross vehicle
30		weight in excess of 8,000 pounds that are subject to the
31		commercial distribution fee imposed under Section 3-815.1 of
32		the Illinois Vehicle Code. Beginning on July 1, 2004 and
33		through June 30, 2005, the use in this State of motor vehicles
34		of the second division: (i) with a gross vehicle weight rating
35		in excess of 8,000 pounds; (ii) that are subject to the
36		commercial distribution fee imposed under Section 3-815.1 of

1		the Illinois Vehicle Code; and (iii) that are primarily used
2		for commercial purposes. Through June 30, 2005, this This
3		exemption applies to repair and replacement parts added after
4		the initial purchase of such a motor vehicle if that motor
5		vehicle is used in a manner that would qualify for the rolling
6		stock exemption otherwise provided for in this Act. For
7		purposes of this paragraph, "used for commercial purposes"
8		means the transportation of persons or property in furtherance
9		of any commercial or industrial enterprise whether for-hire or
10		not.
11		(13) Proceeds from sales to owners, lessors, or shippers of
12		tangible personal property that is utilized by interstate
13		carriers for hire for use as rolling stock moving in interstate
14		commerce and equipment operated by a telecommunications
15		provider, licensed as a common carrier by the Federal
16		Communications Commission, which is permanently installed in
17		or affixed to aircraft moving in interstate commerce.
18		(14) Machinery and equipment that will be used by the
19		purchaser, or a lessee of the purchaser, primarily in the
20		process of manufacturing or assembling tangible personal
21		property for wholesale or retail sale or lease, whether the
22		sale or lease is made directly by the manufacturer or by some
23		other person, whether the materials used in the process are
24		owned by the manufacturer or some other person, or whether the
25		sale or lease is made apart from or as an incident to the
26		seller's engaging in the service occupation of producing
27		machines, tools, dies, jigs, patterns, gauges, or other similar
28		items of no commercial value on special order for a particular
29		purchaser.
30		(15) Proceeds of mandatory service charges separately
31		stated on customers' bills for purchase and consumption of food
32		and beverages, to the extent that the proceeds of the service
33		charge are in fact turned over as tips or as a substitute for
34		tips to the employees who participate directly in preparing,
35		serving, hosting or cleaning up the food or beverage function
36		with respect to which the service charge is imposed.

1		(16) Petroleum products sold to a purchaser if the seller
2		is prohibited by federal law from charging tax to the
3		purchaser.
4		(17) Tangible personal property sold to a common carrier by
5		rail or motor that receives the physical possession of the
6		property in Illinois and that transports the property, or
7		shares with another common carrier in the transportation of the
8		property, out of Illinois on a standard uniform bill of lading
9		showing the seller of the property as the shipper or consignor
10		of the property to a destination outside Illinois, for use
11		outside Illinois.
12		(18) Legal tender, currency, medallions, or gold or silver
13		coinage issued by the State of Illinois, the government of the
14		United States of America, or the government of any foreign
15		country, and bullion.
16		(19) Until July 1 2003, oil field exploration, drilling,
17		and production equipment, including (i) rigs and parts of rigs,
18		rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
19		tubular goods, including casing and drill strings, (iii) pumps
20		and pump-jack units, (iv) storage tanks and flow lines, (v) any
21		individual replacement part for oil field exploration,
22		drilling, and production equipment, and (vi) machinery and
23		equipment purchased for lease; but excluding motor vehicles
24		required to be registered under the Illinois Vehicle Code.
25		(20) Photoprocessing machinery and equipment, including
26		repair and replacement parts, both new and used, including that
27		manufactured on special order, certified by the purchaser to be
28		used primarily for photoprocessing, and including
29		photoprocessing machinery and equipment purchased for lease.
30		(21) Until July 1, 2003, coal exploration, mining,
31		offhighway hauling, processing, maintenance, and reclamation
32		equipment, including replacement parts and equipment, and
33		including equipment purchased for lease, but excluding motor
34		vehicles required to be registered under the Illinois Vehicle
35		Code.
36		(22) Fuel and petroleum products sold to or used by an air

1		carrier, certified by the carrier to be used for consumption,
2		shipment, or storage in the conduct of its business as an air
3		common carrier, for a flight destined for or returning from a
4		location or locations outside the United States without regard
5		to previous or subsequent domestic stopovers.
6		(23) A transaction in which the purchase order is received
7		by a florist who is located outside Illinois, but who has a
8		florist located in Illinois deliver the property to the
9		purchaser or the purchaser's donee in Illinois.
10		(24) Fuel consumed or used in the operation of ships,
11		barges, or vessels that are used primarily in or for the
12		transportation of property or the conveyance of persons for
13		hire on rivers bordering on this State if the fuel is delivered
14		by the seller to the purchaser's barge, ship, or vessel while
15		it is afloat upon that bordering river.
16		(25) A motor vehicle sold in this State to a nonresident
17		even though the motor vehicle is delivered to the nonresident
18		in this State, if the motor vehicle is not to be titled in this
19		State, and if a drive-away permit is issued to the motor
20		vehicle as provided in Section 3-603 of the Illinois Vehicle
21		Code or if the nonresident purchaser has vehicle registration
22		plates to transfer to the motor vehicle upon returning to his
23		or her home state. The issuance of the drive-away permit or
24		having the out-of-state registration plates to be transferred
25		is prima facie evidence that the motor vehicle will not be
26		titled in this State.
27		(26) Semen used for artificial insemination of livestock
28		for direct agricultural production.
29		(27) Horses, or interests in horses, registered with and
30		meeting the requirements of any of the Arabian Horse Club
31		Registry of America, Appaloosa Horse Club, American Quarter
32		Horse Association, United States Trotting Association, or
33		Jockey Club, as appropriate, used for purposes of breeding or
34		racing for prizes.
35		(28) Computers and communications equipment utilized for
36		any hospital purpose and equipment used in the diagnosis,

1		analysis, or treatment of hospital patients sold to a lessor
2		who leases the equipment, under a lease of one year or longer
3		executed or in effect at the time of the purchase, to a
4		hospital that has been issued an active tax exemption
5		identification number by the Department under Section 1g of
6		this Act.
7		(29) Personal property sold to a lessor who leases the
8		property, under a lease of one year or longer executed or in
9		effect at the time of the purchase, to a governmental body that
10		has been issued an active tax exemption identification number
11		by the Department under Section 1g of this Act.
12		(30) Beginning with taxable years ending on or after
13		December 31, 1995 and ending with taxable years ending on or
14		before December 31, 2004, personal property that is donated for
15		disaster relief to be used in a State or federally declared
16		disaster area in Illinois or bordering Illinois by a
17		manufacturer or retailer that is registered in this State to a
18		corporation, society, association, foundation, or institution
19		that has been issued a sales tax exemption identification
20		number by the Department that assists victims of the disaster
21		who reside within the declared disaster area.
22		(31) Beginning with taxable years ending on or after
23		December 31, 1995 and ending with taxable years ending on or
24		before December 31, 2004, personal property that is used in the
25		performance of infrastructure repairs in this State, including
26		but not limited to municipal roads and streets, access roads,
27		bridges, sidewalks, waste disposal systems, water and sewer
28		line extensions, water distribution and purification
29		facilities, storm water drainage and retention facilities, and
30		sewage treatment facilities, resulting from a State or
31		federally declared disaster in Illinois or bordering Illinois
32		when such repairs are initiated on facilities located in the
33		declared disaster area within 6 months after the disaster.
34		(32) Beginning July 1, 1999, game or game birds sold at a
35		"game breeding and hunting preserve area" or an "exotic game
36		hunting area" as those terms are used in the Wildlife Code or

1		at a hunting enclosure approved through rules adopted by the
2		Department of Natural Resources. This paragraph is exempt from
3		the provisions of Section 2-70.
4		(33) A motor vehicle, as that term is defined in Section
5		1-146 of the Illinois Vehicle Code, that is donated to a
6		corporation, limited liability company, society, association,
7		foundation, or institution that is determined by the Department
8		to be organized and operated exclusively for educational
9		purposes. For purposes of this exemption, "a corporation,
10		limited liability company, society, association, foundation,
11		or institution organized and operated exclusively for
12		educational purposes" means all tax-supported public schools,
13		private schools that offer systematic instruction in useful
14		branches of learning by methods common to public schools and
15		that compare favorably in their scope and intensity with the
16		course of study presented in tax-supported schools, and
17		vocational or technical schools or institutes organized and
18		operated exclusively to provide a course of study of not less
19		than 6 weeks duration and designed to prepare individuals to
20		follow a trade or to pursue a manual, technical, mechanical,
21		industrial, business, or commercial occupation.
22		(34) Beginning January 1, 2000, personal property,
23		including food, purchased through fundraising events for the
24		benefit of a public or private elementary or secondary school,
25		a group of those schools, or one or more school districts if
26		the events are sponsored by an entity recognized by the school
27		district that consists primarily of volunteers and includes
28		parents and teachers of the school children. This paragraph
29		does not apply to fundraising events (i) for the benefit of
30		private home instruction or (ii) for which the fundraising
31		entity purchases the personal property sold at the events from
32		another individual or entity that sold the property for the
33		purpose of resale by the fundraising entity and that profits
34		from the sale to the fundraising entity. This paragraph is
35		exempt from the provisions of Section 2-70.
36		(35) Beginning January 1, 2000 and through December 31,

1		2001, new or used automatic vending machines that prepare and
2		serve hot food and beverages, including coffee, soup, and other
3		items, and replacement parts for these machines. Beginning
4		January 1, 2002 and through June 30, 2003, machines and parts
5		for machines used in commercial, coin-operated amusement and
6		vending business if a use or occupation tax is paid on the
7		gross receipts derived from the use of the commercial,
8		coin-operated amusement and vending machines. This paragraph
9		is exempt from the provisions of Section 2-70.
10		(35-5) Food for human consumption that is to be consumed
11		off the premises where it is sold (other than alcoholic
12		beverages, soft drinks, and food that has been prepared for
13		immediate consumption) and prescription and nonprescription
14		medicines, drugs, medical appliances, and insulin, urine
15		testing materials, syringes, and needles used by diabetics, for
16		human use, when purchased for use by a person receiving medical
17		assistance under Article 5 of the Illinois Public Aid Code who
18		resides in a licensed long-term care facility, as defined in
19		the Nursing Home Care Act.
20		(36) Beginning August 2, 2001, computers and
21		communications equipment utilized for any hospital purpose and
22		equipment used in the diagnosis, analysis, or treatment of
23		hospital patients sold to a lessor who leases the equipment,
24		under a lease of one year or longer executed or in effect at
25		the time of the purchase, to a hospital that has been issued an
26		active tax exemption identification number by the Department
27		under Section 1g of this Act. This paragraph is exempt from the
28		provisions of Section 2-70.
29		(37) Beginning August 2, 2001, personal property sold to a
30		lessor who leases the property, under a lease of one year or
31		longer executed or in effect at the time of the purchase, to a
32		governmental body that has been issued an active tax exemption
33		identification number by the Department under Section 1g of
34		this Act. This paragraph is exempt from the provisions of
35		Section 2-70.
36		(38) Beginning on January 1, 2002, tangible personal

1		property purchased from an Illinois retailer by a taxpayer
2		engaged in centralized purchasing activities in Illinois who
3		will, upon receipt of the property in Illinois, temporarily
4		store the property in Illinois (i) for the purpose of
5		subsequently transporting it outside this State for use or
6		consumption thereafter solely outside this State or (ii) for
7		the purpose of being processed, fabricated, or manufactured
8		into, attached to, or incorporated into other tangible personal
9		property to be transported outside this State and thereafter
10		used or consumed solely outside this State. The Director of
11		Revenue shall, pursuant to rules adopted in accordance with the
12		Illinois Administrative Procedure Act, issue a permit to any
13		taxpayer in good standing with the Department who is eligible
14		for the exemption under this paragraph (38). The permit issued
15		under this paragraph (38) shall authorize the holder, to the
16		extent and in the manner specified in the rules adopted under
17		this Act, to purchase tangible personal property from a
18		retailer exempt from the taxes imposed by this Act. Taxpayers
19		shall maintain all necessary books and records to substantiate
20		the use and consumption of all such tangible personal property
21		outside of the State of Illinois.
22		(Source: P.A. 92-16, eff. 6-28-01; 92-35, eff. 7-1-01; 92-227,
23		eff. 8-2-01; 92-337, eff. 8-10-01; 92-484, eff. 8-23-01;
24		92-488, eff. 8-23-01; 92-651, eff. 7-11-02; 92-680, eff.
25		7-16-02; 93-23, eff. 6-20-03; 93-24, eff. 6-20-03; revised
26		9-11-03.)
27		(35 ILCS 120/2-51)
28		Sec. 2-51. Motor vehicles; trailers; use as rolling stock
29		definition.
30		(a) Through June 30, 2003, "use as rolling stock moving in
31		interstate commerce" in paragraphs (12) and (13) of Section 2-5
32		means for motor vehicles, as defined in Section 1-146 of the
33		Illinois Vehicle Code, and trailers, as defined in Section
34		1-209 of the Illinois Vehicle Code, when on 15 or more
35		occasions in a 12-month period the motor vehicle and trailer

1		has carried persons or property for hire in interstate
2		commerce, even just between points in Illinois, if the motor
3		vehicle and trailer transports persons whose journeys or
4		property whose shipments originate or terminate outside
5		Illinois. This definition applies to all property purchased for
6		the purpose of being attached to those motor vehicles or
7		trailers as a part thereof.
8		(b) On and after July 1, 2003 and through June 30, 2004,
9		"use as rolling stock moving in interstate commerce" in
10		paragraphs (12) and (13) of Section 2-5 occurs for motor
11		vehicles, as defined in Section 1-146 of the Illinois Vehicle
12		Code, when during a 12-month period the rolling stock has
13		carried persons or property for hire in interstate commerce for
14		51% of its total trips and transports persons whose journeys or
15		property whose shipments originate or terminate outside
16		Illinois. Trips that are only between points in Illinois shall
17		not be counted as interstate trips when calculating whether the
18		tangible personal property qualifies for the exemption but such
19		trips shall be included in total trips taken.
20		(c) Beginning July 1, 2004, "use as rolling stock moving in
21		interstate commerce" in paragraphs (12) and (13) of Section 2-5
22		occurs for motor vehicles, as defined in Section 1-146 of the
23		Illinois Vehicle Code, when during a 12-month period the
24		rolling stock has carried persons or property for hire in
25		interstate commerce for greater than 50% of its total trips for
26		that period or for greater than 50% of its total miles for that
27		period. The person claiming the exemption shall make an
28		election at the time of purchase to use either the trips or
29		mileage method. Persons who purchased motor vehicles prior to
30		July 1, 2004 shall make an election to use either the trips or
31		mileage method and document that election in their books and
32		records. If no election is made under this subsection to use
33		the trips or mileage method, the person shall be deemed to have
34		chosen the mileage method. Any election to use either the trips
35		or mileage method will remain in effect for that motor vehicle
36		for any period for which the Department may issue a notice of

1		tax liability under this Act.
2		For purposes of determining qualifying trips or miles,
3		motor vehicles that carry persons or property for hire, even
4		just between points in Illinois, will be considered used for
5		hire in interstate commerce if the motor vehicle transports
6		persons whose journeys or property whose shipments originate or
7		terminate outside Illinois. The exemption for motor vehicles
8		used as rolling stock moving in interstate commerce may be
9		claimed only for motor vehicles whose gross vehicle weight
10		rating exceeds 16,000 pounds. This definition applies to all
11		property purchased for the purpose of being attached to those
12		motor vehicles as a part thereof.
13		(d) Beginning July 1, 2004, "use as rolling stock moving in
14		interstate commerce" in paragraphs (12) and (13) of Section 2-5
15		occurs for trailers, as defined in Section 1-209 of the
16		Illinois Vehicle Code, semitrailers as defined in Section 1-187
17		of the Illinois Vehicle Code, and pole trailers as defined in
18		Section 1-161 of the Illinois Vehicle Code, when during a
19		12-month period the rolling stock has carried persons or
20		property for hire in interstate commerce for greater than 50%
21		of its total trips for that period or for greater than 50% of
22		its total miles for that period. The person claiming the
23		exemption for a trailer or trailers that will not be dedicated
24		to a motor vehicle or group of motor vehicles shall make an
25		election at the time of purchase to use either the trips or
26		mileage method. Persons who purchased trailers prior to July 1,
27		2004 that are not dedicated to a motor vehicle or group of
28		motor vehicles shall make an election to use either the trips
29		or mileage method and document that election in their books and
30		records. If no election is made under this subsection to use
31		the trips or mileage method, the person shall be deemed to have
32		chosen the mileage method. Any election to use either the trips
33		or mileage method will remain in effect for that trailer for
34		any period for which the Department may issue a notice of tax
35		liability under this Act.
36		For purposes of determining qualifying trips or miles,

1		trailers, semitrailers, or pole trailers that carry property
2		for hire, even just between points in Illinois, will be
3		considered used for hire in interstate commerce if the
4		trailers, semitrailers, or pole trailers transport property
5		whose shipments originate or terminate outside Illinois. This
6		definition applies to all property purchased for the purpose of
7		being attached to those trailers, semitrailers, or pole
8		trailers as a part thereof. In lieu of a person providing
9		documentation regarding the qualifying use of each individual
10		trailer, semitrailer, or pole trailer, that person may document
11		such qualifying use by providing documentation of the
12		following:
13		(1) If a trailer, semitrailer, or pole trailer is
14		dedicated to a motor vehicle that qualifies as rolling
15		stock moving in interstate commerce under subsection (c) of
16		this Section, then that trailer, semitrailer, or pole
17		trailer qualifies as rolling stock moving in interstate
18		commerce under this subsection.
19		(2) If a trailer, semitrailer, or pole trailer is
20		dedicated to a group of motor vehicles that all qualify as
21		rolling stock moving in interstate commerce under
22		subsection (c) of this Section, then that trailer,
23		semitrailer, or pole trailer qualifies as rolling stock
24		moving in interstate commerce under this subsection.
25		(3) If one or more trailers, semitrailers, or pole
26		trailers are dedicated to a group of motor vehicles and not
27		all of those motor vehicles in that group qualify as
28		rolling stock moving in interstate commerce under
29		subsection (c) of this Section, then the percentage of
30		those trailers, semitrailers, or pole trailers that
31		qualifies as rolling stock moving in interstate commerce
32		under this subsection is equal to the percentage of those
33		motor vehicles in that group that qualify as rolling stock
34		moving in interstate commerce under subsection (c) of this
35		Section to which those trailers, semitrailers, or pole
36		trailers are dedicated. However, to determine the

1		qualification for the exemption provided under this item
2		(3), the mathematical application of the qualifying
3		percentage to one or more trailers, semitrailers, or pole
4		trailers under this subpart shall not be allowed as to any
5		fraction of a trailer, semitrailer, or pole trailer.
6		(Source: P.A. 93-23, eff. 6-20-03.)

7		Section 30. The Illinois Vehicle Code is amended by
8		changing Section 3-815.1 as follows:
9		(625 ILCS 5/3-815.1)
10		Sec. 3-815.1. Commercial distribution fee. Beginning July
11		1, 2003, in addition to any tax or fee imposed under this Code:
12		(a) Vehicles of the second division with a gross
13		vehicle weight that exceeds 8,000 pounds and that incur any
14		tax or fee under subsection (a) of Section 3-815 of this
15		Code or subsection (a) of Section 3-818 of this Code, as
16		applicable, and shall pay to the Secretary of State a
17		commercial distribution fee, for each registration year,
18		for the use of the public highways, State infrastructure,
19		and State services, in an amount equal to: (i) for a
20		registration year beginning on or after July 1, 2003 and
21		before July 1, 2005, 36% of the taxes and fees incurred
22		under subsection (a) of Section 3-815 of this Code, or
23		subsection (a) of Section 3-818 of this Code, as
24		applicable, rounded up to the nearest whole dollar; (ii)
25		for a registration year beginning on or after July 1, 2005
26		and before July 1, 2006, 21.5% of the taxes and fees
27		incurred under subsection (a) of Section 3-815 of this
28		Code, or subsection (a) of Section 3-818 of this Code, as
29		applicable, rounded up to the nearest whole dollar; and
30		(iii) for a registration year beginning on or after July 1,
31		2006, 14.35% of the taxes and fees incurred under
32		subsection (a) of Section 3-815 of this Code, or subsection
33		(a) of Section 3-818 of this Code, as applicable, rounded
34		up to the nearest whole dollar.

1		(b) Until June 30, 2004, vehicles Vehicles of the
2		second division with a gross vehicle weight of 8,000 pounds
3		or less and that incur any tax or fee under subsection (a)
4		of Section 3-815 of this Code or subsection (a) of Section
5		3-818 of this Code, as applicable, and have claimed the
6		rolling stock exemption under the Retailers' Occupation
7		Tax Act, Use Tax Act, Service Occupation Tax Act, or
8		Service Use Tax Act shall pay to the Illinois Department of
9		Revenue (or the Secretary of State under an
10		intergovernmental agreement) a commercial distribution
11		fee, for each registration year, for the use of the public
12		highways, State infrastructure, and State services, in an
13		amount equal to 36% of the taxes and fees incurred under
14		subsection (a) of Section 3-815 of this Code or subsection
15		(a) of Section 3-818 of this Code, as applicable, rounded
16		up to the nearest whole dollar.
17		The fees paid under this Section shall be deposited by the
18		Secretary of State into the General Revenue Fund.
19		(Source: P.A. 93-23, eff. 6-20-03; revised 10-9-03.)

Section 99. Effective date. This Act takes effect on July 1, 2004.