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90_SB0525
35 ILCS 5/201 from Ch. 120, par. 2-201
35 ILCS 5/203 from Ch. 120, par. 2-203
35 ILCS 5/206 from Ch. 120, par. 2-206
35 ILCS 5/207 from Ch. 120, par. 2-207
35 ILCS 105/2a from Ch. 120, par. 439.2a
35 ILCS 105/3-5 from Ch. 120, par. 439.3-5
35 ILCS 105/3-60 from Ch. 120, par. 439.3-60
35 ILCS 105/3-85
35 ILCS 105/12 from Ch. 120, par. 439.12
35 ILCS 110/2 from Ch. 120, par. 439.32
35 ILCS 110/2a from Ch. 120, par. 439.32a
35 ILCS 110/3-5 from Ch. 120, par. 439.33-5
35 ILCS 110/3-70
35 ILCS 110/12 from Ch. 120, par. 439.42
35 ILCS 115/2 from Ch. 120, par. 439.102
35 ILCS 115/2a from Ch. 120, par. 439.102a
35 ILCS 115/3-5 from Ch. 120, par. 439.103-5
35 ILCS 115/12 from Ch. 120, par. 439.112
35 ILCS 120/1a from Ch. 120, par. 440a
35 ILCS 120/1d from Ch. 120, par. 440d
35 ILCS 120/1j from Ch. 120, par. 440j
35 ILCS 120/2-5 from Ch. 120, par. 441-5
35 ILCS 120/5k from Ch. 120, par. 444k
35 ILCS 505/2a from Ch. 120, par. 418a
35 ILCS 615/1 from Ch. 120, par. 467.16
35 ILCS 620/1 from Ch. 120, par. 468
35 ILCS 630/2 from Ch. 120, par. 2002
220 ILCS 5/8-403.1 from Ch. 111 2/3, par. 8-403.1
Amends the Illinois Income Tax Act, the Use Tax Act, the
Service Use Tax Act, the Service Occupation Tax Act, the
Retailers' Occupation Tax Act, the Motor Fuel Tax Law, the
Gas Revenue Tax Act, the Public Utilities Revenue Act, the
Telecommunications Excise Tax Act, and the Public Utilities
Act. Sunsets various tax credits, deductions, exemptions, and
discounts on December 31, 2002. Effective immediately.
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1 AN ACT concerning taxes, amending named Acts.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 5. The Illinois Income Tax Act is amended by
5 changing Sections 201, 203, 206, and 207 as follows:
6 (35 ILCS 5/201) (from Ch. 120, par. 2-201)
7 Sec. 201. Tax Imposed.
8 (a) In general. A tax measured by net income is hereby
9 imposed on every individual, corporation, trust and estate
10 for each taxable year ending after July 31, 1969 on the
11 privilege of earning or receiving income in or as a resident
12 of this State. Such tax shall be in addition to all other
13 occupation or privilege taxes imposed by this State or by any
14 municipal corporation or political subdivision thereof.
15 (b) Rates. The tax imposed by subsection (a) of this
16 Section shall be determined as follows:
17 (1) In the case of an individual, trust or estate,
18 for taxable years ending prior to July 1, 1989, an amount
19 equal to 2 1/2% of the taxpayer's net income for the
20 taxable year.
21 (2) In the case of an individual, trust or estate,
22 for taxable years beginning prior to July 1, 1989 and
23 ending after June 30, 1989, an amount equal to the sum of
24 (i) 2 1/2% of the taxpayer's net income for the period
25 prior to July 1, 1989, as calculated under Section 202.3,
26 and (ii) 3% of the taxpayer's net income for the period
27 after June 30, 1989, as calculated under Section 202.3.
28 (3) In the case of an individual, trust or estate,
29 for taxable years beginning after June 30, 1989, an
30 amount equal to 3% of the taxpayer's net income for the
31 taxable year.
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1 (4) (Blank).
2 (5) (Blank).
3 (6) In the case of a corporation, for taxable years
4 ending prior to July 1, 1989, an amount equal to 4% of
5 the taxpayer's net income for the taxable year.
6 (7) In the case of a corporation, for taxable years
7 beginning prior to July 1, 1989 and ending after June 30,
8 1989, an amount equal to the sum of (i) 4% of the
9 taxpayer's net income for the period prior to July 1,
10 1989, as calculated under Section 202.3, and (ii) 4.8% of
11 the taxpayer's net income for the period after June 30,
12 1989, as calculated under Section 202.3.
13 (8) In the case of a corporation, for taxable years
14 beginning after June 30, 1989, an amount equal to 4.8% of
15 the taxpayer's net income for the taxable year.
16 (c) Beginning on July 1, 1979 and thereafter, in
17 addition to such income tax, there is also hereby imposed the
18 Personal Property Tax Replacement Income Tax measured by net
19 income on every corporation (including Subchapter S
20 corporations), partnership and trust, for each taxable year
21 ending after June 30, 1979. Such taxes are imposed on the
22 privilege of earning or receiving income in or as a resident
23 of this State. The Personal Property Tax Replacement Income
24 Tax shall be in addition to the income tax imposed by
25 subsections (a) and (b) of this Section and in addition to
26 all other occupation or privilege taxes imposed by this State
27 or by any municipal corporation or political subdivision
28 thereof.
29 (d) Additional Personal Property Tax Replacement Income
30 Tax Rates. The personal property tax replacement income tax
31 imposed by this subsection and subsection (c) of this Section
32 in the case of a corporation, other than a Subchapter S
33 corporation, shall be an additional amount equal to 2.85% of
34 such taxpayer's net income for the taxable year, except that
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1 beginning on January 1, 1981, and thereafter, the rate of
2 2.85% specified in this subsection shall be reduced to 2.5%,
3 and in the case of a partnership, trust or a Subchapter S
4 corporation shall be an additional amount equal to 1.5% of
5 such taxpayer's net income for the taxable year.
6 (e) Investment credit. A taxpayer shall be allowed a
7 credit against the Personal Property Tax Replacement Income
8 Tax for investment in qualified property.
9 (1) A taxpayer shall be allowed a credit equal to
10 .5% of the basis of qualified property placed in service
11 during the taxable year, provided such property is placed
12 in service on or after July 1, 1984. There shall be
13 allowed an additional credit equal to .5% of the basis of
14 qualified property placed in service during the taxable
15 year, provided such property is placed in service on or
16 after July 1, 1986, and the taxpayer's base employment
17 within Illinois has increased by 1% or more over the
18 preceding year as determined by the taxpayer's employment
19 records filed with the Illinois Department of Employment
20 Security. Taxpayers who are new to Illinois shall be
21 deemed to have met the 1% growth in base employment for
22 the first year in which they file employment records with
23 the Illinois Department of Employment Security. The
24 provisions added to this Section by Public Act 85-1200
25 (and restored by Public Act 87-895) shall be construed as
26 declaratory of existing law and not as a new enactment.
27 If, in any year, the increase in base employment within
28 Illinois over the preceding year is less than 1%, the
29 additional credit shall be limited to that percentage
30 times a fraction, the numerator of which is .5% and the
31 denominator of which is 1%, but shall not exceed .5%.
32 The investment credit shall not be allowed to the extent
33 that it would reduce a taxpayer's liability in any tax
34 year below zero, nor may any credit for qualified
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1 property be allowed for any year other than the year in
2 which the property was placed in service in Illinois. For
3 tax years ending on or after December 31, 1987, and on or
4 before December 31, 1988, the credit shall be allowed for
5 the tax year in which the property is placed in service,
6 or, if the amount of the credit exceeds the tax liability
7 for that year, whether it exceeds the original liability
8 or the liability as later amended, such excess may be
9 carried forward and applied to the tax liability of the 5
10 taxable years following the excess credit years if the
11 taxpayer (i) makes investments which cause the creation
12 of a minimum of 2,000 full-time equivalent jobs in
13 Illinois, (ii) is located in an enterprise zone
14 established pursuant to the Illinois Enterprise Zone Act
15 and (iii) is certified by the Department of Commerce and
16 Community Affairs as complying with the requirements
17 specified in clause (i) and (ii) by July 1, 1986. The
18 Department of Commerce and Community Affairs shall notify
19 the Department of Revenue of all such certifications
20 immediately. For tax years ending after December 31,
21 1988, the credit shall be allowed for the tax year in
22 which the property is placed in service, or, if the
23 amount of the credit exceeds the tax liability for that
24 year, whether it exceeds the original liability or the
25 liability as later amended, such excess may be carried
26 forward and applied to the tax liability of the 5 taxable
27 years following the excess credit years. The credit shall
28 be applied to the earliest year for which there is a
29 liability. If there is credit from more than one tax year
30 that is available to offset a liability, earlier credit
31 shall be applied first.
32 (2) The term "qualified property" means property
33 which:
34 (A) is tangible, whether new or used,
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1 including buildings and structural components of
2 buildings and signs that are real property, but not
3 including land or improvements to real property that
4 are not a structural component of a building such as
5 landscaping, sewer lines, local access roads,
6 fencing, parking lots, and other appurtenances;
7 (B) is depreciable pursuant to Section 167 of
8 the Internal Revenue Code, except that "3-year
9 property" as defined in Section 168(c)(2)(A) of that
10 Code is not eligible for the credit provided by this
11 subsection (e);
12 (C) is acquired by purchase as defined in
13 Section 179(d) of the Internal Revenue Code;
14 (D) is used in Illinois by a taxpayer who is
15 primarily engaged in manufacturing, or in mining
16 coal or fluorite, or in retailing; and
17 (E) has not previously been used in Illinois
18 in such a manner and by such a person as would
19 qualify for the credit provided by this subsection
20 (e) or subsection (f).
21 (3) For purposes of this subsection (e),
22 "manufacturing" means the material staging and production
23 of tangible personal property by procedures commonly
24 regarded as manufacturing, processing, fabrication, or
25 assembling which changes some existing material into new
26 shapes, new qualities, or new combinations. For purposes
27 of this subsection (e) the term "mining" shall have the
28 same meaning as the term "mining" in Section 613(c) of
29 the Internal Revenue Code. For purposes of this
30 subsection (e), the term "retailing" means the sale of
31 tangible personal property or services rendered in
32 conjunction with the sale of tangible consumer goods or
33 commodities.
34 (4) The basis of qualified property shall be the
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1 basis used to compute the depreciation deduction for
2 federal income tax purposes.
3 (5) If the basis of the property for federal income
4 tax depreciation purposes is increased after it has been
5 placed in service in Illinois by the taxpayer, the amount
6 of such increase shall be deemed property placed in
7 service on the date of such increase in basis.
8 (6) The term "placed in service" shall have the
9 same meaning as under Section 46 of the Internal Revenue
10 Code.
11 (7) If during any taxable year, any property ceases
12 to be qualified property in the hands of the taxpayer
13 within 48 months after being placed in service, or the
14 situs of any qualified property is moved outside Illinois
15 within 48 months after being placed in service, the
16 Personal Property Tax Replacement Income Tax for such
17 taxable year shall be increased. Such increase shall be
18 determined by (i) recomputing the investment credit which
19 would have been allowed for the year in which credit for
20 such property was originally allowed by eliminating such
21 property from such computation and, (ii) subtracting such
22 recomputed credit from the amount of credit previously
23 allowed. For the purposes of this paragraph (7), a
24 reduction of the basis of qualified property resulting
25 from a redetermination of the purchase price shall be
26 deemed a disposition of qualified property to the extent
27 of such reduction.
28 (8) Unless the investment credit is extended by
29 law, the basis of qualified property shall not include
30 costs incurred after December 31, 2003, except for costs
31 incurred pursuant to a binding contract entered into on
32 or before December 31, 2003.
33 (f) Investment credit; Enterprise Zone.
34 (1) A taxpayer shall be allowed a credit against
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1 the tax imposed by subsections (a) and (b) of this
2 Section for investment in qualified property which is
3 placed in service in an Enterprise Zone created pursuant
4 to the Illinois Enterprise Zone Act. For partners and for
5 shareholders of Subchapter S corporations, there shall be
6 allowed a credit under this subsection (f) to be
7 determined in accordance with the determination of income
8 and distributive share of income under Sections 702 and
9 704 and Subchapter S of the Internal Revenue Code. The
10 credit shall be .5% of the basis for such property. The
11 credit shall be available only in the taxable year in
12 which the property is placed in service in the Enterprise
13 Zone and shall not be allowed to the extent that it would
14 reduce a taxpayer's liability for the tax imposed by
15 subsections (a) and (b) of this Section to below zero.
16 For tax years ending on or after December 31, 1985, the
17 credit shall be allowed for the tax year in which the
18 property is placed in service, or, if the amount of the
19 credit exceeds the tax liability for that year, whether
20 it exceeds the original liability or the liability as
21 later amended, such excess may be carried forward and
22 applied to the tax liability of the 5 taxable years
23 following the excess credit year. The credit shall be
24 applied to the earliest year for which there is a
25 liability. If there is credit from more than one tax year
26 that is available to offset a liability, the credit
27 accruing first in time shall be applied first.
28 (2) The term qualified property means property
29 which:
30 (A) is tangible, whether new or used,
31 including buildings and structural components of
32 buildings;
33 (B) is depreciable pursuant to Section 167 of
34 the Internal Revenue Code, except that "3-year
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1 property" as defined in Section 168(c)(2)(A) of that
2 Code is not eligible for the credit provided by this
3 subsection (f);
4 (C) is acquired by purchase as defined in
5 Section 179(d) of the Internal Revenue Code;
6 (D) is used in the Enterprise Zone by the
7 taxpayer; and
8 (E) has not been previously used in Illinois
9 in such a manner and by such a person as would
10 qualify for the credit provided by this subsection
11 (f) or subsection (e).
12 (3) The basis of qualified property shall be the
13 basis used to compute the depreciation deduction for
14 federal income tax purposes.
15 (4) If the basis of the property for federal income
16 tax depreciation purposes is increased after it has been
17 placed in service in the Enterprise Zone by the taxpayer,
18 the amount of such increase shall be deemed property
19 placed in service on the date of such increase in basis.
20 (5) The term "placed in service" shall have the
21 same meaning as under Section 46 of the Internal Revenue
22 Code.
23 (6) If during any taxable year, any property ceases
24 to be qualified property in the hands of the taxpayer
25 within 48 months after being placed in service, or the
26 situs of any qualified property is moved outside the
27 Enterprise Zone within 48 months after being placed in
28 service, the tax imposed under subsections (a) and (b) of
29 this Section for such taxable year shall be increased.
30 Such increase shall be determined by (i) recomputing the
31 investment credit which would have been allowed for the
32 year in which credit for such property was originally
33 allowed by eliminating such property from such
34 computation, and (ii) subtracting such recomputed credit
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1 from the amount of credit previously allowed. For the
2 purposes of this paragraph (6), a reduction of the basis
3 of qualified property resulting from a redetermination of
4 the purchase price shall be deemed a disposition of
5 qualified property to the extent of such reduction.
6 This credit applies only to tax years ending on or before
7 December 31, 2002 and does not apply thereafter.
8 (g) Jobs Tax Credit; Enterprise Zone and Foreign
9 Trade Zone or Sub-Zone.
10 (1) A taxpayer conducting a trade or business in an
11 enterprise zone or a High Impact Business designated by
12 the Department of Commerce and Community Affairs
13 conducting a trade or business in a federally designated
14 Foreign Trade Zone or Sub-Zone shall be allowed a credit
15 against the tax imposed by subsections (a) and (b) of
16 this Section in the amount of $500 per eligible employee
17 hired to work in the zone during the taxable year.
18 (2) To qualify for the credit:
19 (A) the taxpayer must hire 5 or more eligible
20 employees to work in an enterprise zone or federally
21 designated Foreign Trade Zone or Sub-Zone during the
22 taxable year;
23 (B) the taxpayer's total employment within the
24 enterprise zone or federally designated Foreign
25 Trade Zone or Sub-Zone must increase by 5 or more
26 full-time employees beyond the total employed in
27 that zone at the end of the previous tax year for
28 which a jobs tax credit under this Section was
29 taken, or beyond the total employed by the taxpayer
30 as of December 31, 1985, whichever is later; and
31 (C) the eligible employees must be employed
32 180 consecutive days in order to be deemed hired for
33 purposes of this subsection.
34 (3) An "eligible employee" means an employee who
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1 is:
2 (A) Certified by the Department of Commerce
3 and Community Affairs as "eligible for services"
4 pursuant to regulations promulgated in accordance
5 with Title II of the Job Training Partnership Act,
6 Training Services for the Disadvantaged or Title III
7 of the Job Training Partnership Act, Employment and
8 Training Assistance for Dislocated Workers Program.
9 (B) Hired after the enterprise zone or
10 federally designated Foreign Trade Zone or Sub-Zone
11 was designated or the trade or business was located
12 in that zone, whichever is later.
13 (C) Employed in the enterprise zone or Foreign
14 Trade Zone or Sub-Zone. An employee is employed in
15 an enterprise zone or federally designated Foreign
16 Trade Zone or Sub-Zone if his services are rendered
17 there or it is the base of operations for the
18 services performed.
19 (D) A full-time employee working 30 or more
20 hours per week.
21 (4) For tax years ending on or after December 31,
22 1985 and prior to December 31, 1988, the credit shall be
23 allowed for the tax year in which the eligible employees
24 are hired. For tax years ending on or after December 31,
25 1988, the credit shall be allowed for the tax year
26 immediately following the tax year in which the eligible
27 employees are hired. If the amount of the credit exceeds
28 the tax liability for that year, whether it exceeds the
29 original liability or the liability as later amended,
30 such excess may be carried forward and applied to the tax
31 liability of the 5 taxable years following the excess
32 credit year. The credit shall be applied to the earliest
33 year for which there is a liability. If there is credit
34 from more than one tax year that is available to offset a
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1 liability, earlier credit shall be applied first.
2 (5) The Department of Revenue shall promulgate such
3 rules and regulations as may be deemed necessary to carry
4 out the purposes of this subsection (g).
5 (6) The credit shall be available for eligible
6 employees hired on or after January 1, 1986.
7 (h) Investment credit; High Impact Business.
8 (1) Subject to subsection (b) of Section 5.5 of the
9 Illinois Enterprise Zone Act, a taxpayer shall be allowed
10 a credit against the tax imposed by subsections (a) and
11 (b) of this Section for investment in qualified property
12 which is placed in service by a Department of Commerce
13 and Community Affairs designated High Impact Business.
14 The credit shall be .5% of the basis for such property.
15 The credit shall not be available until the minimum
16 investments in qualified property set forth in Section
17 5.5 of the Illinois Enterprise Zone Act have been
18 satisfied and shall not be allowed to the extent that it
19 would reduce a taxpayer's liability for the tax imposed
20 by subsections (a) and (b) of this Section to below zero.
21 The credit applicable to such minimum investments shall
22 be taken in the taxable year in which such minimum
23 investments have been completed. The credit for
24 additional investments beyond the minimum investment by a
25 designated high impact business shall be available only
26 in the taxable year in which the property is placed in
27 service and shall not be allowed to the extent that it
28 would reduce a taxpayer's liability for the tax imposed
29 by subsections (a) and (b) of this Section to below zero.
30 For tax years ending on or after December 31, 1987, the
31 credit shall be allowed for the tax year in which the
32 property is placed in service, or, if the amount of the
33 credit exceeds the tax liability for that year, whether
34 it exceeds the original liability or the liability as
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1 later amended, such excess may be carried forward and
2 applied to the tax liability of the 5 taxable years
3 following the excess credit year. The credit shall be
4 applied to the earliest year for which there is a
5 liability. If there is credit from more than one tax
6 year that is available to offset a liability, the credit
7 accruing first in time shall be applied first.
8 Changes made in this subdivision (h)(1) by Public
9 Act 88-670 restore changes made by Public Act 85-1182 and
10 reflect existing law.
11 (2) The term qualified property means property
12 which:
13 (A) is tangible, whether new or used,
14 including buildings and structural components of
15 buildings;
16 (B) is depreciable pursuant to Section 167 of
17 the Internal Revenue Code, except that "3-year
18 property" as defined in Section 168(c)(2)(A) of that
19 Code is not eligible for the credit provided by this
20 subsection (h);
21 (C) is acquired by purchase as defined in
22 Section 179(d) of the Internal Revenue Code; and
23 (D) is not eligible for the Enterprise Zone
24 Investment Credit provided by subsection (f) of this
25 Section.
26 (3) The basis of qualified property shall be the
27 basis used to compute the depreciation deduction for
28 federal income tax purposes.
29 (4) If the basis of the property for federal income
30 tax depreciation purposes is increased after it has been
31 placed in service in a federally designated Foreign Trade
32 Zone or Sub-Zone located in Illinois by the taxpayer, the
33 amount of such increase shall be deemed property placed
34 in service on the date of such increase in basis.
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1 (5) The term "placed in service" shall have the
2 same meaning as under Section 46 of the Internal Revenue
3 Code.
4 (6) If during any taxable year ending on or before
5 December 31, 1996, any property ceases to be qualified
6 property in the hands of the taxpayer within 48 months
7 after being placed in service, or the situs of any
8 qualified property is moved outside Illinois within 48
9 months after being placed in service, the tax imposed
10 under subsections (a) and (b) of this Section for such
11 taxable year shall be increased. Such increase shall be
12 determined by (i) recomputing the investment credit which
13 would have been allowed for the year in which credit for
14 such property was originally allowed by eliminating such
15 property from such computation, and (ii) subtracting such
16 recomputed credit from the amount of credit previously
17 allowed. For the purposes of this paragraph (6), a
18 reduction of the basis of qualified property resulting
19 from a redetermination of the purchase price shall be
20 deemed a disposition of qualified property to the extent
21 of such reduction.
22 (7) Beginning with tax years ending after December
23 31, 1996, if a taxpayer qualifies for the credit under
24 this subsection (h) and thereby is granted a tax
25 abatement and the taxpayer relocates its entire facility
26 in violation of the explicit terms and length of the
27 contract under Section 18-183 of the Property Tax Code,
28 the tax imposed under subsections (a) and (b) of this
29 Section shall be increased for the taxable year in which
30 the taxpayer relocated its facility by an amount equal to
31 the amount of credit received by the taxpayer under this
32 subsection (h).
33 This credit applies only to tax years ending on or before
34 December 31, 2002 and does not apply thereafter.
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1 (i) A credit shall be allowed against the tax imposed by
2 subsections (a) and (b) of this Section for the tax imposed
3 by subsections (c) and (d) of this Section. This credit
4 shall be computed by multiplying the tax imposed by
5 subsections (c) and (d) of this Section by a fraction, the
6 numerator of which is base income allocable to Illinois and
7 the denominator of which is Illinois base income, and further
8 multiplying the product by the tax rate imposed by
9 subsections (a) and (b) of this Section.
10 Any credit earned on or after December 31, 1986 under
11 this subsection which is unused in the year the credit is
12 computed because it exceeds the tax liability imposed by
13 subsections (a) and (b) for that year (whether it exceeds the
14 original liability or the liability as later amended) may be
15 carried forward and applied to the tax liability imposed by
16 subsections (a) and (b) of the 5 taxable years following the
17 excess credit year. This credit shall be applied first to
18 the earliest year for which there is a liability. If there
19 is a credit under this subsection from more than one tax year
20 that is available to offset a liability the earliest credit
21 arising under this subsection shall be applied first.
22 If, during any taxable year ending on or after December
23 31, 1986, the tax imposed by subsections (c) and (d) of this
24 Section for which a taxpayer has claimed a credit under this
25 subsection (i) is reduced, the amount of credit for such tax
26 shall also be reduced. Such reduction shall be determined by
27 recomputing the credit to take into account the reduced tax
28 imposed by subsection (c) and (d). If any portion of the
29 reduced amount of credit has been carried to a different
30 taxable year, an amended return shall be filed for such
31 taxable year to reduce the amount of credit claimed.
32 (j) Training expense credit. Beginning with tax years
33 ending on or after December 31, 1986, a taxpayer shall be
34 allowed a credit against the tax imposed by subsection (a)
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1 and (b) under this Section for all amounts paid or accrued,
2 on behalf of all persons employed by the taxpayer in Illinois
3 or Illinois residents employed outside of Illinois by a
4 taxpayer, for educational or vocational training in
5 semi-technical or technical fields or semi-skilled or skilled
6 fields, which were deducted from gross income in the
7 computation of taxable income. The credit against the tax
8 imposed by subsections (a) and (b) shall be 1.6% of such
9 training expenses. For partners and for shareholders of
10 subchapter S corporations, there shall be allowed a credit
11 under this subsection (j) to be determined in accordance with
12 the determination of income and distributive share of income
13 under Sections 702 and 704 and subchapter S of the Internal
14 Revenue Code.
15 Any credit allowed under this subsection which is unused
16 in the year the credit is earned may be carried forward to
17 each of the 5 taxable years following the year for which the
18 credit is first computed until it is used. This credit shall
19 be applied first to the earliest year for which there is a
20 liability. If there is a credit under this subsection from
21 more than one tax year that is available to offset a
22 liability the earliest credit arising under this subsection
23 shall be applied first.
24 This credit applies only to tax years ending on or before
25 December 31, 2002 and does not apply thereafter.
26 (k) Research and development credit.
27 Beginning with tax years ending after July 1, 1990, a
28 taxpayer shall be allowed a credit against the tax imposed by
29 subsections (a) and (b) of this Section for increasing
30 research activities in this State. The credit allowed
31 against the tax imposed by subsections (a) and (b) shall be
32 equal to 6 1/2% of the qualifying expenditures for increasing
33 research activities in this State.
34 For purposes of this subsection, "qualifying
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1 expenditures" means the qualifying expenditures as defined
2 for the federal credit for increasing research activities
3 which would be allowable under Section 41 of the Internal
4 Revenue Code and which are conducted in this State,
5 "qualifying expenditures for increasing research activities
6 in this State" means the excess of qualifying expenditures
7 for the taxable year in which incurred over qualifying
8 expenditures for the base period, "qualifying expenditures
9 for the base period" means the average of the qualifying
10 expenditures for each year in the base period, and "base
11 period" means the 3 taxable years immediately preceding the
12 taxable year for which the determination is being made.
13 Any credit in excess of the tax liability for the taxable
14 year may be carried forward. A taxpayer may elect to have the
15 unused credit shown on its final completed return carried
16 over as a credit against the tax liability for the following
17 5 taxable years or until it has been fully used, whichever
18 occurs first.
19 If an unused credit is carried forward to a given year
20 from 2 or more earlier years, that credit arising in the
21 earliest year will be applied first against the tax liability
22 for the given year. If a tax liability for the given year
23 still remains, the credit from the next earliest year will
24 then be applied, and so on, until all credits have been used
25 or no tax liability for the given year remains. Any
26 remaining unused credit or credits then will be carried
27 forward to the next following year in which a tax liability
28 is incurred, except that no credit can be carried forward to
29 a year which is more than 5 years after the year in which the
30 expense for which the credit is given was incurred.
31 Unless extended by law, the credit shall not include
32 costs incurred after December 31, 1999, except for costs
33 incurred pursuant to a binding contract entered into on or
34 before December 31, 1999.
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1 (Source: P.A. 88-45; 88-89; 88-141; 88-547, eff. 6-30-94;
2 88-670, eff. 12-2-94; 89-235, eff. 8-4-95; 89-519, eff.
3 7-18-96; 89-591, eff. 8-1-96.)
4 (35 ILCS 5/203) (from Ch. 120, par. 2-203)
5 Sec. 203. Base income defined.
6 (a) Individuals.
7 (1) In general. In the case of an individual, base
8 income means an amount equal to the taxpayer's adjusted
9 gross income for the taxable year as modified by
10 paragraph (2).
11 (2) Modifications. The adjusted gross income
12 referred to in paragraph (1) shall be modified by adding
13 thereto the sum of the following amounts:
14 (A) An amount equal to all amounts paid or
15 accrued to the taxpayer as interest or dividends
16 during the taxable year to the extent excluded from
17 gross income in the computation of adjusted gross
18 income, except stock dividends of qualified public
19 utilities described in Section 305(e) of the
20 Internal Revenue Code;
21 (B) An amount equal to the amount of tax
22 imposed by this Act to the extent deducted from
23 gross income in the computation of adjusted gross
24 income for the taxable year;
25 (C) An amount equal to the amount received
26 during the taxable year as a recovery or refund of
27 real property taxes paid with respect to the
28 taxpayer's principal residence under the Revenue Act
29 of 1939 and for which a deduction was previously
30 taken under subparagraph (L) of this paragraph (2)
31 prior to July 1, 1991, the retrospective application
32 date of Article 4 of Public Act 87-17. In the case
33 of multi-unit or multi-use structures and farm
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1 dwellings, the taxes on the taxpayer's principal
2 residence shall be that portion of the total taxes
3 for the entire property which is attributable to
4 such principal residence;
5 (D) An amount equal to the amount of the
6 capital gain deduction allowable under the Internal
7 Revenue Code, to the extent deducted from gross
8 income in the computation of adjusted gross income;
9 and
10 (D-5) An amount, to the extent not included in
11 adjusted gross income, equal to the amount of money
12 withdrawn by the taxpayer in the taxable year from a
13 medical care savings account and the interest earned
14 on the account in the taxable year of a withdrawal
15 pursuant to subsection (b) of Section 20 of the
16 Medical Care Savings Account Act;
17 and by deducting from the total so obtained the sum of
18 the following amounts:
19 (E) Any amount included in such total in
20 respect of any compensation (including but not
21 limited to any compensation paid or accrued to a
22 serviceman while a prisoner of war or missing in
23 action) paid to a resident by reason of being on
24 active duty in the Armed Forces of the United States
25 and in respect of any compensation paid or accrued
26 to a resident who as a governmental employee was a
27 prisoner of war or missing in action, and in respect
28 of any compensation paid to a resident in 1971 or
29 thereafter for annual training performed pursuant to
30 Sections 502 and 503, Title 32, United States Code
31 as a member of the Illinois National Guard;
32 (F) An amount equal to all amounts included in
33 such total pursuant to the provisions of Sections
34 402(a), 402(c), 403(a), 403(b), 406(a), 407(a), and
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1 408 of the Internal Revenue Code, or included in
2 such total as distributions under the provisions of
3 any retirement or disability plan for employees of
4 any governmental agency or unit, or retirement
5 payments to retired partners, which payments are
6 excluded in computing net earnings from self
7 employment by Section 1402 of the Internal Revenue
8 Code and regulations adopted pursuant thereto;
9 (G) The valuation limitation amount;
10 (H) An amount equal to the amount of any tax
11 imposed by this Act which was refunded to the
12 taxpayer and included in such total for the taxable
13 year;
14 (I) An amount equal to all amounts included in
15 such total pursuant to the provisions of Section 111
16 of the Internal Revenue Code as a recovery of items
17 previously deducted from adjusted gross income in
18 the computation of taxable income;
19 (J) An amount equal to those dividends
20 included in such total which were paid by a
21 corporation which conducts business operations in an
22 Enterprise Zone or zones created under the Illinois
23 Enterprise Zone Act, and conducts substantially all
24 of its operations in an Enterprise Zone or zones;
25 (K) An amount equal to those dividends
26 included in such total that were paid by a
27 corporation that conducts business operations in a
28 federally designated Foreign Trade Zone or Sub-Zone
29 and that is designated a High Impact Business
30 located in Illinois; provided that dividends
31 eligible for the deduction provided in subparagraph
32 (J) of paragraph (2) of this subsection shall not be
33 eligible for the deduction provided under this
34 subparagraph (K);
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1 (L) For taxable years ending after December
2 31, 1983, an amount equal to all social security
3 benefits and railroad retirement benefits included
4 in such total pursuant to Sections 72(r) and 86 of
5 the Internal Revenue Code;
6 (M) With the exception of any amounts
7 subtracted under subparagraph (N), an amount equal
8 to the sum of all amounts disallowed as deductions
9 by Sections 171(a) (2), and 265(2) of the Internal
10 Revenue Code of 1954, as now or hereafter amended,
11 and all amounts of expenses allocable to interest
12 and disallowed as deductions by Section 265(1) of
13 the Internal Revenue Code of 1954, as now or
14 hereafter amended;
15 (N) An amount equal to all amounts included in
16 such total which are exempt from taxation by this
17 State either by reason of its statutes or
18 Constitution or by reason of the Constitution,
19 treaties or statutes of the United States; provided
20 that, in the case of any statute of this State that
21 exempts income derived from bonds or other
22 obligations from the tax imposed under this Act, the
23 amount exempted shall be the interest net of bond
24 premium amortization;
25 (O) An amount equal to any contribution made
26 to a job training project established pursuant to
27 the Tax Increment Allocation Redevelopment Act;
28 (P) An amount equal to the amount of the
29 deduction used to compute the federal income tax
30 credit for restoration of substantial amounts held
31 under claim of right for the taxable year pursuant
32 to Section 1341 of the Internal Revenue Code of
33 1986;
34 (Q) An amount equal to any amounts included in
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1 such total, received by the taxpayer as an
2 acceleration in the payment of life, endowment or
3 annuity benefits in advance of the time they would
4 otherwise be payable as an indemnity for a terminal
5 illness;
6 (R) An amount equal to the amount of any
7 federal or State bonus paid to veterans of the
8 Persian Gulf War;
9 (S) An amount, to the extent included in
10 adjusted gross income, equal to the amount of a
11 contribution made in the taxable year on behalf of
12 the taxpayer to a medical care savings account
13 established under the Medical Care Savings Account
14 Act to the extent the contribution is accepted by
15 the account administrator as provided in that Act;
16 (T) An amount, to the extent included in
17 adjusted gross income, equal to the amount of
18 interest earned in the taxable year on a medical
19 care savings account established under the Medical
20 Care Savings Account Act on behalf of the taxpayer,
21 other than interest added pursuant to item (D-5) of
22 this paragraph (2);
23 (U) For one taxable year beginning on or after
24 January 1, 1994, an amount equal to the total amount
25 of tax imposed and paid under subsections (a) and
26 (b) of Section 201 of this Act on grant amounts
27 received by the taxpayer under the Nursing Home
28 Grant Assistance Act during the taxpayer's taxable
29 years 1992 and 1993; and
30 (V) Beginning with tax years ending on or
31 after December 31, 1995 and ending with tax years
32 ending on or before December 31, 1999, an amount
33 equal to the amount paid by a taxpayer who is a
34 self-employed taxpayer, a partner of a partnership,
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1 or a shareholder in a Subchapter S corporation for
2 health insurance or long-term care insurance for
3 that taxpayer or that taxpayer's spouse or
4 dependents, to the extent that the amount paid for
5 that health insurance or long-term care insurance
6 may be deducted under Section 213 of the Internal
7 Revenue Code of 1986, has not been deducted on the
8 federal income tax return of the taxpayer, and does
9 not exceed the taxable income attributable to that
10 taxpayer's income, self-employment income, or
11 Subchapter S corporation income; except that no
12 deduction shall be allowed under this item (V) if
13 the taxpayer is eligible to participate in any
14 health insurance or long-term care insurance plan of
15 an employer of the taxpayer or the taxpayer's
16 spouse. The amount of the health insurance and
17 long-term care insurance subtracted under this item
18 (V) shall be determined by multiplying total health
19 insurance and long-term care insurance premiums paid
20 by the taxpayer times a number that represents the
21 fractional percentage of eligible medical expenses
22 under Section 213 of the Internal Revenue Code of
23 1986 not actually deducted on the taxpayer's federal
24 income tax return.
25 The deductions provided in subparagraphs (J), (K), and
26 (O) apply only to tax years ending on or before December 31,
27 2002 and do not apply thereafter.
28 (b) Corporations.
29 (1) In general. In the case of a corporation, base
30 income means an amount equal to the taxpayer's taxable
31 income for the taxable year as modified by paragraph (2).
32 (2) Modifications. The taxable income referred to
33 in paragraph (1) shall be modified by adding thereto the
34 sum of the following amounts:
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1 (A) An amount equal to all amounts paid or
2 accrued to the taxpayer as interest and all
3 distributions received from regulated investment
4 companies during the taxable year to the extent
5 excluded from gross income in the computation of
6 taxable income;
7 (B) An amount equal to the amount of tax
8 imposed by this Act to the extent deducted from
9 gross income in the computation of taxable income
10 for the taxable year;
11 (C) In the case of a regulated investment
12 company or real estate investment trust, an amount
13 equal to the excess of (i) the net long-term capital
14 gain for the taxable year, over (ii) the amount of
15 the capital gain dividends designated as such in
16 accordance with Section 852(b)(3)(C) or Section
17 857(b)(3)(C) of the Internal Revenue Code and any
18 amount designated under Section 852(b)(3)(D) of the
19 Internal Revenue Code, attributable to the taxable
20 year.
21 This amendatory Act of 1995 is declarative of existing
22 law and is not a new enactment.
23 (D) The amount of any net operating loss
24 deduction taken in arriving at taxable income, other
25 than a net operating loss carried forward from a
26 taxable year ending prior to December 31, 1986; and
27 (E) For taxable years in which a net operating
28 loss carryback or carryforward from a taxable year
29 ending prior to December 31, 1986 is an element of
30 taxable income under paragraph (1) of subsection (e)
31 or subparagraph (E) of paragraph (2) of subsection
32 (e), the amount by which addition modifications
33 other than those provided by this subparagraph (E)
34 exceeded subtraction modifications in such earlier
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1 taxable year, with the following limitations applied
2 in the order that they are listed:
3 (i) the addition modification relating to
4 the net operating loss carried back or forward
5 to the taxable year from any taxable year
6 ending prior to December 31, 1986 shall be
7 reduced by the amount of addition modification
8 under this subparagraph (E) which related to
9 that net operating loss and which was taken
10 into account in calculating the base income of
11 an earlier taxable year, and
12 (ii) the addition modification relating
13 to the net operating loss carried back or
14 forward to the taxable year from any taxable
15 year ending prior to December 31, 1986 shall
16 not exceed the amount of such carryback or
17 carryforward;
18 For taxable years in which there is a net
19 operating loss carryback or carryforward from more
20 than one other taxable year ending prior to December
21 31, 1986, the addition modification provided in this
22 subparagraph (E) shall be the sum of the amounts
23 computed independently under the preceding
24 provisions of this subparagraph (E) for each such
25 taxable year,
26 and by deducting from the total so obtained the sum of
27 the following amounts:
28 (F) An amount equal to the amount of any tax
29 imposed by this Act which was refunded to the
30 taxpayer and included in such total for the taxable
31 year;
32 (G) An amount equal to any amount included in
33 such total under Section 78 of the Internal Revenue
34 Code;
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1 (H) In the case of a regulated investment
2 company, an amount equal to the amount of exempt
3 interest dividends as defined in subsection (b) (5)
4 of Section 852 of the Internal Revenue Code, paid to
5 shareholders for the taxable year;
6 (I) With the exception of any amounts
7 subtracted under subparagraph (J), an amount equal
8 to the sum of all amounts disallowed as deductions
9 by Sections 171(a) (2), and 265(a)(2) and amounts
10 disallowed as interest expense by Section 291(a)(3)
11 of the Internal Revenue Code, as now or hereafter
12 amended, and all amounts of expenses allocable to
13 interest and disallowed as deductions by Section
14 265(a)(1) of the Internal Revenue Code, as now or
15 hereafter amended;
16 (J) An amount equal to all amounts included in
17 such total which are exempt from taxation by this
18 State either by reason of its statutes or
19 Constitution or by reason of the Constitution,
20 treaties or statutes of the United States; provided
21 that, in the case of any statute of this State that
22 exempts income derived from bonds or other
23 obligations from the tax imposed under this Act, the
24 amount exempted shall be the interest net of bond
25 premium amortization;
26 (K) An amount equal to those dividends
27 included in such total which were paid by a
28 corporation which conducts business operations in an
29 Enterprise Zone or zones created under the Illinois
30 Enterprise Zone Act and conducts substantially all
31 of its operations in an Enterprise Zone or zones;
32 (L) An amount equal to those dividends
33 included in such total that were paid by a
34 corporation that conducts business operations in a
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1 federally designated Foreign Trade Zone or Sub-Zone
2 and that is designated a High Impact Business
3 located in Illinois; provided that dividends
4 eligible for the deduction provided in subparagraph
5 (K) of paragraph 2 of this subsection shall not be
6 eligible for the deduction provided under this
7 subparagraph (L);
8 (M) For any taxpayer that is a financial
9 organization within the meaning of Section 304(c) of
10 this Act, an amount included in such total as
11 interest income from a loan or loans made by such
12 taxpayer to a borrower, to the extent that such a
13 loan is secured by property which is eligible for
14 the Enterprise Zone Investment Credit. To determine
15 the portion of a loan or loans that is secured by
16 property eligible for a Section 201(h) investment
17 credit to the borrower, the entire principal amount
18 of the loan or loans between the taxpayer and the
19 borrower should be divided into the basis of the
20 Section 201(h) investment credit property which
21 secures the loan or loans, using for this purpose
22 the original basis of such property on the date that
23 it was placed in service in the Enterprise Zone.
24 The subtraction modification available to taxpayer
25 in any year under this subsection shall be that
26 portion of the total interest paid by the borrower
27 with respect to such loan attributable to the
28 eligible property as calculated under the previous
29 sentence;
30 (M-1) For any taxpayer that is a financial
31 organization within the meaning of Section 304(c) of
32 this Act, an amount included in such total as
33 interest income from a loan or loans made by such
34 taxpayer to a borrower, to the extent that such a
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1 loan is secured by property which is eligible for
2 the High Impact Business Investment Credit. To
3 determine the portion of a loan or loans that is
4 secured by property eligible for a Section 201(i)
5 investment credit to the borrower, the entire
6 principal amount of the loan or loans between the
7 taxpayer and the borrower should be divided into the
8 basis of the Section 201(i) investment credit
9 property which secures the loan or loans, using for
10 this purpose the original basis of such property on
11 the date that it was placed in service in a
12 federally designated Foreign Trade Zone or Sub-Zone
13 located in Illinois. No taxpayer that is eligible
14 for the deduction provided in subparagraph (M) of
15 paragraph (2) of this subsection shall be eligible
16 for the deduction provided under this subparagraph
17 (M-1). The subtraction modification available to
18 taxpayers in any year under this subsection shall be
19 that portion of the total interest paid by the
20 borrower with respect to such loan attributable to
21 the eligible property as calculated under the
22 previous sentence;
23 (N) Two times any contribution made during the
24 taxable year to a designated zone organization to
25 the extent that the contribution (i) qualifies as a
26 charitable contribution under subsection (c) of
27 Section 170 of the Internal Revenue Code and (ii)
28 must, by its terms, be used for a project approved
29 by the Department of Commerce and Community Affairs
30 under Section 11 of the Illinois Enterprise Zone
31 Act;
32 (O) An amount equal to: (i) 85% for taxable
33 years ending on or before December 31, 1992, or, a
34 percentage equal to the percentage allowable under
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1 Section 243(a)(1) of the Internal Revenue Code of
2 1986 for taxable years ending after December 31,
3 1992, of the amount by which dividends included in
4 taxable income and received from a corporation that
5 is not created or organized under the laws of the
6 United States or any state or political subdivision
7 thereof, including, for taxable years ending on or
8 after December 31, 1988, dividends received or
9 deemed received or paid or deemed paid under
10 Sections 951 through 964 of the Internal Revenue
11 Code, exceed the amount of the modification provided
12 under subparagraph (G) of paragraph (2) of this
13 subsection (b) which is related to such dividends;
14 plus (ii) 100% of the amount by which dividends,
15 included in taxable income and received, including,
16 for taxable years ending on or after December 31,
17 1988, dividends received or deemed received or paid
18 or deemed paid under Sections 951 through 964 of the
19 Internal Revenue Code, from any such corporation
20 specified in clause (i) that would but for the
21 provisions of Section 1504 (b) (3) of the Internal
22 Revenue Code be treated as a member of the
23 affiliated group which includes the dividend
24 recipient, exceed the amount of the modification
25 provided under subparagraph (G) of paragraph (2) of
26 this subsection (b) which is related to such
27 dividends;
28 (P) An amount equal to any contribution made
29 to a job training project established pursuant to
30 the Tax Increment Allocation Redevelopment Act; and
31 (Q) An amount equal to the amount of the
32 deduction used to compute the federal income tax
33 credit for restoration of substantial amounts held
34 under claim of right for the taxable year pursuant
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1 to Section 1341 of the Internal Revenue Code of
2 1986.
3 The deductions provided in subparagraphs (K), (L),
4 (M), (M-1), (N), and (P) apply only to tax years ending
5 on or before December 31, 2002 and do not apply
6 thereafter.
7 (3) Special rule. For purposes of paragraph (2)
8 (A), "gross income" in the case of a life insurance
9 company, for tax years ending on and after December 31,
10 1994, shall mean the gross investment income for the
11 taxable year.
12 (c) Trusts and estates.
13 (1) In general. In the case of a trust or estate,
14 base income means an amount equal to the taxpayer's
15 taxable income for the taxable year as modified by
16 paragraph (2).
17 (2) Modifications. Subject to the provisions of
18 paragraph (3), the taxable income referred to in
19 paragraph (1) shall be modified by adding thereto the sum
20 of the following amounts:
21 (A) An amount equal to all amounts paid or
22 accrued to the taxpayer as interest or dividends
23 during the taxable year to the extent excluded from
24 gross income in the computation of taxable income;
25 (B) In the case of (i) an estate, $600; (ii) a
26 trust which, under its governing instrument, is
27 required to distribute all of its income currently,
28 $300; and (iii) any other trust, $100, but in each
29 such case, only to the extent such amount was
30 deducted in the computation of taxable income;
31 (C) An amount equal to the amount of tax
32 imposed by this Act to the extent deducted from
33 gross income in the computation of taxable income
34 for the taxable year;
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1 (D) The amount of any net operating loss
2 deduction taken in arriving at taxable income, other
3 than a net operating loss carried forward from a
4 taxable year ending prior to December 31, 1986;
5 (E) For taxable years in which a net operating
6 loss carryback or carryforward from a taxable year
7 ending prior to December 31, 1986 is an element of
8 taxable income under paragraph (1) of subsection (e)
9 or subparagraph (E) of paragraph (2) of subsection
10 (e), the amount by which addition modifications
11 other than those provided by this subparagraph (E)
12 exceeded subtraction modifications in such taxable
13 year, with the following limitations applied in the
14 order that they are listed:
15 (i) the addition modification relating to
16 the net operating loss carried back or forward
17 to the taxable year from any taxable year
18 ending prior to December 31, 1986 shall be
19 reduced by the amount of addition modification
20 under this subparagraph (E) which related to
21 that net operating loss and which was taken
22 into account in calculating the base income of
23 an earlier taxable year, and
24 (ii) the addition modification relating
25 to the net operating loss carried back or
26 forward to the taxable year from any taxable
27 year ending prior to December 31, 1986 shall
28 not exceed the amount of such carryback or
29 carryforward;
30 For taxable years in which there is a net
31 operating loss carryback or carryforward from more
32 than one other taxable year ending prior to December
33 31, 1986, the addition modification provided in this
34 subparagraph (E) shall be the sum of the amounts
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1 computed independently under the preceding
2 provisions of this subparagraph (E) for each such
3 taxable year;
4 (F) For taxable years ending on or after
5 January 1, 1989, an amount equal to the tax deducted
6 pursuant to Section 164 of the Internal Revenue Code
7 if the trust or estate is claiming the same tax for
8 purposes of the Illinois foreign tax credit under
9 Section 601 of this Act; and
10 (G) An amount equal to the amount of the
11 capital gain deduction allowable under the Internal
12 Revenue Code, to the extent deducted from gross
13 income in the computation of taxable income;
14 and by deducting from the total so obtained the sum of
15 the following amounts:
16 (H) An amount equal to all amounts included in
17 such total pursuant to the provisions of Sections
18 402(a), 402(c), 403(a), 403(b), 406(a), 407(a) and
19 408 of the Internal Revenue Code or included in such
20 total as distributions under the provisions of any
21 retirement or disability plan for employees of any
22 governmental agency or unit, or retirement payments
23 to retired partners, which payments are excluded in
24 computing net earnings from self employment by
25 Section 1402 of the Internal Revenue Code and
26 regulations adopted pursuant thereto;
27 (I) The valuation limitation amount;
28 (J) An amount equal to the amount of any tax
29 imposed by this Act which was refunded to the
30 taxpayer and included in such total for the taxable
31 year;
32 (K) An amount equal to all amounts included in
33 taxable income as modified by subparagraphs (A),
34 (B), (C), (D), (E), (F) and (G) which are exempt
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1 from taxation by this State either by reason of its
2 statutes or Constitution or by reason of the
3 Constitution, treaties or statutes of the United
4 States; provided that, in the case of any statute of
5 this State that exempts income derived from bonds or
6 other obligations from the tax imposed under this
7 Act, the amount exempted shall be the interest net
8 of bond premium amortization;
9 (L) With the exception of any amounts
10 subtracted under subparagraph (K), an amount equal
11 to the sum of all amounts disallowed as deductions
12 by Sections 171(a) (2) and 265(a)(2) of the Internal
13 Revenue Code, as now or hereafter amended, and all
14 amounts of expenses allocable to interest and
15 disallowed as deductions by Section 265(1) of the
16 Internal Revenue Code of 1954, as now or hereafter
17 amended;
18 (M) An amount equal to those dividends
19 included in such total which were paid by a
20 corporation which conducts business operations in an
21 Enterprise Zone or zones created under the Illinois
22 Enterprise Zone Act and conducts substantially all
23 of its operations in an Enterprise Zone or Zones;
24 (N) An amount equal to any contribution made
25 to a job training project established pursuant to
26 the Tax Increment Allocation Redevelopment Act;
27 (O) An amount equal to those dividends
28 included in such total that were paid by a
29 corporation that conducts business operations in a
30 federally designated Foreign Trade Zone or Sub-Zone
31 and that is designated a High Impact Business
32 located in Illinois; provided that dividends
33 eligible for the deduction provided in subparagraph
34 (M) of paragraph (2) of this subsection shall not be
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1 eligible for the deduction provided under this
2 subparagraph (O); and
3 (P) An amount equal to the amount of the
4 deduction used to compute the federal income tax
5 credit for restoration of substantial amounts held
6 under claim of right for the taxable year pursuant
7 to Section 1341 of the Internal Revenue Code of
8 1986.
9 The deductions provided in subparagraphs (M), (N),
10 and (O) apply only to tax years ending on or before
11 December 31, 2002 and do not apply thereafter.
12 (3) Limitation. The amount of any modification
13 otherwise required under this subsection shall, under
14 regulations prescribed by the Department, be adjusted by
15 any amounts included therein which were properly paid,
16 credited, or required to be distributed, or permanently
17 set aside for charitable purposes pursuant to Internal
18 Revenue Code Section 642(c) during the taxable year.
19 (d) Partnerships.
20 (1) In general. In the case of a partnership, base
21 income means an amount equal to the taxpayer's taxable
22 income for the taxable year as modified by paragraph (2).
23 (2) Modifications. The taxable income referred to
24 in paragraph (1) shall be modified by adding thereto the
25 sum of the following amounts:
26 (A) An amount equal to all amounts paid or
27 accrued to the taxpayer as interest or dividends
28 during the taxable year to the extent excluded from
29 gross income in the computation of taxable income;
30 (B) An amount equal to the amount of tax
31 imposed by this Act to the extent deducted from
32 gross income for the taxable year; and
33 (C) The amount of deductions allowed to the
34 partnership pursuant to Section 707 (c) of the
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1 Internal Revenue Code in calculating its taxable
2 income;
3 (D) An amount equal to the amount of the
4 capital gain deduction allowable under the Internal
5 Revenue Code, to the extent deducted from gross
6 income in the computation of taxable income;
7 and by deducting from the total so obtained the following
8 amounts:
9 (E) The valuation limitation amount;
10 (F) An amount equal to the amount of any tax
11 imposed by this Act which was refunded to the
12 taxpayer and included in such total for the taxable
13 year;
14 (G) An amount equal to all amounts included in
15 taxable income as modified by subparagraphs (A),
16 (B), (C) and (D) which are exempt from taxation by
17 this State either by reason of its statutes or
18 Constitution or by reason of the Constitution,
19 treaties or statutes of the United States; provided
20 that, in the case of any statute of this State that
21 exempts income derived from bonds or other
22 obligations from the tax imposed under this Act, the
23 amount exempted shall be the interest net of bond
24 premium amortization;
25 (H) Any income of the partnership which
26 constitutes personal service income as defined in
27 Section 1348 (b) (1) of the Internal Revenue Code
28 (as in effect December 31, 1981) or a reasonable
29 allowance for compensation paid or accrued for
30 services rendered by partners to the partnership,
31 whichever is greater;
32 (I) An amount equal to all amounts of income
33 distributable to an entity subject to the Personal
34 Property Tax Replacement Income Tax imposed by
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1 subsections (c) and (d) of Section 201 of this Act
2 including amounts distributable to organizations
3 exempt from federal income tax by reason of Section
4 501(a) of the Internal Revenue Code;
5 (J) With the exception of any amounts
6 subtracted under subparagraph (G), an amount equal
7 to the sum of all amounts disallowed as deductions
8 by Sections 171(a) (2), and 265(2) of the Internal
9 Revenue Code of 1954, as now or hereafter amended,
10 and all amounts of expenses allocable to interest
11 and disallowed as deductions by Section 265(1) of
12 the Internal Revenue Code, as now or hereafter
13 amended;
14 (K) An amount equal to those dividends
15 included in such total which were paid by a
16 corporation which conducts business operations in an
17 Enterprise Zone or zones created under the Illinois
18 Enterprise Zone Act, enacted by the 82nd General
19 Assembly, and which does not conduct such operations
20 other than in an Enterprise Zone or Zones;
21 (L) An amount equal to any contribution made
22 to a job training project established pursuant to
23 the Real Property Tax Increment Allocation
24 Redevelopment Act;
25 (M) An amount equal to those dividends
26 included in such total that were paid by a
27 corporation that conducts business operations in a
28 federally designated Foreign Trade Zone or Sub-Zone
29 and that is designated a High Impact Business
30 located in Illinois; provided that dividends
31 eligible for the deduction provided in subparagraph
32 (K) of paragraph (2) of this subsection shall not be
33 eligible for the deduction provided under this
34 subparagraph (M); and
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1 (N) An amount equal to the amount of the
2 deduction used to compute the federal income tax
3 credit for restoration of substantial amounts held
4 under claim of right for the taxable year pursuant
5 to Section 1341 of the Internal Revenue Code of
6 1986.
7 The deductions provided in subparagraphs (K), (L), and
8 (M) apply only to tax years ending on or before December 31,
9 2002 and do not apply thereafter.
10 (e) Gross income; adjusted gross income; taxable income.
11 (1) In general. Subject to the provisions of
12 paragraph (2) and subsection (b) (3), for purposes of
13 this Section and Section 803(e), a taxpayer's gross
14 income, adjusted gross income, or taxable income for the
15 taxable year shall mean the amount of gross income,
16 adjusted gross income or taxable income properly
17 reportable for federal income tax purposes for the
18 taxable year under the provisions of the Internal Revenue
19 Code. Taxable income may be less than zero. However, for
20 taxable years ending on or after December 31, 1986, net
21 operating loss carryforwards from taxable years ending
22 prior to December 31, 1986, may not exceed the sum of
23 federal taxable income for the taxable year before net
24 operating loss deduction, plus the excess of addition
25 modifications over subtraction modifications for the
26 taxable year. For taxable years ending prior to December
27 31, 1986, taxable income may never be an amount in excess
28 of the net operating loss for the taxable year as defined
29 in subsections (c) and (d) of Section 172 of the Internal
30 Revenue Code, provided that when taxable income of a
31 corporation (other than a Subchapter S corporation),
32 trust, or estate is less than zero and addition
33 modifications, other than those provided by subparagraph
34 (E) of paragraph (2) of subsection (b) for corporations
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1 or subparagraph (E) of paragraph (2) of subsection (c)
2 for trusts and estates, exceed subtraction modifications,
3 an addition modification must be made under those
4 subparagraphs for any other taxable year to which the
5 taxable income less than zero (net operating loss) is
6 applied under Section 172 of the Internal Revenue Code or
7 under subparagraph (E) of paragraph (2) of this
8 subsection (e) applied in conjunction with Section 172 of
9 the Internal Revenue Code.
10 (2) Special rule. For purposes of paragraph (1) of
11 this subsection, the taxable income properly reportable
12 for federal income tax purposes shall mean:
13 (A) Certain life insurance companies. In the
14 case of a life insurance company subject to the tax
15 imposed by Section 801 of the Internal Revenue Code,
16 life insurance company taxable income, plus the
17 amount of distribution from pre-1984 policyholder
18 surplus accounts as calculated under Section 815a of
19 the Internal Revenue Code;
20 (B) Certain other insurance companies. In the
21 case of mutual insurance companies subject to the
22 tax imposed by Section 831 of the Internal Revenue
23 Code, insurance company taxable income;
24 (C) Regulated investment companies. In the
25 case of a regulated investment company subject to
26 the tax imposed by Section 852 of the Internal
27 Revenue Code, investment company taxable income;
28 (D) Real estate investment trusts. In the
29 case of a real estate investment trust subject to
30 the tax imposed by Section 857 of the Internal
31 Revenue Code, real estate investment trust taxable
32 income;
33 (E) Consolidated corporations. In the case of
34 a corporation which is a member of an affiliated
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1 group of corporations filing a consolidated income
2 tax return for the taxable year for federal income
3 tax purposes, taxable income determined as if such
4 corporation had filed a separate return for federal
5 income tax purposes for the taxable year and each
6 preceding taxable year for which it was a member of
7 an affiliated group. For purposes of this
8 subparagraph, the taxpayer's separate taxable income
9 shall be determined as if the election provided by
10 Section 243(b) (2) of the Internal Revenue Code had
11 been in effect for all such years;
12 (F) Cooperatives. In the case of a
13 cooperative corporation or association, the taxable
14 income of such organization determined in accordance
15 with the provisions of Section 1381 through 1388 of
16 the Internal Revenue Code;
17 (G) Subchapter S corporations. In the case
18 of: (i) a Subchapter S corporation for which there
19 is in effect an election for the taxable year under
20 Section 1362 of the Internal Revenue Code, the
21 taxable income of such corporation determined in
22 accordance with Section 1363(b) of the Internal
23 Revenue Code, except that taxable income shall take
24 into account those items which are required by
25 Section 1363(b)(1) of the Internal Revenue Code to
26 be separately stated; and (ii) a Subchapter S
27 corporation for which there is in effect a federal
28 election to opt out of the provisions of the
29 Subchapter S Revision Act of 1982 and have applied
30 instead the prior federal Subchapter S rules as in
31 effect on July 1, 1982, the taxable income of such
32 corporation determined in accordance with the
33 federal Subchapter S rules as in effect on July 1,
34 1982; and
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1 (H) Partnerships. In the case of a
2 partnership, taxable income determined in accordance
3 with Section 703 of the Internal Revenue Code,
4 except that taxable income shall take into account
5 those items which are required by Section 703(a)(1)
6 to be separately stated but which would be taken
7 into account by an individual in calculating his
8 taxable income.
9 (f) Valuation limitation amount.
10 (1) In general. The valuation limitation amount
11 referred to in subsections (a) (2) (G), (c) (2) (I) and
12 (d)(2) (E) is an amount equal to:
13 (A) The sum of the pre-August 1, 1969
14 appreciation amounts (to the extent consisting of
15 gain reportable under the provisions of Section 1245
16 or 1250 of the Internal Revenue Code) for all
17 property in respect of which such gain was reported
18 for the taxable year; plus
19 (B) The lesser of (i) the sum of the
20 pre-August 1, 1969 appreciation amounts (to the
21 extent consisting of capital gain) for all property
22 in respect of which such gain was reported for
23 federal income tax purposes for the taxable year, or
24 (ii) the net capital gain for the taxable year,
25 reduced in either case by any amount of such gain
26 included in the amount determined under subsection
27 (a) (2) (F) or (c) (2) (H).
28 (2) Pre-August 1, 1969 appreciation amount.
29 (A) If the fair market value of property
30 referred to in paragraph (1) was readily
31 ascertainable on August 1, 1969, the pre-August 1,
32 1969 appreciation amount for such property is the
33 lesser of (i) the excess of such fair market value
34 over the taxpayer's basis (for determining gain) for
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1 such property on that date (determined under the
2 Internal Revenue Code as in effect on that date), or
3 (ii) the total gain realized and reportable for
4 federal income tax purposes in respect of the sale,
5 exchange or other disposition of such property.
6 (B) If the fair market value of property
7 referred to in paragraph (1) was not readily
8 ascertainable on August 1, 1969, the pre-August 1,
9 1969 appreciation amount for such property is that
10 amount which bears the same ratio to the total gain
11 reported in respect of the property for federal
12 income tax purposes for the taxable year, as the
13 number of full calendar months in that part of the
14 taxpayer's holding period for the property ending
15 July 31, 1969 bears to the number of full calendar
16 months in the taxpayer's entire holding period for
17 the property.
18 (C) The Department shall prescribe such
19 regulations as may be necessary to carry out the
20 purposes of this paragraph.
21 (g) Double deductions. Unless specifically provided
22 otherwise, nothing in this Section shall permit the same item
23 to be deducted more than once.
24 (h) Legislative intention. Except as expressly provided
25 by this Section there shall be no modifications or
26 limitations on the amounts of income, gain, loss or deduction
27 taken into account in determining gross income, adjusted
28 gross income or taxable income for federal income tax
29 purposes for the taxable year, or in the amount of such items
30 entering into the computation of base income and net income
31 under this Act for such taxable year, whether in respect of
32 property values as of August 1, 1969 or otherwise.
33 (Source: P.A. 88-195; 88-648, eff. 9-16-94; 88-669, eff.
34 11-29-94; 88-670, eff. 12-2-94; 89-89, eff. 6-30-95; 89-235,
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1 eff. 8-4-95; 89-418, eff. 11-15-95; 89-460, eff. 5-24-96;
2 89-626, eff. 8-9-96.)
3 (35 ILCS 5/206) (from Ch. 120, par. 2-206)
4 Sec. 206. Tax credits for coal research and coal
5 utilization equipment.
6 (a) Until December 31, 2002 January 1, 2005, each
7 corporation subject to this Act shall be entitled to a credit
8 against the tax imposed by subsections (a) and (b) of Section
9 201 in an amount equal to 20% of the amount donated to the
10 Illinois Center for Research on Sulfur in Coal.
11 (b) Until December 31, 2002 January 1, 2005, each
12 corporation subject to this Act shall be entitled to a credit
13 against the tax imposed by subsections (a) and (b) of Section
14 201 in an amount equal to 5% of the amount spent during the
15 taxable year by the corporation on equipment purchased for
16 the purpose of maintaining or increasing the use of Illinois
17 coal at any Illinois facility owned, leased or operated by
18 the corporation. Such equipment shall be limited to direct
19 coal combustion equipment and pollution control equipment
20 necessary thereto. For purposes of this credit, the amount
21 spent on qualifying equipment shall be defined as the basis
22 of the equipment used to compute the depreciation deduction
23 for federal income tax purposes.
24 For tax years ending on or after December 31, 1987, the
25 credit shall be allowed for the tax year in which the amount
26 is donated or the equipment purchased is placed in service,
27 or, if the amount of the credit exceeds the tax liability for
28 that year, whether it exceeds the original liability or the
29 liability as later amended, such excess may be carried
30 forward and applied to the tax liability of the 5 taxable
31 years following the excess credit years. The credit shall be
32 applied to the earliest year for which there is a liability.
33 If there is credit from more than one tax year that is
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1 available to offset a liability, earlier credit shall be
2 applied first.
3 (c) This credit applies only to tax years ending on or
4 before December 31, 2002 and does not apply thereafter.
5 (Source: P.A. 88-599, eff. 9-1-94.)
6 (35 ILCS 5/207) (from Ch. 120, par. 2-207)
7 Sec. 207. Net Losses.
8 (a) If after applying all of the modifications provided
9 for in paragraph (2) of Section 203(b), paragraph (2) of
10 Section 203(c) and paragraph (2) of Section 203(d) and the
11 allocation and apportionment provisions of Article 3 of this
12 Act, the taxpayer's net income results in a loss, such loss
13 shall be allowed as a carryover or carryback deduction in the
14 manner allowed under Section 172 of the Internal Revenue
15 Code.
16 (b) Any loss determined under subsection (a) of this
17 Section must be carried back or carried forward in the same
18 manner for purposes of subsections (a) and (b) of Section 201
19 of this Act as for purposes of subsections (c) and (d) of
20 Section 201 of this Act.
21 (c) This deduction applies only to tax years ending on
22 or before December 31, 2002 and does not apply thereafter.
23 (Source: P.A. 85-731.)
24 Section 10. The Use Tax Act is amended by changing
25 Sections 2a, 3-5, 3-60, 3-85, and 12 as follows:
26 (35 ILCS 105/2a) (from Ch. 120, par. 439.2a)
27 Sec. 2a. "Pollution control facilities" means any system,
28 method, construction, device or appliance appurtenant thereto
29 sold or used or intended for the primary purpose of
30 eliminating, preventing, or reducing air and water pollution
31 as the term "air pollution" or "water pollution" is defined
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1 in the "Environmental Protection Act", enacted by the 76th
2 General Assembly, or for the primary purpose of treating,
3 pretreating, modifying or disposing of any potential solid,
4 liquid or gaseous pollutant which if released without such
5 treatment, pretreatment, modification or disposal might be
6 harmful, detrimental or offensive to human, plant or animal
7 life, or to property.
8 The purchase, employment and transfer of such tangible
9 personal property as pollution control facilities is not a
10 purchase, use or sale of tangible personal property.
11 This exemption applies only to tax years ending on or
12 before December 31, 2002 and does not apply thereafter.
13 (Source: P.A. 76-2447.)
14 (35 ILCS 105/3-5) (from Ch. 120, par. 439.3-5)
15 Sec. 3-5. Exemptions. Use of the following tangible
16 personal property is exempt from the tax imposed by this Act:
17 (1) Personal property purchased from a corporation,
18 society, association, foundation, institution, or
19 organization, other than a limited liability company, that is
20 organized and operated as a not-for-profit service enterprise
21 for the benefit of persons 65 years of age or older if the
22 personal property was not purchased by the enterprise for the
23 purpose of resale by the enterprise.
24 (2) Personal property purchased by a not-for-profit
25 Illinois county fair association for use in conducting,
26 operating, or promoting the county fair.
27 (3) Personal property purchased by a not-for-profit
28 music or dramatic arts organization that establishes, by
29 proof required by the Department by rule, that it has
30 received an exemption under Section 501(c)(3) of the Internal
31 Revenue Code and that is organized and operated for the
32 presentation of live public performances of musical or
33 theatrical works on a regular basis.
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1 (4) Personal property purchased by a governmental body,
2 by a corporation, society, association, foundation, or
3 institution organized and operated exclusively for
4 charitable, religious, or educational purposes, or by a
5 not-for-profit corporation, society, association, foundation,
6 institution, or organization that has no compensated officers
7 or employees and that is organized and operated primarily for
8 the recreation of persons 55 years of age or older. A limited
9 liability company may qualify for the exemption under this
10 paragraph only if the limited liability company is organized
11 and operated exclusively for educational purposes. On and
12 after July 1, 1987, however, no entity otherwise eligible for
13 this exemption shall make tax-free purchases unless it has an
14 active exemption identification number issued by the
15 Department.
16 (5) A passenger car that is a replacement vehicle to the
17 extent that the purchase price of the car is subject to the
18 Replacement Vehicle Tax.
19 (6) Graphic arts machinery and equipment, including
20 repair and replacement parts, both new and used, and
21 including that manufactured on special order, certified by
22 the purchaser to be used primarily for graphic arts
23 production, and including machinery and equipment purchased
24 for lease. This exemption applies only to tax years ending on
25 or before December 31, 2002 and does not apply thereafter.
26 (7) Farm chemicals. This exemption applies only to tax
27 years ending on or before December 31, 2002 and does not
28 apply thereafter.
29 (8) Legal tender, currency, medallions, or gold or
30 silver coinage issued by the State of Illinois, the
31 government of the United States of America, or the government
32 of any foreign country, and bullion.
33 (9) Personal property purchased from a teacher-sponsored
34 student organization affiliated with an elementary or
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1 secondary school located in Illinois.
2 (10) A motor vehicle of the first division, a motor
3 vehicle of the second division that is a self-contained motor
4 vehicle designed or permanently converted to provide living
5 quarters for recreational, camping, or travel use, with
6 direct walk through to the living quarters from the driver's
7 seat, or a motor vehicle of the second division that is of
8 the van configuration designed for the transportation of not
9 less than 7 nor more than 16 passengers, as defined in
10 Section 1-146 of the Illinois Vehicle Code, that is used for
11 automobile renting, as defined in the Automobile Renting
12 Occupation and Use Tax Act.
13 (11) Farm machinery and equipment, both new and used,
14 including that manufactured on special order, certified by
15 the purchaser to be used primarily for production agriculture
16 or State or federal agricultural programs, including
17 individual replacement parts for the machinery and equipment,
18 and including machinery and equipment purchased for lease,
19 but excluding motor vehicles required to be registered under
20 the Illinois Vehicle Code. This exemption applies only to tax
21 years ending on or before December 31, 2002 and does not
22 apply thereafter.
23 (12) Fuel and petroleum products sold to or used by an
24 air common carrier, certified by the carrier to be used for
25 consumption, shipment, or storage in the conduct of its
26 business as an air common carrier, for a flight destined for
27 or returning from a location or locations outside the United
28 States without regard to previous or subsequent domestic
29 stopovers. This exemption applies only to tax years ending on
30 or before December 31, 2002 and does not apply thereafter.
31 (13) Proceeds of mandatory service charges separately
32 stated on customers' bills for the purchase and consumption
33 of food and beverages purchased at retail from a retailer, to
34 the extent that the proceeds of the service charge are in
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1 fact turned over as tips or as a substitute for tips to the
2 employees who participate directly in preparing, serving,
3 hosting or cleaning up the food or beverage function with
4 respect to which the service charge is imposed.
5 (14) Oil field exploration, drilling, and production
6 equipment, including (i) rigs and parts of rigs, rotary rigs,
7 cable tool rigs, and workover rigs, (ii) pipe and tubular
8 goods, including casing and drill strings, (iii) pumps and
9 pump-jack units, (iv) storage tanks and flow lines, (v) any
10 individual replacement part for oil field exploration,
11 drilling, and production equipment, and (vi) machinery and
12 equipment purchased for lease; but excluding motor vehicles
13 required to be registered under the Illinois Vehicle Code.
14 This exemption applies only to tax years ending on or before
15 December 31, 2002 and does not apply thereafter.
16 (15) Photoprocessing machinery and equipment, including
17 repair and replacement parts, both new and used, including
18 that manufactured on special order, certified by the
19 purchaser to be used primarily for photoprocessing, and
20 including photoprocessing machinery and equipment purchased
21 for lease.
22 (16) Coal exploration, mining, offhighway hauling,
23 processing, maintenance, and reclamation equipment, including
24 replacement parts and equipment, and including equipment
25 purchased for lease, but excluding motor vehicles required to
26 be registered under the Illinois Vehicle Code. This exemption
27 applies only to tax years ending on or before December 31,
28 2002 and does not apply thereafter.
29 (17) Distillation machinery and equipment, sold as a
30 unit or kit, assembled or installed by the retailer,
31 certified by the user to be used only for the production of
32 ethyl alcohol that will be used for consumption as motor fuel
33 or as a component of motor fuel for the personal use of the
34 user, and not subject to sale or resale. This exemption
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1 applies only to tax years ending on or before December 31,
2 2002 and does not apply thereafter.
3 (18) Manufacturing and assembling machinery and
4 equipment used primarily in the process of manufacturing or
5 assembling tangible personal property for wholesale or retail
6 sale or lease, whether that sale or lease is made directly by
7 the manufacturer or by some other person, whether the
8 materials used in the process are owned by the manufacturer
9 or some other person, or whether that sale or lease is made
10 apart from or as an incident to the seller's engaging in the
11 service occupation of producing machines, tools, dies, jigs,
12 patterns, gauges, or other similar items of no commercial
13 value on special order for a particular purchaser. This
14 exemption applies only to tax years ending on or before
15 December 31, 2002 and does not apply thereafter.
16 (19) Personal property delivered to a purchaser or
17 purchaser's donee inside Illinois when the purchase order for
18 that personal property was received by a florist located
19 outside Illinois who has a florist located inside Illinois
20 deliver the personal property.
21 (20) Semen used for artificial insemination of livestock
22 for direct agricultural production.
23 (21) Horses, or interests in horses, registered with and
24 meeting the requirements of any of the Arabian Horse Club
25 Registry of America, Appaloosa Horse Club, American Quarter
26 Horse Association, United States Trotting Association, or
27 Jockey Club, as appropriate, used for purposes of breeding or
28 racing for prizes.
29 (22) Computers and communications equipment utilized for
30 any hospital purpose and equipment used in the diagnosis,
31 analysis, or treatment of hospital patients purchased by a
32 lessor who leases the equipment, under a lease of one year or
33 longer executed or in effect at the time the lessor would
34 otherwise be subject to the tax imposed by this Act, to a
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1 hospital that has been issued an active tax exemption
2 identification number by the Department under Section 1g of
3 the Retailers' Occupation Tax Act. If the equipment is
4 leased in a manner that does not qualify for this exemption
5 or is used in any other non-exempt manner, the lessor shall
6 be liable for the tax imposed under this Act or the Service
7 Use Tax Act, as the case may be, based on the fair market
8 value of the property at the time the non-qualifying use
9 occurs. No lessor shall collect or attempt to collect an
10 amount (however designated) that purports to reimburse that
11 lessor for the tax imposed by this Act or the Service Use Tax
12 Act, as the case may be, if the tax has not been paid by the
13 lessor. If a lessor improperly collects any such amount from
14 the lessee, the lessee shall have a legal right to claim a
15 refund of that amount from the lessor. If, however, that
16 amount is not refunded to the lessee for any reason, the
17 lessor is liable to pay that amount to the Department.
18 (23) Personal property purchased by a lessor who leases
19 the property, under a lease of one year or longer executed
20 or in effect at the time the lessor would otherwise be
21 subject to the tax imposed by this Act, to a governmental
22 body that has been issued an active sales tax exemption
23 identification number by the Department under Section 1g of
24 the Retailers' Occupation Tax Act. If the property is leased
25 in a manner that does not qualify for this exemption or used
26 in any other non-exempt manner, the lessor shall be liable
27 for the tax imposed under this Act or the Service Use Tax
28 Act, as the case may be, based on the fair market value of
29 the property at the time the non-qualifying use occurs. No
30 lessor shall collect or attempt to collect an amount (however
31 designated) that purports to reimburse that lessor for the
32 tax imposed by this Act or the Service Use Tax Act, as the
33 case may be, if the tax has not been paid by the lessor. If
34 a lessor improperly collects any such amount from the lessee,
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1 the lessee shall have a legal right to claim a refund of that
2 amount from the lessor. If, however, that amount is not
3 refunded to the lessee for any reason, the lessor is liable
4 to pay that amount to the Department.
5 (24) Beginning with taxable years ending on or after
6 December 31, 1995 and ending with taxable years ending on or
7 before December 31, 2004, personal property that is donated
8 for disaster relief to be used in a State or federally
9 declared disaster area in Illinois or bordering Illinois by a
10 manufacturer or retailer that is registered in this State to
11 a corporation, society, association, foundation, or
12 institution that has been issued a sales tax exemption
13 identification number by the Department that assists victims
14 of the disaster who reside within the declared disaster area.
15 (25) Beginning with taxable years ending on or after
16 December 31, 1995 and ending with taxable years ending on or
17 before December 31, 2004, personal property that is used in
18 the performance of infrastructure repairs in this State,
19 including but not limited to municipal roads and streets,
20 access roads, bridges, sidewalks, waste disposal systems,
21 water and sewer line extensions, water distribution and
22 purification facilities, storm water drainage and retention
23 facilities, and sewage treatment facilities, resulting from a
24 State or federally declared disaster in Illinois or bordering
25 Illinois when such repairs are initiated on facilities
26 located in the declared disaster area within 6 months after
27 the disaster.
28 (Source: P.A. 88-337; 88-480; 88-547; 88-670, eff. 12-2-94;
29 89-16, eff. 5-30-95; 89-115, eff. 1-1-96; 89-349, eff.
30 8-17-95; 89-495, eff. 6-24-96; 89-496, eff. 6-25-96; 89-626,
31 eff. 8-9-96; revised 8-21-96.)
32 (35 ILCS 105/3-60) (from Ch. 120, par. 439.3-60)
33 Sec. 3-60. Rolling stock exemption. The rolling stock
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1 exemption applies to rolling stock used by an interstate
2 carrier for hire, even just between points in Illinois, if
3 the rolling stock transports, for hire, persons whose
4 journeys or property whose shipments originate or terminate
5 outside Illinois.
6 This exemption applies only to tax years ending on or
7 before December 31, 2002 and does not apply thereafter.
8 (Source: P.A. 86-44; 86-244; 86-252; 86-820; 86-905; 86-928;
9 86-953; 86-1394; 86-1475.)
10 (35 ILCS 105/3-85)
11 Sec. 3-85. Manufacturer's Purchase Credit. For purchases
12 of machinery and equipment made on and after January 1, 1995,
13 a purchaser of manufacturing machinery and equipment that
14 qualifies for the exemption provided by paragraph (18) of
15 Section 3-5 of this Act earns a credit in an amount equal to
16 a fixed percentage of the tax which would have been incurred
17 under this Act on those purchases. For purchases of graphic
18 arts machinery and equipment made on or after July 1, 1996, a
19 purchaser of graphic arts machinery and equipment that
20 qualifies for the exemption provided by paragraph (6) of
21 Section 3-5 of this Act earns a credit in an amount equal to
22 a fixed percentage of the tax that would have been incurred
23 under this Act on those purchases. The credit earned for
24 purchases of manufacturing machinery and equipment or graphic
25 arts machinery and equipment shall be referred to as the
26 Manufacturer's Purchase Credit. A graphic arts producer is a
27 person engaged in graphic arts production as defined in
28 Section 2-30 of the Retailers' Occupation Tax Act. Beginning
29 July 1, 1996, all references in this Section to manufacturers
30 or manufacturing shall also be deemed to refer to graphic
31 arts producers or graphic arts production.
32 The amount of credit shall be a percentage of the tax
33 that would have been incurred on the purchase of
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1 manufacturing machinery and equipment or graphic arts
2 machinery and equipment if the exemptions provided by
3 paragraph (6) or paragraph (18) of Section 3-5 of this Act
4 had not been applicable. The percentage shall be as follows:
5 (1) 15% for purchases made on or before June 30,
6 1995.
7 (2) 25% for purchases made after June 30, 1995, and
8 on or before June 30, 1996.
9 (3) 40% for purchases made after June 30, 1996, and
10 on or before June 30, 1997.
11 (4) 50% for purchases made on or after July 1,
12 1997.
13 A purchaser of production related tangible personal
14 property desiring to use the Manufacturer's Purchase Credit
15 shall certify to the seller that the purchaser is satisfying
16 all or part of the liability under the Use Tax Act or the
17 Service Use Tax Act that is due on the purchase of the
18 production related tangible personal property by use of
19 Manufacturer's Purchase Credit. The Manufacturer's Purchase
20 Credit certification must be dated and shall include the name
21 and address of the purchaser, the purchaser's registration
22 number, if registered, the credit being applied, and a
23 statement that the State Use Tax or Service Use Tax liability
24 is being satisfied with the manufacturer's or graphic arts
25 producer's accumulated purchase credit. Certification may be
26 incorporated into the manufacturer's or graphic arts
27 producer's purchase order. Manufacturer's Purchase Credit
28 certification by the manufacturer or graphic arts producer
29 may be used to satisfy the retailer's or serviceman's
30 liability under the Retailers' Occupation Tax Act or Service
31 Occupation Tax Act for the credit claimed, not to exceed
32 6.25% of the receipts subject to tax from a qualifying
33 purchase, but only if the retailer or serviceman reports the
34 Manufacturer's Purchase Credit claimed as required by the
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1 Department. The Manufacturer's Purchase Credit earned by
2 purchase of exempt manufacturing machinery and equipment or
3 graphic arts machinery and equipment is a non-transferable
4 credit. A manufacturer or graphic arts producer that enters
5 into a contract involving the installation of tangible
6 personal property into real estate within a manufacturing or
7 graphic arts production facility may authorize a construction
8 contractor to utilize credit accumulated by the manufacturer
9 or graphic arts producer to purchase the tangible personal
10 property. A manufacturer or graphic arts producer intending
11 to use accumulated credit to purchase such tangible personal
12 property shall execute a written contract authorizing the
13 contractor to utilize a specified dollar amount of credit.
14 The contractor shall furnish the supplier with the
15 manufacturer's or graphic arts producer's name, registration
16 or resale number, and a statement that a specific amount of
17 the Use Tax or Service Use Tax liability, not to exceed 6.25%
18 of the selling price, is being satisfied with the credit. The
19 manufacturer or graphic arts producer shall remain liable to
20 timely report all information required by the annual Report
21 of Manufacturer's Purchase Credit Used for all credit
22 utilized by a construction contractor.
23 The Manufacturer's Purchase Credit may be used to satisfy
24 liability under the Use Tax Act or the Service Use Tax Act
25 due on the purchase of production related tangible personal
26 property (including purchases by a manufacturer, by a graphic
27 arts producer, or by a lessor who rents or leases the use of
28 the property to a manufacturer or graphic arts producer) that
29 does not otherwise qualify for the manufacturing machinery
30 and equipment exemption or the graphic arts machinery and
31 equipment exemption. "Production related tangible personal
32 property" means (i) all tangible personal property used or
33 consumed by the purchaser in a manufacturing facility in
34 which a manufacturing process described in Section 2-45 of
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1 the Retailers' Occupation Tax Act takes place, including
2 tangible personal property purchased for incorporation into
3 real estate within a manufacturing facility and including,
4 but not limited to, tangible personal property used or
5 consumed in activities such as preproduction material
6 handling, receiving, quality control, inventory control,
7 storage, staging, and packaging for shipping and
8 transportation purposes; (ii) all tangible personal property
9 used or consumed by the purchaser in a graphic arts facility
10 in which graphic arts production as described in Section 2-30
11 of the Retailers' Occupation Tax Act takes place, including
12 tangible personal property purchased for incorporation into
13 real estate within a graphic arts facility and including, but
14 not limited to, all tangible personal property used or
15 consumed in activities such as graphic arts preliminary or
16 pre-press production, pre-production material handling,
17 receiving, quality control, inventory control, storage,
18 staging, sorting, labeling, mailing, tying, wrapping, and
19 packaging; and (iii) all tangible personal property used or
20 consumed by the purchaser for research and development.
21 "Production related tangible personal property" does not
22 include (i) tangible personal property used, within or
23 without a manufacturing facility, in sales, purchasing,
24 accounting, fiscal management, marketing, personnel
25 recruitment or selection, or landscaping or (ii) tangible
26 personal property required to be titled or registered with a
27 department, agency, or unit of federal, state, or local
28 government. The Manufacturer's Purchase Credit may be used
29 to satisfy the tax arising either from the purchase of
30 machinery and equipment on or after January 1, 1995 for which
31 the exemption provided by paragraph (18) of Section 3-5 of
32 this Act was erroneously claimed, or the purchase of
33 machinery and equipment on or after July 1, 1996 for which
34 the exemption provided by paragraph (6) of Section 3-5 of
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1 this Act was erroneously claimed, but not in satisfaction of
2 penalty, if any, and interest for failure to pay the tax when
3 due. A purchaser of production related tangible personal
4 property who is required to pay Illinois Use Tax or Service
5 Use Tax on the purchase directly to the Department may
6 utilize the Manufacturer's Purchase Credit in satisfaction of
7 the tax arising from that purchase, but not in satisfaction
8 of penalty and interest. A purchaser who uses the
9 Manufacturer's Purchase Credit to purchase property which is
10 later determined not to be production related tangible
11 personal property may be liable for tax, penalty, and
12 interest on the purchase of that property as of the date of
13 purchase but shall be entitled to use the disallowed
14 Manufacturer's Purchase Credit, so long as it has not
15 expired, on qualifying purchases of production related
16 tangible personal property not previously subject to credit
17 usage. The Manufacturer's Purchase Credit earned by a
18 manufacturer or graphic arts producer expires the last day of
19 the second calendar year following the calendar year in which
20 the credit arose.
21 A purchaser earning Manufacturer's Purchase Credit shall
22 sign and file an annual Report of Manufacturer's Purchase
23 Credit Earned for each calendar year no later than the last
24 day of the sixth month following the calendar year in which a
25 Manufacturer's Purchase Credit is earned. A Report of
26 Manufacturer's Purchase Credit Earned shall be filed on forms
27 as prescribed or approved by the Department and shall state,
28 for each month of the calendar year: (i) the total purchase
29 price of all purchases of exempt manufacturing or graphic
30 arts machinery on which the credit was earned; (ii) the total
31 State Use Tax or Service Use Tax which would have been due on
32 those items; (iii) the percentage used to calculate the
33 amount of credit earned; (iv) the amount of credit earned;
34 and (v) such other information as the Department may
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1 reasonably require. A purchaser earning Manufacturer's
2 Purchase Credit shall maintain records which identify, as to
3 each purchase of manufacturing or graphic arts machinery and
4 equipment on which the purchaser earned Manufacturer's
5 Purchase Credit, the vendor (including, if applicable, either
6 the vendor's registration number or Federal Employer
7 Identification Number), the purchase price, and the amount of
8 Manufacturer's Purchase Credit earned on each purchase.
9 A purchaser using Manufacturer's Purchase Credit shall
10 sign and file an annual Report of Manufacturer's Purchase
11 Credit Used for each calendar year no later than the last day
12 of the sixth month following the calendar year in which a
13 Manufacturer's Purchase Credit is used. A Report of
14 Manufacturer's Purchase Credit Used shall be filed on forms
15 as prescribed or approved by the Department and shall state,
16 for each month of the calendar year: (i) the total purchase
17 price of production related tangible personal property
18 purchased from Illinois suppliers; (ii) the total purchase
19 price of production related tangible personal property
20 purchased from out-of-state suppliers; (iii) the total amount
21 of credit used during such month; and (iv) such other
22 information as the Department may reasonably require. A
23 purchaser using Manufacturer's Purchase Credit shall maintain
24 records that identify, as to each purchase of production
25 related tangible personal property on which the purchaser
26 used Manufacturer's Purchase Credit, the vendor (including,
27 if applicable, either the vendor's registration number or
28 Federal Employer Identification Number), the purchase price,
29 and the amount of Manufacturer's Purchase Credit used on each
30 purchase.
31 No annual report shall be filed before May 1, 1996. A
32 purchaser that fails to file an annual Report of
33 Manufacturer's Purchase Credit Earned or an annual Report of
34 Manufacturer's Purchase Credit Used by the last day of the
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1 sixth month following the end of the calendar year shall
2 forfeit all Manufacturer's Purchase Credit for that calendar
3 year unless it establishes that its failure to file was due
4 to reasonable cause. Manufacturer's Purchase Credit reports
5 may be amended to report and claim credit on qualifying
6 purchases not previously reported at any time before the
7 credit would have expired, unless both the Department and the
8 purchaser have agreed to an extension of the statute of
9 limitations for the issuance of a notice of tax liability as
10 provided in Section 4 of the Retailers' Occupation Tax Act.
11 If the time for assessment or refund has been extended, then
12 amended reports for a calendar year may be filed at any time
13 prior to the date to which the statute of limitations for the
14 calendar year or portion thereof has been extended. No
15 Manufacturer's Purchase Credit report filed with the
16 Department for periods prior to January 1, 1995 shall be
17 approved. Manufacturer's Purchase Credit claimed on an
18 amended report may be used to satisfy tax liability under the
19 Use Tax Act or the Service Use Tax Act (i) on qualifying
20 purchases of production related tangible personal property
21 made after the date the amended report is filed or (ii)
22 assessed by the Department on qualifying purchases of
23 production related tangible personal property made in the
24 case of manufacturers on or after January 1, 1995, or in the
25 case of graphic arts producers on or after July 1, 1996.
26 If the purchaser is not the manufacturer or a graphic
27 arts producer, but rents or leases the use of the property to
28 a manufacturer or graphic arts producer, the purchaser may
29 earn, report, and use Manufacturer's Purchase Credit in the
30 same manner as a manufacturer or graphic arts producer.
31 A purchaser shall not be entitled to any Manufacturer's
32 Purchase Credit for a purchase that is required to be
33 reported and is not timely reported as provided in this
34 Section. A purchaser remains liable for (i) any tax that was
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1 satisfied by use of a Manufacturer's Purchase Credit, as of
2 the date of purchase, if that use is not timely reported as
3 required in this Section and (ii) for any applicable
4 penalties and interest for failing to pay the tax when due.
5 This credit applies only to tax years ending on or before
6 December 31, 2002 and does not apply thereafter.
7 (Source: P.A. 88-547, eff. 6-30-94; 89-89, eff. 6-30-95;
8 89-235, eff. 8-4-95; 89-531, eff. 7-19-96.)
9 (35 ILCS 105/12) (from Ch. 120, par. 439.12)
10 Sec. 12. Applicability of Retailers' Occupation Tax Act
11 and Uniform Penalty and Interest Act. All of the provisions
12 of Sections 1d, 1e, 1f, 1i, 1j, 1k, 1m, 1n, 2a, 2b, 2c, 3, 4
13 (except that the time limitation provisions shall run from
14 the date when the tax is due rather than from the date when
15 gross receipts are received), 5 (except that the time
16 limitation provisions on the issuance of notices of tax
17 liability shall run from the date when the tax is due rather
18 than from the date when gross receipts are received and
19 except that in the case of a failure to file a return
20 required by this Act, no notice of tax liability shall be
21 issued on and after each July 1 and January 1 covering tax
22 due with that return during any month or period more than 6
23 years before that July 1 or January 1, respectively), 5a, 5b,
24 5c, 5d, 5e, 5f, 5g, 5h, 5j, 5k, 5l, 7, 8, 9, 10, 11 and 12 of
25 the Retailers' Occupation Tax Act and Section 3-7 of the
26 Uniform Penalty and Interest Act, which are not inconsistent
27 with this Act, shall apply, as far as practicable, to the
28 subject matter of this Act to the same extent as if such
29 provisions were included herein.
30 The exemptions provided in Sections 1d, 1j, and 5k of the
31 Retailers' Occupation Tax Act apply only to tax years ending
32 on or before December 31, 2002 and do not apply thereafter.
33 (Source: P.A. 87-205; 87-895; 88-660, eff. 9-16-94.)
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1 Section 15. The Service Use Tax Act is amended by
2 changing Sections 2, 2a, 3-5, 3-70, and 12 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
5 right or power over tangible personal property incident to
6 the ownership of that property, but does not include the sale
7 or use for demonstration by him of that property in any form
8 as tangible personal property in the regular course of
9 business. "Use" does not mean the interim use of tangible
10 personal property nor the physical incorporation of tangible
11 personal property, as an ingredient or constituent, into
12 other tangible personal property, (a) which is sold in the
13 regular course of business or (b) which the person
14 incorporating such ingredient or constituent therein has
15 undertaken at the time of such purchase to cause to be
16 transported in interstate commerce to destinations outside
17 the State of Illinois.
18 "Purchased from a serviceman" means the acquisition of
19 the ownership of, or title to, tangible personal property
20 through a sale of service.
21 "Purchaser" means any person who, through a sale of
22 service, acquires the ownership of, or title to, any tangible
23 personal property.
24 "Cost price" means the consideration paid by the
25 serviceman for a purchase valued in money, whether paid in
26 money or otherwise, including cash, credits and services, and
27 shall be determined without any deduction on account of the
28 supplier's cost of the property sold or on account of any
29 other expense incurred by the supplier. When a serviceman
30 contracts out part or all of the services required in his
31 sale of service, it shall be presumed that the cost price to
32 the serviceman of the property transferred to him or her by
33 his or her subcontractor is equal to 50% of the
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1 subcontractor's charges to the serviceman in the absence of
2 proof of the consideration paid by the subcontractor for the
3 purchase of such property.
4 "Selling price" means the consideration for a sale valued
5 in money whether received in money or otherwise, including
6 cash, credits and service, and shall be determined without
7 any deduction on account of the serviceman's cost of the
8 property sold, the cost of materials used, labor or service
9 cost or any other expense whatsoever, but does not include
10 interest or finance charges which appear as separate items on
11 the bill of sale or sales contract nor charges that are added
12 to prices by sellers on account of the seller's duty to
13 collect, from the purchaser, the tax that is imposed by this
14 Act.
15 "Department" means the Department of Revenue.
16 "Person" means any natural individual, firm, partnership,
17 association, joint stock company, joint venture, public or
18 private corporation, limited liability company, and any
19 receiver, executor, trustee, guardian or other representative
20 appointed by order of any court.
21 "Sale of service" means any transaction except:
22 (1) a retail sale of tangible personal property
23 taxable under the Retailers' Occupation Tax Act or under
24 the Use Tax Act.
25 (2) a sale of tangible personal property for the
26 purpose of resale made in compliance with Section 2c of
27 the Retailers' Occupation Tax Act.
28 (3) except as hereinafter provided, a sale or
29 transfer of tangible personal property as an incident to
30 the rendering of service for or by any governmental body,
31 or for or by any corporation, society, association,
32 foundation or institution organized and operated
33 exclusively for charitable, religious or educational
34 purposes or any not-for-profit corporation, society,
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1 association, foundation, institution or organization
2 which has no compensated officers or employees and which
3 is organized and operated primarily for the recreation of
4 persons 55 years of age or older. A limited liability
5 company may qualify for the exemption under this
6 paragraph only if the limited liability company is
7 organized and operated exclusively for educational
8 purposes.
9 (4) a sale or transfer of tangible personal
10 property as an incident to the rendering of service for
11 interstate carriers for hire for use as rolling stock
12 moving in interstate commerce or by lessors under a lease
13 of one year or longer, executed or in effect at the time
14 of purchase of personal property, to interstate carriers
15 for hire for use as rolling stock moving in interstate
16 commerce so long as so used by such interstate carriers
17 for hire, and equipment operated by a telecommunications
18 provider, licensed as a common carrier by the Federal
19 Communications Commission, which is permanently installed
20 in or affixed to aircraft moving in interstate commerce.
21 This exemption applies only to tax years ending on or
22 before December 31, 2002 and does not apply thereafter.
23 (4a) a sale or transfer of tangible personal
24 property as an incident to the rendering of service for
25 owners, lessors, or shippers of tangible personal
26 property which is utilized by interstate carriers for
27 hire for use as rolling stock moving in interstate
28 commerce so long as so used by interstate carriers for
29 hire, and equipment operated by a telecommunications
30 provider, licensed as a common carrier by the Federal
31 Communications Commission, which is permanently installed
32 in or affixed to aircraft moving in interstate commerce.
33 This exemption applies only to tax years ending on or
34 before December 31, 2002 and does not apply thereafter.
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1 (5) a sale or transfer of machinery and equipment
2 used primarily in the process of the manufacturing or
3 assembling, either in an existing, an expanded or a new
4 manufacturing facility, of tangible personal property for
5 wholesale or retail sale or lease, whether such sale or
6 lease is made directly by the manufacturer or by some
7 other person, whether the materials used in the process
8 are owned by the manufacturer or some other person, or
9 whether such sale or lease is made apart from or as an
10 incident to the seller's engaging in a service occupation
11 and the applicable tax is a Service Use Tax or Service
12 Occupation Tax, rather than Use Tax or Retailers'
13 Occupation Tax. This exemption applies only to tax years
14 ending on or before December 31, 2002 and does not apply
15 thereafter.
16 (5a) the repairing, reconditioning or remodeling,
17 for a common carrier by rail, of tangible personal
18 property which belongs to such carrier for hire, and as
19 to which such carrier receives the physical possession of
20 the repaired, reconditioned or remodeled item of tangible
21 personal property in Illinois, and which such carrier
22 transports, or shares with another common carrier in the
23 transportation of such property, out of Illinois on a
24 standard uniform bill of lading showing the person who
25 repaired, reconditioned or remodeled the property to a
26 destination outside Illinois, for use outside Illinois.
27 (5b) a sale or transfer of tangible personal
28 property which is produced by the seller thereof on
29 special order in such a way as to have made the
30 applicable tax the Service Occupation Tax or the Service
31 Use Tax, rather than the Retailers' Occupation Tax or the
32 Use Tax, for an interstate carrier by rail which receives
33 the physical possession of such property in Illinois, and
34 which transports such property, or shares with another
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1 common carrier in the transportation of such property,
2 out of Illinois on a standard uniform bill of lading
3 showing the seller of the property as the shipper or
4 consignor of such property to a destination outside
5 Illinois, for use outside Illinois.
6 (6) a sale or transfer of distillation machinery
7 and equipment, sold as a unit or kit and assembled or
8 installed by the retailer, which machinery and equipment
9 is certified by the user to be used only for the
10 production of ethyl alcohol that will be used for
11 consumption as motor fuel or as a component of motor fuel
12 for the personal use of such user and not subject to sale
13 or resale. This exemption applies only to tax years
14 ending on or before December 31, 2002 and does not apply
15 thereafter.
16 (7) at the election of any serviceman not required
17 to be otherwise registered as a retailer under Section 2a
18 of the Retailers' Occupation Tax Act, made for each
19 fiscal year sales of service in which the aggregate
20 annual cost price of tangible personal property
21 transferred as an incident to the sales of service is
22 less than 35%, or 75% in the case of servicemen
23 transferring prescription drugs or servicemen engaged in
24 graphic arts production, of the aggregate annual total
25 gross receipts from all sales of service. The purchase of
26 such tangible personal property by the serviceman shall
27 be subject to tax under the Retailers' Occupation Tax Act
28 and the Use Tax Act. However, if a primary serviceman
29 who has made the election described in this paragraph
30 subcontracts service work to a secondary serviceman who
31 has also made the election described in this paragraph,
32 the primary serviceman does not incur a Use Tax liability
33 if the secondary serviceman (i) has paid or will pay Use
34 Tax on his or her cost price of any tangible personal
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1 property transferred to the primary serviceman and (ii)
2 certifies that fact in writing to the primary serviceman.
3 Tangible personal property transferred incident to the
4 completion of a maintenance agreement is exempt from the tax
5 imposed pursuant to this Act.
6 Exemption (5) also includes machinery and equipment used
7 in the general maintenance or repair of such exempt machinery
8 and equipment or for in-house manufacture of exempt machinery
9 and equipment. For the purposes of exemption (5), each of
10 these terms shall have the following meanings: (1)
11 "manufacturing process" shall mean the production of any
12 article of tangible personal property, whether such article
13 is a finished product or an article for use in the process of
14 manufacturing or assembling a different article of tangible
15 personal property, by procedures commonly regarded as
16 manufacturing, processing, fabricating, or refining which
17 changes some existing material or materials into a material
18 with a different form, use or name. In relation to a
19 recognized integrated business composed of a series of
20 operations which collectively constitute manufacturing, or
21 individually constitute manufacturing operations, the
22 manufacturing process shall be deemed to commence with the
23 first operation or stage of production in the series, and
24 shall not be deemed to end until the completion of the final
25 product in the last operation or stage of production in the
26 series; and further, for purposes of exemption (5),
27 photoprocessing is deemed to be a manufacturing process of
28 tangible personal property for wholesale or retail sale; (2)
29 "assembling process" shall mean the production of any article
30 of tangible personal property, whether such article is a
31 finished product or an article for use in the process of
32 manufacturing or assembling a different article of tangible
33 personal property, by the combination of existing materials
34 in a manner commonly regarded as assembling which results in
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1 a material of a different form, use or name; (3) "machinery"
2 shall mean major mechanical machines or major components of
3 such machines contributing to a manufacturing or assembling
4 process; and (4) "equipment" shall include any independent
5 device or tool separate from any machinery but essential to
6 an integrated manufacturing or assembly process; including
7 computers used primarily in operating exempt machinery and
8 equipment in a computer assisted design, computer assisted
9 manufacturing (CAD/CAM) system; or any subunit or assembly
10 comprising a component of any machinery or auxiliary, adjunct
11 or attachment parts of machinery, such as tools, dies, jigs,
12 fixtures, patterns and molds; or any parts which require
13 periodic replacement in the course of normal operation; but
14 shall not include hand tools. The purchaser of such machinery
15 and equipment who has an active resale registration number
16 shall furnish such number to the seller at the time of
17 purchase. The user of such machinery and equipment and tools
18 without an active resale registration number shall prepare a
19 certificate of exemption for each transaction stating facts
20 establishing the exemption for that transaction, which
21 certificate shall be available to the Department for
22 inspection or audit. The Department shall prescribe the form
23 of the certificate.
24 Any informal rulings, opinions or letters issued by the
25 Department in response to an inquiry or request for any
26 opinion from any person regarding the coverage and
27 applicability of exemption (5) to specific devices shall be
28 published, maintained as a public record, and made available
29 for public inspection and copying. If the informal ruling,
30 opinion or letter contains trade secrets or other
31 confidential information, where possible the Department shall
32 delete such information prior to publication. Whenever such
33 informal rulings, opinions, or letters contain any policy of
34 general applicability, the Department shall formulate and
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1 adopt such policy as a rule in accordance with the provisions
2 of the Illinois Administrative Procedure Act.
3 On and after July 1, 1987, no entity otherwise eligible
4 under exemption (3) of this Section shall make tax free
5 purchases unless it has an active exemption identification
6 number issued by the Department.
7 The purchase, employment and transfer of such tangible
8 personal property as newsprint and ink for the primary
9 purpose of conveying news (with or without other information)
10 is not a purchase, use or sale of service or of tangible
11 personal property within the meaning of this Act.
12 "Serviceman" means any person who is engaged in the
13 occupation of making sales of service.
14 "Sale at retail" means "sale at retail" as defined in the
15 Retailers' Occupation Tax Act.
16 "Supplier" means any person who makes sales of tangible
17 personal property to servicemen for the purpose of resale as
18 an incident to a sale of service.
19 "Serviceman maintaining a place of business in this
20 State", or any like term, means and includes any serviceman:
21 1. having or maintaining within this State,
22 directly or by a subsidiary, an office, distribution
23 house, sales house, warehouse or other place of business,
24 or any agent or other representative operating within
25 this State under the authority of the serviceman or its
26 subsidiary, irrespective of whether such place of
27 business or agent or other representative is located here
28 permanently or temporarily, or whether such serviceman or
29 subsidiary is licensed to do business in this State;
30 2. soliciting orders for tangible personal property
31 by means of a telecommunication or television shopping
32 system (which utilizes toll free numbers) which is
33 intended by the retailer to be broadcast by cable
34 television or other means of broadcasting, to consumers
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1 located in this State;
2 3. pursuant to a contract with a broadcaster or
3 publisher located in this State, soliciting orders for
4 tangible personal property by means of advertising which
5 is disseminated primarily to consumers located in this
6 State and only secondarily to bordering jurisdictions;
7 4. soliciting orders for tangible personal property
8 by mail if the solicitations are substantial and
9 recurring and if the retailer benefits from any banking,
10 financing, debt collection, telecommunication, or
11 marketing activities occurring in this State or benefits
12 from the location in this State of authorized
13 installation, servicing, or repair facilities;
14 5. being owned or controlled by the same interests
15 which own or control any retailer engaging in business in
16 the same or similar line of business in this State;
17 6. having a franchisee or licensee operating under
18 its trade name if the franchisee or licensee is required
19 to collect the tax under this Section;
20 7. pursuant to a contract with a cable television
21 operator located in this State, soliciting orders for
22 tangible personal property by means of advertising which
23 is transmitted or distributed over a cable television
24 system in this State; or
25 8. engaging in activities in Illinois, which
26 activities in the state in which the supply business
27 engaging in such activities is located would constitute
28 maintaining a place of business in that state.
29 (Source: P.A. 88-480; 88-505; 88-547; 88-670, eff. 12-2-94;
30 89-675, eff. 8-14-96.)
31 (35 ILCS 110/2a) (from Ch. 120, par. 439.32a)
32 Sec. 2a. "Pollution control facilities" means any system,
33 method, construction, device or appliance appurtenant thereto
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1 used in this State acquired as an incident to the purchase of
2 a service from a serviceman for the primary purpose of
3 eliminating, preventing, or reducing air and water pollution
4 as the term "air pollution" or "water pollution" is defined
5 in the "Environmental Protection Act", enacted by the 76th
6 General Assembly, or for the primary purpose of treating,
7 pretreating, modifying or disposing of any potential solid,
8 liquid or gaseous pollutant which if released without such
9 treatment, pretreatment, modification or disposal might be
10 harmful, detrimental or offensive to human, plant or animal
11 life, or to property.
12 The purchase, employment or transfer of such tangible
13 personal property as pollution control facilities is not a
14 purchase, use or sale of service or of tangible personal
15 property within the meaning of this Act.
16 This exemption applies only to tax years ending on or
17 before December 31, 2002 and does not apply thereafter.
18 (Source: P.A. 76-2248.)
19 (35 ILCS 110/3-5) (from Ch. 120, par. 439.33-5)
20 Sec. 3-5. Exemptions. Use of the following tangible
21 personal property is exempt from the tax imposed by this Act:
22 (1) Personal property purchased from a corporation,
23 society, association, foundation, institution, or
24 organization, other than a limited liability company, that is
25 organized and operated as a not-for-profit service enterprise
26 for the benefit of persons 65 years of age or older if the
27 personal property was not purchased by the enterprise for the
28 purpose of resale by the enterprise.
29 (2) Personal property purchased by a non-profit Illinois
30 county fair association for use in conducting, operating, or
31 promoting the county fair.
32 (3) Personal property purchased by a not-for-profit
33 music or dramatic arts organization that establishes, by
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1 proof required by the Department by rule, that it has
2 received an exemption under Section 501(c)(3) of the Internal
3 Revenue Code and that is organized and operated for the
4 presentation of live public performances of musical or
5 theatrical works on a regular basis.
6 (4) Legal tender, currency, medallions, or gold or
7 silver coinage issued by the State of Illinois, the
8 government of the United States of America, or the government
9 of any foreign country, and bullion.
10 (5) Graphic arts machinery and equipment, including
11 repair and replacement parts, both new and used, and
12 including that manufactured on special order or purchased for
13 lease, certified by the purchaser to be used primarily for
14 graphic arts production. This exemption applies only to tax
15 years ending on or before December 31, 2002 and does not
16 apply thereafter.
17 (6) Personal property purchased from a teacher-sponsored
18 student organization affiliated with an elementary or
19 secondary school located in Illinois.
20 (7) Farm machinery and equipment, both new and used,
21 including that manufactured on special order, certified by
22 the purchaser to be used primarily for production agriculture
23 or State or federal agricultural programs, including
24 individual replacement parts for the machinery and equipment,
25 and including machinery and equipment purchased for lease,
26 but excluding motor vehicles required to be registered under
27 the Illinois Vehicle Code. This exemption applies only to tax
28 years ending on or before December 31, 2002 and does not
29 apply thereafter.
30 (8) Fuel and petroleum products sold to or used by an
31 air common carrier, certified by the carrier to be used for
32 consumption, shipment, or storage in the conduct of its
33 business as an air common carrier, for a flight destined for
34 or returning from a location or locations outside the United
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1 States without regard to previous or subsequent domestic
2 stopovers. This exemption applies only to tax years ending on
3 or before December 31, 2002 and does not apply thereafter.
4 (9) Proceeds of mandatory service charges separately
5 stated on customers' bills for the purchase and consumption
6 of food and beverages acquired as an incident to the purchase
7 of a service from a serviceman, to the extent that the
8 proceeds of the service charge are in fact turned over as
9 tips or as a substitute for tips to the employees who
10 participate directly in preparing, serving, hosting or
11 cleaning up the food or beverage function with respect to
12 which the service charge is imposed.
13 (10) Oil field exploration, drilling, and production
14 equipment, including (i) rigs and parts of rigs, rotary rigs,
15 cable tool rigs, and workover rigs, (ii) pipe and tubular
16 goods, including casing and drill strings, (iii) pumps and
17 pump-jack units, (iv) storage tanks and flow lines, (v) any
18 individual replacement part for oil field exploration,
19 drilling, and production equipment, and (vi) machinery and
20 equipment purchased for lease; but excluding motor vehicles
21 required to be registered under the Illinois Vehicle Code.
22 This exemption applies only to tax years ending on or before
23 December 31, 2002 and does not apply thereafter.
24 (11) Proceeds from the sale of photoprocessing machinery
25 and equipment, including repair and replacement parts, both
26 new and used, including that manufactured on special order,
27 certified by the purchaser to be used primarily for
28 photoprocessing, and including photoprocessing machinery and
29 equipment purchased for lease.
30 (12) Coal exploration, mining, offhighway hauling,
31 processing, maintenance, and reclamation equipment, including
32 replacement parts and equipment, and including equipment
33 purchased for lease, but excluding motor vehicles required to
34 be registered under the Illinois Vehicle Code. This exemption
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1 applies only to tax years ending on or before December 31,
2 2002 and does not apply thereafter.
3 (13) Semen used for artificial insemination of livestock
4 for direct agricultural production.
5 (14) Horses, or interests in horses, registered with and
6 meeting the requirements of any of the Arabian Horse Club
7 Registry of America, Appaloosa Horse Club, American Quarter
8 Horse Association, United States Trotting Association, or
9 Jockey Club, as appropriate, used for purposes of breeding or
10 racing for prizes.
11 (15) Computers and communications equipment utilized for
12 any hospital purpose and equipment used in the diagnosis,
13 analysis, or treatment of hospital patients purchased by a
14 lessor who leases the equipment, under a lease of one year or
15 longer executed or in effect at the time the lessor would
16 otherwise be subject to the tax imposed by this Act, to a
17 hospital that has been issued an active tax exemption
18 identification number by the Department under Section 1g of
19 the Retailers' Occupation Tax Act. If the equipment is leased
20 in a manner that does not qualify for this exemption or is
21 used in any other non-exempt manner, the lessor shall be
22 liable for the tax imposed under this Act or the Use Tax Act,
23 as the case may be, based on the fair market value of the
24 property at the time the non-qualifying use occurs. No
25 lessor shall collect or attempt to collect an amount (however
26 designated) that purports to reimburse that lessor for the
27 tax imposed by this Act or the Use Tax Act, as the case may
28 be, if the tax has not been paid by the lessor. If a lessor
29 improperly collects any such amount from the lessee, the
30 lessee shall have a legal right to claim a refund of that
31 amount from the lessor. If, however, that amount is not
32 refunded to the lessee for any reason, the lessor is liable
33 to pay that amount to the Department.
34 (16) Personal property purchased by a lessor who leases
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1 the property, under a lease of one year or longer executed or
2 in effect at the time the lessor would otherwise be subject
3 to the tax imposed by this Act, to a governmental body that
4 has been issued an active tax exemption identification number
5 by the Department under Section 1g of the Retailers'
6 Occupation Tax Act. If the property is leased in a manner
7 that does not qualify for this exemption or is used in any
8 other non-exempt manner, the lessor shall be liable for the
9 tax imposed under this Act or the Use Tax Act, as the case
10 may be, based on the fair market value of the property at the
11 time the non-qualifying use occurs. No lessor shall collect
12 or attempt to collect an amount (however designated) that
13 purports to reimburse that lessor for the tax imposed by this
14 Act or the Use Tax Act, as the case may be, if the tax has
15 not been paid by the lessor. If a lessor improperly collects
16 any such amount from the lessee, the lessee shall have a
17 legal right to claim a refund of that amount from the lessor.
18 If, however, that amount is not refunded to the lessee for
19 any reason, the lessor is liable to pay that amount to the
20 Department.
21 (17) Beginning with taxable years ending on or after
22 December 31, 1995 and ending with taxable years ending on or
23 before December 31, 2004, personal property that is donated
24 for disaster relief to be used in a State or federally
25 declared disaster area in Illinois or bordering Illinois by a
26 manufacturer or retailer that is registered in this State to
27 a corporation, society, association, foundation, or
28 institution that has been issued a sales tax exemption
29 identification number by the Department that assists victims
30 of the disaster who reside within the declared disaster area.
31 (18) Beginning with taxable years ending on or after
32 December 31, 1995 and ending with taxable years ending on or
33 before December 31, 2004, personal property that is used in
34 the performance of infrastructure repairs in this State,
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1 including but not limited to municipal roads and streets,
2 access roads, bridges, sidewalks, waste disposal systems,
3 water and sewer line extensions, water distribution and
4 purification facilities, storm water drainage and retention
5 facilities, and sewage treatment facilities, resulting from a
6 State or federally declared disaster in Illinois or bordering
7 Illinois when such repairs are initiated on facilities
8 located in the declared disaster area within 6 months after
9 the disaster.
10 (Source: P.A. 88-337; 88-480; 88-547; 88-670, eff. 12-2-94;
11 89-16, eff. 5-30-95; 89-115, eff. 1-1-96; 89-349, eff.
12 8-17-95; 89-495, eff. 6-24-96; 89-496, eff. 6-25-96; 89-626,
13 eff. 8-9-96; revised 8-21-96.)
14 (35 ILCS 110/3-70)
15 Sec. 3-70. Manufacturer's Purchase Credit. For purchases
16 of machinery and equipment made on and after January 1, 1995,
17 a purchaser of manufacturing machinery and equipment that
18 qualifies for the exemption provided by Section 2 of this Act
19 earns a credit in an amount equal to a fixed percentage of
20 the tax which would have been incurred under this Act on
21 those purchases. For purchases of graphic arts machinery and
22 equipment made on or after July 1, 1996, a purchase of
23 graphic arts machinery and equipment that qualifies for the
24 exemption provided by paragraph (5) of Section 3-5 of this
25 Act earns a credit in an amount equal to a fixed percentage
26 of the tax that would have been incurred under this Act on
27 those purchases. The credit earned for the purchase of
28 manufacturing machinery and equipment and graphic arts
29 machinery and equipment shall be referred to as the
30 Manufacturer's Purchase Credit. A graphic arts producer is a
31 person engaged in graphic arts production as defined in
32 Section 3-30 of the Service Occupation Tax Act. Beginning
33 July 1, 1996, all references in this Section to manufacturers
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1 or manufacturing shall also refer to graphic arts producers
2 or graphic arts production.
3 The amount of credit shall be a percentage of the tax
4 that would have been incurred on the purchase of the
5 manufacturing machinery and equipment or graphic arts
6 machinery and equipment if the exemptions provided by Section
7 2 or paragraph (5) of Section 3-5 of this Act had not been
8 applicable. The percentage shall be as follows:
9 (1) 15% for purchases made on or before June 30,
10 1995.
11 (2) 25% for purchases made after June 30, 1995, and
12 on or before June 30, 1996.
13 (3) 40% for purchases made after June 30, 1996, and
14 on or before June 30, 1997.
15 (4) 50% for purchases made on or after July 1,
16 1997.
17 A purchaser of production related tangible personal
18 property desiring to use the Manufacturer's Purchase Credit
19 shall certify to the seller that the purchaser is satisfying
20 all or part of the liability under the Use Tax Act or the
21 Service Use Tax Act that is due on the purchase of the
22 production related tangible personal property by use of a
23 Manufacturer's Purchase Credit. The Manufacturer's Purchase
24 Credit certification must be dated and shall include the name
25 and address of the purchaser, the purchaser's registration
26 number, if registered, the credit being applied, and a
27 statement that the State Use Tax or Service Use Tax liability
28 is being satisfied with the manufacturer's or graphic arts
29 producer's accumulated purchase credit. Certification may be
30 incorporated into the manufacturer's or graphic arts
31 producer's purchase order. Manufacturer's Purchase Credit
32 certification by the manufacturer or graphic arts producer
33 may be used to satisfy the retailer's or serviceman's
34 liability under the Retailers' Occupation Tax Act or Service
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1 Occupation Tax Act for the credit claimed, not to exceed
2 6.25% of the receipts subject to tax from a qualifying
3 purchase, but only if the retailer or serviceman reports the
4 Manufacturer's Purchase Credit claimed as required by the
5 Department. The Manufacturer's Purchase Credit earned by
6 purchase of exempt manufacturing machinery and equipment or
7 graphic arts machinery and equipment is a non-transferable
8 credit. A manufacturer or graphic arts producer that enters
9 into a contract involving the installation of tangible
10 personal property into real estate within a manufacturing or
11 graphic arts production facility may authorize a construction
12 contractor to utilize credit accumulated by the manufacturer
13 or graphic arts producer to purchase the tangible personal
14 property. A manufacturer or graphic arts producer intending
15 to use accumulated credit to purchase such tangible personal
16 property shall execute a written contract authorizing the
17 contractor to utilize a specified dollar amount of credit.
18 The contractor shall furnish the supplier with the
19 manufacturer's or graphic arts producer's name, registration
20 or resale number, and a statement that a specific amount of
21 the Use Tax or Service Use Tax liability, not to exceed 6.25%
22 of the selling price, is being satisfied with the credit. The
23 manufacturer or graphic arts producer shall remain liable to
24 timely report all information required by the annual Report
25 of Manufacturer's Purchase Credit Used for credit utilized by
26 a construction contractor.
27 The Manufacturer's Purchase Credit may be used to satisfy
28 liability under the Use Tax Act or the Service Use Tax Act
29 due on the purchase of production related tangible personal
30 property (including purchases by a manufacturer, by a graphic
31 arts producer, or a lessor who rents or leases the use of the
32 property to a manufacturer or graphic arts producer) that
33 does not otherwise qualify for the manufacturing machinery
34 and equipment exemption or the graphic arts machinery and
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1 equipment exemption. "Production related tangible personal
2 property" means (i) all tangible personal property used or
3 consumed by the purchaser in a manufacturing facility in
4 which a manufacturing process described in Section 2-45 of
5 the Retailers' Occupation Tax Act takes place, including
6 tangible personal property purchased for incorporation into
7 real estate within a manufacturing facility and including,
8 but not limited to, tangible personal property used or
9 consumed in activities such as pre-production material
10 handling, receiving, quality control, inventory control,
11 storage, staging, and packaging for shipping and
12 transportation purposes; (ii) all tangible personal property
13 used or consumed by the purchaser in a graphic arts facility
14 in which graphic arts production as described in Section 2-30
15 of the Retailers' Occupation Tax Act takes place, including
16 tangible personal property purchased for incorporation into
17 real estate within a graphic arts facility and including, but
18 not limited to, all tangible personal property used or
19 consumed in activities such as graphic arts preliminary or
20 pre-press production, pre-production material handling,
21 receiving, quality control, inventory control, storage,
22 staging, sorting, labeling, mailing, tying, wrapping, and
23 packaging; and (iii) all tangible personal property used or
24 consumed by the purchaser for research and development.
25 "Production related tangible personal property" does not
26 include (i) tangible personal property used, within or
27 without a manufacturing or graphic arts facility, in sales,
28 purchasing, accounting, fiscal management, marketing,
29 personnel recruitment or selection, or landscaping or (ii)
30 tangible personal property required to be titled or
31 registered with a department, agency, or unit of federal,
32 state, or local government. The Manufacturer's Purchase
33 Credit may be used to satisfy the tax arising either from the
34 purchase of machinery and equipment on or after January 1,
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1 1995 for which the manufacturing machinery and equipment
2 exemption provided by Section 2 of this Act was erroneously
3 claimed, or the purchase of machinery and equipment on or
4 after July 1, 1996 for which the exemption provided by
5 paragraph (5) of Section 3-5 of this Act was erroneously
6 claimed, but not in satisfaction of penalty, if any, and
7 interest for failure to pay the tax when due. A purchaser of
8 production related tangible personal property who is required
9 to pay Illinois Use Tax or Service Use Tax on the purchase
10 directly to the Department may utilize the Manufacturer's
11 Purchase Credit in satisfaction of the tax arising from that
12 purchase, but not in satisfaction of penalty and interest. A
13 purchaser who uses the Manufacturer's Purchase Credit to
14 purchase property which is later determined not to be
15 production related tangible personal property may be liable
16 for tax, penalty, and interest on the purchase of that
17 property as of the date of purchase but shall be entitled to
18 use the disallowed Manufacturer's Purchase Credit, so long as
19 it has not expired, on qualifying purchases of production
20 related tangible personal property not previously subject to
21 credit usage. The Manufacturer's Purchase Credit earned by a
22 manufacturer or graphic arts producer expires the last day of
23 the second calendar year following the calendar year in which
24 the credit arose.
25 A purchaser earning Manufacturer's Purchase Credit shall
26 sign and file an annual Report of Manufacturer's Purchase
27 Credit Earned for each calendar year no later than the last
28 day of the sixth month following the calendar year in which a
29 Manufacturer's Purchase Credit is earned. A Report of
30 Manufacturer's Purchase Credit Earned shall be filed on forms
31 as prescribed or approved by the Department and shall state,
32 for each month of the calendar year: (i) the total purchase
33 price of all purchases of exempt manufacturing or graphic
34 arts machinery on which the credit was earned; (ii) the total
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1 State Use Tax or Service Use Tax which would have been due on
2 those items; (iii) the percentage used to calculate the
3 amount of credit earned; (iv) the amount of credit earned;
4 and (v) such other information as the Department may
5 reasonably require. A purchaser earning Manufacturer's
6 Purchase Credit shall maintain records which identify, as to
7 each purchase of manufacturing or graphic arts machinery and
8 equipment on which the purchaser earned Manufacturer's
9 Purchase Credit, the vendor (including, if applicable, either
10 the vendor's registration number or Federal Employer
11 Identification Number), the purchase price, and the amount of
12 Manufacturer's Purchase Credit earned on each purchase.
13 A purchaser using Manufacturer's Purchase Credit shall
14 sign and file an annual Report of Manufacturer's Purchase
15 Credit Used for each calendar year no later than the last day
16 of the sixth month following the calendar year in which a
17 Manufacturer's Purchase Credit is used. A Report of
18 Manufacturer's Purchase Credit Used shall be filed on forms
19 as prescribed or approved by the Department and shall state,
20 for each month of the calendar year: (i) the total purchase
21 price of production related tangible personal property
22 purchased from Illinois suppliers; (ii) the total purchase
23 price of production related tangible personal property
24 purchased from out-of-state suppliers; (iii) the total amount
25 of credit used during such month; and (iv) such other
26 information as the Department may reasonably require. A
27 purchaser using Manufacturer's Purchase Credit shall maintain
28 records that identify, as to each purchase of production
29 related tangible personal property on which the purchaser
30 used Manufacturer's Purchase Credit, the vendor (including,
31 if applicable, either the vendor's registration number or
32 Federal Employer Identification Number), the purchase price,
33 and the amount of Manufacturer's Purchase Credit used on each
34 purchase.
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1 No annual report shall be filed before May 1, 1996. A
2 purchaser that fails to file an annual Report of
3 Manufacturer's Purchase Credit Earned or an annual Report of
4 Manufacturer's Purchase Credit Used by the last day of the
5 sixth month following the end of the calendar year shall
6 forfeit all Manufacturer's Purchase Credit for that calendar
7 year unless it establishes that its failure to file was due
8 to reasonable cause. Manufacturer's Purchase Credit reports
9 may be amended to report and claim credit on qualifying
10 purchases not previously reported at any time before the
11 credit would have expired, unless both the Department and the
12 purchaser have agreed to an extension of the statute of
13 limitations for the issuance of a notice of tax liability as
14 provided in Section 4 of the Retailers' Occupation Tax Act.
15 If the time for assessment or refund has been extended, then
16 amended reports for a calendar year may be filed at any time
17 prior to the date to which the statute of limitations for the
18 calendar year or portion thereof has been extended. No
19 Manufacturer's Purchase Credit report filed with the
20 Department for periods prior to January 1, 1995 shall be
21 approved. Manufacturer's Purchase Credit claimed on an
22 amended report may be used to satisfy tax liability under the
23 Use Tax Act or the Service Use Tax Act (i) on qualifying
24 purchases of production related tangible personal property
25 made after the date the amended report is filed or (ii)
26 assessed by the Department on qualifying purchases of
27 production related tangible personal property made in the
28 case of manufacturers on or after January 1, 1995, or in the
29 case of graphic arts producers on or after July 1, 1996.
30 If the purchaser is not the manufacturer or a graphic
31 arts producer, but rents or leases the use of the property to
32 a manufacturer or a graphic arts producer, the purchaser may
33 earn, report, and use Manufacturer's Purchase Credit in the
34 same manner as a manufacturer or graphic arts producer.
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1 A purchaser shall not be entitled to any Manufacturer's
2 Purchase Credit for a purchase that is required to be
3 reported and is not timely reported as provided in this
4 Section. A purchaser remains liable for (i) any tax that was
5 satisfied by use of a Manufacturer's Purchase Credit, as of
6 the date of purchase, if that use is not timely reported as
7 required in this Section and (ii) for any applicable
8 penalties and interest for failing to pay the tax when due.
9 This exemption applies only to tax years ending on or before
10 December 31, 2002 and does not apply thereafter.
11 (Source: P.A. 88-547, eff. 6-30-94; 89-89, eff. 6-30-95;
12 89-235, eff. 8-4-95; 89-531, eff. 7-19-96.)
13 (35 ILCS 110/12) (from Ch. 120, par. 439.42)
14 Sec. 12. Applicability of Retailers' Occupation Tax Act
15 and Uniform Penalty and Interest Act. All of the provisions
16 of Sections 1d, 1e, 1f, 1i, 1j, 1k, 1m, 1n, 2a, 2b, 2c, 3
17 (except as to the disposition by the Department of the money
18 collected under this Act), 4 (except that the time limitation
19 provisions shall run from the date when gross receipts are
20 received), 5 (except that the time limitation provisions on
21 the issuance of notices of tax liability shall run from the
22 date when the tax is due rather than from the date when gross
23 receipts are received and except that in the case of a
24 failure to file a return required by this Act, no notice of
25 tax liability shall be issued on and after July 1 and January
26 1 covering tax due with that return during any month or
27 period more than 6 years before that July 1 or January 1,
28 respectively), 5a, 5b, 5c, 5d, 5e, 5f, 5g, 5j, 5k, 5l, 7, 8,
29 9, 10, 11 and 12 of the Retailers' Occupation Tax Act which
30 are not inconsistent with this Act, and Section 3-7 of the
31 Uniform Penalty and Interest Act, shall apply, as far as
32 practicable, to the subject matter of this Act to the same
33 extent as if such provisions were included herein.
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1 The exemptions provided in Sections 1d, 1j, and 5k of the
2 Retailers' Occupation Tax Act apply only to tax years ending
3 on or before December 31, 2002 and do not apply thereafter.
4 (Source: P.A. 87-205; 88-660, eff. 9-16-94.)
5 Section 20. The Service Occupation Tax Act is amended by
6 changing Sections 2, 2a, 3-5, and 12 as follows:
7 (35 ILCS 115/2) (from Ch. 120, par. 439.102)
8 Sec. 2. "Transfer" means any transfer of the title to
9 property or of the ownership of property whether or not the
10 transferor retains title as security for the payment of
11 amounts due him from the transferee.
12 "Cost Price" means the consideration paid by the
13 serviceman for a purchase valued in money, whether paid in
14 money or otherwise, including cash, credits and services, and
15 shall be determined without any deduction on account of the
16 supplier's cost of the property sold or on account of any
17 other expense incurred by the supplier. When a serviceman
18 contracts out part or all of the services required in his
19 sale of service, it shall be presumed that the cost price to
20 the serviceman of the property transferred to him by his or
21 her subcontractor is equal to 50% of the subcontractor's
22 charges to the serviceman in the absence of proof of the
23 consideration paid by the subcontractor for the purchase of
24 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
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1 under the Retailers' Occupation Tax Act or under the Use Tax
2 Act.
3 (b) A sale of tangible personal property for the purpose
4 of resale made in compliance with Section 2c of the
5 Retailers' Occupation Tax Act.
6 (c) Except as hereinafter provided, a sale or transfer
7 of tangible personal property as an incident to the rendering
8 of service for or by any governmental body or for or by any
9 corporation, society, association, foundation or institution
10 organized and operated exclusively for charitable, religious
11 or educational purposes or any not-for-profit corporation,
12 society, association, foundation, institution or organization
13 which has no compensated officers or employees and which is
14 organized and operated primarily for the recreation of
15 persons 55 years of age or older. A limited liability company
16 may qualify for the exemption under this paragraph only if
17 the limited liability company is organized and operated
18 exclusively for educational purposes.
19 (d) A sale or transfer of tangible personal property as
20 an incident to the rendering of service for interstate
21 carriers for hire for use as rolling stock moving in
22 interstate commerce or lessors under leases of one year or
23 longer, executed or in effect at the time of purchase, to
24 interstate carriers for hire for use as rolling stock moving
25 in interstate commerce, and equipment operated by a
26 telecommunications provider, licensed as a common carrier by
27 the Federal Communications Commission, which is permanently
28 installed in or affixed to aircraft moving in interstate
29 commerce. This exemption applies only to tax years ending on
30 or before December 31, 2002 and does not apply thereafter.
31 (d-1) A sale or transfer of tangible personal property
32 as an incident to the rendering of service for owners,
33 lessors or shippers of tangible personal property which is
34 utilized by interstate carriers for hire for use as rolling
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1 stock moving in interstate commerce, and equipment operated
2 by a telecommunications provider, licensed as a common
3 carrier by the Federal Communications Commission, which is
4 permanently installed in or affixed to aircraft moving in
5 interstate commerce. This exemption applies only to tax years
6 ending on or before December 31, 2002 and does not apply
7 thereafter.
8 (d-2) The repairing, reconditioning or remodeling, for a
9 common carrier by rail, of tangible personal property which
10 belongs to such carrier for hire, and as to which such
11 carrier receives the physical possession of the repaired,
12 reconditioned or remodeled item of tangible personal property
13 in Illinois, and which such carrier transports, or shares
14 with another common carrier in the transportation of such
15 property, out of Illinois on a standard uniform bill of
16 lading showing the person who repaired, reconditioned or
17 remodeled the property as the shipper or consignor of such
18 property to a destination outside Illinois, for use outside
19 Illinois.
20 (d-3) A sale or transfer of tangible personal property
21 which is produced by the seller thereof on special order in
22 such a way as to have made the applicable tax the Service
23 Occupation Tax or the Service Use Tax, rather than the
24 Retailers' Occupation Tax or the Use Tax, for an interstate
25 carrier by rail which receives the physical possession of
26 such property in Illinois, and which transports such
27 property, or shares with another common carrier in the
28 transportation of such property, out of Illinois on a
29 standard uniform bill of lading showing the seller of the
30 property as the shipper or consignor of such property to a
31 destination outside Illinois, for use outside Illinois.
32 (d-4) Until January 1, 1997, a sale, by a registered
33 serviceman paying tax under this Act to the Department, of
34 special order printed materials delivered outside Illinois
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1 and which are not returned to this State, if delivery is made
2 by the seller or agent of the seller, including an agent who
3 causes the product to be delivered outside Illinois by a
4 common carrier or the U.S. postal service.
5 (e) A sale or transfer of machinery and equipment used
6 primarily in the process of the manufacturing or assembling,
7 either in an existing, an expanded or a new manufacturing
8 facility, of tangible personal property for wholesale or
9 retail sale or lease, whether such sale or lease is made
10 directly by the manufacturer or by some other person, whether
11 the materials used in the process are owned by the
12 manufacturer or some other person, or whether such sale or
13 lease is made apart from or as an incident to the seller's
14 engaging in a service occupation and the applicable tax is a
15 Service Occupation Tax or Service Use Tax, rather than
16 Retailers' Occupation Tax or Use Tax. This exemption applies
17 only to tax years ending on or before December 31, 2002 and
18 does not apply thereafter.
19 (f) The sale or transfer of distillation machinery and
20 equipment, sold as a unit or kit and assembled or installed
21 by the retailer, which machinery and equipment is certified
22 by the user to be used only for the production of ethyl
23 alcohol that will be used for consumption as motor fuel or as
24 a component of motor fuel for the personal use of such user
25 and not subject to sale or resale. This exemption applies
26 only to tax years ending on or before December 31, 2002 and
27 does not apply thereafter.
28 (g) At the election of any serviceman not required to be
29 otherwise registered as a retailer under Section 2a of the
30 Retailers' Occupation Tax Act, made for each fiscal year
31 sales of service in which the aggregate annual cost price of
32 tangible personal property transferred as an incident to the
33 sales of service is less than 35% (75% in the case of
34 servicemen transferring prescription drugs or servicemen
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1 engaged in graphic arts production) of the aggregate annual
2 total gross receipts from all sales of service. The purchase
3 of such tangible personal property by the serviceman shall be
4 subject to tax under the Retailers' Occupation Tax Act and
5 the Use Tax Act. However, if a primary serviceman who has
6 made the election described in this paragraph subcontracts
7 service work to a secondary serviceman who has also made the
8 election described in this paragraph, the primary serviceman
9 does not incur a Use Tax liability if the secondary
10 serviceman (i) has paid or will pay Use Tax on his or her
11 cost price of any tangible personal property transferred to
12 the primary serviceman and (ii) certifies that fact in
13 writing to the primary serviceman.
14 Tangible personal property transferred incident to the
15 completion of a maintenance agreement is exempt from the tax
16 imposed pursuant to this Act.
17 Exemption (e) also includes machinery and equipment used
18 in the general maintenance or repair of such exempt machinery
19 and equipment or for in-house manufacture of exempt machinery
20 and equipment. For the purposes of exemption (e), each of
21 these terms shall have the following meanings: (1)
22 "manufacturing process" shall mean the production of any
23 article of tangible personal property, whether such article
24 is a finished product or an article for use in the process of
25 manufacturing or assembling a different article of tangible
26 personal property, by procedures commonly regarded as
27 manufacturing, processing, fabricating, or refining which
28 changes some existing material or materials into a material
29 with a different form, use or name. In relation to a
30 recognized integrated business composed of a series of
31 operations which collectively constitute manufacturing, or
32 individually constitute manufacturing operations, the
33 manufacturing process shall be deemed to commence with the
34 first operation or stage of production in the series, and
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1 shall not be deemed to end until the completion of the final
2 product in the last operation or stage of production in the
3 series; and further for purposes of exemption (e),
4 photoprocessing is deemed to be a manufacturing process of
5 tangible personal property for wholesale or retail sale; (2)
6 "assembling process" shall mean the production of any article
7 of tangible personal property, whether such article is a
8 finished product or an article for use in the process of
9 manufacturing or assembling a different article of tangible
10 personal property, by the combination of existing materials
11 in a manner commonly regarded as assembling which results in
12 a material of a different form, use or name; (3) "machinery"
13 shall mean major mechanical machines or major components of
14 such machines contributing to a manufacturing or assembling
15 process; and (4) "equipment" shall include any independent
16 device or tool separate from any machinery but essential to
17 an integrated manufacturing or assembly process; including
18 computers used primarily in operating exempt machinery and
19 equipment in a computer assisted design, computer assisted
20 manufacturing (CAD/CAM) system; or any subunit or assembly
21 comprising a component of any machinery or auxiliary, adjunct
22 or attachment parts of machinery, such as tools, dies, jigs,
23 fixtures, patterns and molds; or any parts which require
24 periodic replacement in the course of normal operation; but
25 shall not include hand tools. The purchaser of such machinery
26 and equipment who has an active resale registration number
27 shall furnish such number to the seller at the time of
28 purchase. The purchaser of such machinery and equipment and
29 tools without an active resale registration number shall
30 furnish to the seller a certificate of exemption for each
31 transaction stating facts establishing the exemption for that
32 transaction, which certificate shall be available to the
33 Department for inspection or audit.
34 The rolling stock exemption applies to rolling stock used
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1 by an interstate carrier for hire, even just between points
2 in Illinois, if such rolling stock transports, for hire,
3 persons whose journeys or property whose shipments originate
4 or terminate outside Illinois.
5 Any informal rulings, opinions or letters issued by the
6 Department in response to an inquiry or request for any
7 opinion from any person regarding the coverage and
8 applicability of exemption (e) to specific devices shall be
9 published, maintained as a public record, and made available
10 for public inspection and copying. If the informal ruling,
11 opinion or letter contains trade secrets or other
12 confidential information, where possible the Department shall
13 delete such information prior to publication. Whenever such
14 informal rulings, opinions, or letters contain any policy of
15 general applicability, the Department shall formulate and
16 adopt such policy as a rule in accordance with the provisions
17 of the 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
28 an incident to a sale of service.
29 (Source: P.A. 88-480; 88-505; 88-526; 88-547; 88-670, eff.
30 12-2-94; 89-675, eff. 8-14-96.)
31 (35 ILCS 115/2a) (from Ch. 120, par. 439.102a)
32 Sec. 2a. "Pollution control facilities" means any system,
33 method, construction, device or appliance appurtenant thereto
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1 transferred by a serviceman for the primary purpose of
2 eliminating, preventing, or reducing air and water pollution
3 as the term "air pollution" or "water pollution" is defined
4 in the "Environmental Protection Act", enacted by the 76th
5 General Assembly, or for the primary purpose of treating,
6 pretreating, modifying or disposing of any potential solid,
7 liquid or gaseous pollutant which if released without such
8 treatment, pretreatment, modification or disposal might be
9 harmful, detrimental or offensive to human, plant or animal
10 life, or to property.
11 The purchase, employment and transfer of such tangible
12 personal property as pollution control facilities shall not
13 be deemed to be a purchase, use or sale of service or of
14 tangible personal property, but shall be deemed to be
15 intangible personal property.
16 This exemption applies only to tax years ending on or
17 before December 31, 2002 and does not apply thereafter.
18 (Source: P.A. 76-2449.)
19 (35 ILCS 115/3-5) (from Ch. 120, par. 439.103-5)
20 Sec. 3-5. Exemptions. The following tangible personal
21 property is exempt from the tax imposed by this Act:
22 (1) Personal property sold by a corporation, society,
23 association, foundation, institution, or organization, other
24 than a limited liability company, that is organized and
25 operated as a not-for-profit service enterprise for the
26 benefit of persons 65 years of age or older if the personal
27 property was not purchased by the enterprise for the purpose
28 of resale by the enterprise.
29 (2) Personal property purchased by a not-for-profit
30 Illinois county fair association for use in conducting,
31 operating, or promoting the county fair.
32 (3) Personal property purchased by any not-for-profit
33 music or dramatic arts organization that establishes, by
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1 proof required by the Department by rule, that it has
2 received an exemption under Section 501(c)(3) of the
3 Internal Revenue Code and that is organized and operated for
4 the presentation of live public performances of musical or
5 theatrical works on a regular basis.
6 (4) Legal tender, currency, medallions, or gold or
7 silver coinage issued by the State of Illinois, the
8 government of the United States of America, or the government
9 of any foreign country, and bullion.
10 (5) Graphic arts machinery and equipment, including
11 repair and replacement parts, both new and used, and
12 including that manufactured on special order or purchased for
13 lease, certified by the purchaser to be used primarily for
14 graphic arts production. This exemption applies only to tax
15 years ending on or before December 31, 2002 and does not
16 apply thereafter.
17 (6) Personal property sold by a teacher-sponsored
18 student organization affiliated with an elementary or
19 secondary school located in Illinois.
20 (7) Farm machinery and equipment, both new and used,
21 including that manufactured on special order, certified by
22 the purchaser to be used primarily for production agriculture
23 or State or federal agricultural programs, including
24 individual replacement parts for the machinery and equipment,
25 and including machinery and equipment purchased for lease,
26 but excluding motor vehicles required to be registered under
27 the Illinois Vehicle Code. This exemption applies only to tax
28 years ending on or before December 31, 2002 and does not
29 apply thereafter.
30 (8) Fuel and petroleum products sold to or used by an
31 air common carrier, certified by the carrier to be used for
32 consumption, shipment, or storage in the conduct of its
33 business as an air common carrier, for a flight destined for
34 or returning from a location or locations outside the United
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1 States without regard to previous or subsequent domestic
2 stopovers. This exemption applies only to tax years ending on
3 or before December 31, 2002 and does not apply thereafter.
4 (9) Proceeds of mandatory service charges separately
5 stated on customers' bills for the purchase and consumption
6 of food and beverages, to the extent that the proceeds of the
7 service charge are in fact turned over as tips or as a
8 substitute for tips to the employees who participate directly
9 in preparing, serving, hosting or cleaning up the food or
10 beverage function with respect to which the service charge is
11 imposed.
12 (10) Oil field exploration, drilling, and production
13 equipment, including (i) rigs and parts of rigs, rotary rigs,
14 cable tool rigs, and workover rigs, (ii) pipe and tubular
15 goods, including casing and drill strings, (iii) pumps and
16 pump-jack units, (iv) storage tanks and flow lines, (v) any
17 individual replacement part for oil field exploration,
18 drilling, and production equipment, and (vi) machinery and
19 equipment purchased for lease; but excluding motor vehicles
20 required to be registered under the Illinois Vehicle Code.
21 This exemption applies only to tax years ending on or before
22 December 31, 2002 and does not apply thereafter.
23 (11) Photoprocessing machinery and equipment, including
24 repair and replacement parts, both new and used, including
25 that manufactured on special order, certified by the
26 purchaser to be used primarily for photoprocessing, and
27 including photoprocessing machinery and equipment purchased
28 for lease.
29 (12) Coal exploration, mining, offhighway hauling,
30 processing, maintenance, and reclamation equipment, including
31 replacement parts and equipment, and including equipment
32 purchased for lease, but excluding motor vehicles required to
33 be registered under the Illinois Vehicle Code. This exemption
34 applies only to tax years ending on or before December 31,
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1 2002 and does not apply thereafter.
2 (13) Food for human consumption that is to be consumed
3 off the premises where it is sold (other than alcoholic
4 beverages, soft drinks and food that has been prepared for
5 immediate consumption) and prescription and nonprescription
6 medicines, drugs, medical appliances, and insulin, urine
7 testing materials, syringes, and needles used by diabetics,
8 for human use, when purchased for use by a person receiving
9 medical assistance under Article 5 of the Illinois Public Aid
10 Code who resides in a licensed long-term care facility, as
11 defined in the Nursing Home Care Act.
12 (14) Semen used for artificial insemination of livestock
13 for direct agricultural production.
14 (15) Horses, or interests in horses, registered with and
15 meeting the requirements of any of the Arabian Horse Club
16 Registry of America, Appaloosa Horse Club, American Quarter
17 Horse Association, United States Trotting Association, or
18 Jockey Club, as appropriate, used for purposes of breeding or
19 racing for prizes.
20 (16) Computers and communications equipment utilized
21 for any hospital purpose and equipment used in the diagnosis,
22 analysis, or treatment of hospital patients sold to a lessor
23 who leases the equipment, under a lease of one year or longer
24 executed or in effect at the time of the purchase, to a
25 hospital that has been issued an active tax exemption
26 identification number by the Department under Section 1g of
27 the Retailers' Occupation Tax Act.
28 (17) Personal property sold to a lessor who leases the
29 property, under a lease of one year or longer executed or in
30 effect at the time of the purchase, to a governmental body
31 that has been issued an active tax exemption identification
32 number by the Department under Section 1g of the Retailers'
33 Occupation Tax Act.
34 (18) Beginning with taxable years ending on or after
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1 December 31, 1995 and ending with taxable years ending on or
2 before December 31, 2004, personal property that is donated
3 for disaster relief to be used in a State or federally
4 declared disaster area in Illinois or bordering Illinois by a
5 manufacturer or retailer that is registered in this State to
6 a corporation, society, association, foundation, or
7 institution that has been issued a sales tax exemption
8 identification number by the Department that assists victims
9 of the disaster who reside within the declared disaster area.
10 (19) Beginning with taxable years ending on or after
11 December 31, 1995 and ending with taxable years ending on or
12 before December 31, 2004, personal property that is used in
13 the performance of infrastructure repairs in this State,
14 including but not limited to municipal roads and streets,
15 access roads, bridges, sidewalks, waste disposal systems,
16 water and sewer line extensions, water distribution and
17 purification facilities, storm water drainage and retention
18 facilities, and sewage treatment facilities, resulting from a
19 State or federally declared disaster in Illinois or bordering
20 Illinois when such repairs are initiated on facilities
21 located in the declared disaster area within 6 months after
22 the disaster.
23 (Source: P.A. 88-337; 88-480; 88-547; 88-670, eff. 12-2-94;
24 89-16, eff. 5-30-95; 89-115, eff. 1-1-96; 89-349, eff.
25 8-17-95; 89-495, eff. 6-24-96; 89-496, eff. 6-25-96; 89-626,
26 eff. 8-9-96; revised 8-21-96.)
27 (35 ILCS 115/12) (from Ch. 120, par. 439.112)
28 Sec. 12. All of the provisions of Sections 1d, 1e, 1f,
29 1i, 1j, 1k, 1m, 1n, 2a, 2b, 2c, 3 (except as to the
30 disposition by the Department of the tax collected under this
31 Act), 4 (except that the time limitation provisions shall run
32 from the date when the tax is due rather than from the date
33 when gross receipts are received), 5 (except that the time
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1 limitation provisions on the issuance of notices of tax
2 liability shall run from the date when the tax is due rather
3 than from the date when gross receipts are received), 5a, 5b,
4 5c, 5d, 5e, 5f, 5g, 5j, 5k, 5l, 7, 8, 9, 10, 11 and 12 of the
5 "Retailers' Occupation Tax Act" which are not inconsistent
6 with this Act, and Section 3-7 of the Uniform Penalty and
7 Interest Act shall apply, as far as practicable, to the
8 subject matter of this Act to the same extent as if such
9 provisions were included herein.
10 The exemptions provided in Sections 1d, 1j, and 5k of the
11 Retailers' Occupation Tax Act apply only to tax years ending
12 on or before December 31, 2002 and do not apply thereafter.
13 (Source: P.A. 86-1490; 87-205.)
14 Section 25. The Retailers' Occupation Tax Act is amended
15 by changing Sections 1a, 1d, 1j, 2-5, and 5k as follows:
16 (35 ILCS 120/1a) (from Ch. 120, par. 440a)
17 Sec. 1a. "Pollution control facilities" means any system,
18 method, construction, device or appliance appurtenant thereto
19 sold or used or intended for the primary purpose of
20 eliminating, preventing, or reducing air and water pollution
21 as the term "air pollution" or "water pollution" is defined
22 in the "Environmental Protection Act", enacted by the 76th
23 General Assembly, or for the primary purpose of treating,
24 pretreating, modifying or disposing of any potential solid,
25 liquid or gaseous pollutant which if released without such
26 treatment, pretreatment, modification or disposal might be
27 harmful, detrimental or offensive to human, plant or animal
28 life, or to property.
29 The purchase, employment and transfer of such tangible
30 personal property as pollution control facilities is not a
31 purchase, use or sale of tangible personal property.
32 This exemption applies only to tax years ending on or
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1 before December 31, 2002 and does not apply thereafter.
2 (Source: P.A. 76-2450.)
3 (35 ILCS 120/1d) (from Ch. 120, par. 440d)
4 Sec. 1d. Subject to the provisions of Section 1f, all
5 tangible personal property to be used or consumed within an
6 enterprise zone established pursuant to the "Illinois
7 Enterprise Zone Act", as amended, or subject to the
8 provisions of Section 5.5 of the Illinois Enterprise Zone
9 Act, all tangible personal property to be used or consumed by
10 any High Impact Business, in the process of the manufacturing
11 or assembly of tangible personal property for wholesale or
12 retail sale or lease or in the process of graphic arts
13 production if used or consumed at a facility which is a
14 Department of Commerce and Community Affairs certified
15 business and located in a county of more than 4,000 persons
16 and less than 45,000 persons is exempt from the tax imposed
17 by this Act. This exemption includes repair and replacement
18 parts for machinery and equipment used primarily in the
19 process of manufacturing or assembling tangible personal
20 property or in the process of graphic arts production if used
21 or consumed at a facility which is a Department of Commerce
22 and Community Affairs certified business and located in a
23 county of more than 4,000 persons and less than 45,000
24 persons for wholesale or retail sale, or lease, and
25 equipment, manufacturing or graphic arts fuels, material and
26 supplies for the maintenance, repair or operation of such
27 manufacturing or assembling or graphic arts machinery or
28 equipment.
29 This exemption applies only to tax years ending on or
30 before December 31, 2002 and does not apply thereafter.
31 (Source: P.A. 85-1182; 86-1456.)
32 (35 ILCS 120/1j) (from Ch. 120, par. 440j)
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1 Sec. 1j. Exemption - Machinery or Equipment used in the
2 operation of high impact service facilities. Subject to the
3 provisions of Section 1i of this Act, machinery or equipment
4 used in the operation of a high impact service facility, as
5 defined in Section 1i of this Act, located within an
6 enterprise zone established pursuant to the Illinois
7 Enterprise Zone Act shall be exempt from the tax imposed by
8 this Act. Machinery and equipment, new and replacement, shall
9 include, but not be limited to: (i) motor driven heavy
10 equipment not considered rolling stock which is used for the
11 purpose of transporting parcels, machinery, or equipment, or
12 trailers used for the shipment of parcels, and equipment used
13 to maintain and provide in-house services, within the
14 confines of the facility, and (ii) automated machinery and
15 equipment used for the purposes of transporting parcels
16 within the facility, along with all components, parts,
17 pieces, and computer software or hardware contained in the
18 electronic control systems related thereto. The Department of
19 Revenue shall promulgate such rules and regulations as
20 necessary to further define machinery and equipment eligible
21 for exemption in a high impact service facility.
22 This exemption applies only to tax years ending on or
23 before December 31, 2002 and does not apply thereafter.
24 (Source: P.A. 85-1409.)
25 (35 ILCS 120/2-5) (from Ch. 120, par. 441-5)
26 Sec. 2-5. Exemptions. Gross receipts from proceeds from
27 the sale of the following tangible personal property are
28 exempt from the tax imposed by this Act:
29 (1) Farm chemicals. This exemption applies only to tax
30 years ending on or before December 31, 2002 and does not
31 apply thereafter.
32 (2) Farm machinery and equipment, both new and used,
33 including that manufactured on special order, certified by
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1 the purchaser to be used primarily for production agriculture
2 or State or federal agricultural programs, including
3 individual replacement parts for the machinery and equipment,
4 and including machinery and equipment purchased for lease,
5 but excluding motor vehicles required to be registered under
6 the Illinois Vehicle Code. This exemption applies only to tax
7 years ending on or before December 31, 2002 and does not
8 apply thereafter.
9 (3) Distillation machinery and equipment, sold as a unit
10 or kit, assembled or installed by the retailer, certified by
11 the user to be used only for the production of ethyl alcohol
12 that will be used for consumption as motor fuel or as a
13 component of motor fuel for the personal use of the user, and
14 not subject to sale or resale. This exemption applies only to
15 tax years ending on or before December 31, 2002 and does not
16 apply thereafter.
17 (4) Graphic arts machinery and equipment, including
18 repair and replacement parts, both new and used, and
19 including that manufactured on special order or purchased for
20 lease, certified by the purchaser to be used primarily for
21 graphic arts production. This exemption applies only to tax
22 years ending on or before December 31, 2002 and does not
23 apply thereafter.
24 (5) A motor vehicle of the first division, a motor
25 vehicle of the second division that is a self-contained motor
26 vehicle designed or permanently converted to provide living
27 quarters for recreational, camping, or travel use, with
28 direct walk through access to the living quarters from the
29 driver's seat, or a motor vehicle of the second division that
30 is of the van configuration designed for the transportation
31 of not less than 7 nor more than 16 passengers, as defined in
32 Section 1-146 of the Illinois Vehicle Code, that is used for
33 automobile renting, as defined in the Automobile Renting
34 Occupation and Use Tax Act.
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1 (6) Personal property sold by a teacher-sponsored
2 student organization affiliated with an elementary or
3 secondary school located in Illinois.
4 (7) Proceeds of that portion of the selling price of a
5 passenger car the sale of which is subject to the Replacement
6 Vehicle Tax.
7 (8) Personal property sold to an Illinois county fair
8 association for use in conducting, operating, or promoting
9 the county fair.
10 (9) Personal property sold to a not-for-profit music or
11 dramatic arts organization that establishes, by proof
12 required by the Department by rule, that it has received an
13 exemption under Section 501(c) (3) of the Internal Revenue
14 Code and that is organized and operated for the presentation
15 of live public performances of musical or theatrical works on
16 a regular basis.
17 (10) Personal property sold by a corporation, society,
18 association, foundation, institution, or organization, other
19 than a limited liability company, that is organized and
20 operated as a not-for-profit service enterprise for the
21 benefit of persons 65 years of age or older if the personal
22 property was not purchased by the enterprise for the purpose
23 of resale by the enterprise.
24 (11) Personal property sold to a governmental body, to a
25 corporation, society, association, foundation, or institution
26 organized and operated exclusively for charitable, religious,
27 or educational purposes, or to a not-for-profit corporation,
28 society, association, foundation, institution, or
29 organization that has no compensated officers or employees
30 and that is organized and operated primarily for the
31 recreation of persons 55 years of age or older. A limited
32 liability company may qualify for the exemption under this
33 paragraph only if the limited liability company is organized
34 and operated exclusively for educational purposes. On and
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1 after July 1, 1987, however, no entity otherwise eligible for
2 this exemption shall make tax-free purchases unless it has an
3 active identification number issued by the Department.
4 (12) Personal property sold to interstate carriers for
5 hire for use as rolling stock moving in interstate commerce
6 or to lessors under leases of one year or longer executed or
7 in effect at the time of purchase by interstate carriers for
8 hire for use as rolling stock moving in interstate commerce
9 and equipment operated by a telecommunications provider,
10 licensed as a common carrier by the Federal Communications
11 Commission, which is permanently installed in or affixed to
12 aircraft moving in interstate commerce. This exemption
13 applies only to tax years ending on or before December 31,
14 2002 and does not apply thereafter.
15 (13) Proceeds from sales to owners, lessors, or shippers
16 of tangible personal property that is utilized by interstate
17 carriers for hire for use as rolling stock moving in
18 interstate commerce and equipment operated by a
19 telecommunications provider, licensed as a common carrier by
20 the Federal Communications Commission, which is permanently
21 installed in or affixed to aircraft moving in interstate
22 commerce. This exemption applies only to tax years ending on
23 or before December 31, 2002 and does not apply thereafter.
24 (14) Machinery and equipment that will be used by the
25 purchaser, or a lessee of the purchaser, primarily in the
26 process of manufacturing or assembling tangible personal
27 property for wholesale or retail sale or lease, whether the
28 sale or lease is made directly by the manufacturer or by some
29 other person, whether the materials used in the process are
30 owned by the manufacturer or some other person, or whether
31 the sale or lease is made apart from or as an incident to the
32 seller's engaging in the service occupation of producing
33 machines, tools, dies, jigs, patterns, gauges, or other
34 similar items of no commercial value on special order for a
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1 particular purchaser. This exemption applies only to tax
2 years ending on or before December 31, 2002 and does not
3 apply thereafter.
4 (15) Proceeds of mandatory service charges separately
5 stated on customers' bills for purchase and consumption of
6 food and beverages, to the extent that the proceeds of the
7 service charge are in fact turned over as tips or as a
8 substitute for tips to the employees who participate directly
9 in preparing, serving, hosting or cleaning up the food or
10 beverage function with respect to which the service charge is
11 imposed.
12 (16) Petroleum products sold to a purchaser if the
13 seller is prohibited by federal law from charging tax to the
14 purchaser.
15 (17) Tangible personal property sold to a common carrier
16 by rail that receives the physical possession of the property
17 in Illinois and that transports the property, or shares with
18 another common carrier in the transportation of the property,
19 out of Illinois on a standard uniform bill of lading showing
20 the seller of the property as the shipper or consignor of the
21 property to a destination outside Illinois, for use outside
22 Illinois.
23 (18) Legal tender, currency, medallions, or gold or
24 silver coinage issued by the State of Illinois, the
25 government of the United States of America, or the government
26 of any foreign country, and bullion.
27 (19) Oil field exploration, drilling, and production
28 equipment, including (i) rigs and parts of rigs, rotary rigs,
29 cable tool rigs, and workover rigs, (ii) pipe and tubular
30 goods, including casing and drill strings, (iii) pumps and
31 pump-jack units, (iv) storage tanks and flow lines, (v) any
32 individual replacement part for oil field exploration,
33 drilling, and production equipment, and (vi) machinery and
34 equipment purchased for lease; but excluding motor vehicles
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1 required to be registered under the Illinois Vehicle Code.
2 This exemption applies only to tax years ending on or before
3 December 31, 2002 and does not apply thereafter.
4 (20) Photoprocessing machinery and equipment, including
5 repair and replacement parts, both new and used, including
6 that manufactured on special order, certified by the
7 purchaser to be used primarily for photoprocessing, and
8 including photoprocessing machinery and equipment purchased
9 for lease.
10 (21) Coal exploration, mining, offhighway hauling,
11 processing, maintenance, and reclamation equipment, including
12 replacement parts and equipment, and including equipment
13 purchased for lease, but excluding motor vehicles required to
14 be registered under the Illinois Vehicle Code. This exemption
15 applies only to tax years ending on or before December 31,
16 2002 and does not apply thereafter.
17 (22) Fuel and petroleum products sold to or used by an
18 air carrier, certified by the carrier to be used for
19 consumption, shipment, or storage in the conduct of its
20 business as an air common carrier, for a flight destined for
21 or returning from a location or locations outside the United
22 States without regard to previous or subsequent domestic
23 stopovers. This exemption applies only to tax years ending on
24 or before December 31, 2002 and does not apply thereafter.
25 (23) A transaction in which the purchase order is
26 received by a florist who is located outside Illinois, but
27 who has a florist located in Illinois deliver the property to
28 the purchaser or the purchaser's donee in Illinois.
29 (24) Fuel consumed or used in the operation of ships,
30 barges, or vessels that are used primarily in or for the
31 transportation of property or the conveyance of persons for
32 hire on rivers bordering on this State if the fuel is
33 delivered by the seller to the purchaser's barge, ship, or
34 vessel while it is afloat upon that bordering river.
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1 (25) A motor vehicle sold in this State to a nonresident
2 even though the motor vehicle is delivered to the nonresident
3 in this State, if the motor vehicle is not to be titled in
4 this State, and if a driveaway decal permit is issued to the
5 motor vehicle as provided in Section 3-603 of the Illinois
6 Vehicle Code or if the nonresident purchaser has vehicle
7 registration plates to transfer to the motor vehicle upon
8 returning to his or her home state. The issuance of the
9 driveaway decal permit or having the out-of-state
10 registration plates to be transferred is prima facie evidence
11 that the motor vehicle will not be titled in this State.
12 (26) Semen used for artificial insemination of livestock
13 for direct agricultural production.
14 (27) Horses, or interests in horses, registered with and
15 meeting the requirements of any of the Arabian Horse Club
16 Registry of America, Appaloosa Horse Club, American Quarter
17 Horse Association, United States Trotting Association, or
18 Jockey Club, as appropriate, used for purposes of breeding or
19 racing for prizes.
20 (28) Computers and communications equipment utilized
21 for any hospital purpose and equipment used in the diagnosis,
22 analysis, or treatment of hospital patients sold to a lessor
23 who leases the equipment, under a lease of one year or longer
24 executed or in effect at the time of the purchase, to a
25 hospital that has been issued an active tax exemption
26 identification number by the Department under Section 1g of
27 this Act.
28 (29) Personal property sold to a lessor who leases the
29 property, under a lease of one year or longer executed or in
30 effect at the time of the purchase, to a governmental body
31 that has been issued an active tax exemption identification
32 number by the Department under Section 1g of this Act.
33 (30) Beginning with taxable years ending on or after
34 December 31, 1995 and ending with taxable years ending on or
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1 before December 31, 2004, personal property that is donated
2 for disaster relief to be used in a State or federally
3 declared disaster area in Illinois or bordering Illinois by a
4 manufacturer or retailer that is registered in this State to
5 a corporation, society, association, foundation, or
6 institution that has been issued a sales tax exemption
7 identification number by the Department that assists victims
8 of the disaster who reside within the declared disaster area.
9 (31) Beginning with taxable years ending on or after
10 December 31, 1995 and ending with taxable years ending on or
11 before December 31, 2004, personal property that is used in
12 the performance of infrastructure repairs in this State,
13 including but not limited to municipal roads and streets,
14 access roads, bridges, sidewalks, waste disposal systems,
15 water and sewer line extensions, water distribution and
16 purification facilities, storm water drainage and retention
17 facilities, and sewage treatment facilities, resulting from a
18 State or federally declared disaster in Illinois or bordering
19 Illinois when such repairs are initiated on facilities
20 located in the declared disaster area within 6 months after
21 the disaster.
22 (Source: P.A. 88-337; 88-480; 88-547; 88-670, eff. 12-2-94;
23 89-16, eff. 5-30-95; 89-115, eff. 1-1-96; 89-349, eff.
24 8-17-95; 89-495, eff. 6-24-96; 89-496, eff. 6-25-96; 89-626,
25 eff. 8-9-96; revised 8-21-96.)
26 (35 ILCS 120/5k) (from Ch. 120, par. 444k)
27 Sec. 5k. Each retailer whose place a business is within
28 a county or municipality which has established an Enterprise
29 Zone pursuant to the "Illinois Enterprise Zone Act" and who
30 makes a sale of building materials to be incorporated into
31 real estate in such enterprise zone by remodeling,
32 rehabilitation or new construction, may deduct receipts from
33 such sales when calculating the tax imposed by this Act. The
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1 deduction allowed by this Section for the sale of building
2 materials may be limited, to the extent authorized by
3 ordinance, adopted after the effective date of this
4 amendatory Act of 1992, by the municipality or county that
5 created the enterprise zone. The corporate authorities of
6 any municipality or county that adopts an ordinance or
7 resolution imposing or changing any limitation on the
8 enterprise zone exemption for building materials shall
9 transmit to the Department of Revenue on or not later than 5
10 days after publication, as provided by law, a certified copy
11 of the ordinance or resolution imposing or changing those
12 limitations, whereupon the Department of Revenue shall
13 proceed to administer and enforce those limitations effective
14 the first day of the second calendar month next following
15 date of receipt by the Department of the certified ordinance
16 or resolution.
17 This deduction applies only to tax years ending on or
18 before December 31, 2002 and does not apply thereafter.
19 (Source: P.A. 87-848.)
20 Section 30. The Motor Fuel Tax Law is amended by
21 changing Section 2a as follows:
22 (35 ILCS 505/2a) (from Ch. 120, par. 418a)
23 Sec. 2a. Except as hereinafter provided, on and after
24 January 1, 1990 and before January 1, 2013, a tax of
25 three-tenths of a cent per gallon is imposed upon the
26 privilege of being a receiver in this State of fuel for sale
27 or use.
28 The tax shall be paid by the receiver in this State who
29 first sells or uses fuel. In the case of a sale, the tax
30 shall be stated as a separate item on the invoice.
31 For the purpose of the tax imposed by this Section, being
32 a receiver of "motor fuel" as defined by Section 1.1 of this
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1 Act, and aviation fuels, home heating oil and kerosene, but
2 excluding liquified petroleum gases, is subject to tax
3 without regard to whether the fuel is intended to be used for
4 operation of motor vehicles on the public highways and
5 waters. However, no such tax shall be imposed upon the
6 importation or receipt of aviation fuels and kerosene at
7 airports with over 300,000 operations per year, for years
8 prior to 1991, and over 170,000 operations per year beginning
9 in 1991, located in a city of more than 1,000,000 inhabitants
10 for sale to or use by holders of certificates of public
11 convenience and necessity or foreign air carrier permits,
12 issued by the United States Department of Transportation, and
13 their air carrier affiliates, or upon the importation or
14 receipt of aviation fuels and kerosene at facilities owned or
15 leased by those certificate or permit holders and used in
16 their activities at an airport described above. In addition,
17 no such tax shall be imposed upon the importation or receipt
18 of diesel fuel by a rail carrier, registered pursuant to
19 Section 18c-7201 of the Illinois Vehicle Code and used
20 directly in railroad operations. In addition, no such tax
21 shall be imposed when the sale is made with delivery to a
22 purchaser outside this State or when the sale is made to a
23 person holding a valid license as a receiver. In addition,
24 no tax shall be imposed upon diesel fuel consumed or used in
25 the operation of ships, barges, or vessels, that are used
26 primarily in or for the transportation of property in
27 interstate commerce for hire on rivers bordering on this
28 State, if the diesel fuel is delivered by a licensed receiver
29 to the purchaser's barge, ship, or vessel while it is afloat
30 upon that bordering river. A specific notation thereof shall
31 be made on the invoices or sales slips covering each sale.
32 This exemption applies only to tax years ending on or before
33 December 31, 2002 and does not apply thereafter.
34 (Source: P.A. 88-496; 89-428, eff. 1-1-96; 89-457, eff.
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1 5-22-96; 89-468, eff. 1-1-97.)
2 Section 35. The Gas Revenue Tax Act is amended by
3 changing Section 1 as follows:
4 (35 ILCS 615/1) (from Ch. 120, par. 467.16)
5 Sec. 1. For the purposes of this Act: "Gross receipts"
6 means the consideration received for gas distributed,
7 supplied, furnished or sold to persons for use or consumption
8 and not for resale, and for all services (including the
9 transportation or storage of gas for an end-user) rendered in
10 connection therewith, and shall include cash, services and
11 property of every kind or nature, and shall be determined
12 without any deduction on account of the cost of the service,
13 product or commodity supplied, the cost of materials used,
14 labor or service costs, or any other expense whatsoever.
15 However, "gross receipts" shall not include receipts from:
16 (i) any minimum or other charge for gas or gas
17 service where the customer has taken no therms of gas;
18 (ii) any charge for a dishonored check;
19 (iii) any finance or credit charge, penalty or
20 charge for delayed payment, or discount for prompt
21 payment;
22 (iv) any charge for reconnection of service or for
23 replacement or relocation of facilities;
24 (v) any advance or contribution in aid of
25 construction;
26 (vi) repair, inspection or servicing of equipment
27 located on customer premises;
28 (vii) leasing or rental of equipment, the leasing
29 or rental of which is not necessary to distributing,
30 furnishing, supplying, selling, transporting or storing
31 gas;
32 (viii) any sale to a customer if the taxpayer is
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1 prohibited by federal or State constitution, treaty,
2 convention, statute or court decision from recovering the
3 related tax liability from such customer;
4 (ix) any charges added to customers' bills pursuant
5 to the provisions of Section 9-221 or Section 9-222 of
6 the Public Utilities Act, as amended, or any charges
7 added to customers' bills by taxpayers who are not
8 subject to rate regulation by the Illinois Commerce
9 Commission for the purpose of recovering any of the tax
10 liabilities or other amounts specified in such provisions
11 of such Act; and
12 (x) any charge for gas or gas services to a
13 customer who acquired contractual rights for the direct
14 purchase of gas or gas services originating from an
15 out-of-state supplier or source on or before March 1,
16 1995, except for those charges solely related to the
17 local distribution of gas by a public utility.
18 In case credit is extended, the amount thereof shall be
19 included only as and when payments are received.
20 "Gross receipts" shall not include consideration received
21 from business enterprises certified under Section 9-222.1 of
22 the Public Utilities Act, as amended, to the extent of such
23 exemption and during the period of time specified by the
24 Department of Commerce and Community Affairs. This exemption
25 applies only to tax years ending on or before December 31,
26 2002 and does not apply thereafter.
27 "Department" means the Department of Revenue of the State
28 of Illinois.
29 "Director" means the Director of Revenue for the
30 Department of Revenue of the State of Illinois.
31 "Taxpayer" means a person engaged in the business of
32 distributing, supplying, furnishing or selling gas for use or
33 consumption and not for resale.
34 "Person" means any natural individual, firm, trust,
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1 estate, partnership, association, joint stock company, joint
2 adventure, corporation, limited liability company, or a
3 receiver, trustee, guardian or other representative appointed
4 by order of any court, or any city, town, county or other
5 political subdivision of this State.
6 "Invested capital" means that amount equal to (i) the
7 average of the balances at the beginning and end of each
8 taxable period of the taxpayer's total stockholder's equity
9 and total long-term debt, less investments in and advances to
10 all corporations, as set forth on the balance sheets included
11 in the taxpayer's annual report to the Illinois Commerce
12 Commission for the taxable period; (ii) multiplied by a
13 fraction determined under Sections 301 and 304(a) of the
14 "Illinois Income Tax Act" and reported on the Illinois income
15 tax return for the taxable period ending in or with the
16 taxable period in question. However, notwithstanding the
17 income tax return reporting requirement stated above,
18 beginning July 1, 1979, no taxpayer's denominators used to
19 compute the sales, property or payroll factors under
20 subsection (a) of Section 304 of the Illinois Income Tax Act
21 shall include payroll, property or sales of any corporate
22 entity other than the taxpayer for the purposes of
23 determining an allocation for the invested capital tax. This
24 amendatory Act of 1982, Public Act 82-1024, is not intended
25 to and does not make any change in the meaning of any
26 provision of this Act, it having been the intent of the
27 General Assembly in initially enacting the definition of
28 "invested capital" to provide for apportionment of the
29 invested capital of each company, based solely upon the
30 sales, property and payroll of that company.
31 "Taxable period" means each period which ends after the
32 effective date of this Act and which is covered by an annual
33 report filed by the taxpayer with the Illinois Commerce
34 Commission.
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1 (Source: P.A. 88-480; 89-417, eff. 1-1-96.)
2 Section 40. The Public Utilities Revenue Act is amended
3 by changing Section 1 as follows:
4 (35 ILCS 620/1) (from Ch. 120, par. 468)
5 Sec. 1. For the purposes of this Act: "Gross receipts"
6 means the consideration received for electricity distributed,
7 supplied, furnished or sold to persons for use or consumption
8 and not for resale, and for all services (including the
9 transmission of electricity for an end-user) rendered in
10 connection therewith, and includes cash, services and
11 property of every kind or nature, and shall be determined
12 without any deduction on account of the cost of the service,
13 product or commodity supplied, the cost of materials used,
14 labor or service costs, or any other expense whatsoever.
15 However, "gross receipts" shall not include receipts from:
16 (i) any minimum or other charge for electricity or
17 electric service where the customer has taken no
18 kilowatt-hours of electricity;
19 (ii) any charge for a dishonored check;
20 (iii) any finance or credit charge, penalty or
21 charge for delayed payment, or discount for prompt
22 payment;
23 (iv) any charge for reconnection of service or for
24 replacement or relocation of facilities;
25 (v) any advance or contribution in aid of
26 construction;
27 (vi) repair, inspection or servicing of equipment
28 located on customer premises;
29 (vii) leasing or rental of equipment, the leasing
30 or rental of which is not necessary to distributing,
31 furnishing, supplying, selling or transporting
32 electricity;
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1 (viii) any sale to a customer if the taxpayer is
2 prohibited by federal or State constitution, treaty,
3 convention, statute or court decision from recovering the
4 related tax liability from such customer; and
5 (ix) any charges added to customers' bills pursuant
6 to the provisions of Section 9-221 or Section 9-222 of
7 the Public Utilities Act, as amended, or any charges
8 added to customers' bills by taxpayers who are not
9 subject to rate regulation by the Illinois Commerce
10 Commission for the purpose of recovering any of the tax
11 liabilities or other amount specified in such provisions
12 of such Act. In case credit is extended, the amount
13 thereof shall be included only as and when payments are
14 received.
15 "Gross receipts" shall not include consideration received
16 from business enterprises certified under Section 9-222.1 of
17 the Public Utilities Act, as amended, to the extent of such
18 exemption and during the period of time specified by the
19 Department of Commerce and Community Affairs. This exemption
20 applies only to tax years ending on or before December 31,
21 2002 and does not apply thereafter.
22 "Department" means the Department of Revenue of the State
23 of Illinois.
24 "Director" means the Director of Revenue for the
25 Department of Revenue of the State of Illinois.
26 "Taxpayer" means a person engaged in the business of
27 distributing, supplying, furnishing or selling electricity
28 for use or consumption and not for resale.
29 "Person" means any natural individual, firm, trust,
30 estate, partnership, association, joint stock company, joint
31 adventure, corporation, limited liability company, or a
32 receiver, trustee, guardian or other representative appointed
33 by order of any court, or any city, town, county or other
34 political subdivision of this State.
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1 "Invested capital" means that amount equal to (i) the
2 average of the balances at the beginning and end of each
3 taxable period of the taxpayer's total stockholder's equity
4 and total long-term debt, less investments in and advances to
5 all corporations, as set forth on the balance sheets included
6 in the taxpayer's annual report to the Illinois Commerce
7 Commission for the taxable period; (ii) multiplied by a
8 fraction determined under Sections 301 and 304(a) of the
9 "Illinois Income Tax Act" and reported on the Illinois income
10 tax return for the taxable period ending in or with the
11 taxable period in question. However, notwithstanding the
12 income tax return reporting requirement stated above,
13 beginning July 1, 1979, no taxpayer's denominators used to
14 compute the sales, property or payroll factors under
15 subsection (a) of Section 304 of the Illinois Income Tax Act
16 shall include payroll, property or sales of any corporate
17 entity other than the taxpayer for the purposes of
18 determining an allocation for the invested capital tax. This
19 amendatory Act of 1982, Public Act 82-1024, is not intended
20 to and does not make any change in the meaning of any
21 provision of this Act, it having been the intent of the
22 General Assembly in initially enacting the definition of
23 "invested capital" to provide for apportionment of the
24 invested capital of each company, based solely upon the
25 sales, property and payroll of that company.
26 In the case of an electric cooperative subject to the tax
27 imposed by Section 2a.1, "invested capital" means an amount
28 equal to the product determined by multiplying, (i) the
29 average of the balances at the beginning and end of the
30 taxable period of the taxpayer's total equity (including
31 memberships, patronage capital, operating margins,
32 non-operating margins, other margins and other equities), as
33 set forth on the balance sheets included in the taxpayer's
34 annual report to the United States Department of Agriculture
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1 Rural Electrification Administration (established pursuant to
2 the federal Rural Electrification Act of 1936, as amended),
3 by (ii) the fraction determined under Sections 301 and 304(a)
4 of the Illinois Income Tax Act, as amended, for the taxable
5 period.
6 "Taxable period" means each period which ends after the
7 effective date of this Act and which is covered by an annual
8 report filed by the taxpayer with the Illinois Commerce
9 Commission. In the case of an electric cooperative subject
10 to the tax imposed by Section 2a.1, "taxable period" means
11 each calendar year ending after the effective date of this
12 Act and covered by an annual report filed by the taxpayer
13 with the United States Department of Agriculture Rural
14 Electrification Administration.
15 (Source: P.A. 88-480.)
16 Section 45. The Telecommunications Excise Tax Act is
17 amended by changing Section 2 as follows:
18 (35 ILCS 630/2) (from Ch. 120, par. 2002)
19 Sec. 2. As used in this Article, unless the context
20 clearly requires otherwise:
21 (a) "Gross charge" means the amount paid for the act or
22 privilege of originating or receiving telecommunications in
23 this State and for all services and equipment provided in
24 connection therewith by a retailer, valued in money whether
25 paid in money or otherwise, including cash, credits, services
26 and property of every kind or nature, and shall be determined
27 without any deduction on account of the cost of such
28 telecommunications, the cost of materials used, labor or
29 service costs or any other expense whatsoever. In case
30 credit is extended, the amount thereof shall be included only
31 as and when paid. "Gross charges" for private line service
32 shall include charges imposed at each channel point within
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1 this State, charges for the channel mileage between each
2 channel point within this State, and charges for that portion
3 of the interstate inter-office channel provided within
4 Illinois. However, "gross charges" shall not include:
5 (1) any amounts added to a purchaser's bill because
6 of a charge made pursuant to (i) the tax imposed by this
7 Article; (ii) charges added to customers' bills pursuant
8 to the provisions of Sections 9-221 or 9-222 of the
9 Public Utilities Act, as amended, or any similar charges
10 added to customers' bills by retailers who are not
11 subject to rate regulation by the Illinois Commerce
12 Commission for the purpose of recovering any of the tax
13 liabilities or other amounts specified in such provisions
14 of such Act; or (iii) the tax imposed by Section 4251 of
15 the Internal Revenue Code;
16 (2) charges for a sent collect telecommunication
17 received outside of the State;
18 (3) charges for leased time on equipment or charges
19 for the storage of data or information for subsequent
20 retrieval or the processing of data or information
21 intended to change its form or content. Such equipment
22 includes, but is not limited to, the use of calculators,
23 computers, data processing equipment, tabulating
24 equipment or accounting equipment and also includes the
25 usage of computers under a time-sharing agreement;
26 (4) charges for customer equipment, including such
27 equipment that is leased or rented by the customer from
28 any source, wherein such charges are disaggregated and
29 separately identified from other charges;
30 (5) charges to business enterprises certified under
31 Section 9-222.1 of the Public Utilities Act, as amended,
32 to the extent of such exemption and during the period of
33 time specified by the Department of Commerce and
34 Community Affairs;
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1 (6) charges for telecommunications and all services
2 and equipment provided in connection therewith between a
3 parent corporation and its wholly owned subsidiaries or
4 between wholly owned subsidiaries when the tax imposed
5 under this Article has already been paid to a retailer
6 and only to the extent that the charges between the
7 parent corporation and wholly owned subsidiaries or
8 between wholly owned subsidiaries represent expense
9 allocation between the corporations and not the
10 generation of profit for the corporation rendering such
11 service;
12 (7) bad debts. Bad debt means any portion of a debt that
13 is related to a sale at retail for which gross charges are
14 not otherwise deductible or excludable that has become
15 worthless or uncollectable, as determined under applicable
16 federal income tax standards. If the portion of the debt
17 deemed to be bad is subsequently paid, the retailer shall
18 report and pay the tax on that portion during the reporting
19 period in which the payment is made;
20 (8) charges paid by inserting coins in coin-operated
21 telecommunication devices.
22 The exemption provided in paragraph (5) of this
23 subsection applies only to tax years ending on or before
24 December 31, 2002 and does not apply thereafter.
25 (b) "Amount paid" means the amount charged to the
26 taxpayer's service address in this State regardless of where
27 such amount is billed or paid.
28 (c) "Telecommunications", in addition to the meaning
29 ordinarily and popularly ascribed to it, includes, without
30 limitation, messages or information transmitted through use
31 of local, toll and wide area telephone service; private line
32 services; channel services; telegraph services;
33 teletypewriter; computer exchange services; cellular mobile
34 telecommunications service; specialized mobile radio;
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1 stationary two way radio; paging service; or any other form
2 of mobile and portable one-way or two-way communications; or
3 any other transmission of messages or information by
4 electronic or similar means, between or among points by wire,
5 cable, fiber-optics, laser, microwave, radio, satellite or
6 similar facilities. As used in this Act, "private line" means
7 a dedicated non-traffic sensitive service for a single
8 customer, that entitles the customer to exclusive or priority
9 use of a communications channel or group of channels, from
10 one or more specified locations to one or more other
11 specified locations. The definition of "telecommunications"
12 shall not include value added services in which computer
13 processing applications are used to act on the form, content,
14 code and protocol of the information for purposes other than
15 transmission. "Telecommunications" shall not include
16 purchases of telecommunications by a telecommunications
17 service provider for use as a component part of the service
18 provided by him to the ultimate retail consumer who
19 originates or terminates the taxable end-to-end
20 communications. Carrier access charges, right of access
21 charges, charges for use of inter-company facilities, and all
22 telecommunications resold in the subsequent provision of,
23 used as a component of, or integrated into end-to-end
24 telecommunications service shall be non-taxable as sales for
25 resale.
26 (d) "Interstate telecommunications" means all
27 telecommunications that either originate or terminate outside
28 this State.
29 (e) "Intrastate telecommunications" means all
30 telecommunications that originate and terminate within this
31 State.
32 (f) "Department" means the Department of Revenue of the
33 State of Illinois.
34 (g) "Director" means the Director of Revenue for the
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1 Department of Revenue of the State of Illinois.
2 (h) "Taxpayer" means a person who individually or
3 through his agents, employees or permittees engages in the
4 act or privilege of originating or receiving
5 telecommunications in this State and who incurs a tax
6 liability under this Article.
7 (i) "Person" means any natural individual, firm, trust,
8 estate, partnership, association, joint stock company, joint
9 venture, corporation, limited liability company, or a
10 receiver, trustee, guardian or other representative appointed
11 by order of any court, the Federal and State governments,
12 including State universities created by statute or any city,
13 town, county or other political subdivision of this State.
14 (j) "Purchase at retail" means the acquisition,
15 consumption or use of telecommunication through a sale at
16 retail.
17 (k) "Sale at retail" means the transmitting, supplying
18 or furnishing of telecommunications and all services and
19 equipment provided in connection therewith for a
20 consideration to persons other than the Federal and State
21 governments, and State universities created by statute and
22 other than between a parent corporation and its wholly owned
23 subsidiaries or between wholly owned subsidiaries for their
24 use or consumption and not for resale.
25 (l) "Retailer" means and includes every person engaged
26 in the business of making sales at retail as defined in this
27 Article. The Department may, in its discretion, upon
28 application, authorize the collection of the tax hereby
29 imposed by any retailer not maintaining a place of business
30 within this State, who, to the satisfaction of the
31 Department, furnishes adequate security to insure collection
32 and payment of the tax. Such retailer shall be issued,
33 without charge, a permit to collect such tax. When so
34 authorized, it shall be the duty of such retailer to collect
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1 the tax upon all of the gross charges for telecommunications
2 in this State in the same manner and subject to the same
3 requirements as a retailer maintaining a place of business
4 within this State. The permit may be revoked by the
5 Department at its discretion.
6 (m) "Retailer maintaining a place of business in this
7 State", or any like term, means and includes any retailer
8 having or maintaining within this State, directly or by a
9 subsidiary, an office, distribution facilities, transmission
10 facilities, sales office, warehouse or other place of
11 business, or any agent or other representative operating
12 within this State under the authority of the retailer or its
13 subsidiary, irrespective of whether such place of business or
14 agent or other representative is located here permanently or
15 temporarily, or whether such retailer or subsidiary is
16 licensed to do business in this State.
17 (n) "Service address" means the location of
18 telecommunications equipment from which the
19 telecommunications services are originated or at which
20 telecommunications services are received by a taxpayer. In
21 the event this may not be a defined location, as in the case
22 of mobile phones, paging systems, maritime systems,
23 air-to-ground systems and the like, service address shall
24 mean the location of a taxpayer's primary use of the
25 telecommunications equipment as defined by telephone number,
26 authorization code, or location in Illinois where bills are
27 sent.
28 (Source: P.A. 88-480.)
29 Section 50. The Public Utilities Act is amended by
30 changing Section 8-403.1 as follows:
31 (220 ILCS 5/8-403.1) (from Ch. 111 2/3, par. 8-403.1)
32 Sec. 8-403.1. (a) It is hereby declared to be the policy
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1 of this State to encourage the development of alternate
2 energy production facilities in order to conserve our energy
3 resources and to provide for their most efficient use.
4 (b) For the purpose of this Section and Section 9-215.1,
5 "qualified solid waste energy facility" means a facility
6 determined by the Illinois Commerce Commission to qualify as
7 such under the Local Solid Waste Disposal Act, to use methane
8 gas generated from landfills as its primary fuel, and to
9 possess characteristics that would enable it to qualify as a
10 cogeneration or small power production facility under federal
11 law.
12 (c) In furtherance of the policy declared in this
13 Section, the Illinois Commerce Commission shall require
14 electric utilities to enter into long-term contracts to
15 purchase electricity from qualified solid waste energy
16 facilities located in the electric utility's service area,
17 for a period beginning on the date that the facility begins
18 generating electricity and having a duration of not less than
19 10 years in the case of facilities fueled by
20 landfill-generated methane, or 20 years in the case of
21 facilities fueled by methane generated from a landfill owned
22 by a forest preserve district. The purchase rate contained
23 in such contracts shall be equal to the average amount per
24 kilowatt-hour paid from time to time by the unit or units of
25 local government in which the electricity generating
26 facilities are located, excluding amounts paid for street
27 lighting and pumping service.
28 (d) Whenever a public utility is required to purchase
29 electricity pursuant to subsection (c) above, it shall be
30 entitled to credits in respect of its obligations to pay
31 taxes under The Public Utilities Revenue Act equal to the
32 amounts, if any, by which payments for such electricity
33 exceed (i) the then current rate at which the utility must
34 purchase the output of qualified facilities pursuant to the
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1 federal Public Utility Regulatory Policies Act of 1978, less
2 (ii) any costs, expenses, losses, damages or other amounts
3 incurred by the utility, or for which it becomes liable,
4 arising out of its failure to obtain such electricity from
5 such other sources. The amount of any such credit shall, in
6 the first instance, be determined by the utility, which shall
7 make a monthly report of such credits to the Illinois
8 Commerce Commission and, on its monthly tax return, to the
9 Illinois Department of Revenue. Under no circumstances shall
10 a utility be required to purchase electricity from a
11 qualified solid waste energy facility at the rate prescribed
12 in subsection (c) of this Section if such purchase would
13 result in estimated tax credits that exceed, on a monthly
14 basis, the utility's estimated obligation to pay taxes under
15 the Public Utilities Revenue Act. The owner or operator shall
16 negotiate facility operating conditions with the purchasing
17 utility in accordance with that utility's posted standard
18 terms and conditions for small power producers. If the
19 Department of Revenue disputes the amount of any such credit,
20 such dispute shall be decided by the Illinois Commerce
21 Commission. Whenever a qualified solid waste energy facility
22 has paid or otherwise satisfied in full the capital costs or
23 indebtedness incurred in developing and implementing the
24 qualified facility, the qualified facility shall reimburse
25 the Public Utilities Fund in the State treasury for the
26 actual reduction in payments to that Fund caused by this
27 subsection (d) in a manner to be determined by the Illinois
28 Commerce Commission and based on the manner in which revenues
29 for that Fund were reduced.
30 These credits apply only to tax years ending on or before
31 December 31, 2002 and do not apply thereafter.
32 (e) The Illinois Commerce Commission shall not require
33 an electric utility to purchase electricity from any
34 qualified solid waste energy facility which is owned or
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1 operated by an entity that is primarily engaged in the
2 business of producing or selling electricity, gas, or useful
3 thermal energy from a source other than one or more qualified
4 solid waste energy facilities.
5 (f) This Section does not require an electric utility to
6 construct additional facilities unless those facilities are
7 paid for by the owner or operator of the affected qualified
8 solid waste energy facility.
9 (g) The Illinois Commerce Commission shall require that:
10 (1) electric utilities use the electricity purchased from a
11 qualified solid waste energy facility to displace electricity
12 generated from nuclear power or coal mined and purchased
13 outside the boundaries of the State of Illinois before
14 displacing electricity generated from coal mined and
15 purchased within the State of Illinois, to the extent
16 possible, and (2) electric utilities report annually to the
17 Commission on the extent of such displacements.
18 (h) Nothing in this Section is intended to cause an
19 electric utility that is required to purchase power hereunder
20 to incur any economic loss as a result of its purchase. All
21 amounts paid for power which a utility is required to
22 purchase pursuant to subparagraph (c) shall be deemed to be
23 costs prudently incurred for purposes of computing charges
24 under rates authorized by Section 9-220 of this Act. Tax
25 credits provided for herein shall be reflected in charges
26 made pursuant to rates so authorized to the extent such
27 credits are based upon a cost which is also reflected in such
28 charges.
29 (Source: P.A. 89-448, eff. 3-14-96.)
30 Section 99. Effective date. This Act takes effect upon
31 becoming law.