State of Illinois
92nd General Assembly
Legislation

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92_HB0278

 
                                               LRB9203893SMdv

 1        AN ACT concerning taxation.

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

 4        Section 5.  The  Use  Tax  Act  is  amended  by  changing
 5    Section 2 as follows:

 6        (35 ILCS 105/2) (from Ch. 120, par. 439.2)
 7        Sec.  2.   "Use"  means the exercise by any person of any
 8    right or power over tangible personal  property  incident  to
 9    the  ownership  of  that  property,  except  that it does not
10    include the sale of such property in  any  form  as  tangible
11    personal  property  in  the regular course of business to the
12    extent that such property is not first subjected to a use for
13    which it was purchased, and does not include the use of  such
14    property  by  its  owner for demonstration purposes: Provided
15    that the property purchased is deemed to be purchased for the
16    purpose of resale, despite first being used, to the extent to
17    which it is resold  as  an  ingredient  of  an  intentionally
18    produced  product or by-product of manufacturing.  "Use" does
19    not mean the demonstration use or  interim  use  of  tangible
20    personal property by a retailer before he sells that tangible
21    personal property.  For watercraft or aircraft, if the period
22    of  demonstration  use or interim use by the retailer exceeds
23    18 months, the retailer shall pay on the retailers'  original
24    cost  price  the  tax  imposed by this Act, and no credit for
25    that tax is  permitted  if  the  watercraft  or  aircraft  is
26    subsequently  sold  by the retailer.  "Use" does not mean the
27    physical incorporation of tangible personal property, to  the
28    extent  not  first  subjected  to  a  use  for  which  it was
29    purchased,  as  an  ingredient  or  constituent,  into  other
30    tangible personal property (a) which is sold in  the  regular
31    course of business or (b) which the person incorporating such
 
                            -2-                LRB9203893SMdv
 1    ingredient  or constituent therein has undertaken at the time
 2    of such purchase to cause to  be  transported  in  interstate
 3    commerce  to  destinations  outside  the  State  of Illinois:
 4    Provided  that  the  property  purchased  is  deemed  to   be
 5    purchased  for  the  purpose  of  resale, despite first being
 6    used, to the extent to which it is resold as an ingredient of
 7    an  intentionally   produced   product   or   by-product   of
 8    manufacturing.
 9        "Watercraft"  means  a  Class  2,  Class  3,  or  Class 4
10    watercraft as defined in Section 3-2 of the Boat Registration
11    and Safety Act, a personal watercraft, or any  boat  equipped
12    with an inboard motor.
13        "Purchase   at  retail"  means  the  acquisition  of  the
14    ownership of or title to tangible personal property through a
15    sale at retail.
16        "Purchaser" means anyone who, through a sale  at  retail,
17    acquires  the  ownership  of tangible personal property for a
18    valuable consideration.
19        "Sale at retail" means any transfer of the  ownership  of
20    or  title  to  tangible  personal  property  to  a purchaser,
21    including an Internet transfer, for the purpose of  use,  and
22    not  for  the  purpose  of  resale  in  any  form as tangible
23    personal property to the extent not first subjected to a  use
24    for  which  it  was  purchased, for a valuable consideration:
25    Provided  that  the  property  purchased  is  deemed  to   be
26    purchased  for  the  purpose  of  resale, despite first being
27    used, to the extent to which it is resold as an ingredient of
28    an  intentionally   produced   product   or   by-product   of
29    manufacturing.    For  this  purpose,  slag  produced  as  an
30    incident to manufacturing pig  iron  or  steel  and  sold  is
31    considered  to  be  an  intentionally  produced by-product of
32    manufacturing.  "Sale at retail" includes any  such  transfer
33    made  for resale unless made in compliance with Section 2c of
34    the  Retailers'  Occupation  Tax  Act,  as  incorporated   by
 
                            -3-                LRB9203893SMdv
 1    reference  into Section 12 of this Act.  Transactions whereby
 2    the possession of the property is transferred but the  seller
 3    retains  the  title  as  security  for payment of the selling
 4    price are sales.
 5        "Sale at retail" shall also be construed to  include  any
 6    Illinois  florist's  sales  transaction in which the purchase
 7    order is received in Illinois by a florist and  the  sale  is
 8    for  use  or  consumption,  but  the  Illinois  florist has a
 9    florist  in  another  state  deliver  the  property  to   the
10    purchaser or the purchaser's donee in such other state.
11        Nonreusable  tangible  personal  property that is used by
12    persons engaged in the business of  operating  a  restaurant,
13    cafeteria,  or  drive-in  is  a  sale  for  resale when it is
14    transferred to customers in the ordinary course  of  business
15    as  part  of  the  sale  of  food or beverages and is used to
16    deliver, package, or consume food or beverages, regardless of
17    where consumption of the food or beverages occurs.   Examples
18    of  those  items include, but are not limited to nonreusable,
19    paper and plastic  cups,  plates,  baskets,  boxes,  sleeves,
20    buckets  or  other  containers,  utensils, straws, placemats,
21    napkins, doggie bags, and  wrapping  or  packaging  materials
22    that are transferred to customers as part of the sale of food
23    or beverages in the ordinary course of business.
24        The  purchase,  employment  and transfer of such tangible
25    personal property  as  newsprint  and  ink  for  the  primary
26    purpose of conveying news (with or without other information)
27    is not a purchase, use or sale of tangible personal property.
28        "Selling price" means the consideration for a sale valued
29    in  money  whether  received in money or otherwise, including
30    cash, credits, property other than as  hereinafter  provided,
31    and  services, but not including the value of or credit given
32    for traded-in tangible personal property where the item  that
33    is  traded-in  is of like kind and character as that which is
34    being sold, and shall be determined without any deduction  on
 
                            -4-                LRB9203893SMdv
 1    account  of  the  cost  of  the  property  sold,  the cost of
 2    materials used, labor or service cost or  any  other  expense
 3    whatsoever,  but does not include interest or finance charges
 4    which appear as separate items on the bill of sale  or  sales
 5    contract  nor  charges that are added to prices by sellers on
 6    account of the seller's tax liability under  the  "Retailers'
 7    Occupation  Tax  Act",  or on account of the seller's duty to
 8    collect, from the purchaser, the tax that is imposed by  this
 9    Act,  or  on  account  of  the  seller's  tax liability under
10    Section 8-11-1 of the Illinois Municipal Code, as  heretofore
11    and  hereafter  amended,  or  on  account of the seller's tax
12    liability under the "County Retailers' Occupation  Tax  Act".
13    Effective  December  1,  1985,  "selling price" shall include
14    charges that are added to prices by sellers on account of the
15    seller's tax  liability  under  the  Cigarette  Tax  Act,  on
16    account  of the seller's duty to collect, from the purchaser,
17    the tax imposed under the  Cigarette  Use  Tax  Act,  and  on
18    account  of the seller's duty to collect, from the purchaser,
19    any cigarette tax imposed by a home rule unit.
20        The phrase "like kind and character" shall  be  liberally
21    construed  (including  but  not  limited to any form of motor
22    vehicle for any form of motor vehicle, or any kind of farm or
23    agricultural  implement  for  any  other  kind  of  farm   or
24    agricultural  implement),  while not including a kind of item
25    which, if sold at retail by that retailer,  would  be  exempt
26    from  retailers' occupation tax and use tax as an isolated or
27    occasional sale.
28        "Department" means the Department of Revenue.
29        "Person" means any natural individual, firm, partnership,
30    association, joint stock company, joint adventure, public  or
31    private   corporation,   limited   liability  company,  or  a
32    receiver, executor, trustee, guardian or other representative
33    appointed by order of any court.
34        "Retailer" means and includes every person engaged in the
 
                            -5-                LRB9203893SMdv
 1    business of  making  sales  at  retail  as  defined  in  this
 2    Section.
 3        A  person  who  holds  himself  or  herself  out as being
 4    engaged (or  who  habitually  engages)  in  selling  tangible
 5    personal  property  at  retail  is  a retailer hereunder with
 6    respect to  such  sales  (and  not  primarily  in  a  service
 7    occupation) notwithstanding the fact that such person designs
 8    and produces such tangible personal property on special order
 9    for the purchaser and in such a way as to render the property
10    of  value  only  to such purchaser, if such tangible personal
11    property so produced on special  order  serves  substantially
12    the  same  function  as  stock  or standard items of tangible
13    personal property that are sold at retail.
14        A person whose activities  are  organized  and  conducted
15    primarily  as  a  not-for-profit  service enterprise, and who
16    engages in  selling  tangible  personal  property  at  retail
17    (whether to the public or merely to members and their guests)
18    is  a  retailer  with respect to such transactions, excepting
19    only  a  person  organized  and  operated   exclusively   for
20    charitable,  religious or educational purposes either (1), to
21    the extent of sales by such person to its members,  students,
22    patients  or inmates of tangible personal property to be used
23    primarily for the purposes of such person,  or  (2),  to  the
24    extent  of sales by such person of tangible personal property
25    which is not sold or offered for sale  by  persons  organized
26    for  profit.  The selling of school books and school supplies
27    by schools at retail to students is not  "primarily  for  the
28    purposes  of"  the  school  which  does  such  selling.  This
29    paragraph  does  not  apply  to  nor  subject   to   taxation
30    occasional  dinners, social or similar activities of a person
31    organized and operated exclusively for charitable,  religious
32    or  educational  purposes, whether or not such activities are
33    open to the public.
34        A person who is the recipient  of  a  grant  or  contract
 
                            -6-                LRB9203893SMdv
 1    under  Title  VII  of  the  Older Americans Act of 1965 (P.L.
 2    92-258) and serves  meals  to  participants  in  the  federal
 3    Nutrition Program for the Elderly in return for contributions
 4    established  in amount by the individual participant pursuant
 5    to a schedule of  suggested  fees  as  provided  for  in  the
 6    federal  Act is not a retailer under this Act with respect to
 7    such transactions.
 8        Persons  who  engage  in  the  business  of  transferring
 9    tangible personal property upon  the  redemption  of  trading
10    stamps are retailers hereunder when engaged in such business.
11        The  isolated  or  occasional  sale  of tangible personal
12    property at retail by a person who does not hold himself  out
13    as  being  engaged  (or  who  does  not habitually engage) in
14    selling such tangible personal property at retail or  a  sale
15    through  a  bulk  vending machine does not make such person a
16    retailer hereunder.  However, any person who is engaged in  a
17    business  which  is  not  subject  to  the tax imposed by the
18    "Retailers' Occupation Tax Act" because of involving the sale
19    of or a contract  to  sell  real  estate  or  a  construction
20    contract  to  improve  real estate, but who, in the course of
21    conducting  such  business,   transfers   tangible   personal
22    property  to users or consumers in the finished form in which
23    it was purchased, and which  does  not  become  real  estate,
24    under any provision of a construction contract or real estate
25    sale  or  real  estate sales agreement entered into with some
26    other person arising out of or  because  of  such  nontaxable
27    business,  is  a  retailer  to the extent of the value of the
28    tangible personal  property  so  transferred.   If,  in  such
29    transaction,  a  separate  charge  is  made  for the tangible
30    personal property so transferred, the value of such property,
31    for the purposes of this Act, is  the  amount  so  separately
32    charged,  but  not less than the cost of such property to the
33    transferor; if no separate charge is made, the value of  such
34    property,  for  the  purposes of this Act, is the cost to the
 
                            -7-                LRB9203893SMdv
 1    transferor of such tangible personal property.
 2        "Retailer maintaining a place of business in this State",
 3    or any like term, means and includes  any  of  the  following
 4    retailers:
 5             1.  A  retailer  having  or  maintaining within this
 6        State,  directly  or  by   a   subsidiary,   an   office,
 7        distribution house, sales house, warehouse or other place
 8        of   business,  or  any  agent  or  other  representative
 9        operating within this State under the  authority  of  the
10        retailer  or its subsidiary, irrespective of whether such
11        place of business or agent  or  other  representative  is
12        located  here permanently or temporarily, or whether such
13        retailer or subsidiary is licensed to do business in this
14        State. However, the ownership of property that is located
15        at the premises of a printer with which the retailer  has
16        contracted  for  printing  and that consists of the final
17        printed product, property that  becomes  a  part  of  the
18        final  printed  product,  or  copy from which the printed
19        product is produced shall  not  result  in  the  retailer
20        being  deemed to have or maintain an office, distribution
21        house, sales house, warehouse, or other place of business
22        within this State.
23             2.  A  retailer  soliciting  orders   for   tangible
24        personal  property  by  means  of  a telecommunication or
25        television shopping  system  (which  utilizes  toll  free
26        numbers)   which  is  intended  by  the  retailer  to  be
27        broadcast  by  cable  television  or   other   means   of
28        broadcasting, to consumers located in this State.
29             3.  A  retailer,  pursuant  to  a  contract  with  a
30        broadcaster   or   publisher   located   in  this  State,
31        soliciting orders for tangible personal property by means
32        of  advertising  which  is  disseminated   primarily   to
33        consumers  located  in this State and only secondarily to
34        bordering jurisdictions.
 
                            -8-                LRB9203893SMdv
 1             4.  A  retailer  soliciting  orders   for   tangible
 2        personal  property  by  mail  if  the  solicitations  are
 3        substantial  and  recurring  and if the retailer benefits
 4        from   any   banking,   financing,    debt    collection,
 5        telecommunication,  or  marketing activities occurring in
 6        this State or benefits from the location in this State of
 7        authorized installation, servicing, or repair facilities.
 8             5.  A retailer that is owned or  controlled  by  the
 9        same  interests that own or control any retailer engaging
10        in business in the same or similar line  of  business  in
11        this State.
12             6.  A  retailer  having  a  franchisee  or  licensee
13        operating  under  its  trade  name  if  the franchisee or
14        licensee is  required  to  collect  the  tax  under  this
15        Section.
16             7.  A  retailer, pursuant to a contract with a cable
17        television operator located  in  this  State,  soliciting
18        orders   for  tangible  personal  property  by  means  of
19        advertising which is transmitted or  distributed  over  a
20        cable television system in this State.
21             8.  A  retailer  engaging in activities in Illinois,
22        which  activities  in  the  state  in  which  the  retail
23        business engaging in such  activities  is  located  would
24        constitute maintaining a place of business in that state.
25             9.  A   retailer   soliciting  orders  for  tangible
26        personal property  by  means  of  the  Internet  that  is
27        intended  to  be transmitted to consumers located in this
28        State.
29        "Bulk vending machine" means a  nonelectrically  operated
30    vending  machine,  containing  unsorted  confections, nuts or
31    other merchandise which, when a coin of  a  denomination  not
32    larger  than  one  cent  is  inserted, are dispensed in equal
33    portions, at random and without selection by the customer.
34    (Source: P.A. 90-289, eff. 8-1-97.)
 
                            -9-                LRB9203893SMdv
 1        Section 10.  The  Service  Use  Tax  Act  is  amended  by
 2    changing Section 2 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
 
                            -10-               LRB9203893SMdv
 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,
 
                            -11-               LRB9203893SMdv
 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             (4a)  a  sale  or  transfer  of  tangible   personal
22        property  as  an incident to the rendering of service for
23        owners,  lessors,  or  shippers  of   tangible   personal
24        property  which  is  utilized  by interstate carriers for
25        hire for  use  as  rolling  stock  moving  in  interstate
26        commerce  so  long  as so used by interstate carriers for
27        hire, and  equipment  operated  by  a  telecommunications
28        provider,  licensed  as  a  common carrier by the Federal
29        Communications Commission, which is permanently installed
30        in or affixed to aircraft moving in interstate commerce.
31             (5)  a sale or transfer of machinery  and  equipment
32        used  primarily  in  the  process of the manufacturing or
33        assembling, either in an existing, an expanded or  a  new
34        manufacturing facility, of tangible personal property for
 
                            -12-               LRB9203893SMdv
 1        wholesale  or  retail sale or lease, whether such sale or
 2        lease is made directly by the  manufacturer  or  by  some
 3        other  person,  whether the materials used in the process
 4        are owned by the manufacturer or some  other  person,  or
 5        whether  such  sale  or lease is made apart from or as an
 6        incident to the seller's engaging in a service occupation
 7        and the applicable tax is a Service Use  Tax  or  Service
 8        Occupation   Tax,  rather  than  Use  Tax  or  Retailers'
 9        Occupation Tax.
10             (5a)  the repairing, reconditioning  or  remodeling,
11        for  a  common  carrier  by  rail,  of  tangible personal
12        property which belongs to such carrier for hire,  and  as
13        to which such carrier receives the physical possession of
14        the repaired, reconditioned or remodeled item of tangible
15        personal  property  in  Illinois,  and which such carrier
16        transports, or shares with another common carrier in  the
17        transportation  of  such  property,  out of Illinois on a
18        standard uniform bill of lading showing  the  person  who
19        repaired,  reconditioned  or  remodeled the property to a
20        destination outside Illinois, for use outside Illinois.
21             (5b)  a  sale  or  transfer  of  tangible   personal
22        property  which  is  produced  by  the  seller thereof on
23        special  order  in  such  a  way  as  to  have  made  the
24        applicable tax the Service Occupation Tax or the  Service
25        Use Tax, rather than the Retailers' Occupation Tax or the
26        Use Tax, for an interstate carrier by rail which receives
27        the physical possession of such property in Illinois, and
28        which  transports  such  property, or shares with another
29        common carrier in the transportation  of  such  property,
30        out  of  Illinois  on  a  standard uniform bill of lading
31        showing the seller of the  property  as  the  shipper  or
32        consignor  of  such  property  to  a  destination outside
33        Illinois, for use outside Illinois.
34             (6)  a sale or transfer  of  distillation  machinery
 
                            -13-               LRB9203893SMdv
 1        and  equipment,  sold  as  a unit or kit and assembled or
 2        installed by the retailer, which machinery and  equipment
 3        is  certified  by  the  user  to  be  used  only  for the
 4        production  of  ethyl  alcohol  that  will  be  used  for
 5        consumption as motor fuel or as a component of motor fuel
 6        for the personal use of such user and not subject to sale
 7        or resale.
 8             (7)  at the election of any serviceman not  required
 9        to be otherwise registered as a retailer under Section 2a
10        of  the  Retailers'  Occupation  Tax  Act,  made for each
11        fiscal year sales  of  service  in  which  the  aggregate
12        annual   cost   price   of   tangible  personal  property
13        transferred as an incident to the  sales  of  service  is
14        less   than  35%,  or  75%  in  the  case  of  servicemen
15        transferring prescription drugs or servicemen engaged  in
16        graphic  arts  production,  of the aggregate annual total
17        gross receipts from all sales of service. The purchase of
18        such tangible personal property by the  serviceman  shall
19        be subject to tax under the Retailers' Occupation Tax Act
20        and  the  Use  Tax Act.  However, if a primary serviceman
21        who has made the election  described  in  this  paragraph
22        subcontracts  service  work to a secondary serviceman who
23        has also made the election described in  this  paragraph,
24        the primary serviceman does not incur a Use Tax liability
25        if  the secondary serviceman (i) has paid or will pay Use
26        Tax on his or her cost price  of  any  tangible  personal
27        property  transferred  to the primary serviceman and (ii)
28        certifies that fact in writing to the primary serviceman.
29        Tangible personal property transferred  incident  to  the
30    completion  of a maintenance agreement is exempt from the tax
31    imposed pursuant to this Act.
32        Exemption (5) also includes machinery and equipment  used
33    in the general maintenance or repair of such exempt machinery
34    and equipment or for in-house manufacture of exempt machinery
 
                            -14-               LRB9203893SMdv
 1    and  equipment.  For  the  purposes of exemption (5), each of
 2    these  terms  shall  have  the   following   meanings:    (1)
 3    "manufacturing  process"  shall  mean  the  production of any
 4    article of tangible personal property, whether  such  article
 5    is a finished product or an article for use in the process of
 6    manufacturing  or  assembling a different article of tangible
 7    personal  property,  by  procedures  commonly   regarded   as
 8    manufacturing,  processing,  fabricating,  or  refining which
 9    changes some existing material or materials into  a  material
10    with  a  different  form,  use  or  name.   In  relation to a
11    recognized  integrated  business  composed  of  a  series  of
12    operations which collectively  constitute  manufacturing,  or
13    individually   constitute   manufacturing   operations,   the
14    manufacturing  process  shall  be deemed to commence with the
15    first operation or stage of production  in  the  series,  and
16    shall  not be deemed to end until the completion of the final
17    product in the last operation or stage of production  in  the
18    series;   and   further,   for  purposes  of  exemption  (5),
19    photoprocessing is deemed to be a  manufacturing  process  of
20    tangible  personal property for wholesale or retail sale; (2)
21    "assembling process" shall mean the production of any article
22    of tangible personal property,  whether  such  article  is  a
23    finished  product  or  an  article  for use in the process of
24    manufacturing or assembling a different article  of  tangible
25    personal  property,  by the combination of existing materials
26    in a manner commonly regarded as assembling which results  in
27    a  material of a different form, use or name; (3) "machinery"
28    shall mean major mechanical machines or major  components  of
29    such  machines  contributing to a manufacturing or assembling
30    process; and (4) "equipment" shall  include  any  independent
31    device  or  tool separate from any machinery but essential to
32    an integrated manufacturing or  assembly  process;  including
33    computers  used  primarily  in operating exempt machinery and
34    equipment in a computer assisted  design,  computer  assisted
 
                            -15-               LRB9203893SMdv
 1    manufacturing  (CAD/CAM)  system;  or any subunit or assembly
 2    comprising a component of any machinery or auxiliary, adjunct
 3    or attachment parts of machinery, such as tools, dies,  jigs,
 4    fixtures,  patterns  and  molds;  or  any parts which require
 5    periodic replacement in the course of normal  operation;  but
 6    shall not include hand tools. The purchaser of such machinery
 7    and  equipment  who  has an active resale registration number
 8    shall furnish such number  to  the  seller  at  the  time  of
 9    purchase.  The user of such machinery and equipment and tools
10    without an active resale registration number shall prepare  a
11    certificate  of  exemption for each transaction stating facts
12    establishing  the  exemption  for  that  transaction,   which
13    certificate   shall   be  available  to  the  Department  for
14    inspection or audit.  The Department shall prescribe the form
15    of the certificate.
16        Any informal rulings, opinions or letters issued  by  the
17    Department  in  response  to  an  inquiry  or request for any
18    opinion  from  any  person   regarding   the   coverage   and
19    applicability  of  exemption (5) to specific devices shall be
20    published, maintained as a public record, and made  available
21    for  public  inspection and copying.  If the informal ruling,
22    opinion  or  letter   contains   trade   secrets   or   other
23    confidential information, where possible the Department shall
24    delete  such information prior to publication.  Whenever such
25    informal rulings, opinions, or letters contain any policy  of
26    general  applicability,  the  Department  shall formulate and
27    adopt such policy as a rule in accordance with the provisions
28    of the Illinois Administrative Procedure Act.
29        On and after July 1, 1987, no entity  otherwise  eligible
30    under  exemption  (3)  of  this  Section  shall make tax free
31    purchases unless it has an  active  exemption  identification
32    number issued by the Department.
33        The  purchase,  employment  and transfer of such tangible
34    personal property  as  newsprint  and  ink  for  the  primary
 
                            -16-               LRB9203893SMdv
 1    purpose of conveying news (with or without other information)
 2    is  not  a  purchase,  use  or sale of service or of tangible
 3    personal property within the meaning of this Act.
 4        "Serviceman" means any  person  who  is  engaged  in  the
 5    occupation of making sales of service.
 6        "Sale at retail" means "sale at retail" as defined in the
 7    Retailers' Occupation Tax Act.
 8        "Supplier"  means  any person who makes sales of tangible
 9    personal property to servicemen for the purpose of resale  as
10    an incident to a sale of service.
11        "Serviceman  maintaining  a  place  of  business  in this
12    State", or any like term, means and includes any serviceman:
13             1.  having  or  maintaining   within   this   State,
14        directly  or  by  a  subsidiary,  an office, distribution
15        house, sales house, warehouse or other place of business,
16        or any agent or  other  representative  operating  within
17        this  State  under the authority of the serviceman or its
18        subsidiary,  irrespective  of  whether  such   place   of
19        business or agent or other representative is located here
20        permanently or temporarily, or whether such serviceman or
21        subsidiary is licensed to do business in this State;
22             2.  soliciting orders for tangible personal property
23        by  means  of  a telecommunication or television shopping
24        system  (which  utilizes  toll  free  numbers)  which  is
25        intended  by  the  retailer  to  be  broadcast  by  cable
26        television or other means of broadcasting,  to  consumers
27        located in this State;
28             3.  pursuant  to  a  contract  with a broadcaster or
29        publisher located in this State,  soliciting  orders  for
30        tangible  personal property by means of advertising which
31        is disseminated primarily to consumers  located  in  this
32        State and only secondarily to bordering jurisdictions;
33             4.  soliciting orders for tangible personal property
34        by   mail   if  the  solicitations  are  substantial  and
 
                            -17-               LRB9203893SMdv
 1        recurring and if the retailer benefits from any  banking,
 2        financing,   debt   collection,   telecommunication,   or
 3        marketing  activities occurring in this State or benefits
 4        from  the  location   in   this   State   of   authorized
 5        installation, servicing, or repair facilities;
 6             5.  being  owned or controlled by the same interests
 7        which own or control any retailer engaging in business in
 8        the same or similar line of business in this State;
 9             6.  having a franchisee or licensee operating  under
10        its  trade name if the franchisee or licensee is required
11        to collect the tax under this Section;
12             7.  pursuant to a contract with a  cable  television
13        operator  located  in  this  State, soliciting orders for
14        tangible personal property by means of advertising  which
15        is  transmitted  or  distributed  over a cable television
16        system in this State; or
17             8.  engaging  in  activities  in   Illinois,   which
18        activities  in  the  state  in  which the supply business
19        engaging in such activities is located  would  constitute
20        maintaining a place of business in that state; or
21             9.  soliciting orders for tangible personal property
22        by   means  of  the  Internet  that  is  intended  to  be
23        transmitted to consumers in this State.
24    (Source: P.A. 91-51, eff. 6-30-99.)

25        Section 15.  The Service Occupation Tax Act is amended by
26    changing Section 2 as follows:

27        (35 ILCS 115/2) (from Ch. 120, par. 439.102)
28        Sec. 2. "Transfer" means any transfer  of  the  title  to
29    property  or  of  the  ownership  of  property,  including an
30    Internet transfer, whether  or  not  the  transferor  retains
31    title as security for the payment of amounts due him from the
32    transferee.
 
                            -18-               LRB9203893SMdv
 1        "Cost   Price"   means  the  consideration  paid  by  the
 2    serviceman for a purchase valued in money,  whether  paid  in
 3    money or otherwise, including cash, credits and services, and
 4    shall  be  determined without any deduction on account of the
 5    supplier's cost of the property sold or  on  account  of  any
 6    other  expense  incurred  by  the supplier. When a serviceman
 7    contracts out part or all of the  services  required  in  his
 8    sale  of service, it shall be presumed that the cost price to
 9    the serviceman of the property transferred to him by  his  or
10    her  subcontractor  is  equal  to  50% of the subcontractor's
11    charges to the serviceman in the  absence  of  proof  of  the
12    consideration  paid  by the subcontractor for the purchase of
13    such property.
14        "Department" means the Department of Revenue.
15        "Person" means any natural individual, firm, partnership,
16    association, joint stock company, joint  venture,  public  or
17    private  corporation,  limited  liability  company,  and  any
18    receiver, executor, trustee, guardian or other representative
19    appointed by order of any court.
20        "Sale of Service" means any transaction except:
21        (a)  A  retail sale of tangible personal property taxable
22    under the Retailers' Occupation Tax Act or under the Use  Tax
23    Act.
24        (b)  A sale of tangible personal property for the purpose
25    of   resale  made  in  compliance  with  Section  2c  of  the
26    Retailers' Occupation Tax Act.
27        (c)  Except as hereinafter provided, a sale  or  transfer
28    of tangible personal property as an incident to the rendering
29    of  service  for or by any governmental body or for or by any
30    corporation, society, association, foundation or  institution
31    organized  and operated exclusively for charitable, religious
32    or educational purposes or  any  not-for-profit  corporation,
33    society, association, foundation, institution or organization
34    which  has  no compensated officers or employees and which is
 
                            -19-               LRB9203893SMdv
 1    organized  and  operated  primarily  for  the  recreation  of
 2    persons 55 years of age or older. A limited liability company
 3    may qualify for the exemption under this  paragraph  only  if
 4    the  limited  liability  company  is  organized  and operated
 5    exclusively for educational purposes.
 6        (d)  A sale or transfer of tangible personal property  as
 7    an  incident  to  the  rendering  of  service  for interstate
 8    carriers  for  hire  for  use  as  rolling  stock  moving  in
 9    interstate commerce or lessors under leases of  one  year  or
10    longer,  executed  or  in  effect at the time of purchase, to
11    interstate carriers for hire for use as rolling stock  moving
12    in   interstate   commerce,   and  equipment  operated  by  a
13    telecommunications provider, licensed as a common carrier  by
14    the  Federal  Communications Commission, which is permanently
15    installed in or affixed  to  aircraft  moving  in  interstate
16    commerce.
17        (d-1)  A  sale  or transfer of tangible personal property
18    as an incident  to  the  rendering  of  service  for  owners,
19    lessors  or  shippers  of tangible personal property which is
20    utilized by interstate carriers for hire for use  as  rolling
21    stock  moving  in interstate commerce, and equipment operated
22    by  a  telecommunications  provider,  licensed  as  a  common
23    carrier by the Federal Communications  Commission,  which  is
24    permanently  installed  in  or  affixed to aircraft moving in
25    interstate commerce.
26        (d-2)  The repairing, reconditioning or remodeling, for a
27    common carrier by rail, of tangible personal  property  which
28    belongs  to  such  carrier  for  hire,  and  as to which such
29    carrier receives the physical  possession  of  the  repaired,
30    reconditioned or remodeled item of tangible personal property
31    in  Illinois,  and  which  such carrier transports, or shares
32    with another common carrier in  the  transportation  of  such
33    property,  out  of  Illinois  on  a  standard uniform bill of
34    lading showing the  person  who  repaired,  reconditioned  or
 
                            -20-               LRB9203893SMdv
 1    remodeled  the  property  as the shipper or consignor of such
 2    property to a destination outside Illinois, for  use  outside
 3    Illinois.
 4        (d-3)  A  sale  or transfer of tangible personal property
 5    which is produced by the seller thereof on special  order  in
 6    such  a  way  as  to have made the applicable tax the Service
 7    Occupation Tax or  the  Service  Use  Tax,  rather  than  the
 8    Retailers'  Occupation  Tax or the Use Tax, for an interstate
 9    carrier by rail which receives  the  physical  possession  of
10    such   property   in  Illinois,  and  which  transports  such
11    property, or  shares  with  another  common  carrier  in  the
12    transportation  of  such  property,  out  of  Illinois  on  a
13    standard  uniform  bill  of  lading showing the seller of the
14    property as the shipper or consignor of such  property  to  a
15    destination outside Illinois, for use outside Illinois.
16        (d-4)  Until  January  1,  1997,  a sale, by a registered
17    serviceman paying tax under this Act to  the  Department,  of
18    special  order  printed  materials delivered outside Illinois
19    and which are not returned to this State, if delivery is made
20    by the seller or agent of the seller, including an agent  who
21    causes  the  product  to  be  delivered outside Illinois by a
22    common carrier or the U.S. postal service.
23        (e)  A sale or transfer of machinery and  equipment  used
24    primarily  in the process of the manufacturing or assembling,
25    either in an existing, an expanded  or  a  new  manufacturing
26    facility,  of  tangible  personal  property  for wholesale or
27    retail sale or lease, whether such  sale  or  lease  is  made
28    directly by the manufacturer or by some other person, whether
29    the   materials   used  in  the  process  are  owned  by  the
30    manufacturer or some other person, or whether  such  sale  or
31    lease  is  made  apart from or as an incident to the seller's
32    engaging in a service occupation and the applicable tax is  a
33    Service  Occupation  Tax  or  Service  Use  Tax,  rather than
34    Retailers' Occupation Tax or Use Tax.
 
                            -21-               LRB9203893SMdv
 1        (f)  The sale or transfer of distillation  machinery  and
 2    equipment,  sold  as a unit or kit and assembled or installed
 3    by the retailer, which machinery and equipment  is  certified
 4    by  the  user  to  be  used  only for the production of ethyl
 5    alcohol that will be used for consumption as motor fuel or as
 6    a component of motor fuel for the personal use of  such  user
 7    and not subject to sale or resale.
 8        (g)  At the election of any serviceman not required to be
 9    otherwise  registered  as  a retailer under Section 2a of the
10    Retailers' Occupation Tax Act,  made  for  each  fiscal  year
11    sales  of service in which the aggregate annual cost price of
12    tangible personal property transferred as an incident to  the
13    sales  of  service  is  less  than  35%  (75%  in the case of
14    servicemen  transferring  prescription  drugs  or  servicemen
15    engaged in graphic arts production) of the  aggregate  annual
16    total  gross receipts from all sales of service. The purchase
17    of such tangible personal property by the serviceman shall be
18    subject to tax under the Retailers' Occupation  Tax  Act  and
19    the  Use  Tax  Act.  However, if a primary serviceman who has
20    made the election described in  this  paragraph  subcontracts
21    service  work to a secondary serviceman who has also made the
22    election described in this paragraph, the primary  serviceman
23    does   not  incur  a  Use  Tax  liability  if  the  secondary
24    serviceman (i) has paid or will pay Use Tax  on  his  or  her
25    cost  price  of any tangible personal property transferred to
26    the primary  serviceman  and  (ii)  certifies  that  fact  in
27    writing to the primary serviceman.
28        Tangible  personal  property  transferred incident to the
29    completion of a maintenance agreement is exempt from the  tax
30    imposed pursuant to this Act.
31        Exemption  (e) also includes machinery and equipment used
32    in the general maintenance or repair of such exempt machinery
33    and equipment or for in-house manufacture of exempt machinery
34    and equipment. For the purposes of  exemption  (e),  each  of
 
                            -22-               LRB9203893SMdv
 1    these   terms   shall   have  the  following  meanings:   (1)
 2    "manufacturing process" shall  mean  the  production  of  any
 3    article  of  tangible personal property, whether such article
 4    is a finished product or an article for use in the process of
 5    manufacturing or assembling a different article  of  tangible
 6    personal   property,   by  procedures  commonly  regarded  as
 7    manufacturing, processing,  fabricating,  or  refining  which
 8    changes  some  existing material or materials into a material
 9    with a different  form,  use  or  name.   In  relation  to  a
10    recognized  integrated  business  composed  of  a  series  of
11    operations  which  collectively  constitute manufacturing, or
12    individually   constitute   manufacturing   operations,   the
13    manufacturing process shall be deemed to  commence  with  the
14    first  operation  or  stage  of production in the series, and
15    shall not be deemed to end until the completion of the  final
16    product  in  the last operation or stage of production in the
17    series;  and  further  for   purposes   of   exemption   (e),
18    photoprocessing  is  deemed  to be a manufacturing process of
19    tangible personal property for wholesale or retail sale;  (2)
20    "assembling process" shall mean the production of any article
21    of  tangible  personal  property,  whether  such article is a
22    finished product or an article for  use  in  the  process  of
23    manufacturing  or  assembling a different article of tangible
24    personal property, by the combination of  existing  materials
25    in  a manner commonly regarded as assembling which results in
26    a material of a different form, use or name; (3)  "machinery"
27    shall  mean  major mechanical machines or major components of
28    such machines contributing to a manufacturing  or  assembling
29    process;  and  (4)  "equipment" shall include any independent
30    device or tool separate from any machinery but  essential  to
31    an  integrated  manufacturing  or assembly process; including
32    computers used primarily in operating  exempt  machinery  and
33    equipment  in  a  computer assisted design, computer assisted
34    manufacturing (CAD/CAM) system; or any  subunit  or  assembly
 
                            -23-               LRB9203893SMdv
 1    comprising a component of any machinery or auxiliary, adjunct
 2    or  attachment parts of machinery, such as tools, dies, jigs,
 3    fixtures, patterns and molds;  or  any  parts  which  require
 4    periodic  replacement  in the course of normal operation; but
 5    shall not include hand tools. The purchaser of such machinery
 6    and equipment who has an active  resale  registration  number
 7    shall  furnish  such  number  to  the  seller  at the time of
 8    purchase. The purchaser of such machinery and  equipment  and
 9    tools  without  an  active  resale  registration number shall
10    furnish to the seller a certificate  of  exemption  for  each
11    transaction stating facts establishing the exemption for that
12    transaction,  which  certificate  shall  be  available to the
13    Department for inspection or audit.
14        The rolling stock exemption applies to rolling stock used
15    by an interstate carrier for hire, even just  between  points
16    in  Illinois,  if  such  rolling  stock transports, for hire,
17    persons whose journeys or property whose shipments  originate
18    or terminate outside Illinois.
19        Any  informal  rulings, opinions or letters issued by the
20    Department in response to  an  inquiry  or  request  for  any
21    opinion   from   any   person   regarding  the  coverage  and
22    applicability of exemption (e) to specific devices  shall  be
23    published,  maintained as a public record, and made available
24    for public inspection and copying.  If the  informal  ruling,
25    opinion   or   letter   contains   trade   secrets  or  other
26    confidential information, where possible the Department shall
27    delete such information prior to publication.  Whenever  such
28    informal  rulings, opinions, or letters contain any policy of
29    general applicability, the  Department  shall  formulate  and
30    adopt such policy as a rule in accordance with the provisions
31    of the Illinois Administrative Procedure Act.
32        On  and  after July 1, 1987, no entity otherwise eligible
33    under exemption (c) of  this  Section  shall  make  tax  free
34    purchases  unless  it  has an active exemption identification
 
                            -24-               LRB9203893SMdv
 1    number issued by the Department.
 2        "Serviceman" means any  person  who  is  engaged  in  the
 3    occupation of making sales of service.
 4        "Sale at Retail" means "sale at retail" as defined in the
 5    Retailers' Occupation Tax Act.
 6        "Supplier"  means  any person who makes sales of tangible
 7    personal property to servicemen for the purpose of resale  as
 8    an incident to a sale of service.
 9    (Source: P.A. 91-51, eff. 6-30-99.)

10        Section 20.  The Retailers' Occupation Tax Act is amended
11    by changing Section 1 as follows:

12        (35 ILCS 120/1) (from Ch. 120, par. 440)
13        Sec. 1.  Definitions.
14        "Sale  at  retail" means any transfer of the ownership of
15    or title  to  tangible  personal  property  to  a  purchaser,
16    including  an  Internet  transfer,  for the purpose of use or
17    consumption, and not for the purpose of resale in any form as
18    tangible personal property to the extent not first  subjected
19    to  a  use  for  which  it  was  purchased,  for  a  valuable
20    consideration:   Provided  that  the  property  purchased  is
21    deemed  to  be  purchased  for the purpose of resale, despite
22    first being used, to the extent to which it is resold  as  an
23    ingredient  of an intentionally produced product or byproduct
24    of manufacturing.  For this  purpose,  slag  produced  as  an
25    incident  to  manufacturing  pig  iron  or  steel and sold is
26    considered to  be  an  intentionally  produced  byproduct  of
27    manufacturing.   Transactions  whereby  the possession of the
28    property is transferred but the seller retains the  title  as
29    security  for payment of the selling price shall be deemed to
30    be sales.
31        "Sale at  retail"  shall  be  construed  to  include  any
32    transfer  of  the  ownership of or title to tangible personal
 
                            -25-               LRB9203893SMdv
 1    property to a purchaser, for use or consumption by any  other
 2    person  to  whom  such  purchaser  may  transfer the tangible
 3    personal property without a valuable  consideration,  and  to
 4    include  any transfer, whether made for or without a valuable
 5    consideration, for resale in any form  as  tangible  personal
 6    property  unless  made  in compliance with Section 2c of this
 7    Act.
 8        Sales of tangible personal property, which  property,  to
 9    the  extent  not  first  subjected  to a use for which it was
10    purchased, as an ingredient or  constituent,  goes  into  and
11    forms  a  part of tangible personal property subsequently the
12    subject of a "Sale at retail", are not  sales  at  retail  as
13    defined in this Act:  Provided that the property purchased is
14    deemed  to  be  purchased  for the purpose of resale, despite
15    first being used, to the extent to which it is resold  as  an
16    ingredient  of an intentionally produced product or byproduct
17    of manufacturing.
18        "Sale at  retail"  shall  be  construed  to  include  any
19    Illinois  florist's  sales  transaction in which the purchase
20    order is received in Illinois by a florist and  the  sale  is
21    for  use  or  consumption,  but  the  Illinois  florist has a
22    florist  in  another  state  deliver  the  property  to   the
23    purchaser or the purchaser's donee in such other state.
24        Nonreusable  tangible  personal  property that is used by
25    persons engaged in the business of  operating  a  restaurant,
26    cafeteria,  or  drive-in  is  a  sale  for  resale when it is
27    transferred to customers in the ordinary course  of  business
28    as  part  of  the  sale  of  food or beverages and is used to
29    deliver, package, or consume food or beverages, regardless of
30    where consumption of the food or beverages occurs.   Examples
31    of  those  items include, but are not limited to nonreusable,
32    paper and plastic  cups,  plates,  baskets,  boxes,  sleeves,
33    buckets  or  other  containers,  utensils, straws, placemats,
34    napkins, doggie bags, and  wrapping  or  packaging  materials
 
                            -26-               LRB9203893SMdv
 1    that are transferred to customers as part of the sale of food
 2    or beverages in the ordinary course of business.
 3        The  purchase,  employment  and transfer of such tangible
 4    personal property  as  newsprint  and  ink  for  the  primary
 5    purpose of conveying news (with or without other information)
 6    is not a purchase, use or sale of tangible personal property.
 7        A  person  whose  activities  are organized and conducted
 8    primarily as a not-for-profit  service  enterprise,  and  who
 9    engages  in  selling  tangible  personal  property  at retail
10    (whether to the public or merely to members and their guests)
11    is engaged in  the  business  of  selling  tangible  personal
12    property   at  retail  with  respect  to  such  transactions,
13    excepting only a person organized  and  operated  exclusively
14    for charitable, religious or educational purposes either (1),
15    to  the  extent  of  sales  by  such  person  to its members,
16    students, patients or inmates of tangible  personal  property
17    to be used primarily for the purposes of such person, or (2),
18    to  the  extent  of sales by such person of tangible personal
19    property which is not sold or offered  for  sale  by  persons
20    organized for profit.  The selling of school books and school
21    supplies  by  schools at retail to students is not "primarily
22    for the purposes of" the school which does such selling.  The
23    provisions of this paragraph shall not apply to  nor  subject
24    to taxation occasional dinners, socials or similar activities
25    of   a   person   organized   and  operated  exclusively  for
26    charitable, religious or educational purposes, whether or not
27    such activities are open to the public.
28        A person who is the recipient  of  a  grant  or  contract
29    under  Title  VII  of  the  Older Americans Act of 1965 (P.L.
30    92-258) and serves  meals  to  participants  in  the  federal
31    Nutrition Program for the Elderly in return for contributions
32    established  in amount by the individual participant pursuant
33    to a schedule of  suggested  fees  as  provided  for  in  the
34    federal  Act  is  not  engaged  in  the  business  of selling
 
                            -27-               LRB9203893SMdv
 1    tangible personal property at retail  with  respect  to  such
 2    transactions.
 3        "Purchaser"  means  anyone who, through a sale at retail,
 4    acquires the ownership  of  or  title  to  tangible  personal
 5    property for a valuable consideration.
 6        "Reseller  of motor fuel" means any person engaged in the
 7    business of selling or delivering or  transferring  title  of
 8    motor   fuel   to  another  person  other  than  for  use  or
 9    consumption. No person shall act as a reseller of motor  fuel
10    within  this  State  without  first  being  registered  as  a
11    reseller  pursuant  to  Section  2c or a retailer pursuant to
12    Section 2a.
13        "Selling  price"  or  the  "amount  of  sale"  means  the
14    consideration for a sale valued in money whether received  in
15    money  or otherwise, including cash, credits, property, other
16    than as hereinafter provided, and services, but not including
17    the value of or credit given for traded-in tangible  personal
18    property where the item that is traded-in is of like kind and
19    character   as  that  which  is  being  sold,  and  shall  be
20    determined without any deduction on account of  the  cost  of
21    the  property  sold,  the  cost  of  materials used, labor or
22    service cost or any other expense whatsoever,  but  does  not
23    include  charges  that  are  added  to  prices  by sellers on
24    account of the seller's tax liability under this Act,  or  on
25    account  of the seller's duty to collect, from the purchaser,
26    the tax that is imposed by the Use Tax Act, or on account  of
27    the  seller's  tax  liability  under  Section  8-11-1  of the
28    Illinois Municipal Code, as heretofore and hereafter amended,
29    or on account of the seller's tax liability under the  County
30    Retailers'  Occupation Tax Act, or on account of the seller's
31    tax liability  under  the  Home  Rule  Municipal  Soft  Drink
32    Retailers'  Occupation Tax, or on account of the seller's tax
33    liability  under  any  tax  imposed   under   the   "Regional
34    Transportation  Authority  Act",  approved December 12, 1973.
 
                            -28-               LRB9203893SMdv
 1    Effective December 1, 1985,  "selling  price"  shall  include
 2    charges that are added to prices by sellers on account of the
 3    seller's  tax  liability  under  the  Cigarette  Tax  Act, on
 4    account of the sellers' duty to collect, from the  purchaser,
 5    the  tax  imposed  under  the  Cigarette  Use Tax Act, and on
 6    account of the seller's duty to collect, from the  purchaser,
 7    any cigarette tax imposed by a home rule unit.
 8        The  phrase  "like kind and character" shall be liberally
 9    construed (including but not limited to  any  form  of  motor
10    vehicle for any form of motor vehicle, or any kind of farm or
11    agricultural   implement  for  any  other  kind  of  farm  or
12    agricultural implement), while not including a kind  of  item
13    which,  if  sold  at retail by that retailer, would be exempt
14    from retailers' occupation tax and use tax as an isolated  or
15    occasional sale.
16        "Gross  receipts"  from  the  sales  of tangible personal
17    property at retail means  the  total  selling  price  or  the
18    amount  of  such sales, as hereinbefore defined.  In the case
19    of charge  and  time  sales,  the  amount  thereof  shall  be
20    included  only  as  and  when  payments  are  received by the
21    seller. Receipts or other consideration derived by  a  seller
22    from  the sale, transfer or assignment of accounts receivable
23    to a wholly owned subsidiary  will  not  be  deemed  payments
24    prior  to  the  time  the  purchaser  makes  payment  on such
25    accounts.
26        "Department" means the Department of Revenue.
27        "Person" means any natural individual, firm, partnership,
28    association, joint stock company, joint adventure, public  or
29    private   corporation,   limited   liability  company,  or  a
30    receiver, executor, trustee, guardian or other representative
31    appointed by order of any court.
32        The isolated or  occasional  sale  of  tangible  personal
33    property  at retail by a person who does not hold himself out
34    as being engaged (or  who  does  not  habitually  engage)  in
 
                            -29-               LRB9203893SMdv
 1    selling  such tangible personal property at retail, or a sale
 2    through a bulk vending machine, does not constitute  engaging
 3    in  a  business of selling such tangible personal property at
 4    retail within the meaning of  this  Act;  provided  that  any
 5    person  who  is engaged in a business which is not subject to
 6    the tax imposed by this Act because of involving the sale  of
 7    or  a contract to sell real estate or a construction contract
 8    to  improve  real  estate  or  a  construction  contract   to
 9    engineer,  install,  and  maintain  an  integrated  system of
10    products, but who, in the course of conducting such business,
11    transfers tangible personal property to users or consumers in
12    the finished form in which it was purchased, and  which  does
13    not  become  real estate or was not engineered and installed,
14    under any provision of a construction contract or real estate
15    sale or real estate sales agreement entered  into  with  some
16    other  person  arising  out  of or because of such nontaxable
17    business, is engaged in  the  business  of  selling  tangible
18    personal property at retail to the extent of the value of the
19    tangible  personal  property  so  transferred.  If, in such a
20    transaction, a separate  charge  is  made  for  the  tangible
21    personal property so transferred, the value of such property,
22    for  the  purpose  of  this  Act,  shall  be  the  amount  so
23    separately  charged,  but  not  less  than  the  cost of such
24    property to the transferor; if no separate  charge  is  made,
25    the  value of such property, for the purposes of this Act, is
26    the  cost  to  the  transferor  of  such  tangible   personal
27    property.  Construction contracts for the improvement of real
28    estate   consisting   of   engineering,   installation,   and
29    maintenance  of  voice,  data,  video,  security,   and   all
30    telecommunication  systems  do  not  constitute engaging in a
31    business of selling  tangible  personal  property  at  retail
32    within  the  meaning  of  this  Act  if  they are sold at one
33    specified contract price.
34        A person who  holds  himself  or  herself  out  as  being
 
                            -30-               LRB9203893SMdv
 1    engaged  (or  who  habitually  engages)  in  selling tangible
 2    personal property at  retail  is  a  person  engaged  in  the
 3    business  of  selling  tangible  personal  property at retail
 4    hereunder with respect to such sales (and not primarily in  a
 5    service occupation) notwithstanding the fact that such person
 6    designs  and  produces  such  tangible  personal  property on
 7    special order for the purchaser and  in  such  a  way  as  to
 8    render  the property of value only to such purchaser, if such
 9    tangible personal  property  so  produced  on  special  order
10    serves  substantially  the same function as stock or standard
11    items of tangible personal property that are sold at retail.
12        Persons  who  engage  in  the  business  of  transferring
13    tangible personal property upon  the  redemption  of  trading
14    stamps  are  engaged in the business of selling such property
15    at retail and shall be liable  for  and  shall  pay  the  tax
16    imposed  by  this Act on the basis of the retail value of the
17    property transferred upon redemption of such stamps.
18        "Bulk vending machine" means a  nonelectrically  operated
19    vending  machine,  containing  unsorted  confections, nuts or
20    other merchandise which, when a coin of  a  denomination  not
21    larger  than  one  cent  is  inserted, are dispensed in equal
22    portions, at random and without selection by the customer.
23    (Source: P.A. 90-289, eff. 8-1-97.)

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