Public Act 098-0583
 
SB2243 EnrolledLRB098 09659 HLH 39805 b


  
    AN ACT concerning revenue.
  
 
    Be it enacted by the People of the State of Illinois,
 
represented in the General Assembly:
  

  
 
    Section 5. The Use Tax Act is amended  by changing Sections 
3, 3-5, 3-25, and 3-50 as follows:
 



    (35 ILCS 105/3)  (from Ch. 120, par. 439.3)



    Sec. 3. Tax imposed. A tax is imposed upon the privilege of 
using in
this State tangible personal property purchased at 
retail from a
retailer, including computer software, and

including photographs, negatives, and positives that are the 
product of
photoprocessing, but not including products of 
photoprocessing produced for
use in motion pictures for 
commercial exhibition.
Beginning January 1, 2001, prepaid 
telephone calling arrangements shall be
considered tangible 
personal property subject to the tax imposed under this Act

regardless of the form in which those arrangements may be 
embodied,
transmitted, or fixed by any method now known or 
hereafter developed. Purchases of (1) electricity delivered to 
customers by wire;  (2) natural or artificial gas that is 
delivered to customers through pipes, pipelines, or mains;  and 
(3) water that is delivered to customers through pipes, 
pipelines, or mains are not subject to tax under this Act.  The 
provisions of this amendatory Act of the 98th General Assembly 
are declaratory of existing law as to the meaning and scope of 
this Act. 

(Source: P.A. 91-51, eff. 6-30-99; 91-870, eff. 6-22-00.)

 


    (35 ILCS 105/3-5)


    Sec. 3-5. Exemptions. Use of the following tangible 
personal property
is exempt from the tax imposed by this Act:

    (1) Personal property purchased from a corporation, 
society, association,
foundation, institution, or 
organization, other than a limited liability
company, that is 
organized and operated as a not-for-profit service enterprise

for the benefit of persons 65 years of age or older if the 
personal property
was not purchased by the enterprise for the 
purpose of resale by the
enterprise.

    (2) Personal property purchased by a not-for-profit 
Illinois county
fair association for use in conducting, 
operating, or promoting the
county fair.

    (3) Personal property purchased by a not-for-profit
arts or 
cultural organization that establishes, by proof required by 
the
Department by
rule, that it has received an exemption under 
Section 501(c)(3) of the Internal
Revenue Code and that is 
organized and operated primarily for the
presentation
or 
support of arts or cultural programming, activities, or 
services.  These
organizations include, but are not limited to, 
music and dramatic arts
organizations such as symphony 
orchestras and theatrical groups, arts and
cultural service 
organizations, local arts councils, visual arts organizations,

and media arts organizations.
On and after the effective date 
of this amendatory Act of the 92nd General
Assembly, however, 
an entity otherwise eligible for this exemption shall not
make 
tax-free purchases unless it has an active identification 
number issued by
the Department.

    (4) Personal property purchased by a governmental body, by 
a
corporation, society, association, foundation, or 
institution organized and
operated exclusively for charitable, 
religious, or educational purposes, or
by a not-for-profit 
corporation, society, association, foundation,
institution, or 
organization that has no compensated officers or employees
and 
that is organized and operated primarily for the recreation of 
persons
55 years of age or older. A limited liability company 
may qualify for the
exemption under this paragraph only if the 
limited liability company is
organized and operated 
exclusively for educational purposes. On and after July
1, 
1987, however, no entity otherwise eligible for this exemption 
shall make
tax-free purchases unless it has an active exemption 
identification number
issued by the Department.

    (5) Until July 1, 2003, a passenger car that is a 
replacement vehicle to
the extent that the
purchase price of 
the car is subject to the Replacement Vehicle Tax.

    (6) Until July 1, 2003 and beginning again on September 1, 
2004 through August 30, 2014, graphic arts machinery and 
equipment, including
repair and replacement
parts, both new and 
used, and including that manufactured on special order,

certified by the purchaser to be used primarily for graphic 
arts production,
and including machinery and equipment 
purchased for lease.
 Equipment includes chemicals or chemicals 
acting as catalysts but only if
the
chemicals or chemicals 
acting as catalysts effect a direct and immediate change
upon a 
graphic arts product.

    (7) Farm chemicals.

    (8) Legal tender, currency, medallions, or gold or silver 
coinage issued by
the State of Illinois, the government of the 
United States of America, or the
government of any foreign 
country, and bullion.

    (9) Personal property purchased from a teacher-sponsored 
student
organization affiliated with an elementary or 
secondary school located in
Illinois.

    (10) A motor vehicle of the first division, a motor vehicle 
of the
second division that is a self-contained motor vehicle 
designed or
permanently converted to provide living quarters 
for recreational, camping,
or travel use, with direct walk 
through to the living quarters from the
driver's seat, or a 
motor vehicle of the second division that is of the
van 
configuration designed for the transportation of not less than 
7 nor
more than 16 passengers, as defined in Section 1-146 of 
the Illinois
Vehicle Code, that is used for automobile renting, 
as defined in the
Automobile Renting Occupation and Use Tax 
Act.

    (11) Farm machinery and equipment, both new and used,

including that manufactured on special order, certified by the 
purchaser
to be used primarily for production agriculture or 
State or federal
agricultural programs, including individual 
replacement parts for
the machinery and equipment, including 
machinery and equipment
purchased
for lease,
and including 
implements of husbandry defined in Section 1-130 of
the 
Illinois Vehicle Code, farm machinery and agricultural 
chemical and
fertilizer spreaders, and nurse wagons required to 
be registered
under Section 3-809 of the Illinois Vehicle Code,

but excluding other motor
vehicles required to be
registered 
under the Illinois Vehicle Code.
Horticultural polyhouses or 
hoop houses used for propagating, growing, or
overwintering 
plants shall be considered farm machinery and equipment under

this item (11).
Agricultural chemical tender tanks and dry 
boxes shall include units sold
separately from a motor vehicle 
required to be licensed and units sold mounted
on a motor 
vehicle required to be licensed if the selling price of the 
tender
is separately stated.

    Farm machinery and equipment shall include precision 
farming equipment
that is
installed or purchased to be 
installed on farm machinery and equipment
including, but not 
limited to, tractors, harvesters, sprayers, planters,
seeders, 
or spreaders.
Precision farming equipment includes, but is not 
limited to, soil testing
sensors, computers, monitors, 
software, global positioning
and mapping systems, and other 
such equipment.

    Farm machinery and equipment also includes computers, 
sensors, software, and
related equipment used primarily in the

computer-assisted operation of production agriculture 
facilities, equipment,
and
activities such as, but not limited 
to,
the collection, monitoring, and correlation of
animal and 
crop data for the purpose of
formulating animal diets and 
agricultural chemicals.  This item (11) is exempt
from the 
provisions of
Section 3-90.

    (12) Fuel and petroleum products sold to or used by an air 
common
carrier, certified by the carrier to be used for 
consumption, shipment, or
storage in the conduct of its 
business as an air common carrier, for a
flight destined for or 
returning from a location or locations
outside the United 
States without regard to previous or subsequent domestic

stopovers.

    (13) Proceeds of mandatory service charges separately

stated on customers' bills for the purchase and consumption of 
food and
beverages purchased at retail from a retailer, to the 
extent that the proceeds
of the service charge are in fact 
turned over as tips or as a substitute
for tips to the 
employees who participate directly in preparing, serving,

hosting or cleaning up the food or beverage function with 
respect to which
the service charge is imposed.

    (14) Until July 1, 2003, oil field exploration, drilling, 
and production
equipment,
including (i) rigs and parts of rigs, 
rotary
rigs, cable tool rigs, and workover rigs, (ii) pipe and 
tubular goods,
including casing and drill strings, (iii) pumps 
and pump-jack units, (iv)
storage tanks and flow lines, (v) any 
individual replacement part for oil
field exploration, 
drilling, and production equipment, and (vi) machinery and

equipment purchased
for lease; but excluding motor vehicles 
required to be registered under the
Illinois Vehicle Code.

    (15) Photoprocessing machinery and equipment, including 
repair and
replacement parts, both new and used, including that

manufactured on special order, certified by the purchaser to be 
used
primarily for photoprocessing, and including

photoprocessing machinery and equipment purchased for lease.

    (16) Until July 1, 2003, and beginning again on the 
effective date of this amendatory Act of the 97th General 
Assembly and thereafter, coal and aggregate exploration, 
mining, offhighway hauling,
processing, maintenance, and 
reclamation equipment,
including replacement parts and 
equipment, and
including equipment purchased for lease, but 
excluding motor
vehicles required to be registered under the 
Illinois Vehicle Code.

    (17) Until July 1, 2003, distillation machinery and 
equipment, sold as a
unit or kit,
assembled or installed by the 
retailer, certified by the user to be used
only for the 
production of ethyl alcohol that will be used for consumption

as motor fuel or as a component of motor fuel for the personal 
use of the
user, and not subject to sale or resale.

    (18) Manufacturing and assembling machinery and equipment 
used
primarily in the process of manufacturing or assembling 
tangible
personal property for wholesale or retail sale or 
lease, whether that sale
or lease is made directly by the 
manufacturer or by some other person,
whether the materials 
used in the process are
owned by the manufacturer or some other 
person, or whether that sale or
lease is made apart from or as 
an incident to the seller's engaging in
the service occupation 
of producing machines, tools, dies, jigs,
patterns, gauges, or 
other similar items of no commercial value on
special order for 
a particular purchaser. The exemption provided by this 
paragraph (18) does not include machinery and equipment used in 
(i) the generation of electricity for wholesale or retail sale; 
(ii) the generation or treatment of natural or artificial gas 
for wholesale or retail sale that is delivered to customers 
through pipes, pipelines, or mains; or (iii) the treatment of 
water for wholesale or retail sale that is delivered to 
customers through pipes, pipelines, or mains.    The provisions of 
this amendatory Act of the 98th General Assembly are 
declaratory of existing law as to the meaning and scope of this 
exemption.

    (19) Personal property delivered to a purchaser or 
purchaser's donee
inside Illinois when the purchase order for 
that personal property was
received by a florist located 
outside Illinois who has a florist located
inside Illinois 
deliver the personal property.

    (20) Semen used for artificial insemination of livestock 
for direct
agricultural production.

    (21) Horses, or interests in horses, registered with and 
meeting the
requirements of any of the
Arabian Horse Club 
Registry of America, Appaloosa Horse Club, American Quarter

Horse Association, United States
Trotting Association, or 
Jockey Club, as appropriate, used for
purposes of breeding or 
racing for prizes. This item (21) is exempt from the provisions 
of Section 3-90, and the exemption provided for under this item 
(21) applies for all periods beginning May 30, 1995, but no 
claim for credit or refund is allowed on or after January 1, 
2008
 for such taxes paid during the period beginning May 30, 
2000 and ending on January 1, 2008.


    (22) Computers and communications equipment utilized for 
any
hospital
purpose
and equipment used in the diagnosis,

analysis, or treatment of hospital patients purchased by a 
lessor who leases
the
equipment, under a lease of one year or 
longer executed or in effect at the
time the lessor would 
otherwise be subject to the tax imposed by this Act, to a

hospital
 that has been issued an active tax exemption 
identification number by
the
Department under Section 1g of the 
Retailers' Occupation Tax Act.  If the
equipment is leased in a 
manner that does not qualify for
this exemption or is used in 
any other non-exempt manner, the lessor
shall be liable for the

tax imposed under this Act or the Service Use Tax Act, as the 
case may
be, based on the fair market value of the property at 
the time the
non-qualifying use occurs.  No lessor shall collect 
or attempt to collect an
amount (however
designated) that 
purports to reimburse that lessor for the tax imposed by this

Act or the Service Use Tax Act, as the case may be, if the tax 
has not been
paid by the lessor.  If a lessor improperly 
collects any such amount from the
lessee, the lessee shall have 
a legal right to claim a refund of that amount
from the lessor.  
If, however, that amount is not refunded to the lessee for
any 
reason, the lessor is liable to pay that amount to the 
Department.

    (23) Personal property purchased by a lessor who leases the

property, under
a
lease of
 one year or longer executed or in 
effect at the time
the lessor would otherwise be subject to the 
tax imposed by this Act,
to a governmental body
that has been 
issued an active sales tax exemption identification number by 
the
Department under Section 1g of the Retailers' Occupation 
Tax Act.
If the
property is leased in a manner that does not 
qualify for
this exemption
or used in any other non-exempt 
manner, the lessor shall be liable for the
tax imposed under 
this Act or the Service Use Tax Act, as the case may
be, based 
on the fair market value of the property at the time the

non-qualifying use occurs.  No lessor shall collect or attempt 
to collect an
amount (however
designated) that purports to 
reimburse that lessor for the tax imposed by this
Act or the 
Service Use Tax Act, as the case may be, if the tax has not been

paid by the lessor.  If a lessor improperly collects any such 
amount from the
lessee, the lessee shall have a legal right to 
claim a refund of that amount
from the lessor.  If, however, 
that amount is not refunded to the lessee for
any reason, the 
lessor is liable to pay that amount to the Department.

    (24) Beginning with taxable years ending on or after 
December
31, 1995
and
ending with taxable years ending on or 
before December 31, 2004,
personal property that is
donated for 
disaster relief to be used in a State or federally declared

disaster area in Illinois or bordering Illinois by a 
manufacturer or retailer
that is registered in this State to a 
corporation, society, association,
foundation, or institution 
that has been issued a sales tax exemption
identification 
number by the Department that assists victims of the disaster

who reside within the declared disaster area.

    (25) Beginning with taxable years ending on or after 
December
31, 1995 and
ending with taxable years ending on or 
before December 31, 2004, personal
property that is used in the 
performance of infrastructure repairs in this
State, including 
but not limited to municipal roads and streets, access roads,

bridges, sidewalks, waste disposal systems, water and sewer 
line extensions,
water distribution and purification 
facilities, storm water drainage and
retention facilities, and 
sewage treatment facilities, resulting from a State
or 
federally declared disaster in Illinois or bordering Illinois 
when such
repairs are initiated on facilities located in the 
declared disaster area
within 6 months after the disaster.

    (26) Beginning July 1, 1999, game or game birds purchased 
at a "game
breeding
and hunting preserve area" as that term is

used in
the Wildlife Code.  This paragraph is exempt from the 
provisions
of
Section 3-90.

    (27) A motor vehicle, as that term is defined in Section 
1-146
of the
Illinois
Vehicle Code, that is donated to a 
corporation, limited liability company,
society, association, 
foundation, or institution that is determined by the
Department 
to be organized and operated exclusively for educational 
purposes.
For purposes of this exemption, "a corporation, 
limited liability company,
society, association, foundation, 
or institution organized and operated
exclusively for 
educational purposes" means all tax-supported public schools,

private schools that offer systematic instruction in useful 
branches of
learning by methods common to public schools and 
that compare favorably in
their scope and intensity with the 
course of study presented in tax-supported
schools, and 
vocational or technical schools or institutes organized and

operated exclusively to provide a course of study of not less 
than 6 weeks
duration and designed to prepare individuals to 
follow a trade or to pursue a
manual, technical, mechanical, 
industrial, business, or commercial
occupation.

    (28) Beginning January 1, 2000,  personal property, 
including
food,
purchased through fundraising
events for the 
benefit of
a public or private elementary or
secondary school, 
a group of those schools, or one or more school
districts if 
the events are
sponsored by an entity recognized by the school 
district that consists
primarily of volunteers and includes

parents and teachers of the school children.  This paragraph 
does not apply
to fundraising
events (i) for the benefit of 
private home instruction or (ii)
for which the fundraising 
entity purchases the personal property sold at
the events from 
another individual or entity that sold the property for the

purpose of resale by the fundraising entity and that
profits 
from the sale to the
fundraising entity.  This paragraph is 
exempt
from the provisions
of Section 3-90.

    (29) Beginning January 1, 2000 and through December 31, 
2001, new or
used automatic vending
machines that prepare and 
serve hot food and beverages, including coffee, soup,
and
other 
items, and replacement parts for these machines.
Beginning 
January 1,
2002 and through June 30, 2003, machines and parts 
for machines used in
commercial, coin-operated amusement and 
vending business if a use or occupation
tax is paid on the 
gross receipts derived from the use of the commercial,

coin-operated amusement and vending machines.
This
paragraph

is exempt from the provisions of Section 3-90.

    (30) Beginning January 1, 2001 and through June 30, 2016, 
food for human consumption that is to be consumed off the 
premises
where it is sold (other than alcoholic beverages, soft 
drinks, and food that
has been prepared for immediate 
consumption) and prescription and
nonprescription medicines, 
drugs, medical appliances, and insulin, urine
testing 
materials, syringes, and needles used by diabetics, for human 
use, when
purchased for use by a person receiving medical 
assistance under Article V of
the Illinois Public Aid Code who 
resides in a licensed long-term care facility,
as defined in 
the Nursing Home Care Act, or in a licensed facility as defined 
in the ID/DD Community Care Act or the Specialized Mental 
Health Rehabilitation Act.

    (31) Beginning on
the effective date of this amendatory Act 
of the 92nd General Assembly,
computers and communications 
equipment
utilized for any hospital purpose and equipment used 
in the diagnosis,
analysis, or treatment of hospital patients 
purchased by a lessor who leases
the equipment, under a lease 
of one year or longer executed or in effect at the
time the 
lessor would otherwise be subject to the tax imposed by this 
Act, to a
hospital that has been issued an active tax exemption 
identification number by
the Department under Section 1g of the 
Retailers' Occupation Tax Act.  If the
equipment is leased in a 
manner that does not qualify for this exemption or is
used in 
any other nonexempt manner, the lessor shall be liable for the 
tax
imposed under this Act or the Service Use Tax Act, as the 
case may be, based on
the fair market value of the property at 
the time the nonqualifying use
occurs.  No lessor shall collect 
or attempt to collect an amount (however
designated) that 
purports to reimburse that lessor for the tax imposed by this

Act or the Service Use Tax Act, as the case may be, if the tax 
has not been
paid by the lessor.  If a lessor improperly 
collects any such amount from the
lessee, the lessee shall have 
a legal right to claim a refund of that amount
from the lessor.  
If, however, that amount is not refunded to the lessee for
any 
reason, the lessor is liable to pay that amount to the 
Department.
This paragraph is exempt from the provisions of 
Section 3-90.

    (32) Beginning on
the effective date of this amendatory Act 
of the 92nd General Assembly,
personal property purchased by a 
lessor who leases the property,
under a lease of one year or 
longer executed or in effect at the time the
lessor would 
otherwise be subject to the tax imposed by this Act, to a

governmental body that has been issued an active sales tax 
exemption
identification number by the Department under 
Section 1g of the Retailers'
Occupation Tax Act.  If the 
property is leased in a manner that does not
qualify for this 
exemption or used in any other nonexempt manner, the lessor

shall be liable for the tax imposed under this Act or the 
Service Use Tax Act,
as the case may be, based on the fair 
market value of the property at the time
the nonqualifying use 
occurs.  No lessor shall collect or attempt to collect
an amount 
(however designated) that purports to reimburse that lessor for 
the
tax imposed by this Act or the Service Use Tax Act, as the 
case may be, if the
tax has not been paid by the lessor.  If a 
lessor improperly collects any such
amount from the lessee, the 
lessee shall have a legal right to claim a refund
of that 
amount from the lessor.  If, however, that amount is not 
refunded to
the lessee for any reason, the lessor is liable to 
pay that amount to the
Department.  This paragraph is exempt 
from the provisions of Section 3-90.

    (33) On and after July 1, 2003 and through June 30, 2004, 
the use in this State of motor vehicles of
the second division 
with a gross vehicle weight in excess of 8,000 pounds and
that 
are subject to the commercial distribution fee imposed under 
Section
3-815.1 of the Illinois Vehicle Code. Beginning on July 
1, 2004 and through June 30, 2005, the use in this State of 
motor vehicles of the second division: (i) with a gross vehicle 
weight rating in excess of 8,000 pounds; (ii) that are subject 
to the commercial distribution fee imposed under Section 
3-815.1 of the Illinois Vehicle Code; and (iii) that are 
primarily used for commercial purposes. Through June 30, 2005, 
this exemption applies to repair and
replacement parts added 
after the initial purchase of such a motor vehicle if
that 
motor
vehicle is used in a manner that would qualify for the 
rolling stock exemption
otherwise provided for in this Act. For 
purposes of this paragraph, the term "used for commercial 
purposes" means the transportation of persons or property in 
furtherance of any commercial or industrial enterprise, 
whether for-hire or not.


    (34) Beginning January 1, 2008, tangible personal property 
used in the construction or maintenance of a community water 
supply, as defined under Section 3.145 of the Environmental 
Protection Act, that is operated by a not-for-profit 
corporation that holds a valid water supply permit issued under 
Title IV of the Environmental Protection Act. This paragraph is 
exempt from the provisions of Section 3-90.
    (35) Beginning January 1, 2010, materials, parts, 
equipment, components, and furnishings incorporated into or 
upon an aircraft as part of the modification, refurbishment, 
completion, replacement, repair, or maintenance of the 
aircraft. This exemption includes consumable supplies used in 
the modification, refurbishment, completion, replacement, 
repair, and maintenance of aircraft, but excludes any 
materials, parts, equipment, components, and consumable 
supplies used in the modification, replacement, repair, and 
maintenance of aircraft engines or power plants, whether such 
engines or power plants are installed or uninstalled upon any 
such aircraft. "Consumable supplies" include, but are not 
limited to, adhesive, tape, sandpaper, general purpose 
lubricants, cleaning solution, latex gloves, and protective 
films. This exemption applies only to those organizations that 
(i) hold an Air Agency Certificate and are empowered to operate 
an approved repair station by the Federal Aviation 
Administration, (ii) have a Class IV Rating, and (iii) conduct 
operations in accordance with Part 145 of the Federal Aviation 
Regulations. The exemption does not include aircraft operated 
by a commercial air carrier providing scheduled passenger air 
service pursuant to authority issued under Part 121 or Part 129 
of the Federal Aviation Regulations. 
    (36) Tangible personal property purchased by a 
public-facilities corporation, as described in Section 
11-65-10 of the Illinois Municipal Code, for purposes of 
constructing or furnishing a municipal convention hall, but 
only if the legal title to the municipal convention hall is 
transferred to the municipality without any further 
consideration by or on behalf of the municipality at the time 
of the completion of the municipal convention hall or upon the 
retirement or redemption of any bonds or other debt instruments 
issued by the public-facilities corporation in connection with 
the development of the municipal convention hall.  This 
exemption includes existing public-facilities corporations as 
provided in Section 11-65-25 of the Illinois Municipal Code.  
This paragraph is exempt from the provisions of Section 3-90. 
(Source: P.A. 96-116, eff. 7-31-09; 96-339, eff. 7-1-10; 
96-532, eff. 8-14-09; 96-759, eff. 1-1-10; 96-1000, eff. 
7-2-10; 97-38, eff. 6-28-11; 97-227, eff. 1-1-12; 97-431, eff. 
8-16-11; 97-636, eff. 6-1-12; 97-767, eff. 7-9-12.)

 



    (35 ILCS 105/3-25)  (from Ch. 120, par. 439.3-25)



    Sec. 3-25. Computer software. For the purposes of this Act, 
"computer
software" means a set of statements, data,
or 
instructions to be used directly or indirectly in a computer in 
order to
bring about a certain result in any form in which 
those statements, data, or
instructions may be embodied, 
transmitted, or fixed, by any method now known
or hereafter 
developed, regardless of whether the statements, data, or

instructions are capable of being perceived by or communicated 
to humans,
and includes prewritten or canned software that is 
held for repeated sale
or lease, and all associated 
documentation and materials, if any, whether
contained on 
magnetic tapes, discs, cards, or other devices or media, but

does not include software that is adapted to specific 
individualized
requirements of a purchaser, custom-made and 
modified software designed for
a particular or limited use by a 
purchaser, or software used to operate
exempt machinery and 
equipment used in the process of manufacturing or
assembling 
tangible personal property for wholesale or retail sale or

lease. Software used to operate machinery and equipment used in 
(i) the generation of electricity for wholesale or retail sale; 
(ii) the generation or treatment of natural or artificial gas 
for wholesale or retail sale that is delivered to customers 
through pipes, pipelines, or mains; or (iii) the treatment of 
water for wholesale or retail sale that is delivered to 
customers through pipes, pipelines, or mains is considered 
"computer software".    The provisions of this amendatory Act of 
the 98th General Assembly are declaratory of existing law as to 
the meaning and scope of this exemption. 

    For the purposes of this Act, computer software shall be 
considered to be
tangible personal property.

(Source: P.A. 91-51, eff. 6-30-99.)

 



    (35 ILCS 105/3-50)  (from Ch. 120, par. 439.3-50)


    Sec. 3-50. Manufacturing and assembly exemption. The 
manufacturing
and assembling machinery and equipment exemption 
includes
machinery and equipment that replaces machinery and 
equipment in an
existing manufacturing facility as well as 
machinery and equipment that
are for use in an expanded or new 
manufacturing facility. The machinery and
equipment exemption 
also includes machinery and equipment used in the
general 
maintenance or repair of exempt machinery and equipment or for

in-house manufacture of exempt machinery and equipment. The 
machinery and equipment exemption does not include machinery 
and equipment used in (i) the generation of electricity for 
wholesale or retail sale; (ii) the generation or treatment of 
natural or artificial gas for wholesale or retail sale that is 
delivered to customers through pipes, pipelines, or mains; or 
(iii)  the treatment of water for wholesale or retail sale that 
is delivered to customers through pipes, pipelines, or mains.      
The provisions of this amendatory Act of the 98th General 
Assembly are declaratory of existing law as to the meaning and 
scope of this exemption. For the
purposes of this exemption, 
terms have the following
meanings:


        (1) "Manufacturing process" means the production of
an 
    article of tangible personal property, whether the article

    is a finished product or an article for use in the process 
    of manufacturing
or assembling a different article of 
    tangible personal property, by
a procedure commonly 
    regarded as manufacturing, processing, fabricating, or

    refining that changes some existing material into a 
    material
with a different form, use, or name.  In relation 
    to a recognized integrated
business composed of a series of 
    operations that collectively constitute
manufacturing, or 
    individually constitute
manufacturing operations, the 
    manufacturing process commences with the
first operation 
    or stage of production in the series
and does not end until 
    the completion of the final product
in the last operation 
    or stage of production in the series.  For purposes
of this 
    exemption, photoprocessing is a
manufacturing process of 
    tangible personal property for wholesale or retail
sale.


        (2) "Assembling process" means the production of
an 
    article of tangible personal property, whether the article

    is a finished product or an article for use in the process 
    of manufacturing
or assembling a different article of 
    tangible personal property, by the
combination of existing 
    materials in a manner commonly regarded as
assembling that 
    results in an article or material of a different
form, use, 
    or name.


        (3) "Machinery" means major
mechanical machines or 
    major components of those machines contributing to a

    manufacturing or assembling process.


        (4) "Equipment" includes an independent device
or tool 
    separate from machinery but essential to an integrated

    manufacturing or assembly process; including computers 
    used primarily in
a manufacturer's computer assisted 
    design,
computer assisted manufacturing (CAD/CAM) system; 
    any
subunit or assembly comprising a component of any 
    machinery or auxiliary,
adjunct, or attachment parts of 
    machinery, such as tools, dies, jigs,
fixtures, patterns, 
    and molds; and any parts that require
periodic replacement 
    in the course of normal operation; but does not
include 
    hand tools. Equipment includes chemicals or chemicals 
    acting as
catalysts but only if
the chemicals or chemicals 
    acting as catalysts effect a direct and
immediate change 
    upon a
product being manufactured or assembled for 
    wholesale or retail sale or
lease.
        (5) "Production related tangible personal property" 
    means all tangible personal property that is used or 
    consumed by the purchaser in a manufacturing facility in 
    which a manufacturing process takes place and includes, 
    without limitation,  tangible personal property that is 
    purchased for incorporation into real estate within a 
    manufacturing facility and tangible personal property that 
    is used or consumed in activities such as research and 
    development, preproduction material handling, receiving, 
    quality control, inventory control, storage, staging, and 
    packaging for shipping and transportation purposes. 
    "Production related tangible personal property" does not 
    include (i) tangible personal property that is used, within 
    or without a manufacturing facility, in sales, purchasing, 
    accounting, fiscal management, marketing, personnel 
    recruitment or selection, or landscaping or (ii) tangible 
    personal property that is required to be titled or 
    registered with a department, agency, or unit of federal, 
    State, or local government. 

    The manufacturing and assembling machinery and equipment 
exemption includes production related tangible personal 
property that is purchased on or after July 1, 2007 and on or 
before June 30, 2008. The exemption for production related 
tangible personal property is subject to both of  the following 
limitations:
        (1) The maximum amount of the exemption for any one 
    taxpayer may not exceed 5% of the purchase price of 
    production related tangible personal property that is 
    purchased on or after July 1, 2007 and on or before June 
    30, 2008. A credit under Section 3-85 of this Act may not 
    be earned by the purchase of production related tangible 
    personal property for which an exemption is received under 
    this Section.
        (2) The maximum aggregate amount of  the exemptions for 
    production related tangible personal property  awarded 
    under this Act and the Retailers' Occupation Tax Act to all 
    taxpayers may not exceed $10,000,000. If the claims for the 
    exemption exceed $10,000,000, then the Department shall 
    reduce the amount of the exemption to each taxpayer on a 
    pro rata basis.
The Department may adopt rules to implement and administer the 
exemption for production related tangible personal property. 
    The manufacturing and assembling machinery and equipment

exemption includes the sale of materials to a purchaser who

produces exempted types of machinery, equipment, or tools and 
who rents or
leases that machinery, equipment, or tools to a

manufacturer of tangible
personal property.  This exemption 
also includes the sale of materials to a
purchaser who 
manufactures those materials into an exempted type of

machinery, equipment, or tools that the purchaser uses
himself 
or herself in the
manufacturing of tangible personal property.  
This exemption includes the
sale of exempted types of machinery 
or equipment to a
purchaser who is not the manufacturer, but 
who rents or leases the use of
the property to a manufacturer. 
The purchaser of the machinery and
equipment who has an active 
resale registration number shall
furnish that number to the 
seller at the time of purchase.
A user of the machinery, 
equipment, or tools without an
active resale registration 
number shall prepare a certificate of exemption
for each 
transaction stating facts establishing the exemption for that

transaction, and that certificate shall be
available to the 
Department for inspection or audit. The Department shall

prescribe the form of the certificate. Informal rulings, 
opinions, or
letters issued by the Department in
response to an 
inquiry or request for an opinion from any person
regarding the 
coverage and applicability of this exemption to specific

devices shall be published, maintained as a public record, and 
made
available for public inspection and copying.  If the 
informal ruling,
opinion, or letter contains trade secrets or 
other confidential
information, where possible, the Department 
shall delete that information
before publication.  Whenever 
informal rulings, opinions, or
letters contain a policy of 
general applicability, the Department
shall formulate and 
adopt that policy as a rule in accordance with the
Illinois 
Administrative Procedure Act.

(Source: P.A. 95-707, eff. 1-11-08.)

 
    Section 10. The Service Use Tax Act is amended  by changing 
Sections 2, 3, and 3-25 as follows:
 



    (35 ILCS 110/2)  (from Ch. 120, par. 439.32)



    Sec. 2. "Use" means the exercise by any person of any right 
or power
over tangible personal property incident to the 
ownership of that
property, but does not include the sale or 
use for demonstration by him
of that property in any form as 
tangible personal property in the
regular course of business.

"Use" does not mean the interim
use of
tangible personal 
property nor the physical incorporation of tangible
personal 
property, as an ingredient or constituent, into other tangible

personal property, (a) which is sold in the regular course of 
business
or (b) which the person incorporating such ingredient 
or constituent
therein has undertaken at the time of such 
purchase to cause to be
transported in interstate commerce to 
destinations outside the State of
Illinois.

    "Purchased from a serviceman" means the acquisition of the 
ownership
of, or title to, tangible personal property through a 
sale of service.

    "Purchaser" means any person who, through a sale of 
service, acquires
the ownership of, or title to, any tangible 
personal property.

    "Cost price" means the consideration paid by the serviceman 
for a
purchase valued in money, whether paid in money or 
otherwise, including
cash, credits and services, and shall be 
determined without any
deduction on account of the supplier's 
cost of the property sold or on
account of any other expense 
incurred by the supplier. When a serviceman
contracts out part 
or all of the services required in his sale of service,
it 
shall be presumed that the cost price to the serviceman of the 
property
transferred to him or her by his or her subcontractor 
is equal to 50% of
the subcontractor's charges to the 
serviceman in the absence of proof of
the consideration paid by 
the subcontractor for the purchase of such property.

    "Selling price" means the consideration for a sale valued 
in money
whether received in money or otherwise, including 
cash, credits and
service, and shall be determined without any 
deduction on account of the
serviceman's cost of the property 
sold, the cost of materials used,
labor or service cost or any 
other expense whatsoever, but does not
include interest or 
finance charges which appear as separate items on
the bill of 
sale or sales contract nor charges that are added to prices
by 
sellers on account of the seller's duty to collect, from the

purchaser, the tax that is imposed by this Act.

    "Department" means the Department of Revenue.

    "Person" means any natural individual, firm, partnership,

association, joint stock company, joint venture, public or 
private
corporation, limited liability company, and any 
receiver, executor, trustee,
guardian or other representative 
appointed by order of any court.

    "Sale of service" means any transaction except:


        (1) a retail sale of tangible personal property taxable 
    under the
Retailers' Occupation Tax Act or under the Use 
    Tax Act.


        (2) a sale of tangible personal property for the 
    purpose of resale
made in compliance with Section 2c of the 
    Retailers' Occupation Tax Act.


        (3) except as hereinafter provided, a sale or transfer 
    of tangible
personal property as an incident to the 
    rendering of service for or by
any governmental body, or 
    for or by any corporation, society,
association, 
    foundation or institution organized and operated

    exclusively for charitable, religious or educational 
    purposes or any
not-for-profit corporation, society, 
    association, foundation,
institution or organization which 
    has no compensated officers or
employees and which is 
    organized and operated primarily for the
recreation of 
    persons 55 years of age or older. A limited liability 
    company
may qualify for the exemption under this paragraph 
    only if the limited
liability company is organized and 
    operated exclusively for educational
purposes.


        (4) a sale or transfer of tangible personal
property as 
    an incident to the
rendering of service for interstate 
    carriers for hire for use as rolling stock
moving in 
    interstate commerce or by lessors under a lease of one year 
    or
longer, executed or in effect at the time of purchase of 
    personal property, to
interstate carriers for hire for use 
    as rolling stock moving in interstate
commerce so long as 
    so used by such interstate carriers for hire, and equipment

    operated by a telecommunications provider, licensed as a 
    common carrier by the
Federal Communications Commission, 
    which is permanently installed in or affixed
to aircraft 
    moving in interstate commerce.


        (4a) a sale or transfer of tangible personal
property 
    as an incident
to the rendering of service for owners, 
    lessors, or shippers of tangible
personal property which is 
    utilized by interstate carriers for hire for
use as rolling 
    stock moving in interstate commerce so long as so used by

    interstate carriers for hire, and equipment operated by a

    telecommunications provider, licensed as a common carrier 
    by the Federal
Communications Commission, which is 
    permanently installed in or affixed to
aircraft moving in 
    interstate commerce.


        (4a-5) on and after July 1, 2003 and through June 30, 
    2004, a sale or transfer of a motor vehicle
of
the
second 
    division with a gross vehicle weight in excess of 8,000 
    pounds as an
incident to the rendering of service if that 
    motor
vehicle is subject
to the commercial distribution fee 
    imposed under Section 3-815.1 of the
Illinois Vehicle
Code.   
    Beginning on July 1, 2004 and through June 30, 2005, the 
    use in this State of motor vehicles of the second division: 
    (i) with a gross vehicle weight rating in excess of 8,000 
    pounds; (ii) that are subject to the commercial 
    distribution fee imposed under Section 3-815.1 of the 
    Illinois Vehicle Code; and (iii) that are primarily used 
    for commercial purposes. Through June 30, 2005, this


    exemption applies to repair and replacement parts added 
    after the
initial
purchase of such a motor vehicle if that 
    motor vehicle is used in a manner that
would
qualify for 
    the rolling stock exemption otherwise provided for in this 
    Act. For purposes of this paragraph, "used for commercial 
    purposes" means the transportation of persons or property 
    in furtherance of any commercial or industrial enterprise 
    whether for-hire or not.



        (5) a sale or transfer of machinery and equipment used 
    primarily in the
process of the manufacturing or 
    assembling, either in an existing, an expanded
or a new 
    manufacturing facility, of tangible personal property for 
    wholesale or
retail sale or lease, whether such sale or 
    lease is made directly by the
manufacturer or by some other 
    person, whether the materials used in the process
are owned 
    by the manufacturer or some other person, or whether such 
    sale or
lease is made apart from or as an incident to the 
    seller's engaging in a
service occupation and the 
    applicable tax is a Service Use Tax or Service
Occupation 
    Tax, rather than Use Tax or Retailers' Occupation Tax. The 
    exemption provided by this paragraph (5) does not include 
    machinery and equipment used in (i) the generation of 
    electricity for wholesale or retail sale; (ii) the 
    generation or treatment of natural or artificial gas for 
    wholesale or retail sale that is delivered to customers 
    through pipes, pipelines, or mains; or (iii)  the treatment 
    of water for wholesale or retail sale that is delivered to 
    customers through pipes, pipelines, or mains.    The 
    provisions of this amendatory Act of the 98th General 
    Assembly are declaratory of existing law as to the meaning 
    and scope of this exemption. 


        (5a) the repairing, reconditioning or remodeling, for 
    a
common carrier by rail, of tangible personal property 
    which belongs to such
carrier for hire, and as to which 
    such carrier receives the physical possession
of the 
    repaired, reconditioned or remodeled item of tangible 
    personal property
in Illinois, and which such carrier 
    transports, or shares with another common
carrier in the 
    transportation of such property, out of Illinois on a 
    standard
uniform bill of lading showing the person who 
    repaired, reconditioned or
remodeled the property to a 
    destination outside Illinois, for use outside
Illinois.


        (5b) a sale or transfer of tangible personal property 
    which is produced by
the seller thereof on special order in 
    such a way as to have made the
applicable tax the Service 
    Occupation Tax or the Service Use Tax, rather than
the 
    Retailers' Occupation Tax or the Use Tax, for an interstate 
    carrier by rail
which receives the physical possession of 
    such property in Illinois, and which
transports such 
    property, or shares with another common carrier in the

    transportation of such property, out of Illinois on a 
    standard uniform bill of
lading showing the seller of the 
    property as the shipper or consignor of such
property to a 
    destination outside Illinois, for use outside Illinois.


        (6) until July 1, 2003, a sale or transfer of 
    distillation machinery
and equipment, sold
as a unit or kit 
    and assembled or installed by the retailer, which
machinery 
    and equipment is certified by the user to be used only for 
    the
production of ethyl alcohol that will be used for 
    consumption as motor fuel
or as a component of motor fuel 
    for the personal use of such user and not
subject to sale 
    or resale.


        (7) at the election of any serviceman not required to 
    be
otherwise registered as a retailer under Section 2a of 
    the Retailers'
Occupation Tax Act, made for each fiscal 
    year sales
of service in which the aggregate annual cost 
    price of tangible
personal property transferred as an 
    incident to the sales of service is
less than 35%, or 75% 
    in the case of servicemen transferring prescription
drugs 
    or servicemen engaged in graphic arts production, of the 
    aggregate
annual total gross receipts from all sales of 
    service. The purchase of
such tangible personal property by 
    the serviceman shall be subject to tax
under the Retailers' 
    Occupation Tax Act and the Use Tax Act.
However, if a

    primary serviceman who has made the election described in 
    this paragraph
subcontracts service work to a secondary 
    serviceman who has also made the
election described in this 
    paragraph, the primary serviceman does not
incur a Use Tax 
    liability if the secondary serviceman (i) has paid or will 
    pay
Use
Tax on his or her cost price of any tangible 
    personal property transferred
to the primary serviceman 
    and (ii) certifies that fact in writing to the
primary

    serviceman.

    Tangible personal property transferred incident to the 
completion of a
maintenance agreement is exempt from the tax 
imposed pursuant to this Act.

    Exemption (5) also includes machinery and equipment used in 
the general
maintenance or repair of such exempt machinery and 
equipment or for in-house
manufacture of exempt machinery and 
equipment. The machinery and equipment exemption does not 
include machinery and equipment used in (i) the generation of 
electricity for wholesale or retail sale; (ii) the generation 
or treatment of natural or artificial gas for wholesale or 
retail sale that is delivered to customers through pipes, 
pipelines, or mains; or (iii) the treatment of water for 
wholesale or retail sale that is delivered to customers through 
pipes, pipelines, or mains.   The provisions of this amendatory 
Act of the 98th General Assembly are declaratory of existing 
law as to the meaning and scope of this exemption. For the 
purposes of exemption
(5), each of these terms shall have the 
following meanings:  (1) "manufacturing
process" shall mean the 
production of any article of tangible personal
property, 
whether such article is a finished product or an article for 
use in
the process of manufacturing or assembling a different 
article of tangible
personal property, by procedures commonly 
regarded as manufacturing,
processing, fabricating, or 
refining which changes some existing
material or materials into 
a material with a different form, use or
name.  In relation to a 
recognized integrated business composed of a
series of 
operations which collectively constitute manufacturing, or

individually constitute manufacturing operations, the 
manufacturing
process shall be deemed to commence with the 
first operation or stage of
production in the series, and shall 
not be deemed to end until the
completion of the final product 
in the last operation or stage of
production in the series; and 
further, for purposes of exemption (5),
photoprocessing is 
deemed to be a manufacturing process of tangible
personal 
property for wholesale or retail sale; (2) "assembling process" 
shall
mean the production of any article of tangible personal 
property, whether such
article is a finished product or an 
article for use in the process of
manufacturing or assembling a 
different article of tangible personal
property, by the 
combination of existing materials in a manner commonly
regarded 
as assembling which results in a material of a different form,

use or name; (3) "machinery" shall mean major mechanical 
machines or
major components of such machines contributing to a 
manufacturing or
assembling process; and (4) "equipment" shall 
include any independent
device or tool separate from any 
machinery but essential to an
integrated manufacturing or 
assembly process; including computers
used primarily in a 
manufacturer's computer
assisted design, computer assisted 
manufacturing (CAD/CAM) system;
or any subunit or assembly 
comprising a component of any machinery or
auxiliary, adjunct 
or attachment parts of machinery, such as tools, dies,
jigs, 
fixtures, patterns and molds; or any parts which require 
periodic
replacement in the course of normal operation; but 
shall not include hand
tools.
Equipment includes chemicals or 
chemicals acting as catalysts but only if the
chemicals or 
chemicals acting as catalysts effect a direct and immediate 
change
upon a
product being manufactured or assembled for 
wholesale or retail sale or
lease.
The purchaser of such 
machinery and equipment who has an active
resale registration 
number shall furnish such number to the seller at the
time of 
purchase. The user of such machinery and equipment and tools

without an active resale registration number shall prepare a 
certificate of
exemption for each transaction stating facts 
establishing the exemption for
that transaction, which 
certificate shall be available to the Department
for inspection 
or audit.  The Department shall prescribe the form of the

certificate.

    Any informal rulings, opinions or letters issued by the 
Department in
response to an inquiry or request for any opinion 
from any person
regarding the coverage and applicability of 
exemption (5) to specific
devices shall be published, 
maintained as a public record, and made
available for public 
inspection and copying.  If the informal ruling,
opinion or 
letter contains trade secrets or other confidential

information, where possible the Department shall delete such 
information
prior to publication.  Whenever such informal 
rulings, opinions, or
letters contain any policy of general 
applicability, the Department
shall formulate and adopt such 
policy as a rule in accordance with the
provisions of the 
Illinois Administrative Procedure Act.

    On and after July 1, 1987, no entity otherwise eligible 
under exemption
(3) of this Section shall make tax free 
purchases unless it has an active
exemption identification 
number issued by the Department.

    The purchase, employment and transfer of such tangible 
personal
property as newsprint and ink for the primary purpose 
of conveying news
(with or without other information) is not a 
purchase, use or sale of
service or of tangible personal 
property within the meaning of this Act.

    "Serviceman" means any person who is engaged in the 
occupation of
making sales of service.

    "Sale at retail" means "sale at retail" as defined in the 
Retailers'
Occupation Tax Act.

    "Supplier" means any person who makes sales of tangible 
personal
property to servicemen for the purpose of resale as an 
incident to a
sale of service.

    "Serviceman maintaining a place of business in this State", 
or any
like term, means and includes any serviceman:


        1. having or maintaining within this State, directly or 
    by a
subsidiary, an office, distribution house, sales 
    house, warehouse or
other place of business, or any agent 
    or other representative operating
within this State under 
    the authority of the serviceman or its
subsidiary, 
    irrespective of whether such place of business or agent or

    other representative is located here permanently or 
    temporarily, or
whether such serviceman or subsidiary is 
    licensed to do business in this
State;
        1.1. beginning July 1, 2011, having a contract with a 
    person located in this State under which the person, for a 
    commission or other consideration based on the sale of 
    service by the serviceman, directly or indirectly refers 
    potential customers to the serviceman by a link on the 
    person's Internet website. The provisions of this 
    paragraph 1.1 shall apply only if the cumulative gross 
    receipts from sales of service by the serviceman to 
    customers who are referred to the serviceman by all persons 
    in this State under such contracts exceed $10,000 during 
    the preceding 4 quarterly periods ending on the last day of 
    March, June, September, and December;
        1.2. beginning July 1, 2011, having a contract with a 
    person located in this State under which:
            A. the serviceman sells the same or substantially 
        similar line of services as the person located in this 
        State and does so using an identical or substantially 
        similar name, trade name, or trademark as the person 
        located in this State; and
            B. the serviceman provides a commission or other 
        consideration to the person located in this State based 
        upon the sale of services by the serviceman.
    The provisions of this paragraph 1.2 shall apply only if 
    the cumulative gross receipts from sales of service by the 
    serviceman to customers in this State under all such 
    contracts exceed $10,000 during the preceding 4 quarterly 
    periods ending on the last day of March, June, September, 
    and December; 


        2. soliciting orders for tangible personal property by 
    means of a
telecommunication or television shopping system 
    (which utilizes toll free
numbers) which is intended by the 
    retailer to be broadcast by cable
television or other means 
    of broadcasting, to consumers located in this State;


        3. pursuant to a contract with a broadcaster or 
    publisher located in this
State, soliciting orders for 
    tangible personal property by means of advertising
which is 
    disseminated primarily to consumers located in this State 
    and only
secondarily to bordering jurisdictions;


        4. soliciting orders for tangible personal property by 
    mail if the
solicitations are substantial and recurring and 
    if the retailer benefits
from any banking, financing, debt 
    collection, telecommunication, or
marketing activities 
    occurring in this State or benefits from the location
in 
    this State of authorized installation, servicing, or 
    repair facilities;


        5. being owned or controlled by the same interests 
    which own or
control any retailer engaging in business in 
    the same or similar line of
business in this State;


        6. having a franchisee or licensee operating under its 
    trade name if
the franchisee or licensee is required to 
    collect the tax under this Section;


        7. pursuant to a contract with a cable television 
    operator located in
this State, soliciting orders for 
    tangible personal property by means of
advertising which is 
    transmitted or distributed over a cable television
system 
    in this State; or


        8. engaging in activities in Illinois, which 
    activities in the
state in which the supply business 
    engaging in such activities is located
would constitute 
    maintaining a place of business in that state.

(Source: P.A. 96-1544, eff. 3-10-11.)

 



    (35 ILCS 110/3)  (from Ch. 120, par. 439.33)



    Sec. 3. Tax imposed. A tax is imposed upon the privilege of 
using in this
State
real or tangible personal property acquired 
as an incident to the
purchase of a service from a serviceman,

including computer software, and including photographs, 
negatives,
and positives that are the
product of 
photoprocessing, but not including products of photoprocessing

produced for use in motion pictures for public commercial 
exhibition.
Beginning January 1, 2001, prepaid telephone 
calling arrangements shall be
considered tangible personal 
property subject to the tax imposed under this Act
regardless 
of the form in which those arrangements may be embodied,

transmitted, or fixed by any method now known or hereafter 
developed. Purchases of (1) electricity delivered to customers 
by wire;  (2) natural or artificial gas that is delivered to 
customers through pipes, pipelines, or mains;  and (3) water 
that is delivered to customers through pipes, pipelines, or 
mains are not subject to tax under this Act.  The provisions of 
this amendatory Act of the 98th General Assembly are 
declaratory of existing law as to the meaning and scope of this 
Act. 

(Source: P.A. 91-51, eff. 6-30-99; 91-870, eff. 6-22-00.)

 



    (35 ILCS 110/3-25)  (from Ch. 120, par. 439.33-25)



    Sec. 3-25. Computer software. For the purposes of this Act, 
"computer
software" means a set of statements, data,
or 
instructions to be used directly or indirectly in a computer in 
order to
bring about a certain result in any form in which 
those statements, data, or
instructions may be embodied, 
transmitted, or fixed, by any method now known
or hereafter 
developed, regardless of whether the statements, data, or

instructions are capable of being perceived by or communicated 
to humans,
and includes prewritten or canned software that is 
held for repeated sale
or lease, and all associated 
documentation and materials, if any, whether
contained on 
magnetic tapes, discs, cards, or other devices or media, but

does not include software that is adapted to specific 
individualized
requirements of a purchaser, custom-made and 
modified software designed for
a particular or limited use by a 
purchaser, or software used to operate
exempt machinery and 
equipment used in the process of manufacturing or
assembling 
tangible personal property for wholesale or retail sale or

lease. Software used to operate machinery and equipment used in 
(i) the generation of electricity for wholesale or retail sale; 
(ii) the generation or treatment of natural or artificial gas 
for wholesale or retail sale that is delivered to customers 
through pipes, pipelines, or mains; or (iii) the treatment of 
water for wholesale or retail sale that is delivered to 
customers through pipes, pipelines, or mains is considered 
"computer software".    The provisions of this amendatory Act of 
the 98th General Assembly are declaratory of existing law as to 
the meaning and scope of this exemption. 

    For the purposes of this Act, computer software shall be 
considered to be
tangible personal property.

(Source: P.A. 91-51, eff. 6-30-99.)

 
    Section 15. The Service Occupation Tax Act is amended  by 
changing Sections 2, 3, and 3-25 as follows:
 



    (35 ILCS 115/2)  (from Ch. 120, par. 439.102)



    Sec. 2. "Transfer" means any transfer of the title to 
property or of
the ownership of property whether or not the 
transferor retains title as
security for the payment of amounts 
due him from the transferee.

    "Cost Price" means the consideration paid by the serviceman 
for a
purchase valued in money, whether paid in money or 
otherwise, including
cash, credits and services, and shall be 
determined without any deduction
on account of the supplier's 
cost of the property sold or on account of any
other expense 
incurred by the supplier. When a serviceman contracts out
part 
or all of the services required in his sale of service, it 
shall be
presumed that the cost price to the serviceman of the 
property
transferred to him by his or her subcontractor is 
equal to 50% of the
subcontractor's charges to the serviceman 
in the absence of proof of the
consideration paid by the 
subcontractor for the purchase of such
property.

    "Department" means the Department of Revenue.

    "Person" means any natural individual, firm, partnership, 
association, joint
stock company, joint venture, public or 
private corporation, limited liability
company, and any 
receiver, executor, trustee, guardian or other representative

appointed by order of any court.

    "Sale of Service" means any transaction except:

    (a) A retail sale of tangible personal property taxable 
under the Retailers'
Occupation Tax Act or under the Use Tax 
Act.

    (b) A sale of tangible personal property for the purpose of 
resale made in
compliance with Section 2c of the Retailers' 
Occupation Tax Act.

    (c) Except as hereinafter provided, a sale or transfer of 
tangible personal
property as an incident to the rendering of 
service for or by any governmental
body or for or by any 
corporation, society, association, foundation or
institution 
organized and operated exclusively for charitable, religious 
or
educational purposes or any not-for-profit corporation, 
society, association,
foundation, institution or organization 
which has no compensated officers or
employees and which is 
organized and operated primarily for the recreation of
persons 
55 years of age or older. A limited liability company may 
qualify for
the exemption under this paragraph only if the 
limited liability company is
organized and operated 
exclusively for educational purposes.

    (d) A sale or transfer of tangible personal
property
as an 
incident to the
rendering of service for interstate carriers 
for hire for use as rolling stock
moving in interstate commerce 
or lessors under leases of one year or longer,
executed or in 
effect at the time of purchase, to interstate carriers for hire

for use as rolling stock moving in interstate commerce, and 
equipment operated
by a telecommunications provider, licensed 
as a common
carrier by the Federal Communications Commission, 
which is permanently
installed in or affixed to aircraft moving 
in interstate commerce.

    (d-1) A sale or transfer of tangible personal
property as 
an incident to
the rendering of service for owners, lessors or 
shippers of tangible personal
property which is utilized by 
interstate carriers for hire for use as rolling
stock moving in 
interstate commerce, and equipment operated
by a 
telecommunications provider, licensed as a common carrier by 
the
Federal Communications Commission, which is permanently 
installed in or
affixed to aircraft moving in interstate 
commerce.

    (d-1.1) On and after July 1, 2003 and through June 30, 
2004, a sale or transfer of a motor vehicle
of the
second 
division with a gross vehicle weight in excess of 8,000 pounds 
as an
incident to the rendering of service if that motor

vehicle is subject
to the commercial distribution fee imposed 
under Section 3-815.1 of the
Illinois Vehicle
Code. Beginning 
on July 1, 2004 and through June 30, 2005, the use in this 
State of motor vehicles of the second division: (i) with a 
gross vehicle weight rating in excess of 8,000 pounds; (ii) 
that are subject to the commercial distribution fee imposed 
under Section 3-815.1 of the Illinois Vehicle Code; and (iii) 
that are primarily used for commercial purposes. Through June 
30, 2005, this exemption applies to repair and replacement 
parts added after the
initial
purchase of such a motor vehicle 
if that motor vehicle is used in a manner that
would
qualify 
for the rolling stock exemption otherwise provided for in this 
Act. For purposes of this paragraph, "used for commercial 
purposes" means the transportation of persons or property in 
furtherance of any commercial or industrial enterprise whether 
for-hire or not.


    (d-2) The repairing, reconditioning or remodeling, for a 
common carrier by
rail, of tangible personal property which 
belongs to such carrier for hire, and
as to which such carrier 
receives the physical possession of the repaired,

reconditioned or remodeled item of tangible personal property 
in Illinois, and
which such carrier transports, or shares with 
another common carrier in the
transportation of such property, 
out of Illinois on a standard uniform bill of
lading showing 
the person who repaired, reconditioned or remodeled the 
property
as the shipper or consignor of such property to a 
destination outside Illinois,
for use outside Illinois.

    (d-3) A sale or transfer of tangible personal property 
which
is produced by the seller thereof on special order in 
such a way as to have
made the applicable tax the Service 
Occupation Tax or the Service Use Tax,
rather than the 
Retailers' Occupation Tax or the Use Tax, for an interstate

carrier by rail which receives the physical possession of such 
property in
Illinois, and which transports such property, or 
shares with another common
carrier in the transportation of 
such property, out of Illinois on a standard
uniform bill of 
lading showing the seller of the property as the shipper or

consignor of such property to a destination outside Illinois, 
for use outside
Illinois.

    (d-4) Until January 1, 1997, a sale, by a registered 
serviceman paying tax
under this Act to the Department, of 
special order printed materials delivered
outside Illinois and 
which are not returned to this State, if delivery is made
by 
the seller or agent of the seller, including an agent who 
causes the product
to be delivered outside Illinois by a common 
carrier or the U.S.
postal service.

    (e) A sale or transfer of machinery and equipment used 
primarily in
the process of the manufacturing or assembling, 
either in an existing, an
expanded or a new manufacturing 
facility, of tangible personal property for
wholesale or retail 
sale or lease, whether such sale or lease is made directly
by 
the manufacturer or by some other person, whether the materials 
used in the
process are owned by the manufacturer or some other 
person, or whether such
sale or lease is made apart from or as 
an incident to the seller's engaging in
a service occupation 
and the applicable tax is a Service Occupation Tax or
Service 
Use Tax, rather than Retailers' Occupation Tax or Use Tax. The 
exemption provided by this paragraph (e) does not include 
machinery and equipment used in (i) the generation of 
electricity for wholesale or retail sale; (ii) the generation 
or treatment of natural or artificial gas for wholesale or 
retail sale that is delivered to customers through pipes, 
pipelines, or mains; or (iii) the treatment of water for 
wholesale or retail sale that is delivered to customers through 
pipes, pipelines, or mains.   The provisions of this amendatory 
Act of the 98th General Assembly are declaratory of existing 
law as to the meaning and scope of this exemption. 

    (f) Until July 1, 2003, the sale or transfer of 
distillation
machinery
and equipment, sold as a
unit or kit and 
assembled or installed by the retailer, which machinery
and 
equipment is certified by the user to be used only for the 
production
of ethyl alcohol that will be used for consumption 
as motor fuel or as a
component of motor fuel for the personal 
use of such user and not subject
to sale or resale.

    (g) At the election of any serviceman not required to be 
otherwise
registered as a retailer under Section 2a of the 
Retailers' Occupation Tax Act,
made for each fiscal year sales 
of service in which the aggregate annual cost
price of tangible 
personal property transferred as an incident to the sales of

service is less than 35% (75% in the case of servicemen 
transferring
prescription drugs or servicemen engaged in 
graphic arts production) of the
aggregate annual total gross 
receipts from all sales of service. The purchase
of such 
tangible personal property by the serviceman shall be subject 
to tax
under the Retailers' Occupation Tax Act and the Use Tax 
Act.
However, if a
primary serviceman who has made the election 
described in this paragraph
subcontracts service work to a 
secondary serviceman who has also made the
election described 
in this paragraph, the primary serviceman does not
incur a Use 
Tax liability if the secondary serviceman (i) has paid or will 
pay
Use
Tax on his or her cost price of any tangible personal 
property transferred
to the primary serviceman and (ii) 
certifies that fact in writing to the
primary serviceman.

    Tangible personal property transferred incident to the 
completion of a
maintenance agreement is exempt from the tax 
imposed pursuant to this Act.

    Exemption (e) also includes machinery and equipment used in 
the
general maintenance or repair of such exempt machinery and 
equipment or for
in-house manufacture of exempt machinery and 
equipment.
The machinery and equipment exemption does not 
include machinery and equipment used in (i) the generation of 
electricity for wholesale or retail sale; (ii) the generation 
or treatment of natural or artificial gas for wholesale or 
retail sale that is delivered to customers through pipes, 
pipelines, or mains; or (iii) the treatment of water for 
wholesale or retail sale that is delivered to customers through 
pipes, pipelines, or mains.     The provisions of this amendatory 
Act of the 98th General Assembly are declaratory of existing 
law as to the meaning and scope of this exemption. For the 
purposes of exemption (e), each of these terms shall have the 
following
meanings:  (1) "manufacturing process" shall mean the 
production of any
article of tangible personal property, 
whether such article is a
finished product or an article for 
use in the process of manufacturing
or assembling a different 
article of tangible personal property, by
procedures commonly 
regarded as manufacturing, processing, fabricating,
or 
refining which changes some existing material or materials into 
a
material with a different form, use or name.  In relation to a

recognized integrated business composed of a series of 
operations which
collectively constitute manufacturing, or 
individually constitute
manufacturing operations, the 
manufacturing process shall be deemed to
commence with the 
first operation or stage of production in the series,
and shall 
not be deemed to end until the completion of the final product

in the last operation or stage of production in the series; and 
further for
purposes of exemption (e), photoprocessing is 
deemed to be a manufacturing
process of tangible personal 
property for wholesale or retail sale;
(2) "assembling process" 
shall mean the production of any article of
tangible personal 
property, whether such article is a finished product
or an 
article for use in the process of manufacturing or assembling a

different article of tangible personal property, by the 
combination of
existing materials in a manner commonly regarded 
as assembling which
results in a material of a different form, 
use or name; (3) "machinery"
shall mean major mechanical 
machines or major components of such machines
contributing to a 
manufacturing or assembling process; and (4) "equipment"
shall 
include any independent device or tool separate from any 
machinery but
essential to an integrated manufacturing or 
assembly process; including
computers used primarily in a 
manufacturer's computer
assisted design, computer assisted 
manufacturing (CAD/CAM) system; or any
subunit or assembly 
comprising a component of any machinery or auxiliary,
adjunct 
or attachment parts of machinery, such as tools, dies, jigs, 
fixtures,
patterns and molds; or any parts which require 
periodic replacement in the
course of normal operation; but 
shall not include hand tools.  Equipment
includes chemicals or 
chemicals acting as catalysts but only if the chemicals
or 
chemicals acting as catalysts effect a direct and immediate 
change upon a
product being manufactured or assembled for 
wholesale or retail sale or lease.
The purchaser of such 
machinery and equipment
who has an active resale registration 
number shall furnish such number to
the seller at the time of 
purchase.  The purchaser of such machinery and
equipment and 
tools without an active resale registration number shall 
furnish
to the seller a certificate of exemption for each 
transaction stating facts
establishing the exemption for that 
transaction, which certificate shall
be available to the 
Department for inspection or audit.

    Except as provided in Section 2d of this Act, the rolling 
stock exemption
applies to rolling
stock
used by an interstate

carrier for hire, even just between points in Illinois, if such 
rolling
stock transports, for hire, persons whose journeys or 
property whose
shipments originate or terminate outside 
Illinois.

    Any informal rulings, opinions or letters issued by the 
Department in
response to an inquiry or request for any opinion 
from any person
regarding the coverage and applicability of 
exemption (e) to specific
devices shall be published, 
maintained as a public record, and made
available for public 
inspection and copying.  If the informal ruling,
opinion or 
letter contains trade secrets or other confidential

information, where possible the Department shall delete such 
information
prior to publication.  Whenever such informal 
rulings, opinions, or
letters contain any policy of general 
applicability, the Department
shall formulate and adopt such 
policy as a rule in accordance with the
provisions of the 
Illinois Administrative Procedure Act.

    On and after July 1, 1987, no entity otherwise eligible 
under exemption
(c) of this Section shall make tax free 
purchases unless it has an active
exemption identification 
number issued by the Department.

    "Serviceman" means any person who is engaged in the 
occupation of
making sales of service.

    "Sale at Retail" means "sale at retail" as defined in the 
Retailers'
Occupation Tax Act.

    "Supplier" means any person who makes sales of tangible 
personal
property to servicemen for the purpose of resale as an 
incident to a
sale of service.

(Source: P.A. 92-484, eff. 8-23-01; 93-23, eff. 6-20-03; 93-24, 
eff. 6-20-03; 93-1033, eff. 9-3-04.)

 



    (35 ILCS 115/3)  (from Ch. 120, par. 439.103)



    Sec. 3. Tax imposed. A tax is imposed upon all
persons 
engaged in the business of
making sales of service (referred to 
as
"servicemen") on all tangible personal property
transferred 
as an incident of a sale of service,
including computer 
software, and including photographs, negatives,
and positives 
that are the
product of photoprocessing, but not including 
products of photoprocessing
produced for use in motion pictures 
for public commercial exhibition.
Beginning January 1, 2001, 
prepaid telephone calling arrangements shall be
considered 
tangible personal property subject to the tax imposed under 
this Act
regardless of the form in which those arrangements may 
be embodied,
transmitted, or fixed by any method now known or 
hereafter developed. Sales of (1) electricity delivered to 
customers by wire;  (2) natural or artificial gas that is 
delivered to customers through pipes, pipelines, or mains;  and 
(3) water that is delivered to customers through pipes, 
pipelines, or mains are not subject to tax under this Act.  The 
provisions of this amendatory Act of the 98th General Assembly 
are declaratory of existing law as to the meaning and scope of 
this Act. 

(Source: P.A. 91-51, eff. 6-30-99; 91-870, eff. 6-22-00.)

 



    (35 ILCS 115/3-25)  (from Ch. 120, par. 439.103-25)



    Sec. 3-25. Computer software. For the purposes of this Act, 
"computer
software" means a set of statements, data,
or 
instructions to be used directly or indirectly in a computer in 
order to
bring about a certain result in any form in which 
those statements, data, or
instructions may be embodied, 
transmitted, or fixed, by any method now known
or hereafter 
developed, regardless of whether the statements, data, or

instructions are capable of being perceived by or communicated 
to humans,
and includes prewritten or canned software that is 
held for repeated sale
or lease, and all associated 
documentation and materials, if any, whether
contained on 
magnetic tapes, discs, cards, or other devices or media, but

does not include software that is adapted to specific 
individualized
requirements of a purchaser, custom-made and 
modified software designed for
a particular or limited use by a 
purchaser, or software used to operate
exempt machinery and 
equipment used in the process of manufacturing or
assembling 
tangible personal property for wholesale or retail sale or

lease. Software used to operate machinery and equipment used in 
(i) the generation of electricity for wholesale or retail sale; 
(ii) the generation or treatment of natural or artificial gas 
for wholesale or retail sale that is delivered to customers 
through pipes, pipelines, or mains; or (iii) the treatment of 
water for wholesale or retail sale that is delivered to 
customers through pipes, pipelines, or mains is considered 
"computer software".    The provisions of this amendatory Act of 
the 98th General Assembly are declaratory of existing law as to 
the meaning and scope of this exemption. 

    For the purposes of this Act, computer software shall be 
considered to be
tangible personal property.

(Source: P.A. 91-51, eff. 6-30-99.)

 
    Section 20. The Retailers' Occupation Tax Act is amended  by 
changing Sections 1d, 2, 2-5, 2-25, 2-45, and 2a as follows:
 



    (35 ILCS 120/1d)  (from Ch. 120, par. 440d)



    Sec. 1d. Subject to the provisions of Section 1f, all 
tangible personal
property to be used or consumed within an 
enterprise zone established
pursuant to the "Illinois 
Enterprise Zone Act", as amended, or subject to
the provisions 
of Section 5.5 of the Illinois Enterprise Zone Act, all

tangible personal property to be used or consumed by any High 
Impact Business,
in the process of the manufacturing or 
assembly of tangible personal property
for wholesale or retail 
sale or lease or in the process of graphic arts
production if 
used or consumed at a facility which is a Department of

Commerce and Economic Opportunity certified business and 
located in a county
of more than 4,000 persons and less than 
45,000 persons is exempt from
the tax imposed by
this Act.  This 
exemption includes repair and replacement parts for
machinery 
and equipment used primarily in the process of manufacturing or

assembling tangible personal property or in the process of 
graphic arts
production if used or consumed at a facility which 
is a Department of
Commerce and Economic Opportunity certified 
business and located in a county
of more than 4,000 persons and 
less than 45,000 persons for wholesale or retail sale, or

lease, and equipment, manufacturing or graphic arts fuels, 
material and
supplies for the
maintenance, repair or operation 
of such manufacturing or assembling
or graphic arts machinery 
or equipment. The exemption provided in this Section for 
tangible personal property to be used or consumed in the 
process of manufacturing or assembly of tangible personal 
property for wholesale or retail sale or lease, and the repair 
and replacement parts for that machinery and equipment, does 
not apply to such property used or consumed in (i) the 
generation of electricity for wholesale or retail sale; (ii) 
the generation or treatment of natural or artificial gas for 
wholesale or retail sale that is delivered to customers through 
pipes, pipelines, or mains; or (iii) the treatment of water for 
wholesale or retail sale that is delivered to customers through 
pipes, pipelines, or mains.  The provisions of this amendatory 
Act of the 98th General Assembly are declaratory of existing 
law as to the meaning and scope of this exemption. 

(Source: P.A. 94-793, eff. 5-19-06.)

 



    (35 ILCS 120/2)  (from Ch. 120, par. 441)



    Sec. 2. Tax imposed. A tax is imposed upon persons engaged 
in the
business of selling at retail tangible personal 
property, including
computer software, and including 
photographs, negatives, and positives that
are the product of 
photoprocessing, but not including products of
photoprocessing 
produced for use in motion pictures for public commercial

exhibition.
Beginning January 1, 2001, prepaid telephone 
calling arrangements shall be
considered tangible personal 
property subject to the tax imposed under this Act
regardless 
of the form in which those arrangements may be embodied,

transmitted, or fixed by any method now known or hereafter 
developed. Sales of (1) electricity delivered to customers by 
wire;  (2) natural or artificial gas that is delivered to 
customers through pipes, pipelines, or mains;  and (3) water 
that is delivered to customers through pipes, pipelines, or 
mains are not subject to tax under this Act.  The provisions of 
this amendatory Act of the 98th General Assembly are 
declaratory of existing law as to the meaning and scope of this 
Act. 

(Source: P.A. 91-51, eff. 6-30-99; 91-870, eff. 6-22-00.)

 


    (35 ILCS 120/2-5)


    Sec. 2-5. Exemptions. Gross receipts from proceeds from the 
sale of
the following tangible personal property are exempt 
from the tax imposed
by this Act:

    (1) Farm chemicals.

    (2) Farm machinery and equipment, both new and used, 
including that
manufactured on special order, certified by the 
purchaser to be used
primarily for production agriculture or 
State or federal agricultural
programs, including individual 
replacement parts for the machinery and
equipment, including 
machinery and equipment purchased for lease,
and including 
implements of husbandry defined in Section 1-130 of
the 
Illinois Vehicle Code, farm machinery and agricultural 
chemical and
fertilizer spreaders, and nurse wagons required to 
be registered
under Section 3-809 of the Illinois Vehicle Code,

but
excluding other motor vehicles required to be registered 
under the Illinois
Vehicle Code.
Horticultural polyhouses or 
hoop houses used for propagating, growing, or
overwintering 
plants shall be considered farm machinery and equipment under

this item (2).
Agricultural chemical tender tanks and dry boxes 
shall include units sold
separately from a motor vehicle 
required to be licensed and units sold mounted
on a motor 
vehicle required to be licensed, if the selling price of the 
tender
is separately stated.

    Farm machinery and equipment shall include precision 
farming equipment
that is
installed or purchased to be 
installed on farm machinery and equipment
including, but not 
limited to, tractors, harvesters, sprayers, planters,
seeders, 
or spreaders.
Precision farming equipment includes, but is not 
limited to,
soil testing sensors, computers, monitors, 
software, global positioning
and mapping systems, and other 
such equipment.

    Farm machinery and equipment also includes computers, 
sensors, software, and
related equipment used primarily in the

computer-assisted operation of production agriculture 
facilities, equipment,
and activities such as, but
not limited 
to,
the collection, monitoring, and correlation of
animal and 
crop data for the purpose of
formulating animal diets and 
agricultural chemicals.  This item (2) is exempt
from the 
provisions of
Section 2-70.

    (3) Until July 1, 2003, distillation machinery and 
equipment, sold as a
unit or kit,
assembled or installed by the 
retailer, certified by the user to be used
only for the 
production of ethyl alcohol that will be used for consumption

as motor fuel or as a component of motor fuel for the personal 
use of the
user, and not subject to sale or resale.

    (4) Until July 1, 2003 and beginning again September 1, 
2004 through August 30, 2014, graphic arts machinery and 
equipment, including
repair and
replacement parts, both new and 
used, and including that manufactured on
special order or 
purchased for lease, certified by the purchaser to be used

primarily for graphic arts production.
Equipment includes 
chemicals or
chemicals acting as catalysts but only if
the 
chemicals or chemicals acting as catalysts effect a direct and 
immediate
change upon a
graphic arts product.

    (5) A motor vehicle of the first division, a motor vehicle 
of the second division that is a self contained motor vehicle 
designed or permanently converted to provide living quarters 
for recreational, camping, or travel use, with direct walk 
through access to the living quarters from the driver's seat, 
or a motor vehicle of the second division that is of the van 
configuration designed for the transportation of not less than 
7 nor more than 16 passengers, as defined in Section 1-146 of 
the Illinois Vehicle Code, that is used for automobile renting, 
as defined in the Automobile Renting Occupation and Use Tax 
Act. This paragraph is exempt from
the provisions of Section 
2-70.

    (6) Personal property sold by a teacher-sponsored student 
organization
affiliated with an elementary or secondary school 
located in Illinois.

    (7) Until July 1, 2003, proceeds of that portion of the 
selling price of
a passenger car the
sale of which is subject 
to the Replacement Vehicle Tax.

    (8) Personal property sold to an Illinois county fair 
association for
use in conducting, operating, or promoting the 
county fair.

    (9) Personal property sold to a not-for-profit arts
or 
cultural organization that establishes, by proof required by 
the Department
by
rule, that it has received an exemption under 
Section 501(c)(3) of the
Internal Revenue Code and that is 
organized and operated primarily for the
presentation
or 
support of arts or cultural programming, activities, or 
services.  These
organizations include, but are not limited to, 
music and dramatic arts
organizations such as symphony 
orchestras and theatrical groups, arts and
cultural service 
organizations, local arts councils, visual arts organizations,

and media arts organizations.
On and after the effective date 
of this amendatory Act of the 92nd General
Assembly, however, 
an entity otherwise eligible for this exemption shall not
make 
tax-free purchases unless it has an active identification 
number issued by
the Department.

    (10) Personal property sold by a corporation, society, 
association,
foundation, institution, or organization, other 
than a limited liability
company, that is organized and 
operated as a not-for-profit service enterprise
for the benefit 
of persons 65 years of age or older if the personal property

was not purchased by the enterprise for the purpose of resale 
by the
enterprise.

    (11) Personal property sold to a governmental body, to a 
corporation,
society, association, foundation, or institution 
organized and operated
exclusively for charitable, religious, 
or educational purposes, or to a
not-for-profit corporation, 
society, association, foundation, institution,
or organization 
that has no compensated officers or employees and that is

organized and operated primarily for the recreation of persons 
55 years of
age or older. A limited liability company may 
qualify for the exemption under
this paragraph only if the 
limited liability company is organized and operated

exclusively for educational purposes. On and after July 1, 
1987, however, no
entity otherwise eligible for this exemption 
shall make tax-free purchases
unless it has an active 
identification number issued by the Department.

    (12) Tangible personal property sold to
interstate 
carriers
for hire for use as
rolling stock moving in interstate 
commerce or to lessors under leases of
one year or longer 
executed or in effect at the time of purchase by
interstate 
carriers for hire for use as rolling stock moving in interstate

commerce and equipment operated by a telecommunications 
provider, licensed as a
common carrier by the Federal 
Communications Commission, which is permanently
installed in 
or affixed to aircraft moving in interstate commerce.

    (12-5) On and after July 1, 2003 and through June 30, 2004, 
motor vehicles of the second division
with a gross vehicle 
weight in excess of 8,000 pounds
that
are
subject to the 
commercial distribution fee imposed under Section 3-815.1 of

the Illinois
Vehicle Code. Beginning on July 1, 2004 and 
through June 30, 2005, the use in this State of motor vehicles 
of the second division: (i) with a gross vehicle weight rating 
in excess of 8,000 pounds; (ii) that are subject to the 
commercial distribution fee imposed under Section 3-815.1 of 
the Illinois Vehicle Code; and (iii) that are primarily used 
for commercial purposes. Through June 30, 2005, this

exemption 
applies to repair and replacement parts added
after the
initial 
purchase of such a motor vehicle if that motor vehicle is used 
in a
manner that
would qualify for the rolling stock exemption 
otherwise provided for in this
Act. For purposes of this 
paragraph, "used for commercial purposes" means the 
transportation of persons or property in furtherance of any 
commercial or industrial enterprise whether for-hire or not.


    (13) Proceeds from sales to owners, lessors, or
shippers of

tangible personal property that is utilized by interstate 
carriers for
hire for use as rolling stock moving in interstate 
commerce
and equipment operated by a telecommunications 
provider, licensed as a
common carrier by the Federal 
Communications Commission, which is
permanently installed in 
or affixed to aircraft moving in interstate commerce.

    (14) Machinery and equipment that will be used by the 
purchaser, or a
lessee of the purchaser, primarily in the 
process of manufacturing or
assembling tangible personal 
property for wholesale or retail sale or
lease, whether the 
sale or lease is made directly by the manufacturer or by
some 
other person, whether the materials used in the process are 
owned by
the manufacturer or some other person, or whether the 
sale or lease is made
apart from or as an incident to the 
seller's engaging in the service
occupation of producing 
machines, tools, dies, jigs, patterns, gauges, or
other similar 
items of no commercial value on special order for a particular

purchaser. The exemption provided by this paragraph (14) does 
not include machinery and equipment used in (i) the generation 
of electricity for wholesale or retail sale; (ii) the 
generation or treatment of natural or artificial gas for 
wholesale or retail sale that is delivered to customers through 
pipes, pipelines, or mains; or (iii) the treatment of water for 
wholesale or retail sale that is delivered to customers through 
pipes, pipelines, or mains.    The provisions of this amendatory 
Act of the 98th General Assembly are declaratory of existing 
law as to the meaning and scope of this exemption.

    (15) Proceeds of mandatory service charges separately 
stated on
customers' bills for purchase and consumption of food 
and beverages, to the
extent that the proceeds of the service 
charge are in fact turned over as
tips or as a substitute for 
tips to the employees who participate directly
in preparing, 
serving, hosting or cleaning up the food or beverage function

with respect to which the service charge is imposed.

    (16) Petroleum products sold to a purchaser if the seller

is prohibited by federal law from charging tax to the 
purchaser.

    (17) Tangible personal property sold to a common carrier by 
rail or
motor that
receives the physical possession of the 
property in Illinois and that
transports the property, or 
shares with another common carrier in the
transportation of the 
property, out of Illinois on a standard uniform bill
of lading 
showing the seller of the property as the shipper or consignor 
of
the property to a destination outside Illinois, for use 
outside Illinois.

    (18) Legal tender, currency, medallions, or gold or silver 
coinage
issued by the State of Illinois, the government of the 
United States of
America, or the government of any foreign 
country, and bullion.

    (19) Until July 1 2003, oil field exploration, drilling, 
and production
equipment, including
(i) rigs and parts of rigs, 
rotary rigs, cable tool
rigs, and workover rigs, (ii) pipe and 
tubular goods, including casing and
drill strings, (iii) pumps 
and pump-jack units, (iv) storage tanks and flow
lines, (v) any 
individual replacement part for oil field exploration,

drilling, and production equipment, and (vi) machinery and 
equipment purchased
for lease; but
excluding motor vehicles 
required to be registered under the Illinois
Vehicle Code.

    (20) Photoprocessing machinery and equipment, including 
repair and
replacement parts, both new and used, including that 
manufactured on
special order, certified by the purchaser to be 
used primarily for
photoprocessing, and including 
photoprocessing machinery and equipment
purchased for lease.

    (21) Until July 1, 2003, and beginning again on the 
effective date of this amendatory Act of the 97th General 
Assembly and thereafter, coal and aggregate exploration, 
mining, offhighway hauling,
processing,
maintenance, and 
reclamation equipment, including
replacement parts and 
equipment, and including
equipment purchased for lease, but 
excluding motor vehicles required to be
registered under the 
Illinois Vehicle Code.

    (22) Fuel and petroleum products sold to or used by an air 
carrier,
certified by the carrier to be used for consumption, 
shipment, or storage
in the conduct of its business as an air 
common carrier, for a flight
destined for or returning from a 
location or locations
outside the United States without regard 
to previous or subsequent domestic
stopovers.

    (23) A transaction in which the purchase order is received 
by a florist
who is located outside Illinois, but who has a 
florist located in Illinois
deliver the property to the 
purchaser or the purchaser's donee in Illinois.

    (24) Fuel consumed or used in the operation of ships, 
barges, or vessels
that are used primarily in or for the 
transportation of property or the
conveyance of persons for 
hire on rivers bordering on this State if the
fuel is delivered 
by the seller to the purchaser's barge, ship, or vessel
while 
it is afloat upon that bordering river.

    (25) Except as provided in item (25-5) of this Section, a


motor vehicle sold in this State to a nonresident even though 
the
motor vehicle is delivered to the nonresident in this 
State, if the motor
vehicle is not to be titled in this State, 
and if a drive-away permit
is issued to the motor vehicle as 
provided in Section 3-603 of the Illinois
Vehicle Code or if 
the nonresident purchaser has vehicle registration
plates to 
transfer to the motor vehicle upon returning to his or her home

state.  The issuance of the drive-away permit or having
the

out-of-state registration plates to be transferred is prima 
facie evidence
that the motor vehicle will not be titled in 
this State.

    (25-5) The exemption under item (25) does not apply if the 
state in which the motor vehicle will be titled does not allow 
a reciprocal exemption for a motor vehicle sold and delivered 
in that state to an Illinois resident but titled in Illinois.  
The tax collected under this Act on the sale of a motor vehicle 
in this State to a resident of another state that does not 
allow a reciprocal exemption shall be imposed at a rate equal 
to the state's rate of tax on taxable property in the state in 
which the purchaser is a resident, except that the tax shall 
not exceed the tax that would otherwise be imposed under this 
Act.  At the time of the sale, the purchaser shall execute a 
statement, signed under penalty of perjury, of his or her 
intent to title the vehicle in the state in which the purchaser 
is a resident within 30 days after the sale and of the fact of 
the payment to the State of Illinois of tax in an amount 
equivalent to the state's rate of tax on taxable property in 
his or her state of residence and shall submit the statement to 
the appropriate tax collection agency in his or her state of 
residence.  In addition, the retailer must retain a signed copy 
of the statement in his or her records. Nothing in this item 
shall be construed to require the removal of the vehicle from 
this state following the filing of an intent to title the 
vehicle in the purchaser's state of residence if the purchaser 
titles the vehicle in his or her state of residence within 30 
days after the date of sale.  The tax collected under this Act 
in accordance with this item (25-5) shall be proportionately 
distributed as if the tax were collected at the 6.25% general 
rate imposed under this Act.

    (25-7) Beginning on July 1, 2007, no tax is imposed under 
this Act on the sale of an aircraft, as defined in Section 3 of 
the Illinois Aeronautics Act,  if all of the following 
conditions are met:
        (1) the aircraft leaves this State within 15 days after 
    the later of  either the issuance of the final billing for 
    the sale of the aircraft, or the authorized approval for 
    return to service, completion of the maintenance record 
    entry, and completion of the test flight and ground test 
    for inspection, as required by 14 C.F.R. 91.407;
        (2) the aircraft is not based or registered in this 
    State after the sale of the aircraft; and
        (3) the seller retains in his or her books and records 
    and provides to the Department a signed and dated 
    certification from the purchaser, on a form prescribed by 
    the Department,  certifying that the requirements of this 
    item (25-7) are met.  The certificate must also include the 
    name and address of the purchaser, the address of the 
    location where the aircraft is to be titled or registered, 
    the address of the primary physical location of the 
    aircraft, and other information that the Department may 
    reasonably require.
    For purposes of this item (25-7):
    "Based in this State" means hangared, stored, or otherwise 
used, excluding post-sale customizations as defined in this 
Section, for 10 or more days in each 12-month period 
immediately following the date of the sale of the aircraft.
    "Registered in this State" means an aircraft registered 
with the Department of Transportation, Aeronautics Division, 
or titled or registered with the Federal Aviation 
Administration to an address located in this State.
    This paragraph (25-7) is exempt from the provisions
of

Section 2-70.

    (26) Semen used for artificial insemination of livestock 
for direct
agricultural production.

    (27) Horses, or interests in horses, registered with and 
meeting the
requirements of any of the
Arabian Horse Club 
Registry of America, Appaloosa Horse Club, American Quarter

Horse Association, United States
Trotting Association, or 
Jockey Club, as appropriate, used for
purposes of breeding or 
racing for prizes. This item (27) is exempt from the provisions 
of Section 2-70, and the exemption provided for under this item 
(27) applies for all periods beginning May 30, 1995, but no 
claim for credit or refund is allowed on or after January 1, 
2008 (the effective date of Public Act 95-88)
 for such taxes 
paid during the period beginning May 30, 2000 and ending on 
January 1, 2008 (the effective date of Public Act 95-88).

    (28) Computers and communications equipment utilized for 
any
hospital
purpose
and equipment used in the diagnosis,

analysis, or treatment of hospital patients sold to a lessor 
who leases the
equipment, under a lease of one year or longer 
executed or in effect at the
time of the purchase, to a

hospital
that has been issued an active tax exemption 
identification number by the
Department under Section 1g of 
this Act.

    (29) Personal property sold to a lessor who leases the

property, under a
lease of one year or longer executed or in 
effect at the time of the purchase,
to a governmental body
that 
has been issued an active tax exemption identification number 
by the
Department under Section 1g of this Act.

    (30) Beginning with taxable years ending on or after 
December
31, 1995
and
ending with taxable years ending on or 
before December 31, 2004,
personal property that is
donated for 
disaster relief to be used in a State or federally declared

disaster area in Illinois or bordering Illinois by a 
manufacturer or retailer
that is registered in this State to a 
corporation, society, association,
foundation, or institution 
that has been issued a sales tax exemption
identification 
number by the Department that assists victims of the disaster

who reside within the declared disaster area.

    (31) Beginning with taxable years ending on or after 
December
31, 1995 and
ending with taxable years ending on or 
before December 31, 2004, personal
property that is used in the 
performance of infrastructure repairs in this
State, including 
but not limited to municipal roads and streets, access roads,

bridges, sidewalks, waste disposal systems, water and sewer 
line extensions,
water distribution and purification 
facilities, storm water drainage and
retention facilities, and 
sewage treatment facilities, resulting from a State
or 
federally declared disaster in Illinois or bordering Illinois 
when such
repairs are initiated on facilities located in the 
declared disaster area
within 6 months after the disaster.

    (32) Beginning July 1, 1999, game or game birds sold at a 
"game breeding
and
hunting preserve area" as that term is used

in the
Wildlife Code.  This paragraph is exempt from the 
provisions
of
Section 2-70.

    (33) A motor vehicle, as that term is defined in Section 
1-146
of the
Illinois Vehicle Code, that is donated to a 
corporation, limited liability
company, society, association, 
foundation, or institution that is determined by
the Department 
to be organized and operated exclusively for educational

purposes.  For purposes of this exemption, "a corporation, 
limited liability
company, society, association, foundation, 
or institution organized and
operated
exclusively for 
educational purposes" means all tax-supported public schools,

private schools that offer systematic instruction in useful 
branches of
learning by methods common to public schools and 
that compare favorably in
their scope and intensity with the 
course of study presented in tax-supported
schools, and 
vocational or technical schools or institutes organized and

operated exclusively to provide a course of study of not less 
than 6 weeks
duration and designed to prepare individuals to 
follow a trade or to pursue a
manual, technical, mechanical, 
industrial, business, or commercial
occupation.

    (34) Beginning January 1, 2000, personal property, 
including food, purchased
through fundraising events for the 
benefit of a public or private elementary or
secondary school, 
a group of those schools, or one or more school districts if

the events are sponsored by an entity recognized by the school 
district that
consists primarily of volunteers and includes 
parents and teachers of the
school children.  This paragraph 
does not apply to fundraising events (i) for
the benefit of 
private home instruction or (ii) for which the fundraising

entity purchases the personal property sold at the events from 
another
individual or entity that sold the property for the 
purpose of resale by the
fundraising entity and that profits 
from the sale to the fundraising entity.
This paragraph is 
exempt from the provisions of Section 2-70.

    (35) Beginning January 1, 2000 and through December 31, 
2001, new or used
automatic vending machines that prepare and 
serve hot food and beverages,
including coffee, soup, and other 
items, and replacement parts for these
machines.  Beginning 
January 1, 2002 and through June 30, 2003, machines
and parts 
for machines used in
commercial, coin-operated amusement and 
vending business if a use or occupation
tax is paid on the 
gross receipts derived from the use of the commercial,

coin-operated amusement and vending machines.  This paragraph 
is exempt from
the provisions of Section 2-70.

    (35-5) Beginning August 23, 2001 and through June 30, 2016, 
food for human consumption that is to be consumed off
the 
premises where it is sold (other than alcoholic beverages, soft 
drinks,
and food that has been prepared for immediate 
consumption) and prescription
and nonprescription medicines, 
drugs, medical appliances, and insulin, urine
testing 
materials, syringes, and needles used by diabetics, for human 
use, when
purchased for use by a person receiving medical 
assistance under Article V of
the Illinois Public Aid Code who 
resides in a licensed long-term care facility,
as defined in 
the Nursing Home Care Act, or a licensed facility as defined in 
the ID/DD Community Care Act or the Specialized Mental Health 
Rehabilitation Act.

    (36) Beginning August 2, 2001, computers and 
communications equipment
utilized for any hospital purpose and 
equipment used in the diagnosis,
analysis, or treatment of 
hospital patients sold to a lessor who leases the
equipment, 
under a lease of one year or longer executed or in effect at 
the
time of the purchase, to a hospital that has been issued an 
active tax
exemption identification number by the Department 
under Section 1g of this Act.
 This paragraph is exempt from the 
provisions of Section 2-70.

    (37) Beginning August 2, 2001, personal property sold to a 
lessor who
leases the property, under a lease of one year or 
longer executed or in effect
at the time of the purchase, to a 
governmental body that has been issued an
active tax exemption 
identification number by the Department under Section 1g
of 
this Act.  This paragraph is exempt from the provisions of 
Section 2-70.

    (38) Beginning on January 1, 2002 and through June 30, 
2016, tangible personal property purchased
from an Illinois 
retailer by a taxpayer engaged in centralized purchasing

activities in Illinois who will, upon receipt of the property 
in Illinois,
temporarily store the property in Illinois (i) for 
the purpose of subsequently
transporting it outside this State 
for use or consumption thereafter solely
outside this State or 
(ii) for the purpose of being processed, fabricated, or

manufactured into, attached to, or incorporated into other 
tangible personal
property to be transported outside this State 
and thereafter used or consumed
solely outside this State.  The 
Director of Revenue shall, pursuant to rules
adopted in 
accordance with the Illinois Administrative Procedure Act, 
issue a
permit to any taxpayer in good standing with the 
Department who is eligible for
the exemption under this 
paragraph (38).  The permit issued under
this paragraph (38) 
shall authorize the holder, to the extent and
in the manner 
specified in the rules adopted under this Act, to purchase

tangible personal property from a retailer exempt from the 
taxes imposed by
this Act.  Taxpayers shall maintain all 
necessary books and records to
substantiate the use and 
consumption of all such tangible personal property
outside of 
the State of Illinois.

    (39) Beginning January 1, 2008, tangible personal property 
used in the construction or maintenance of a community water 
supply, as defined under Section 3.145 of the Environmental 
Protection Act, that is operated by a not-for-profit 
corporation that holds a valid water supply permit issued under 
Title IV of the Environmental Protection Act. This paragraph is 
exempt from the provisions of Section 2-70.

    (40) Beginning January 1, 2010, materials, parts, 
equipment, components, and furnishings incorporated into or 
upon an aircraft as part of the modification, refurbishment, 
completion, replacement, repair, or maintenance of the 
aircraft. This exemption includes consumable supplies used in 
the modification, refurbishment, completion, replacement, 
repair, and maintenance of aircraft, but excludes any 
materials, parts, equipment, components, and consumable 
supplies used in the modification, replacement, repair, and 
maintenance of aircraft engines or power plants, whether such 
engines or power plants are installed or uninstalled upon any 
such aircraft. "Consumable supplies" include, but are not 
limited to, adhesive, tape, sandpaper, general purpose 
lubricants, cleaning solution, latex gloves, and protective 
films. This exemption applies only to those organizations that 
(i) hold an Air Agency Certificate and are empowered to operate 
an approved repair station by the Federal Aviation 
Administration, (ii) have a Class IV Rating, and (iii) conduct 
operations in accordance with Part 145 of the Federal Aviation 
Regulations. The exemption does not include aircraft operated 
by a commercial air carrier providing scheduled passenger air 
service pursuant to authority issued under Part 121 or Part 129 
of the Federal Aviation Regulations. 
    (41) Tangible personal property sold to a 
public-facilities corporation, as described in Section 
11-65-10 of the Illinois Municipal Code, for purposes of 
constructing or furnishing a municipal convention hall, but 
only if the legal title to the municipal convention hall is 
transferred to the municipality without any further 
consideration by or on behalf of the municipality at the time 
of the completion of the municipal convention hall or upon the 
retirement or redemption of any bonds or other debt instruments 
issued by the public-facilities corporation in connection with 
the development of the municipal convention hall.  This 
exemption includes existing public-facilities corporations as 
provided in Section 11-65-25 of the Illinois Municipal Code.  
This paragraph is exempt from the provisions of Section 2-70. 
(Source: P.A. 96-116, eff. 7-31-09; 96-339, eff. 7-1-10; 
96-532, eff. 8-14-09; 96-759, eff. 1-1-10; 96-1000, eff. 
7-2-10; 97-38, eff. 6-28-11; 97-73, eff. 6-30-11; 97-227, eff. 
1-1-12; 97-431, eff. 8-16-11; 97-636, eff. 6-1-12; 97-767, eff. 
7-9-12.)

 



    (35 ILCS 120/2-25)  (from Ch. 120, par. 441-25)



    Sec. 2-25. Computer software. For the purposes of this Act, 
"computer
software" means a set of statements, data,
or 
instructions to be used directly or indirectly in a computer in 
order to
bring about a certain result in any form in which 
those statements, data, or
instructions may be embodied, 
transmitted, or fixed, by any method now known
or hereafter 
developed, regardless of whether the statements, data, or

instructions are capable of being perceived by or communicated 
to humans,
and includes prewritten or canned software that is 
held for repeated sale
or lease, and all associated 
documentation and materials, if any, whether
contained on 
magnetic tapes, discs, cards, or other devices or media, but

does not include software that is adapted to specific 
individualized
requirements of a purchaser, custom-made and 
modified software designed for
a particular or limited use by a 
purchaser, or software used to operate
exempt machinery and 
equipment used in the process of manufacturing or
assembling 
tangible personal property for wholesale or retail sale or

lease. Software used to operate machinery and equipment used in 
(i) the generation of electricity for wholesale or retail sale; 
(ii) the generation or treatment of natural or artificial gas 
for wholesale or retail sale that is delivered to customers 
through pipes, pipelines, or mains; or (iii) the treatment of 
water for wholesale or retail sale that is delivered to 
customers through pipes, pipelines, or mains is considered 
"computer software".     The provisions of this amendatory Act of 
the 98th General Assembly are declaratory of existing law as to 
the meaning and scope of this exemption. 

    For the purposes of this Act, computer software shall be 
considered to be
tangible personal property.

(Source: P.A. 91-51, eff. 6-30-99.)

 



    (35 ILCS 120/2-45)  (from Ch. 120, par. 441-45)


    Sec. 2-45. Manufacturing and assembly exemption. The 
manufacturing
and assembly machinery and equipment exemption 
includes machinery
and equipment that replaces machinery
and 
equipment in an existing manufacturing facility as well as 
machinery
and equipment that are for use in an expanded or new

manufacturing facility.

    The machinery and equipment exemption also includes 
machinery
and equipment used in the
general maintenance or 
repair of exempt machinery and equipment or for
in-house 
manufacture of exempt machinery and equipment.
The machinery 
and equipment exemption does not include machinery and 
equipment used in (i) the generation of electricity for 
wholesale or retail sale; (ii) the generation or treatment of 
natural or artificial gas for wholesale or retail sale that is 
delivered to customers through pipes, pipelines, or mains; or 
(iii) the treatment of water for wholesale or retail sale that 
is delivered to customers through pipes, pipelines, or mains.    
The provisions of this amendatory Act of the 98th General 
Assembly are declaratory of existing law as to the meaning and 
scope of this exemption. For the purposes of this exemption, 
terms have the following meanings:


        (1) "Manufacturing process" means the production of an 
    article of
tangible personal property, whether the article 
    is a finished product or an
article for use in the process 
    of manufacturing or assembling a different
article of 
    tangible personal property, by a procedure commonly 
    regarded as
manufacturing, processing, fabricating, or 
    refining that changes some
existing material or materials 
    into a material with a different form, use,
or name.  In 
    relation to a recognized integrated business composed of a

    series of operations that collectively constitute 
    manufacturing, or
individually constitute manufacturing 
    operations, the manufacturing process
commences with the 
    first operation or stage of production in the series and

    does not end until the completion of the final product in 
    the last
operation or stage of production in the series.  
    For purposes of this
exemption, photoprocessing is a 
    manufacturing process of tangible personal
property for 
    wholesale or retail sale.


        (2) "Assembling process" means the production of an 
    article of
tangible personal property, whether the article 
    is a finished product or an
article for use in the process 
    of manufacturing or assembling a different
article of 
    tangible personal property, by the combination of existing

    materials in a manner commonly regarded as assembling that 
    results in a
material of a different form, use, or name.


        (3) "Machinery" means major mechanical machines or 
    major components of
those machines contributing to a 
    manufacturing or assembling process.


        (4) "Equipment" includes an independent device or tool 
    separate from
machinery but essential to an integrated 
    manufacturing or assembly process;
including computers 
    used primarily in a manufacturer's computer assisted 
    design, computer assisted manufacturing
(CAD/CAM) system; 
    any subunit or assembly comprising a component of any

    machinery or auxiliary, adjunct, or attachment parts of 
    machinery, such as
tools, dies, jigs, fixtures, patterns, 
    and molds; and any parts that
require periodic replacement 
    in the course of normal operation; but does
not include 
    hand tools. Equipment includes chemicals or chemicals 
    acting as
catalysts but only if
the chemicals or chemicals 
    acting as catalysts effect a direct and
immediate change 
    upon a
product being manufactured or assembled for 
    wholesale or retail sale or
lease.

        (5) "Production related tangible personal property" 
    means all tangible personal property that is used or 
    consumed by the purchaser in a manufacturing facility in 
    which a manufacturing process takes place and includes, 
    without limitation,  tangible personal property that is 
    purchased for incorporation into real estate within a 
    manufacturing facility and tangible personal property that 
    is used or consumed in activities such as research and 
    development, preproduction material handling, receiving, 
    quality control, inventory control, storage, staging, and 
    packaging for shipping and transportation purposes. 
    "Production related tangible personal property" does not 
    include (i) tangible personal property that is used, within 
    or without a manufacturing facility, in sales, purchasing, 
    accounting, fiscal management, marketing, personnel 
    recruitment or selection, or landscaping or (ii) tangible 
    personal property that is required to be titled or 
    registered with a department, agency, or unit of federal, 
    State, or local government. 

    The manufacturing and assembling machinery and equipment 
exemption includes production related tangible personal 
property that is purchased on or after July 1, 2007 and on or 
before June 30, 2008. The exemption for production related 
tangible personal property is subject to both of  the following 
limitations:
        (1) The maximum amount of the exemption for any one 
    taxpayer may not exceed 5% of the purchase price of 
    production related tangible personal property that is 
    purchased on or after July 1, 2007 and on or before June 
    30, 2008. A credit under Section 3-85 of this Act may not 
    be earned by the purchase of production related tangible 
    personal property for which an exemption is received under 
    this Section.
        (2) The maximum aggregate amount of  the exemptions for 
    production related tangible personal property  awarded 
    under this Act and the Use
 Tax Act to all taxpayers may not 
    exceed $10,000,000. If the claims for the exemption exceed 
    $10,000,000, then the Department shall reduce the amount of 
    the exemption to each taxpayer on a pro rata basis.
The Department may adopt rules to implement and administer the 
exemption for production related tangible personal property. 
    The manufacturing and assembling machinery and equipment 
exemption
includes the sale of materials to a purchaser who 
produces exempted types
of machinery, equipment, or tools and 
who rents or leases that machinery,
equipment, or tools to a 
manufacturer of tangible personal property.  This
exemption 
also includes the sale of materials to a purchaser who 
manufactures
those materials into an exempted type of 
machinery, equipment, or tools
that the purchaser uses himself 
or herself in the manufacturing of tangible
personal property.  
The purchaser of the machinery and equipment who has an
active 
resale registration number shall furnish that number to the 
seller
at the time of purchase.  A purchaser of the machinery, 
equipment, and
tools without an active resale registration 
number shall furnish to the
seller a certificate of exemption 
for each transaction stating facts
establishing the exemption 
for that transaction, and that certificate shall
be available 
to the Department for inspection or audit.  Informal
rulings, 
opinions, or letters issued by the Department in response to an

inquiry or request for an opinion from any person regarding the 
coverage and
applicability of this exemption to specific 
devices shall be published,
maintained as a public record,
and 
made available for public inspection and copying.  If the 
informal
ruling, opinion, or letter contains trade secrets or 
other confidential
information, where possible, the Department 
shall delete that information
before publication.  Whenever 
informal rulings, opinions, or letters
contain a policy of 
general applicability, the Department shall
formulate and 
adopt that policy as a rule in accordance with the Illinois

Administrative Procedure Act.

(Source: P.A. 95-707, eff. 1-11-08; 96-328, eff. 8-11-09.)

 
    (35 ILCS 120/2a)  (from Ch. 120, par. 441a)
    Sec. 2a. It is unlawful for any person to engage in the 
business of
selling tangible personal property at retail in 
this State without a
certificate of registration from the 
Department. Application
for a certificate of registration 
shall be made to the Department upon
forms furnished by it. 
Each such application shall be signed and verified
and shall 
state: (1) the name and social security number of the

applicant; (2) the address of his principal place
of business; 
(3) the address of the principal place of business from which

he engages in the business of selling tangible personal 
property at retail
in this State and the addresses of all other 
places of business, if any
(enumerating such addresses, if any, 
in a separate list attached to and
made a part of the 
application), from which he engages in the business of
selling 
tangible personal property at retail in this State; (4)
the

name and address of the person or persons who will be 
responsible for
filing returns and payment of taxes due under 
this Act; (5) in the case of a publicly traded corporation, the 
name and title of the Chief Financial Officer, Chief Operating 
Officer, and any other officer or employee with responsibility 
for preparing tax returns under this Act, along with the last 4 
digits of each of their social security numbers, and in the

case of all other corporations
a corporation, the name, title, 
and social security number of
each corporate officer; (6) in 
the case of a limited liability
company, the
name, social 
security number, and FEIN number of
each
manager and member; 
and (7) such other information
as the Department may reasonably 
require.  The application shall contain
an acceptance of 
responsibility signed by the person or persons who will be

responsible for filing returns and payment of the taxes due 
under this
Act.  If the applicant will sell tangible personal 
property at retail
through vending machines, his application to 
register shall indicate the
number of vending machines to be so 
operated.  If requested by the Department at any time, that 
person shall verify the total number of vending machines he or 
she uses in his or her business of selling tangible personal 
property at retail.
    The Department may deny a certificate of registration to 
any applicant
if the owner, any partner, any manager or member 
of a limited liability
company, or a corporate officer of the 
applicant, is or
has been the owner, a partner, a manager or 
member of a limited
liability company, or a corporate officer, 
of another retailer
that is in default for moneys due under 
this Act.
    The Department may require an applicant for a certificate 
of registration hereunder to, at
the time of filing such 
application, furnish a bond from a surety company
authorized to 
do business in the State of Illinois, or an irrevocable
bank 
letter of credit or a bond signed by 2
personal sureties who 
have filed, with the Department, sworn statements
disclosing 
net assets equal to at least 3 times the amount of the bond to

be required of such applicant, or a bond secured by an 
assignment of a bank
account or certificate of deposit, stocks 
or bonds, conditioned upon the
applicant paying to the State of 
Illinois all moneys becoming due under
this Act and under any 
other State tax law or municipal or county tax
ordinance or 
resolution under which the certificate of registration that is

issued to the applicant under this Act will permit the 
applicant to engage
in business without registering separately 
under such other law, ordinance
or resolution. In making a 
determination as to whether to require a bond or other 
security, the Department shall take into consideration whether 
the owner, any partner, any manager or member of a limited 
liability company, or a corporate officer of the applicant is 
or has been the owner, a partner, a manager or member of a 
limited liability company, or a corporate officer of another 
retailer that is in default for moneys due under this Act or 
any other tax or fee Act administered by the Department; and 
whether the owner, any partner, any manager or member of a 
limited liability company, or a corporate officer of the 
applicant is or has been the owner, a partner, a manager or 
member of a limited liability company, or a corporate officer 
of another retailer whose certificate of registration has been 
revoked within the previous 5 years under this Act or any other 
tax or fee Act administered by the Department.  If a bond or 
other security is required, the Department shall fix the amount 
of the bond or other security, taking into consideration the 
amount of money expected to become due from the applicant under 
this Act and under any other State tax law or municipal or 
county tax ordinance or resolution under which the certificate 
of registration that is issued to the applicant under this Act 
will permit the applicant to engage in business without 
registering separately under such other law, ordinance, or 
resolution. The amount of security required by
the Department 
shall be such as, in its opinion, will protect the State of

Illinois against failure to pay the amount which may become due 
from the
applicant under this Act and under any other State tax 
law or municipal or
county tax ordinance or resolution under 
which the certificate of
registration that is issued to the 
applicant under this Act will permit the
applicant to engage in 
business without registering separately under such
other law, 
ordinance or resolution, but the amount of the security 
required
by the Department shall not exceed three times the 
amount of the
applicant's average monthly tax liability, or 
$50,000.00, whichever amount
is lower.
    No certificate of registration under this Act shall be 
issued by the
Department until the applicant provides the 
Department with satisfactory
security, if required, as herein 
provided for.
    Upon receipt of the application for certificate of 
registration in
proper form, and upon approval by the 
Department of the security furnished
by the applicant, if 
required, the Department shall issue to such applicant a

certificate of registration which shall permit the person to 
whom it is
issued to engage in the business of selling tangible 
personal property at
retail in this State. The certificate of 
registration shall be
conspicuously displayed at the place of 
business which the person so
registered states in his 
application to be the principal place of business
from which he 
engages in the business of selling tangible personal property

at retail in this State.
    No certificate of registration issued to a taxpayer who 
files returns
required by this Act on a monthly basis shall be 
valid after the expiration
of 5 years from the date of its 
issuance or last renewal.  The expiration
date of a 
sub-certificate of registration shall be that of the 
certificate
of registration to which the sub-certificate 
relates.  A certificate of
registration shall automatically be 
renewed, subject to revocation as
provided by this Act, for an 
additional 5 years from the date of its
expiration unless 
otherwise notified by the Department as provided by this

paragraph.  Where a taxpayer to whom a certificate of 
registration is
issued under this Act is in default to the 
State of Illinois for delinquent
returns or for moneys due

under this Act or any other State tax law or municipal or 
county ordinance
administered or enforced by the Department, 
the Department shall, not less
than 120 days before the 
expiration date of such certificate of
registration, give 
notice to the taxpayer to whom the certificate was
issued of 
the account period of the delinquent returns, the amount of

tax,
penalty and interest due and owing from the
taxpayer, and 
that the certificate of registration shall not be
automatically 
renewed upon its expiration date unless the taxpayer, on or

before the date of expiration, has filed and paid the 
delinquent returns or
paid the defaulted amount in full.  A

taxpayer to whom such a notice is issued shall be deemed an 
applicant for
renewal.  The Department shall promulgate 
regulations establishing
procedures for taxpayers who file 
returns on a monthly basis but desire and
qualify to change to 
a quarterly or yearly filing basis and will no longer
be 
subject to renewal under this Section, and for taxpayers who 
file
returns on a yearly or quarterly basis but who desire or 
are required to
change to a monthly filing basis and will be 
subject to renewal under
this Section.
    The Department may in its discretion approve renewal by an 
applicant
who is in default if, at the time of application for 
renewal, the applicant
files all of the delinquent returns or 
pays to the Department such
percentage of the defaulted amount 
as may be
determined by the Department and agrees in writing to 
waive all limitations
upon the Department for collection of the 
remaining defaulted amount to the
Department over a period not 
to exceed 5 years from the date of renewal of
the certificate; 
however, no renewal application submitted by an applicant
who 
is in default shall be approved if the immediately preceding 
renewal by
the applicant was conditioned upon the installment 
payment
agreement described in this Section.  The payment 
agreement herein provided
for shall be in addition to and not 
in lieu of the security that may be required by
this Section of 
a taxpayer who is no longer considered a prior continuous

compliance taxpayer.  The execution of the payment agreement as 
provided in
this Act shall not toll the accrual of interest at 
the statutory rate.
    The Department may suspend a certificate of registration if 
the Department finds that the person to whom the certificate of 
registration has been issued knowingly sold contraband 
cigarettes. 
    A certificate of registration issued under this Act more 
than 5 years
before the effective date of this amendatory Act 
of 1989 shall expire and
be subject to the renewal provisions 
of this Section on the next
anniversary of the date of issuance 
of such certificate which occurs more
than 6 months after the 
effective date of this amendatory Act of 1989.  A
certificate of 
registration issued less than 5 years before the effective
date 
of this amendatory Act of 1989 shall expire and be subject to 
the
renewal provisions of this Section on the 5th anniversary 
of the issuance
of the certificate.
    If the person so registered states that he operates other 
places of
business from which he engages in the business of 
selling tangible personal
property at retail in this State, the 
Department shall furnish him with a
sub-certificate of 
registration for each such place of business, and the
applicant 
shall display the appropriate sub-certificate of registration 
at
each such place of business. All sub-certificates of 
registration shall
bear the same registration number as that 
appearing upon the certificate of
registration to which such 
sub-certificates relate.
    If the applicant will sell tangible personal property at 
retail through
vending machines, the Department shall furnish 
him with a sub-certificate
of registration for each such 
vending machine, and the applicant shall
display the 
appropriate sub-certificate of registration on each such

vending machine by attaching the sub-certificate of 
registration to a
conspicuous part of such vending machine. If 
a person who is registered to sell tangible personal property 
at retail through vending machines adds an additional vending 
machine or additional vending machines to the number of vending 
machines he or she uses in his or her business of selling 
tangible personal property at retail, he or she shall notify 
the Department, on a form prescribed by the Department, to 
request an additional sub-certificate or additional 
sub-certificates of registration, as applicable.  With each 
such request, the applicant shall report the number of 
sub-certificates of registration he or she is requesting as 
well as the total number of vending machines from which he or 
she makes retail sales. 
    Where the same person engages in 2 or more businesses of 
selling
tangible personal property at retail in this State, 
which businesses are
substantially different in character or 
engaged in under different trade
names or engaged in under 
other substantially dissimilar circumstances (so
that it is 
more practicable, from an accounting, auditing or bookkeeping

standpoint, for such businesses to be separately registered), 
the
Department may require or permit such person (subject to 
the same
requirements concerning the furnishing of security as 
those that are
provided for hereinbefore in this Section as to 
each application for a
certificate of registration) to apply 
for and obtain a separate certificate
of registration for each 
such business or for any of such businesses, under
a single 
certificate of registration supplemented by related

sub-certificates of registration.
    Any person who is registered under the "Retailers' 
Occupation Tax Act"
as of March 8, 1963, and who, during the 
3-year period immediately prior to
March 8, 1963, or during a 
continuous 3-year period part of which passed
immediately 
before and the remainder of which passes immediately after

March 8, 1963, has been so registered continuously and who is 
determined by
the Department not to have been either delinquent 
or deficient in the
payment of tax liability during that period 
under this Act or under any
other State tax law or municipal or 
county tax ordinance or resolution
under which the certificate 
of registration that is issued to the
registrant under this Act 
will permit the registrant to engage in business
without 
registering separately under such other law, ordinance or

resolution, shall be considered to be a Prior Continuous 
Compliance
taxpayer. Also any taxpayer who has, as verified by 
the Department,
faithfully and continuously complied with the 
condition of his bond or
other security under the provisions of 
this Act for a period of 3
consecutive years shall be 
considered to be a Prior Continuous Compliance
taxpayer.
    Every Prior Continuous Compliance taxpayer shall be exempt 
from all
requirements under this Act concerning the furnishing 
of a bond or other security as a
condition precedent to his 
being authorized to engage in the business of
selling tangible 
personal property at retail in this State. This exemption
shall 
continue for each such taxpayer until such time as he may be

determined by the Department to be delinquent in the filing of 
any returns,
or is determined by the Department (either through 
the Department's
issuance of a final assessment which has 
become final under the Act, or by
the taxpayer's filing of a 
return which admits tax that is not paid to be
due) to be 
delinquent or deficient in the paying of any tax under this Act

or under any other State tax law or municipal or county tax 
ordinance or
resolution under which the certificate of 
registration that is issued to
the registrant under this Act 
will permit the registrant to engage in
business without 
registering separately under such other law, ordinance or

resolution, at which time that taxpayer shall become subject to 
all the
financial responsibility requirements of this Act and, 
as a condition of
being allowed to continue to engage in the 
business of selling tangible
personal property at retail, may 
be required to post bond or other
acceptable security with the 
Department covering liability which such
taxpayer may 
thereafter incur. Any taxpayer who fails to pay an admitted or

established liability under this Act may also be required to 
post bond or
other acceptable security with this Department 
guaranteeing the payment of
such admitted or established 
liability.
    No certificate of registration shall be issued to any 
person who is in
default to the State of Illinois for moneys 
due under this Act or under any
other State tax law or 
municipal or county tax ordinance or resolution
under which the 
certificate of registration that is issued to the applicant

under this Act will permit the applicant to engage in business 
without
registering separately under such other law, ordinance 
or resolution.
    Any person aggrieved by any decision of the Department 
under this
Section may, within 20 days after notice of such 
decision, protest and
request a hearing, whereupon the 
Department shall give notice to such
person of the time and 
place fixed for such hearing and shall hold a
hearing in 
conformity with the provisions of this Act and then issue its

final administrative decision in the matter to such person. In 
the absence
of such a protest within 20 days, the Department's 
decision shall become
final without any further determination 
being made or notice given.
    With respect to security other than bonds (upon which the 
Department may
sue in the event of a forfeiture), if the 
taxpayer fails to pay, when due,
any amount whose payment such 
security guarantees, the Department shall,
after such 
liability is admitted by the taxpayer or established by the

Department through the issuance of a final assessment that has 
become final
under the law, convert the security which that 
taxpayer has furnished into
money for the State, after first 
giving the taxpayer at least 10 days'
written notice, by 
registered or certified mail, to pay the liability or
forfeit 
such security to the Department. If the security consists of 
stocks
or bonds or other securities which are listed on a 
public exchange, the
Department shall sell such securities 
through such public exchange. If
the security consists of an 
irrevocable bank letter of credit, the
Department shall convert 
the security in the manner provided for in the
Uniform 
Commercial Code. If the security consists of a bank certificate 
of
deposit, the Department shall convert the security into 
money by demanding
and collecting the amount of such bank 
certificate of deposit from the bank
which issued such 
certificate. If the security consists of a type of stocks
or 
other securities which are not listed on a public exchange, the

Department shall sell such security to the highest and best 
bidder after
giving at least 10 days' notice of the date, time 
and place of the intended
sale by publication in the "State 
Official Newspaper". If the Department
realizes more than the 
amount of such liability from the security, plus the
expenses 
incurred by the Department in converting the security into 
money,
the Department shall pay such excess to the taxpayer who 
furnished such
security, and the balance shall be paid into the 
State Treasury.
    The Department shall discharge any surety and shall release 
and return
any security deposited, assigned, pledged or 
otherwise provided to it by
a taxpayer under this Section 
within 30 days after:
        (1) such taxpayer becomes a Prior Continuous 
    Compliance taxpayer; or
        (2) such taxpayer has ceased to collect receipts on 
    which he is required
to remit tax to the Department, has 
    filed a final tax return, and has paid
to the Department an 
    amount sufficient to discharge his remaining tax

    liability, as determined by the Department,  under this Act 
    and under every
other State tax law or municipal or county 
    tax ordinance or resolution
under which the certificate of 
    registration issued under this Act permits
the registrant 
    to engage in business without registering separately under

    such other law, ordinance or resolution.  The Department 
    shall make a final
determination of the taxpayer's 
    outstanding tax liability as expeditiously
as possible 
    after his final tax return has been filed; if the 
    Department
cannot make such final determination within 45 
    days after receiving the
final tax return, within such 
    period it shall so notify the taxpayer,
stating its reasons 
    therefor.
(Source: P.A. 96-1355, eff. 7-28-10; 97-335, eff. 1-1-12.)