103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB3111

 

Introduced 2/17/2023, by Rep. Norine K. Hammond

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 105/2  from Ch. 120, par. 439.2
35 ILCS 110/2  from Ch. 120, par. 439.32
35 ILCS 115/2  from Ch. 120, par. 439.102
35 ILCS 120/1  from Ch. 120, par. 440
35 ILCS 120/2-55  from Ch. 120, par. 441-55

    Amends the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, and the Retailers' Occupation Tax Act. Provides that motor carriers that sell items of tangible personal property to purchasers for use or consumption in addition to rendering service as a motor carrier are engaged in a profession or service occupation as a motor carrier and are not engaged in the business of selling tangible personal property to purchasers for use or consumption within the meaning of this Act. Effective immediately.


LRB103 29603 HLH 55998 b

 

 

A BILL FOR

 

HB3111LRB103 29603 HLH 55998 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Use Tax Act is amended by changing Section 2
5as follows:
 
6    (35 ILCS 105/2)  (from Ch. 120, par. 439.2)
7    Sec. 2. Definitions.
8    "Use" means the exercise by any person of any right or
9power over tangible personal property incident to the
10ownership of that property, except that it does not include
11the sale of such property in any form as tangible personal
12property in the regular course of business to the extent that
13such property is not first subjected to a use for which it was
14purchased, and does not include the use of such property by its
15owner for demonstration purposes: Provided that the property
16purchased is deemed to be purchased for the purpose of resale,
17despite first being used, to the extent to which it is resold
18as an ingredient of an intentionally produced product or
19by-product of manufacturing. "Use" does not mean the
20demonstration use or interim use of tangible personal property
21by a retailer before he sells that tangible personal property.
22For watercraft or aircraft, if the period of demonstration use
23or interim use by the retailer exceeds 18 months, the retailer

 

 

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1shall pay on the retailers' original cost price the tax
2imposed by this Act, and no credit for that tax is permitted if
3the watercraft or aircraft is subsequently sold by the
4retailer. "Use" does not mean the physical incorporation of
5tangible personal property, to the extent not first subjected
6to a use for which it was purchased, as an ingredient or
7constituent, into other tangible personal property (a) which
8is sold in the regular course of business or (b) which the
9person incorporating such ingredient or constituent therein
10has undertaken at the time of such purchase to cause to be
11transported in interstate commerce to destinations outside the
12State of Illinois: Provided that the property purchased is
13deemed to be purchased for the purpose of resale, despite
14first being used, to the extent to which it is resold as an
15ingredient of an intentionally produced product or by-product
16of manufacturing.
17    "Watercraft" means a Class 2, Class 3, or Class 4
18watercraft as defined in Section 3-2 of the Boat Registration
19and Safety Act, a personal watercraft, or any boat equipped
20with an inboard motor.
21    "Purchase at retail" means the acquisition of the
22ownership of or title to tangible personal property through a
23sale at retail.
24    "Purchaser" means anyone who, through a sale at retail,
25acquires the ownership of tangible personal property for a
26valuable consideration.

 

 

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1    "Sale at retail" means any transfer of the ownership of or
2title to tangible personal property to a purchaser, for the
3purpose of use, and not for the purpose of resale in any form
4as tangible personal property to the extent not first
5subjected to a use for which it was purchased, for a valuable
6consideration: Provided that the property purchased is deemed
7to be purchased for the purpose of resale, despite first being
8used, to the extent to which it is resold as an ingredient of
9an intentionally produced product or by-product of
10manufacturing. For this purpose, slag produced as an incident
11to manufacturing pig iron or steel and sold is considered to be
12an intentionally produced by-product of manufacturing. "Sale
13at retail" includes any such transfer made for resale unless
14made in compliance with Section 2c of the Retailers'
15Occupation Tax Act, as incorporated by reference into Section
1612 of this Act. Transactions whereby the possession of the
17property is transferred but the seller retains the title as
18security for payment of the selling price are sales.
19    "Sale at retail" shall also be construed to include any
20Illinois florist's sales transaction in which the purchase
21order is received in Illinois by a florist and the sale is for
22use or consumption, but the Illinois florist has a florist in
23another state deliver the property to the purchaser or the
24purchaser's donee in such other state.
25    Nonreusable tangible personal property that is used by
26persons engaged in the business of operating a restaurant,

 

 

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1cafeteria, or drive-in is a sale for resale when it is
2transferred to customers in the ordinary course of business as
3part of the sale of food or beverages and is used to deliver,
4package, or consume food or beverages, regardless of where
5consumption of the food or beverages occurs. Examples of those
6items include, but are not limited to nonreusable, paper and
7plastic cups, plates, baskets, boxes, sleeves, buckets or
8other containers, utensils, straws, placemats, napkins, doggie
9bags, and wrapping or packaging materials that are transferred
10to customers as part of the sale of food or beverages in the
11ordinary course of business.
12    The purchase, employment and transfer of such tangible
13personal property as newsprint and ink for the primary purpose
14of conveying news (with or without other information) is not a
15purchase, use or sale of tangible personal property.
16    "Selling price" means the consideration for a sale valued
17in money whether received in money or otherwise, including
18cash, credits, property other than as hereinafter provided,
19and services, but, prior to January 1, 2020 and beginning
20again on January 1, 2022, not including the value of or credit
21given for traded-in tangible personal property where the item
22that is traded-in is of like kind and character as that which
23is being sold; beginning January 1, 2020 and until January 1,
242022, "selling price" includes the portion of the value of or
25credit given for traded-in motor vehicles of the First
26Division as defined in Section 1-146 of the Illinois Vehicle

 

 

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1Code of like kind and character as that which is being sold
2that exceeds $10,000. "Selling price" shall be determined
3without any deduction on account of the cost of the property
4sold, the cost of materials used, labor or service cost or any
5other expense whatsoever, but does not include interest or
6finance charges which appear as separate items on the bill of
7sale or sales contract nor charges that are added to prices by
8sellers on account of the seller's tax liability under the
9Retailers' Occupation Tax Act, or on account of the seller's
10duty to collect, from the purchaser, the tax that is imposed by
11this Act, or, except as otherwise provided with respect to any
12cigarette tax imposed by a home rule unit, on account of the
13seller's tax liability under any local occupation tax
14administered by the Department, or, except as otherwise
15provided with respect to any cigarette tax imposed by a home
16rule unit on account of the seller's duty to collect, from the
17purchasers, the tax that is imposed under any local use tax
18administered by the Department. Effective December 1, 1985,
19"selling price" shall include charges that are added to prices
20by sellers on account of the seller's tax liability under the
21Cigarette Tax Act, on account of the seller's duty to collect,
22from the purchaser, the tax imposed under the Cigarette Use
23Tax Act, and on account of the seller's duty to collect, from
24the purchaser, any cigarette tax imposed by a home rule unit.
25    Notwithstanding any law to the contrary, for any motor
26vehicle, as defined in Section 1-146 of the Vehicle Code, that

 

 

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1is sold on or after January 1, 2015 for the purpose of leasing
2the vehicle for a defined period that is longer than one year
3and (1) is a motor vehicle of the second division that: (A) is
4a self-contained motor vehicle designed or permanently
5converted to provide living quarters for recreational,
6camping, or travel use, with direct walk through access to the
7living quarters from the driver's seat; (B) is of the van
8configuration designed for the transportation of not less than
97 nor more than 16 passengers; or (C) has a gross vehicle
10weight rating of 8,000 pounds or less or (2) is a motor vehicle
11of the first division, "selling price" or "amount of sale"
12means the consideration received by the lessor pursuant to the
13lease contract, including amounts due at lease signing and all
14monthly or other regular payments charged over the term of the
15lease. Also included in the selling price is any amount
16received by the lessor from the lessee for the leased vehicle
17that is not calculated at the time the lease is executed,
18including, but not limited to, excess mileage charges and
19charges for excess wear and tear. For sales that occur in
20Illinois, with respect to any amount received by the lessor
21from the lessee for the leased vehicle that is not calculated
22at the time the lease is executed, the lessor who purchased the
23motor vehicle does not incur the tax imposed by the Use Tax Act
24on those amounts, and the retailer who makes the retail sale of
25the motor vehicle to the lessor is not required to collect the
26tax imposed by this Act or to pay the tax imposed by the

 

 

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1Retailers' Occupation Tax Act on those amounts. However, the
2lessor who purchased the motor vehicle assumes the liability
3for reporting and paying the tax on those amounts directly to
4the Department in the same form (Illinois Retailers'
5Occupation Tax, and local retailers' occupation taxes, if
6applicable) in which the retailer would have reported and paid
7such tax if the retailer had accounted for the tax to the
8Department. For amounts received by the lessor from the lessee
9that are not calculated at the time the lease is executed, the
10lessor must file the return and pay the tax to the Department
11by the due date otherwise required by this Act for returns
12other than transaction returns. If the retailer is entitled
13under this Act to a discount for collecting and remitting the
14tax imposed under this Act to the Department with respect to
15the sale of the motor vehicle to the lessor, then the right to
16the discount provided in this Act shall be transferred to the
17lessor with respect to the tax paid by the lessor for any
18amount received by the lessor from the lessee for the leased
19vehicle that is not calculated at the time the lease is
20executed; provided that the discount is only allowed if the
21return is timely filed and for amounts timely paid. The
22"selling price" of a motor vehicle that is sold on or after
23January 1, 2015 for the purpose of leasing for a defined period
24of longer than one year shall not be reduced by the value of or
25credit given for traded-in tangible personal property owned by
26the lessor, nor shall it be reduced by the value of or credit

 

 

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1given for traded-in tangible personal property owned by the
2lessee, regardless of whether the trade-in value thereof is
3assigned by the lessee to the lessor. In the case of a motor
4vehicle that is sold for the purpose of leasing for a defined
5period of longer than one year, the sale occurs at the time of
6the delivery of the vehicle, regardless of the due date of any
7lease payments. A lessor who incurs a Retailers' Occupation
8Tax liability on the sale of a motor vehicle coming off lease
9may not take a credit against that liability for the Use Tax
10the lessor paid upon the purchase of the motor vehicle (or for
11any tax the lessor paid with respect to any amount received by
12the lessor from the lessee for the leased vehicle that was not
13calculated at the time the lease was executed) if the selling
14price of the motor vehicle at the time of purchase was
15calculated using the definition of "selling price" as defined
16in this paragraph. Notwithstanding any other provision of this
17Act to the contrary, lessors shall file all returns and make
18all payments required under this paragraph to the Department
19by electronic means in the manner and form as required by the
20Department. This paragraph does not apply to leases of motor
21vehicles for which, at the time the lease is entered into, the
22term of the lease is not a defined period, including leases
23with a defined initial period with the option to continue the
24lease on a month-to-month or other basis beyond the initial
25defined period.
26    The phrase "like kind and character" shall be liberally

 

 

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1construed (including but not limited to any form of motor
2vehicle for any form of motor vehicle, or any kind of farm or
3agricultural implement for any other kind of farm or
4agricultural implement), while not including a kind of item
5which, if sold at retail by that retailer, would be exempt from
6retailers' occupation tax and use tax as an isolated or
7occasional sale.
8    "Department" means the Department of Revenue.
9    "Person" means any natural individual, firm, partnership,
10association, joint stock company, joint adventure, public or
11private corporation, limited liability company, or a receiver,
12executor, trustee, guardian or other representative appointed
13by order of any court.
14    "Retailer" means and includes every person engaged in the
15business of making sales at retail as defined in this Section.
16    A person who holds himself or herself out as being engaged
17(or who habitually engages) in selling tangible personal
18property at retail is a retailer hereunder with respect to
19such sales (and not primarily in a service occupation)
20notwithstanding the fact that such person designs and produces
21such tangible personal property on special order for the
22purchaser and in such a way as to render the property of value
23only to such purchaser, if such tangible personal property so
24produced on special order serves substantially the same
25function as stock or standard items of tangible personal
26property that are sold at retail.

 

 

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1    A person whose activities are organized and conducted
2primarily as a not-for-profit service enterprise, and who
3engages in selling tangible personal property at retail
4(whether to the public or merely to members and their guests)
5is a retailer with respect to such transactions, excepting
6only a person organized and operated exclusively for
7charitable, religious or educational purposes either (1), to
8the extent of sales by such person to its members, students,
9patients or inmates of tangible personal property to be used
10primarily for the purposes of such person, or (2), to the
11extent of sales by such person of tangible personal property
12which is not sold or offered for sale by persons organized for
13profit. The selling of school books and school supplies by
14schools at retail to students is not "primarily for the
15purposes of" the school which does such selling. This
16paragraph does not apply to nor subject to taxation occasional
17dinners, social or similar activities of a person organized
18and operated exclusively for charitable, religious or
19educational purposes, whether or not such activities are open
20to the public.
21    A person who is the recipient of a grant or contract under
22Title VII of the Older Americans Act of 1965 (P.L. 92-258) and
23serves meals to participants in the federal Nutrition Program
24for the Elderly in return for contributions established in
25amount by the individual participant pursuant to a schedule of
26suggested fees as provided for in the federal Act is not a

 

 

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1retailer under this Act with respect to such transactions.
2    Persons who engage in the business of transferring
3tangible personal property upon the redemption of trading
4stamps are retailers hereunder when engaged in such business.
5    The isolated or occasional sale of tangible personal
6property at retail by a person who does not hold himself out as
7being engaged (or who does not habitually engage) in selling
8such tangible personal property at retail or a sale through a
9bulk vending machine does not make such person a retailer
10hereunder. However, any person who is engaged in a business
11which is not subject to the tax imposed by the Retailers'
12Occupation Tax Act because of involving the sale of or a
13contract to sell real estate or a construction contract to
14improve real estate, but who, in the course of conducting such
15business, transfers tangible personal property to users or
16consumers in the finished form in which it was purchased, and
17which does not become real estate, under any provision of a
18construction contract or real estate sale or real estate sales
19agreement entered into with some other person arising out of
20or because of such nontaxable business, is a retailer to the
21extent of the value of the tangible personal property so
22transferred. If, in such transaction, a separate charge is
23made for the tangible personal property so transferred, the
24value of such property, for the purposes of this Act, is the
25amount so separately charged, but not less than the cost of
26such property to the transferor; if no separate charge is

 

 

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1made, the value of such property, for the purposes of this Act,
2is the cost to the transferor of such tangible personal
3property.
4    "Retailer maintaining a place of business in this State",
5or any like term, means and includes any of the following
6retailers:
7        (1) A retailer having or maintaining within this
8    State, directly or by a subsidiary, an office,
9    distribution house, sales house, warehouse or other place
10    of business, or any agent or other representative
11    operating within this State under the authority of the
12    retailer or its subsidiary, irrespective of whether such
13    place of business or agent or other representative is
14    located here permanently or temporarily, or whether such
15    retailer or subsidiary is licensed to do business in this
16    State. However, the ownership of property that is located
17    at the premises of a printer with which the retailer has
18    contracted for printing and that consists of the final
19    printed product, property that becomes a part of the final
20    printed product, or copy from which the printed product is
21    produced shall not result in the retailer being deemed to
22    have or maintain an office, distribution house, sales
23    house, warehouse, or other place of business within this
24    State.
25        (1.1) A retailer having a contract with a person
26    located in this State under which the person, for a

 

 

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1    commission or other consideration based upon the sale of
2    tangible personal property by the retailer, directly or
3    indirectly refers potential customers to the retailer by
4    providing to the potential customers a promotional code or
5    other mechanism that allows the retailer to track
6    purchases referred by such persons. Examples of mechanisms
7    that allow the retailer to track purchases referred by
8    such persons include but are not limited to the use of a
9    link on the person's Internet website, promotional codes
10    distributed through the person's hand-delivered or mailed
11    material, and promotional codes distributed by the person
12    through radio or other broadcast media. The provisions of
13    this paragraph (1.1) shall apply only if the cumulative
14    gross receipts from sales of tangible personal property by
15    the retailer to customers who are referred to the retailer
16    by all persons in this State under such contracts exceed
17    $10,000 during the preceding 4 quarterly periods ending on
18    the last day of March, June, September, and December. A
19    retailer meeting the requirements of this paragraph (1.1)
20    shall be presumed to be maintaining a place of business in
21    this State but may rebut this presumption by submitting
22    proof that the referrals or other activities pursued
23    within this State by such persons were not sufficient to
24    meet the nexus standards of the United States Constitution
25    during the preceding 4 quarterly periods.
26        (1.2) Beginning July 1, 2011, a retailer having a

 

 

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1    contract with a person located in this State under which:
2            (A) the retailer sells the same or substantially
3        similar line of products as the person located in this
4        State and does so using an identical or substantially
5        similar name, trade name, or trademark as the person
6        located in this State; and
7            (B) the retailer provides a commission or other
8        consideration to the person located in this State
9        based upon the sale of tangible personal property by
10        the retailer.
11        The provisions of this paragraph (1.2) shall apply
12    only if the cumulative gross receipts from sales of
13    tangible personal property by the retailer to customers in
14    this State under all such contracts exceed $10,000 during
15    the preceding 4 quarterly periods ending on the last day
16    of March, June, September, and December.
17        (2) (Blank).
18        (3) (Blank).
19        (4) (Blank).
20        (5) (Blank).
21        (6) (Blank).
22        (7) (Blank).
23        (8) (Blank).
24        (9) Beginning October 1, 2018, a retailer making sales
25    of tangible personal property to purchasers in Illinois
26    from outside of Illinois if:

 

 

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1            (A) the cumulative gross receipts from sales of
2        tangible personal property to purchasers in Illinois
3        are $100,000 or more; or
4            (B) the retailer enters into 200 or more separate
5        transactions for the sale of tangible personal
6        property to purchasers in Illinois.
7        The retailer shall determine on a quarterly basis,
8    ending on the last day of March, June, September, and
9    December, whether he or she meets the criteria of either
10    subparagraph (A) or (B) of this paragraph (9) for the
11    preceding 12-month period. If the retailer meets the
12    threshold of either subparagraph (A) or (B) for a 12-month
13    period, he or she is considered a retailer maintaining a
14    place of business in this State and is required to collect
15    and remit the tax imposed under this Act and file returns
16    for one year. At the end of that one-year period, the
17    retailer shall determine whether he or she met the
18    threshold of either subparagraph (A) or (B) during the
19    preceding 12-month period. If the retailer met the
20    criteria in either subparagraph (A) or (B) for the
21    preceding 12-month period, he or she is considered a
22    retailer maintaining a place of business in this State and
23    is required to collect and remit the tax imposed under
24    this Act and file returns for the subsequent year. If at
25    the end of a one-year period a retailer that was required
26    to collect and remit the tax imposed under this Act

 

 

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1    determines that he or she did not meet the threshold in
2    either subparagraph (A) or (B) during the preceding
3    12-month period, the retailer shall subsequently determine
4    on a quarterly basis, ending on the last day of March,
5    June, September, and December, whether he or she meets the
6    threshold of either subparagraph (A) or (B) for the
7    preceding 12-month period.
8        Beginning January 1, 2020, neither the gross receipts
9    from nor the number of separate transactions for sales of
10    tangible personal property to purchasers in Illinois that
11    a retailer makes through a marketplace facilitator and for
12    which the retailer has received a certification from the
13    marketplace facilitator pursuant to Section 2d of this Act
14    shall be included for purposes of determining whether he
15    or she has met the thresholds of this paragraph (9).
16        (10) Beginning January 1, 2020, a marketplace
17    facilitator that meets a threshold set forth in subsection
18    (b) of Section 2d of this Act.
19    Motor carriers, as defined in Section 18c-1104 of the
20Vehicle Code, that sell items of tangible personal property to
21purchasers for use or consumption in addition to rendering
22service as a motor carrier are engaged in a profession or
23service occupation as a motor carrier and are not engaged in
24the business of selling tangible personal property to
25purchasers for use or consumption within the meaning of this
26Act. Those motor carriers are not required to remit retailers'

 

 

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1occupation taxes measured by their receipts from engaging in
2such profession or service occupation, including receipts from
3both services and tangible personal property.
4    "Bulk vending machine" means a vending machine, containing
5unsorted confections, nuts, toys, or other items designed
6primarily to be used or played with by children which, when a
7coin or coins of a denomination not larger than $0.50 are
8inserted, are dispensed in equal portions, at random and
9without selection by the customer.
10(Source: P.A. 101-9, eff. 6-5-19; 101-31, eff. 1-1-20;
11101-604, eff. 1-1-20; 102-353, eff. 1-1-22.)
 
12    Section 10. The Service Use Tax Act is amended by changing
13Section 2 as follows:
 
14    (35 ILCS 110/2)  (from Ch. 120, par. 439.32)
15    Sec. 2. Definitions. In this Act:
16    "Use" means the exercise by any person of any right or
17power over tangible personal property incident to the
18ownership of that property, but does not include the sale or
19use for demonstration by him of that property in any form as
20tangible personal property in the regular course of business.
21"Use" does not mean the interim use of tangible personal
22property nor the physical incorporation of tangible personal
23property, as an ingredient or constituent, into other tangible
24personal property, (a) which is sold in the regular course of

 

 

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1business or (b) which the person incorporating such ingredient
2or constituent therein has undertaken at the time of such
3purchase to cause to be transported in interstate commerce to
4destinations outside the State of Illinois.
5    "Purchased from a serviceman" means the acquisition of the
6ownership of, or title to, tangible personal property through
7a sale of service.
8    "Purchaser" means any person who, through a sale of
9service, acquires the ownership of, or title to, any tangible
10personal property.
11    "Cost price" means the consideration paid by the
12serviceman for a purchase valued in money, whether paid in
13money or otherwise, including cash, credits and services, and
14shall be determined without any deduction on account of the
15supplier's cost of the property sold or on account of any other
16expense incurred by the supplier. When a serviceman contracts
17out part or all of the services required in his sale of
18service, it shall be presumed that the cost price to the
19serviceman of the property transferred to him or her by his or
20her subcontractor is equal to 50% of the subcontractor's
21charges to the serviceman in the absence of proof of the
22consideration paid by the subcontractor for the purchase of
23such property.
24    "Selling price" means the consideration for a sale valued
25in money whether received in money or otherwise, including
26cash, credits and service, and shall be determined without any

 

 

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1deduction on account of the serviceman's cost of the property
2sold, the cost of materials used, labor or service cost or any
3other expense whatsoever, but does not include interest or
4finance charges which appear as separate items on the bill of
5sale or sales contract nor charges that are added to prices by
6sellers on account of the seller's duty to collect, from the
7purchaser, the tax that is imposed by this Act.
8    "Department" means the Department of Revenue.
9    "Person" means any natural individual, firm, partnership,
10association, joint stock company, joint venture, public or
11private corporation, limited liability company, and any
12receiver, executor, trustee, guardian or other representative
13appointed by order of any court.
14    "Sale of service" means any transaction except:
15        (1) a retail sale of tangible personal property
16    taxable under the Retailers' Occupation Tax Act or under
17    the Use Tax Act.
18        (2) a sale of tangible personal property for the
19    purpose of resale made in compliance with Section 2c of
20    the Retailers' Occupation Tax Act.
21        (3) except as hereinafter provided, a sale or transfer
22    of tangible personal property as an incident to the
23    rendering of service for or by any governmental body, or
24    for or by any corporation, society, association,
25    foundation or institution organized and operated
26    exclusively for charitable, religious or educational

 

 

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1    purposes or any not-for-profit corporation, society,
2    association, foundation, institution or organization which
3    has no compensated officers or employees and which is
4    organized and operated primarily for the recreation of
5    persons 55 years of age or older. A limited liability
6    company may qualify for the exemption under this paragraph
7    only if the limited liability company is organized and
8    operated exclusively for educational purposes.
9        (4) (blank).
10        (4a) a sale or transfer of tangible personal property
11    as an incident to the rendering of service for owners,
12    lessors, or shippers of tangible personal property which
13    is utilized by interstate carriers for hire for use as
14    rolling stock moving in interstate commerce so long as so
15    used by interstate carriers for hire, and equipment
16    operated by a telecommunications provider, licensed as a
17    common carrier by the Federal Communications Commission,
18    which is permanently installed in or affixed to aircraft
19    moving in interstate commerce.
20        (4a-5) on and after July 1, 2003 and through June 30,
21    2004, a sale or transfer of a motor vehicle of the second
22    division with a gross vehicle weight in excess of 8,000
23    pounds as an incident to the rendering of service if that
24    motor vehicle is subject to the commercial distribution
25    fee imposed under Section 3-815.1 of the Illinois Vehicle
26    Code. Beginning on July 1, 2004 and through June 30, 2005,

 

 

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1    the use in this State of motor vehicles of the second
2    division: (i) with a gross vehicle weight rating in excess
3    of 8,000 pounds; (ii) that are subject to the commercial
4    distribution fee imposed under Section 3-815.1 of the
5    Illinois Vehicle Code; and (iii) that are primarily used
6    for commercial purposes. Through June 30, 2005, this
7    exemption applies to repair and replacement parts added
8    after the initial purchase of such a motor vehicle if that
9    motor vehicle is used in a manner that would qualify for
10    the rolling stock exemption otherwise provided for in this
11    Act. For purposes of this paragraph, "used for commercial
12    purposes" means the transportation of persons or property
13    in furtherance of any commercial or industrial enterprise
14    whether for-hire or not.
15        (5) a sale or transfer of machinery and equipment used
16    primarily in the process of the manufacturing or
17    assembling, either in an existing, an expanded or a new
18    manufacturing facility, of tangible personal property for
19    wholesale or retail sale or lease, whether such sale or
20    lease is made directly by the manufacturer or by some
21    other person, whether the materials used in the process
22    are owned by the manufacturer or some other person, or
23    whether such sale or lease is made apart from or as an
24    incident to the seller's engaging in a service occupation
25    and the applicable tax is a Service Use Tax or Service
26    Occupation Tax, rather than Use Tax or Retailers'

 

 

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1    Occupation Tax. The exemption provided by this paragraph
2    (5) includes production related tangible personal
3    property, as defined in Section 3-50 of the Use Tax Act,
4    purchased on or after July 1, 2019. The exemption provided
5    by this paragraph (5) does not include machinery and
6    equipment used in (i) the generation of electricity for
7    wholesale or retail sale; (ii) the generation or treatment
8    of natural or artificial gas for wholesale or retail sale
9    that is delivered to customers through pipes, pipelines,
10    or mains; or (iii) the treatment of water for wholesale or
11    retail sale that is delivered to customers through pipes,
12    pipelines, or mains. The provisions of Public Act 98-583
13    are declaratory of existing law as to the meaning and
14    scope of this exemption. The exemption under this
15    paragraph (5) is exempt from the provisions of Section
16    3-75.
17        (5a) the repairing, reconditioning or remodeling, for
18    a common carrier by rail, of tangible personal property
19    which belongs to such carrier for hire, and as to which
20    such carrier receives the physical possession of the
21    repaired, reconditioned or remodeled item of tangible
22    personal property in Illinois, and which such carrier
23    transports, or shares with another common carrier in the
24    transportation of such property, out of Illinois on a
25    standard uniform bill of lading showing the person who
26    repaired, reconditioned or remodeled the property to a

 

 

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1    destination outside Illinois, for use outside Illinois.
2        (5b) a sale or transfer of tangible personal property
3    which is produced by the seller thereof on special order
4    in such a way as to have made the applicable tax the
5    Service Occupation Tax or the Service Use Tax, rather than
6    the Retailers' Occupation Tax or the Use Tax, for an
7    interstate carrier by rail which receives the physical
8    possession of such property in Illinois, and which
9    transports such property, or shares with another common
10    carrier in the transportation of such property, out of
11    Illinois on a standard uniform bill of lading showing the
12    seller of the property as the shipper or consignor of such
13    property to a destination outside Illinois, for use
14    outside Illinois.
15        (6) until July 1, 2003, a sale or transfer of
16    distillation machinery and equipment, sold as a unit or
17    kit and assembled or installed by the retailer, which
18    machinery and equipment is certified by the user to be
19    used only for the production of ethyl alcohol that will be
20    used for consumption as motor fuel or as a component of
21    motor fuel for the personal use of such user and not
22    subject to sale or resale.
23        (7) at the election of any serviceman not required to
24    be otherwise registered as a retailer under Section 2a of
25    the Retailers' Occupation Tax Act, made for each fiscal
26    year sales of service in which the aggregate annual cost

 

 

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1    price of tangible personal property transferred as an
2    incident to the sales of service is less than 35%, or 75%
3    in the case of servicemen transferring prescription drugs
4    or servicemen engaged in graphic arts production, of the
5    aggregate annual total gross receipts from all sales of
6    service. The purchase of such tangible personal property
7    by the serviceman shall be subject to tax under the
8    Retailers' Occupation Tax Act and the Use Tax Act.
9    However, if a primary serviceman who has made the election
10    described in this paragraph subcontracts service work to a
11    secondary serviceman who has also made the election
12    described in this paragraph, the primary serviceman does
13    not incur a Use Tax liability if the secondary serviceman
14    (i) has paid or will pay Use Tax on his or her cost price
15    of any tangible personal property transferred to the
16    primary serviceman and (ii) certifies that fact in writing
17    to the primary serviceman.
18    Tangible personal property transferred incident to the
19completion of a maintenance agreement is exempt from the tax
20imposed pursuant to this Act.
21    Exemption (5) also includes machinery and equipment used
22in the general maintenance or repair of such exempt machinery
23and equipment or for in-house manufacture of exempt machinery
24and equipment. On and after July 1, 2017, exemption (5) also
25includes graphic arts machinery and equipment, as defined in
26paragraph (5) of Section 3-5. The machinery and equipment

 

 

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1exemption does not include machinery and equipment used in (i)
2the generation of electricity for wholesale or retail sale;
3(ii) the generation or treatment of natural or artificial gas
4for wholesale or retail sale that is delivered to customers
5through pipes, pipelines, or mains; or (iii) the treatment of
6water for wholesale or retail sale that is delivered to
7customers through pipes, pipelines, or mains. The provisions
8of Public Act 98-583 are declaratory of existing law as to the
9meaning and scope of this exemption. For the purposes of
10exemption (5), each of these terms shall have the following
11meanings: (1) "manufacturing process" shall mean the
12production of any article of tangible personal property,
13whether such article is a finished product or an article for
14use in the process of manufacturing or assembling a different
15article of tangible personal property, by procedures commonly
16regarded as manufacturing, processing, fabricating, or
17refining which changes some existing material or materials
18into a material with a different form, use or name. In relation
19to a recognized integrated business composed of a series of
20operations which collectively constitute manufacturing, or
21individually constitute manufacturing operations, the
22manufacturing process shall be deemed to commence with the
23first operation or stage of production in the series, and
24shall not be deemed to end until the completion of the final
25product in the last operation or stage of production in the
26series; and further, for purposes of exemption (5),

 

 

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1photoprocessing is deemed to be a manufacturing process of
2tangible personal property for wholesale or retail sale; (2)
3"assembling process" shall mean the production of any article
4of tangible personal property, whether such article is a
5finished product or an article for use in the process of
6manufacturing or assembling a different article of tangible
7personal property, by the combination of existing materials in
8a manner commonly regarded as assembling which results in a
9material of a different form, use or name; (3) "machinery"
10shall mean major mechanical machines or major components of
11such machines contributing to a manufacturing or assembling
12process; and (4) "equipment" shall include any independent
13device or tool separate from any machinery but essential to an
14integrated manufacturing or assembly process; including
15computers used primarily in a manufacturer's computer assisted
16design, computer assisted manufacturing (CAD/CAM) system; or
17any subunit or assembly comprising a component of any
18machinery or auxiliary, adjunct or attachment parts of
19machinery, such as tools, dies, jigs, fixtures, patterns and
20molds; or any parts which require periodic replacement in the
21course of normal operation; but shall not include hand tools.
22Equipment includes chemicals or chemicals acting as catalysts
23but only if the chemicals or chemicals acting as catalysts
24effect a direct and immediate change upon a product being
25manufactured or assembled for wholesale or retail sale or
26lease. The purchaser of such machinery and equipment who has

 

 

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1an active resale registration number shall furnish such number
2to the seller at the time of purchase. The purchaser of such
3machinery and equipment and tools without an active resale
4registration number shall prepare a certificate of exemption
5stating facts establishing the exemption, which certificate
6shall be available to the Department for inspection or audit.
7The Department shall prescribe the form of the certificate.
8    Any informal rulings, opinions or letters issued by the
9Department in response to an inquiry or request for any
10opinion from any person regarding the coverage and
11applicability of exemption (5) to specific devices shall be
12published, maintained as a public record, and made available
13for public inspection and copying. If the informal ruling,
14opinion or letter contains trade secrets or other confidential
15information, where possible the Department shall delete such
16information prior to publication. Whenever such informal
17rulings, opinions, or letters contain any policy of general
18applicability, the Department shall formulate and adopt such
19policy as a rule in accordance with the provisions of the
20Illinois Administrative Procedure Act.
21    On and after July 1, 1987, no entity otherwise eligible
22under exemption (3) of this Section shall make tax-free
23purchases unless it has an active exemption identification
24number issued by the Department.
25    The purchase, employment and transfer of such tangible
26personal property as newsprint and ink for the primary purpose

 

 

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1of conveying news (with or without other information) is not a
2purchase, use or sale of service or of tangible personal
3property within the meaning of this Act.
4    "Serviceman" means any person who is engaged in the
5occupation of making sales of service.
6    Motor carriers, as defined in Section 18c-1104 of the
7Vehicle Code, that sell items of tangible personal property to
8purchasers for use or consumption in addition to rendering
9service as a motor carrier are engaged in a profession or
10service occupation as a motor carrier and are not engaged in
11the business of selling tangible personal property to
12purchasers for use or consumption within the meaning of this
13Act. Those motor carriers are not required to remit retailers'
14occupation taxes measured by their receipts from engaging in
15such profession or service occupation, including receipts from
16both services and tangible personal property.
17    "Sale at retail" means "sale at retail" as defined in the
18Retailers' Occupation Tax Act.
19    "Supplier" means any person who makes sales of tangible
20personal property to servicemen for the purpose of resale as
21an incident to a sale of service.
22    "Serviceman maintaining a place of business in this
23State", or any like term, means and includes any serviceman:
24        (1) having or maintaining within this State, directly
25    or by a subsidiary, an office, distribution house, sales
26    house, warehouse or other place of business, or any agent

 

 

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1    or other representative operating within this State under
2    the authority of the serviceman or its subsidiary,
3    irrespective of whether such place of business or agent or
4    other representative is located here permanently or
5    temporarily, or whether such serviceman or subsidiary is
6    licensed to do business in this State;
7        (1.1) having a contract with a person located in this
8    State under which the person, for a commission or other
9    consideration based on the sale of service by the
10    serviceman, directly or indirectly refers potential
11    customers to the serviceman by providing to the potential
12    customers a promotional code or other mechanism that
13    allows the serviceman to track purchases referred by such
14    persons. Examples of mechanisms that allow the serviceman
15    to track purchases referred by such persons include but
16    are not limited to the use of a link on the person's
17    Internet website, promotional codes distributed through
18    the person's hand-delivered or mailed material, and
19    promotional codes distributed by the person through radio
20    or other broadcast media. The provisions of this paragraph
21    (1.1) shall apply only if the cumulative gross receipts
22    from sales of service by the serviceman to customers who
23    are referred to the serviceman by all persons in this
24    State under such contracts exceed $10,000 during the
25    preceding 4 quarterly periods ending on the last day of
26    March, June, September, and December; a serviceman meeting

 

 

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1    the requirements of this paragraph (1.1) shall be presumed
2    to be maintaining a place of business in this State but may
3    rebut this presumption by submitting proof that the
4    referrals or other activities pursued within this State by
5    such persons were not sufficient to meet the nexus
6    standards of the United States Constitution during the
7    preceding 4 quarterly periods;
8        (1.2) beginning July 1, 2011, having a contract with a
9    person located in this State under which:
10            (A) the serviceman sells the same or substantially
11        similar line of services as the person located in this
12        State and does so using an identical or substantially
13        similar name, trade name, or trademark as the person
14        located in this State; and
15            (B) the serviceman provides a commission or other
16        consideration to the person located in this State
17        based upon the sale of services by the serviceman.
18    The provisions of this paragraph (1.2) shall apply only if
19    the cumulative gross receipts from sales of service by the
20    serviceman to customers in this State under all such
21    contracts exceed $10,000 during the preceding 4 quarterly
22    periods ending on the last day of March, June, September,
23    and December;
24        (2) soliciting orders for tangible personal property
25    by means of a telecommunication or television shopping
26    system (which utilizes toll free numbers) which is

 

 

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1    intended by the retailer to be broadcast by cable
2    television or other means of broadcasting, to consumers
3    located in this State;
4        (3) pursuant to a contract with a broadcaster or
5    publisher located in this State, soliciting orders for
6    tangible personal property by means of advertising which
7    is disseminated primarily to consumers located in this
8    State and only secondarily to bordering jurisdictions;
9        (4) soliciting orders for tangible personal property
10    by mail if the solicitations are substantial and recurring
11    and if the retailer benefits from any banking, financing,
12    debt collection, telecommunication, or marketing
13    activities occurring in this State or benefits from the
14    location in this State of authorized installation,
15    servicing, or repair facilities;
16        (5) being owned or controlled by the same interests
17    which own or control any retailer engaging in business in
18    the same or similar line of business in this State;
19        (6) having a franchisee or licensee operating under
20    its trade name if the franchisee or licensee is required
21    to collect the tax under this Section;
22        (7) pursuant to a contract with a cable television
23    operator located in this State, soliciting orders for
24    tangible personal property by means of advertising which
25    is transmitted or distributed over a cable television
26    system in this State;

 

 

HB3111- 32 -LRB103 29603 HLH 55998 b

1        (8) engaging in activities in Illinois, which
2    activities in the state in which the supply business
3    engaging in such activities is located would constitute
4    maintaining a place of business in that state; or
5        (9) beginning October 1, 2018, making sales of service
6    to purchasers in Illinois from outside of Illinois if:
7            (A) the cumulative gross receipts from sales of
8        service to purchasers in Illinois are $100,000 or
9        more; or
10            (B) the serviceman enters into 200 or more
11        separate transactions for sales of service to
12        purchasers in Illinois.
13        The serviceman shall determine on a quarterly basis,
14    ending on the last day of March, June, September, and
15    December, whether he or she meets the criteria of either
16    subparagraph (A) or (B) of this paragraph (9) for the
17    preceding 12-month period. If the serviceman meets the
18    criteria of either subparagraph (A) or (B) for a 12-month
19    period, he or she is considered a serviceman maintaining a
20    place of business in this State and is required to collect
21    and remit the tax imposed under this Act and file returns
22    for one year. At the end of that one-year period, the
23    serviceman shall determine whether the serviceman met the
24    criteria of either subparagraph (A) or (B) during the
25    preceding 12-month period. If the serviceman met the
26    criteria in either subparagraph (A) or (B) for the

 

 

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1    preceding 12-month period, he or she is considered a
2    serviceman maintaining a place of business in this State
3    and is required to collect and remit the tax imposed under
4    this Act and file returns for the subsequent year. If at
5    the end of a one-year period a serviceman that was
6    required to collect and remit the tax imposed under this
7    Act determines that he or she did not meet the criteria in
8    either subparagraph (A) or (B) during the preceding
9    12-month period, the serviceman subsequently shall
10    determine on a quarterly basis, ending on the last day of
11    March, June, September, and December, whether he or she
12    meets the criteria of either subparagraph (A) or (B) for
13    the preceding 12-month period.
14        Beginning January 1, 2020, neither the gross receipts
15    from nor the number of separate transactions for sales of
16    service to purchasers in Illinois that a serviceman makes
17    through a marketplace facilitator and for which the
18    serviceman has received a certification from the
19    marketplace facilitator pursuant to Section 2d of this Act
20    shall be included for purposes of determining whether he
21    or she has met the thresholds of this paragraph (9).
22        (10) Beginning January 1, 2020, a marketplace
23    facilitator, as defined in Section 2d of this Act.
24(Source: P.A. 100-22, eff. 7-6-17; 100-321, eff. 8-24-17;
25100-587, eff. 6-4-18; 100-863, eff. 8-14-18; 101-9, Article
2610, Section 10-15, eff. 6-5-19; 101-9, Article 25, Section

 

 

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125-10, eff. 6-5-19; 101-604, eff. 12-13-19.)
 
2    Section 15. The Service Occupation Tax Act is amended by
3changing Section 2 as follows:
 
4    (35 ILCS 115/2)  (from Ch. 120, par. 439.102)
5    Sec. 2. In this Act:
6    "Transfer" means any transfer of the title to property or
7of the ownership of property whether or not the transferor
8retains title as security for the payment of amounts due him
9from the transferee.
10    "Cost Price" means the consideration paid by the
11serviceman for a purchase valued in money, whether paid in
12money or otherwise, including cash, credits and services, and
13shall be determined without any deduction on account of the
14supplier's cost of the property sold or on account of any other
15expense incurred by the supplier. When a serviceman contracts
16out part or all of the services required in his sale of
17service, it shall be presumed that the cost price to the
18serviceman of the property transferred to him by his or her
19subcontractor is equal to 50% of the subcontractor's charges
20to the serviceman in the absence of proof of the consideration
21paid by the subcontractor for the purchase of such property.
22    "Department" means the Department of Revenue.
23    "Person" means any natural individual, firm, partnership,
24association, joint stock company, joint venture, public or

 

 

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1private corporation, limited liability company, and any
2receiver, executor, trustee, guardian or other representative
3appointed by order of any court.
4    "Sale of Service" means any transaction except:
5    (a) A retail sale of tangible personal property taxable
6under the Retailers' Occupation Tax Act or under the Use Tax
7Act.
8    (b) A sale of tangible personal property for the purpose
9of resale made in compliance with Section 2c of the Retailers'
10Occupation Tax Act.
11    (c) Except as hereinafter provided, a sale or transfer of
12tangible personal property as an incident to the rendering of
13service for or by any governmental body or for or by any
14corporation, society, association, foundation or institution
15organized and operated exclusively for charitable, religious
16or educational purposes or any not-for-profit corporation,
17society, association, foundation, institution or organization
18which has no compensated officers or employees and which is
19organized and operated primarily for the recreation of persons
2055 years of age or older. A limited liability company may
21qualify for the exemption under this paragraph only if the
22limited liability company is organized and operated
23exclusively for educational purposes.
24    (d) (Blank).
25    (d-1) A sale or transfer of tangible personal property as
26an incident to the rendering of service for owners, lessors or

 

 

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1shippers of tangible personal property which is utilized by
2interstate carriers for hire for use as rolling stock moving
3in interstate commerce, and equipment operated by a
4telecommunications provider, licensed as a common carrier by
5the Federal Communications Commission, which is permanently
6installed in or affixed to aircraft moving in interstate
7commerce.
8    (d-1.1) On and after July 1, 2003 and through June 30,
92004, a sale or transfer of a motor vehicle of the second
10division with a gross vehicle weight in excess of 8,000 pounds
11as an incident to the rendering of service if that motor
12vehicle is subject to the commercial distribution fee imposed
13under Section 3-815.1 of the Illinois Vehicle Code. Beginning
14on July 1, 2004 and through June 30, 2005, the use in this
15State of motor vehicles of the second division: (i) with a
16gross vehicle weight rating in excess of 8,000 pounds; (ii)
17that are subject to the commercial distribution fee imposed
18under Section 3-815.1 of the Illinois Vehicle Code; and (iii)
19that are primarily used for commercial purposes. Through June
2030, 2005, this exemption applies to repair and replacement
21parts added after the initial purchase of such a motor vehicle
22if that motor vehicle is used in a manner that would qualify
23for the rolling stock exemption otherwise provided for in this
24Act. For purposes of this paragraph, "used for commercial
25purposes" means the transportation of persons or property in
26furtherance of any commercial or industrial enterprise whether

 

 

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1for-hire or not.
2    (d-2) The repairing, reconditioning or remodeling, for a
3common carrier by rail, of tangible personal property which
4belongs to such carrier for hire, and as to which such carrier
5receives the physical possession of the repaired,
6reconditioned or remodeled item of tangible personal property
7in Illinois, and which such carrier transports, or shares with
8another common carrier in the transportation of such property,
9out of Illinois on a standard uniform bill of lading showing
10the person who repaired, reconditioned or remodeled the
11property as the shipper or consignor of such property to a
12destination outside Illinois, for use outside Illinois.
13    (d-3) A sale or transfer of tangible personal property
14which is produced by the seller thereof on special order in
15such a way as to have made the applicable tax the Service
16Occupation Tax or the Service Use Tax, rather than the
17Retailers' Occupation Tax or the Use Tax, for an interstate
18carrier by rail which receives the physical possession of such
19property in Illinois, and which transports such property, or
20shares with another common carrier in the transportation of
21such property, out of Illinois on a standard uniform bill of
22lading showing the seller of the property as the shipper or
23consignor of such property to a destination outside Illinois,
24for use outside Illinois.
25    (d-4) Until January 1, 1997, a sale, by a registered
26serviceman paying tax under this Act to the Department, of

 

 

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1special order printed materials delivered outside Illinois and
2which are not returned to this State, if delivery is made by
3the seller or agent of the seller, including an agent who
4causes the product to be delivered outside Illinois by a
5common carrier or the U.S. postal service.
6    (e) A sale or transfer of machinery and equipment used
7primarily in the process of the manufacturing or assembling,
8either in an existing, an expanded or a new manufacturing
9facility, of tangible personal property for wholesale or
10retail sale or lease, whether such sale or lease is made
11directly by the manufacturer or by some other person, whether
12the materials used in the process are owned by the
13manufacturer or some other person, or whether such sale or
14lease is made apart from or as an incident to the seller's
15engaging in a service occupation and the applicable tax is a
16Service Occupation Tax or Service Use Tax, rather than
17Retailers' Occupation Tax or Use Tax. The exemption provided
18by this paragraph (e) includes production related tangible
19personal property, as defined in Section 3-50 of the Use Tax
20Act, purchased on or after July 1, 2019. The exemption
21provided by this paragraph (e) does not include machinery and
22equipment used in (i) the generation of electricity for
23wholesale or retail sale; (ii) the generation or treatment of
24natural or artificial gas for wholesale or retail sale that is
25delivered to customers through pipes, pipelines, or mains; or
26(iii) the treatment of water for wholesale or retail sale that

 

 

HB3111- 39 -LRB103 29603 HLH 55998 b

1is delivered to customers through pipes, pipelines, or mains.
2The provisions of Public Act 98-583 are declaratory of
3existing law as to the meaning and scope of this exemption. The
4exemption under this subsection (e) is exempt from the
5provisions of Section 3-75.
6    (f) Until July 1, 2003, the sale or transfer of
7distillation machinery and equipment, sold as a unit or kit
8and assembled or installed by the retailer, which machinery
9and equipment is certified by the user to be used only for the
10production of ethyl alcohol that will be used for consumption
11as motor fuel or as a component of motor fuel for the personal
12use of such user and not subject to sale or resale.
13    (g) At the election of any serviceman not required to be
14otherwise registered as a retailer under Section 2a of the
15Retailers' Occupation Tax Act, made for each fiscal year sales
16of service in which the aggregate annual cost price of
17tangible personal property transferred as an incident to the
18sales of service is less than 35% (75% in the case of
19servicemen transferring prescription drugs or servicemen
20engaged in graphic arts production) of the aggregate annual
21total gross receipts from all sales of service. The purchase
22of such tangible personal property by the serviceman shall be
23subject to tax under the Retailers' Occupation Tax Act and the
24Use Tax Act. However, if a primary serviceman who has made the
25election described in this paragraph subcontracts service work
26to a secondary serviceman who has also made the election

 

 

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1described in this paragraph, the primary serviceman does not
2incur a Use Tax liability if the secondary serviceman (i) has
3paid or will pay Use Tax on his or her cost price of any
4tangible personal property transferred to the primary
5serviceman and (ii) certifies that fact in writing to the
6primary serviceman.
7    Tangible personal property transferred incident to the
8completion of a maintenance agreement is exempt from the tax
9imposed pursuant to this Act.
10    Exemption (e) also includes machinery and equipment used
11in the general maintenance or repair of such exempt machinery
12and equipment or for in-house manufacture of exempt machinery
13and equipment. On and after July 1, 2017, exemption (e) also
14includes graphic arts machinery and equipment, as defined in
15paragraph (5) of Section 3-5. The machinery and equipment
16exemption does not include machinery and equipment used in (i)
17the generation of electricity for wholesale or retail sale;
18(ii) the generation or treatment of natural or artificial gas
19for wholesale or retail sale that is delivered to customers
20through pipes, pipelines, or mains; or (iii) the treatment of
21water for wholesale or retail sale that is delivered to
22customers through pipes, pipelines, or mains. The provisions
23of Public Act 98-583 are declaratory of existing law as to the
24meaning and scope of this exemption. For the purposes of
25exemption (e), each of these terms shall have the following
26meanings: (1) "manufacturing process" shall mean the

 

 

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1production of any article of tangible personal property,
2whether such article is a finished product or an article for
3use in the process of manufacturing or assembling a different
4article of tangible personal property, by procedures commonly
5regarded as manufacturing, processing, fabricating, or
6refining which changes some existing material or materials
7into a material with a different form, use or name. In relation
8to a recognized integrated business composed of a series of
9operations which collectively constitute manufacturing, or
10individually constitute manufacturing operations, the
11manufacturing process shall be deemed to commence with the
12first operation or stage of production in the series, and
13shall not be deemed to end until the completion of the final
14product in the last operation or stage of production in the
15series; and further for purposes of exemption (e),
16photoprocessing is deemed to be a manufacturing process of
17tangible personal property for wholesale or retail sale; (2)
18"assembling process" shall mean the production of any article
19of tangible personal property, whether such article is a
20finished product or an article for use in the process of
21manufacturing or assembling a different article of tangible
22personal property, by the combination of existing materials in
23a manner commonly regarded as assembling which results in a
24material of a different form, use or name; (3) "machinery"
25shall mean major mechanical machines or major components of
26such machines contributing to a manufacturing or assembling

 

 

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1process; and (4) "equipment" shall include any independent
2device or tool separate from any machinery but essential to an
3integrated manufacturing or assembly process; including
4computers used primarily in a manufacturer's computer assisted
5design, computer assisted manufacturing (CAD/CAM) system; or
6any subunit or assembly comprising a component of any
7machinery or auxiliary, adjunct or attachment parts of
8machinery, such as tools, dies, jigs, fixtures, patterns and
9molds; or any parts which require periodic replacement in the
10course of normal operation; but shall not include hand tools.
11Equipment includes chemicals or chemicals acting as catalysts
12but only if the chemicals or chemicals acting as catalysts
13effect a direct and immediate change upon a product being
14manufactured or assembled for wholesale or retail sale or
15lease. The purchaser of such machinery and equipment who has
16an active resale registration number shall furnish such number
17to the seller at the time of purchase. The purchaser of such
18machinery and equipment and tools without an active resale
19registration number shall furnish to the seller a certificate
20of exemption stating facts establishing the exemption, which
21certificate shall be available to the Department for
22inspection or audit.
23    Except as provided in Section 2d of this Act, the rolling
24stock exemption applies to rolling stock used by an interstate
25carrier for hire, even just between points in Illinois, if
26such rolling stock transports, for hire, persons whose

 

 

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1journeys or property whose shipments originate or terminate
2outside Illinois.
3    Any informal rulings, opinions or letters issued by the
4Department in response to an inquiry or request for any
5opinion from any person regarding the coverage and
6applicability of exemption (e) to specific devices shall be
7published, maintained as a public record, and made available
8for public inspection and copying. If the informal ruling,
9opinion or letter contains trade secrets or other confidential
10information, where possible the Department shall delete such
11information prior to publication. Whenever such informal
12rulings, opinions, or letters contain any policy of general
13applicability, the Department shall formulate and adopt such
14policy as a rule in accordance with the provisions of the
15Illinois Administrative Procedure Act.
16    On and after July 1, 1987, no entity otherwise eligible
17under exemption (c) of this Section shall make tax-free
18purchases unless it has an active exemption identification
19number issued by the Department.
20    "Serviceman" means any person who is engaged in the
21occupation of making sales of service.
22    Motor carriers, as defined in Section 18c-1104 of the
23Vehicle Code, that sell items of tangible personal property to
24purchasers for use or consumption in addition to rendering
25service as a motor carrier are engaged in a profession or
26service occupation as a motor carrier and are not engaged in

 

 

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1the business of selling tangible personal property to
2purchasers for use or consumption within the meaning of this
3Act. Those motor carriers are not required to remit retailers'
4occupation taxes measured by their receipts from engaging in
5such profession or service occupation, including receipts from
6both services and tangible personal property.
7    "Sale at Retail" means "sale at retail" as defined in the
8Retailers' Occupation Tax Act.
9    "Supplier" means any person who makes sales of tangible
10personal property to servicemen for the purpose of resale as
11an incident to a sale of service.
12(Source: P.A. 100-22, eff. 7-6-17; 100-321, eff. 8-24-17;
13100-863, eff. 8-14-18; 101-9, eff. 6-5-19; 101-604, eff.
1412-13-19.)
 
15    Section 20. The Retailers' Occupation Tax Act is amended
16by changing Sections 1 and 2-55 as follows:
 
17    (35 ILCS 120/1)  (from Ch. 120, par. 440)
18    Sec. 1. Definitions. "Sale at retail" means any transfer
19of the ownership of or title to tangible personal property to a
20purchaser, for the purpose of use or consumption, and not for
21the purpose of resale in any form as tangible personal
22property to the extent not first subjected to a use for which
23it was purchased, for a valuable consideration: Provided that
24the property purchased is deemed to be purchased for the

 

 

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1purpose of resale, despite first being used, to the extent to
2which it is resold as an ingredient of an intentionally
3produced product or byproduct of manufacturing. For this
4purpose, slag produced as an incident to manufacturing pig
5iron or steel and sold is considered to be an intentionally
6produced byproduct of manufacturing. Transactions whereby the
7possession of the property is transferred but the seller
8retains the title as security for payment of the selling price
9shall be deemed to be sales.
10    "Sale at retail" shall be construed to include any
11transfer of the ownership of or title to tangible personal
12property to a purchaser, for use or consumption by any other
13person to whom such purchaser may transfer the tangible
14personal property without a valuable consideration, and to
15include any transfer, whether made for or without a valuable
16consideration, for resale in any form as tangible personal
17property unless made in compliance with Section 2c of this
18Act.
19    Sales of tangible personal property, which property, to
20the extent not first subjected to a use for which it was
21purchased, as an ingredient or constituent, goes into and
22forms a part of tangible personal property subsequently the
23subject of a "Sale at retail", are not sales at retail as
24defined in this Act: Provided that the property purchased is
25deemed to be purchased for the purpose of resale, despite
26first being used, to the extent to which it is resold as an

 

 

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1ingredient of an intentionally produced product or byproduct
2of manufacturing.
3    "Sale at retail" shall be construed to include any
4Illinois florist's sales transaction in which the purchase
5order is received in Illinois by a florist and the sale is for
6use or consumption, but the Illinois florist has a florist in
7another state deliver the property to the purchaser or the
8purchaser's donee in such other state.
9    Nonreusable tangible personal property that is used by
10persons engaged in the business of operating a restaurant,
11cafeteria, or drive-in is a sale for resale when it is
12transferred to customers in the ordinary course of business as
13part of the sale of food or beverages and is used to deliver,
14package, or consume food or beverages, regardless of where
15consumption of the food or beverages occurs. Examples of those
16items include, but are not limited to nonreusable, paper and
17plastic cups, plates, baskets, boxes, sleeves, buckets or
18other containers, utensils, straws, placemats, napkins, doggie
19bags, and wrapping or packaging materials that are transferred
20to customers as part of the sale of food or beverages in the
21ordinary course of business.
22    The purchase, employment and transfer of such tangible
23personal property as newsprint and ink for the primary purpose
24of conveying news (with or without other information) is not a
25purchase, use or sale of tangible personal property.
26    A person whose activities are organized and conducted

 

 

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1primarily as a not-for-profit service enterprise, and who
2engages in selling tangible personal property at retail
3(whether to the public or merely to members and their guests)
4is engaged in the business of selling tangible personal
5property at retail with respect to such transactions,
6excepting only a person organized and operated exclusively for
7charitable, religious or educational purposes either (1), to
8the extent of sales by such person to its members, students,
9patients or inmates of tangible personal property to be used
10primarily for the purposes of such person, or (2), to the
11extent of sales by such person of tangible personal property
12which is not sold or offered for sale by persons organized for
13profit. The selling of school books and school supplies by
14schools at retail to students is not "primarily for the
15purposes of" the school which does such selling. The
16provisions of this paragraph shall not apply to nor subject to
17taxation occasional dinners, socials or similar activities of
18a person organized and operated exclusively for charitable,
19religious or educational purposes, whether or not such
20activities are open to the public.
21    A person who is the recipient of a grant or contract under
22Title VII of the Older Americans Act of 1965 (P.L. 92-258) and
23serves meals to participants in the federal Nutrition Program
24for the Elderly in return for contributions established in
25amount by the individual participant pursuant to a schedule of
26suggested fees as provided for in the federal Act is not

 

 

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1engaged in the business of selling tangible personal property
2at retail with respect to such transactions.
3    "Purchaser" means anyone who, through a sale at retail,
4acquires the ownership of or title to tangible personal
5property for a valuable consideration.
6    "Reseller of motor fuel" means any person engaged in the
7business of selling or delivering or transferring title of
8motor fuel to another person other than for use or
9consumption. No person shall act as a reseller of motor fuel
10within this State without first being registered as a reseller
11pursuant to Section 2c or a retailer pursuant to Section 2a.
12    "Selling price" or the "amount of sale" means the
13consideration for a sale valued in money whether received in
14money or otherwise, including cash, credits, property, other
15than as hereinafter provided, and services, but, prior to
16January 1, 2020 and beginning again on January 1, 2022, not
17including the value of or credit given for traded-in tangible
18personal property where the item that is traded-in is of like
19kind and character as that which is being sold; beginning
20January 1, 2020 and until January 1, 2022, "selling price"
21includes the portion of the value of or credit given for
22traded-in motor vehicles of the First Division as defined in
23Section 1-146 of the Illinois Vehicle Code of like kind and
24character as that which is being sold that exceeds $10,000.
25"Selling price" shall be determined without any deduction on
26account of the cost of the property sold, the cost of materials

 

 

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1used, labor or service cost or any other expense whatsoever,
2but does not include charges that are added to prices by
3sellers on account of the seller's tax liability under this
4Act, or on account of the seller's duty to collect, from the
5purchaser, the tax that is imposed by the Use Tax Act, or,
6except as otherwise provided with respect to any cigarette tax
7imposed by a home rule unit, on account of the seller's tax
8liability under any local occupation tax administered by the
9Department, or, except as otherwise provided with respect to
10any cigarette tax imposed by a home rule unit on account of the
11seller's duty to collect, from the purchasers, the tax that is
12imposed under any local use tax administered by the
13Department. Effective December 1, 1985, "selling price" shall
14include charges that are added to prices by sellers on account
15of the seller's tax liability under the Cigarette Tax Act, on
16account of the sellers' duty to collect, from the purchaser,
17the tax imposed under the Cigarette Use Tax Act, and on account
18of the seller's duty to collect, from the purchaser, any
19cigarette tax imposed by a home rule unit.
20    Notwithstanding any law to the contrary, for any motor
21vehicle, as defined in Section 1-146 of the Vehicle Code, that
22is sold on or after January 1, 2015 for the purpose of leasing
23the vehicle for a defined period that is longer than one year
24and (1) is a motor vehicle of the second division that: (A) is
25a self-contained motor vehicle designed or permanently
26converted to provide living quarters for recreational,

 

 

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1camping, or travel use, with direct walk through access to the
2living quarters from the driver's seat; (B) is of the van
3configuration designed for the transportation of not less than
47 nor more than 16 passengers; or (C) has a gross vehicle
5weight rating of 8,000 pounds or less or (2) is a motor vehicle
6of the first division, "selling price" or "amount of sale"
7means the consideration received by the lessor pursuant to the
8lease contract, including amounts due at lease signing and all
9monthly or other regular payments charged over the term of the
10lease. Also included in the selling price is any amount
11received by the lessor from the lessee for the leased vehicle
12that is not calculated at the time the lease is executed,
13including, but not limited to, excess mileage charges and
14charges for excess wear and tear. For sales that occur in
15Illinois, with respect to any amount received by the lessor
16from the lessee for the leased vehicle that is not calculated
17at the time the lease is executed, the lessor who purchased the
18motor vehicle does not incur the tax imposed by the Use Tax Act
19on those amounts, and the retailer who makes the retail sale of
20the motor vehicle to the lessor is not required to collect the
21tax imposed by the Use Tax Act or to pay the tax imposed by
22this Act on those amounts. However, the lessor who purchased
23the motor vehicle assumes the liability for reporting and
24paying the tax on those amounts directly to the Department in
25the same form (Illinois Retailers' Occupation Tax, and local
26retailers' occupation taxes, if applicable) in which the

 

 

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1retailer would have reported and paid such tax if the retailer
2had accounted for the tax to the Department. For amounts
3received by the lessor from the lessee that are not calculated
4at the time the lease is executed, the lessor must file the
5return and pay the tax to the Department by the due date
6otherwise required by this Act for returns other than
7transaction returns. If the retailer is entitled under this
8Act to a discount for collecting and remitting the tax imposed
9under this Act to the Department with respect to the sale of
10the motor vehicle to the lessor, then the right to the discount
11provided in this Act shall be transferred to the lessor with
12respect to the tax paid by the lessor for any amount received
13by the lessor from the lessee for the leased vehicle that is
14not calculated at the time the lease is executed; provided
15that the discount is only allowed if the return is timely filed
16and for amounts timely paid. The "selling price" of a motor
17vehicle that is sold on or after January 1, 2015 for the
18purpose of leasing for a defined period of longer than one year
19shall not be reduced by the value of or credit given for
20traded-in tangible personal property owned by the lessor, nor
21shall it be reduced by the value of or credit given for
22traded-in tangible personal property owned by the lessee,
23regardless of whether the trade-in value thereof is assigned
24by the lessee to the lessor. In the case of a motor vehicle
25that is sold for the purpose of leasing for a defined period of
26longer than one year, the sale occurs at the time of the

 

 

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1delivery of the vehicle, regardless of the due date of any
2lease payments. A lessor who incurs a Retailers' Occupation
3Tax liability on the sale of a motor vehicle coming off lease
4may not take a credit against that liability for the Use Tax
5the lessor paid upon the purchase of the motor vehicle (or for
6any tax the lessor paid with respect to any amount received by
7the lessor from the lessee for the leased vehicle that was not
8calculated at the time the lease was executed) if the selling
9price of the motor vehicle at the time of purchase was
10calculated using the definition of "selling price" as defined
11in this paragraph. Notwithstanding any other provision of this
12Act to the contrary, lessors shall file all returns and make
13all payments required under this paragraph to the Department
14by electronic means in the manner and form as required by the
15Department. This paragraph does not apply to leases of motor
16vehicles for which, at the time the lease is entered into, the
17term of the lease is not a defined period, including leases
18with a defined initial period with the option to continue the
19lease on a month-to-month or other basis beyond the initial
20defined period.
21    The phrase "like kind and character" shall be liberally
22construed (including but not limited to any form of motor
23vehicle for any form of motor vehicle, or any kind of farm or
24agricultural implement for any other kind of farm or
25agricultural implement), while not including a kind of item
26which, if sold at retail by that retailer, would be exempt from

 

 

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1retailers' occupation tax and use tax as an isolated or
2occasional sale.
3    "Gross receipts" from the sales of tangible personal
4property at retail means the total selling price or the amount
5of such sales, as hereinbefore defined. In the case of charge
6and time sales, the amount thereof shall be included only as
7and when payments are received by the seller. Receipts or
8other consideration derived by a seller from the sale,
9transfer or assignment of accounts receivable to a wholly
10owned subsidiary will not be deemed payments prior to the time
11the purchaser makes payment on such accounts.
12    "Department" means the Department of Revenue.
13    "Person" means any natural individual, firm, partnership,
14association, joint stock company, joint adventure, public or
15private corporation, limited liability company, or a receiver,
16executor, trustee, guardian or other representative appointed
17by order of any court.
18    The isolated or occasional sale of tangible personal
19property at retail by a person who does not hold himself out as
20being engaged (or who does not habitually engage) in selling
21such tangible personal property at retail, or a sale through a
22bulk vending machine, does not constitute engaging in a
23business of selling such tangible personal property at retail
24within the meaning of this Act; provided that any person who is
25engaged in a business which is not subject to the tax imposed
26by this Act because of involving the sale of or a contract to

 

 

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1sell real estate or a construction contract to improve real
2estate or a construction contract to engineer, install, and
3maintain an integrated system of products, but who, in the
4course of conducting such business, transfers tangible
5personal property to users or consumers in the finished form
6in which it was purchased, and which does not become real
7estate or was not engineered and installed, under any
8provision of a construction contract or real estate sale or
9real estate sales agreement entered into with some other
10person arising out of or because of such nontaxable business,
11is engaged in the business of selling tangible personal
12property at retail to the extent of the value of the tangible
13personal property so transferred. If, in such a transaction, a
14separate charge is made for the tangible personal property so
15transferred, the value of such property, for the purpose of
16this Act, shall be the amount so separately charged, but not
17less than the cost of such property to the transferor; if no
18separate charge is made, the value of such property, for the
19purposes of this Act, is the cost to the transferor of such
20tangible personal property. Construction contracts for the
21improvement of real estate consisting of engineering,
22installation, and maintenance of voice, data, video, security,
23and all telecommunication systems do not constitute engaging
24in a business of selling tangible personal property at retail
25within the meaning of this Act if they are sold at one
26specified contract price.

 

 

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1    A person who holds himself or herself out as being engaged
2(or who habitually engages) in selling tangible personal
3property at retail is a person engaged in the business of
4selling tangible personal property at retail hereunder with
5respect to such sales (and not primarily in a service
6occupation) notwithstanding the fact that such person designs
7and produces such tangible personal property on special order
8for the purchaser and in such a way as to render the property
9of value only to such purchaser, if such tangible personal
10property so produced on special order serves substantially the
11same function as stock or standard items of tangible personal
12property that are sold at retail.
13    Persons who engage in the business of transferring
14tangible personal property upon the redemption of trading
15stamps are engaged in the business of selling such property at
16retail and shall be liable for and shall pay the tax imposed by
17this Act on the basis of the retail value of the property
18transferred upon redemption of such stamps.
19    Motor carriers, as defined in Section 18c-1104 of the
20Vehicle Code, that sell items of tangible personal property to
21purchasers for use or consumption in addition to rendering
22service as a motor carrier are engaged in a profession or
23service occupation as a motor carrier and are not engaged in
24the business of selling tangible personal property to
25purchasers for use or consumption within the meaning of this
26Act. Those motor carriers are not required to remit retailers'

 

 

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1occupation taxes measured by their receipts from engaging in
2such profession or service occupation, including receipts from
3both services and tangible personal property.
4    "Bulk vending machine" means a vending machine, containing
5unsorted confections, nuts, toys, or other items designed
6primarily to be used or played with by children which, when a
7coin or coins of a denomination not larger than $0.50 are
8inserted, are dispensed in equal portions, at random and
9without selection by the customer.
10    "Remote retailer" means a retailer that does not maintain
11within this State, directly or by a subsidiary, an office,
12distribution house, sales house, warehouse or other place of
13business, or any agent or other representative operating
14within this State under the authority of the retailer or its
15subsidiary, irrespective of whether such place of business or
16agent is located here permanently or temporarily or whether
17such retailer or subsidiary is licensed to do business in this
18State.
19    "Marketplace" means a physical or electronic place, forum,
20platform, application, or other method by which a marketplace
21seller sells or offers to sell items.
22    "Marketplace facilitator" means a person who, pursuant to
23an agreement with an unrelated third-party marketplace seller,
24directly or indirectly through one or more affiliates
25facilitates a retail sale by an unrelated third party
26marketplace seller by:

 

 

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1        (1) listing or advertising for sale by the marketplace
2    seller in a marketplace, tangible personal property that
3    is subject to tax under this Act; and
4        (2) either directly or indirectly, through agreements
5    or arrangements with third parties, collecting payment
6    from the customer and transmitting that payment to the
7    marketplace seller regardless of whether the marketplace
8    facilitator receives compensation or other consideration
9    in exchange for its services.
10    A person who provides advertising services, including
11listing products for sale, is not considered a marketplace
12facilitator, so long as the advertising service platform or
13forum does not engage, directly or indirectly through one or
14more affiliated persons, in the activities described in
15paragraph (2) of this definition of "marketplace facilitator".
16    "Marketplace facilitator" does not include any person
17licensed under the Auction License Act. This exemption does
18not apply to any person who is an Internet auction listing
19service, as defined by the Auction License Act.
20    "Marketplace seller" means a person that makes sales
21through a marketplace operated by an unrelated third party
22marketplace facilitator.
23(Source: P.A. 101-31, eff. 6-28-19; 101-604, eff. 1-1-20;
24102-353, eff. 1-1-22; 102-634, eff. 8-27-21; 102-813, eff.
255-13-22.)
 

 

 

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1    (35 ILCS 120/2-55)  (from Ch. 120, par. 441-55)
2    Sec. 2-55. Serviceman transfer. Tangible personal property
3purchased by a serviceman, as defined in Section 2 of the
4Service Occupation Tax Act, is subject to the tax imposed by
5this Act when purchased for transfer by the serviceman
6incidental to completion of a maintenance agreement.
7    Motor carriers, as defined in Section 18c-1104 of the
8Vehicle Code, that sell items of tangible personal property to
9purchasers for use or consumption in addition to rendering
10service as a motor carrier are engaged in a profession or
11service occupation as a motor carrier and are not engaged in
12the business of selling tangible personal property to
13purchasers for use or consumption within the meaning of this
14Act. Those motor carriers are not required to remit retailers'
15occupation taxes measured by their receipts from engaging in
16such profession or service occupation, including receipts from
17both services and tangible personal property.
18(Source: P.A. 91-51, eff. 6-30-99.)
 
19    Section 99. Effective date. This Act takes effect upon
20becoming law.