HB4438 103RD GENERAL ASSEMBLY

LRB103 36261 HLH 66358 b

103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB4438

Introduced 1/16/2024, by Rep. Norine K. Hammond

SYNOPSIS AS INTRODUCED:

35 ILCS 173/5-10
35 ILCS 615/1	from Ch. 120, par. 467.16
35 ILCS 640/2-4

Amends the Gas Use Tax Law. Exempts certain business enterprises from taxation under the Act. Amends the Gas Revenue Tax Act. Provides that the definition of "gross receipts" does not include consideration received from certain business enterprises. Amends the Electricity Excise Tax Law. Provides that the tax under the Act is not imposed with respect to any use by the purchaser in the process of manufacturing or assembling tangible personal property for wholesale or for retail sale or lease. Effective immediately.

A BILL FOR

AN ACT concerning revenue.

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

Section 5. The Gas Use Tax Law is amended by changing Section 5-10 as follows:

(35 ILCS 173/5-10)

Sec. 5-10. Imposition of tax. Beginning October 1, 2003, a tax is imposed upon the privilege of using in this State gas obtained in a purchase of out-of-state gas at the rate of 2.4 cents per therm or 5% of the purchase price for the billing period, whichever is the lower rate. Such tax rate shall be referred to as the "self-assessing purchaser tax rate". Beginning with bills issued by delivering suppliers on and after October 1, 2003, purchasers may elect an alternative tax rate of 2.4 cents per therm to be paid under the provisions of Section 5-15 of this Law to a delivering supplier maintaining a place of business in this State. Such tax rate shall be referred to as the "alternate tax rate".

The tax imposed under this Section shall not apply to gas used by business enterprises certified under Section 9-222.1 of the Public Utilities Act, as amended, to the extent of such exemption and during the period of time specified by the Department of Commerce and Economic Opportunity.

The tax imposed under this Section does not apply to gas used by any business enterprise that is properly assigned or included within one of the following Standard Industrial Classifications, as designated in the 1987 Standard Industrial Classification Manual prepared by the federal Office of Management and Budget: 10; 12; 13; 14; 21; 22; 23; 24; 25; 26; 27; 28; 29; 30; 31; 32; 33; 34; 35; 36; 37; 38; or 39.

(Source: P.A. 93-31, eff. 10-1-03; 94-793, eff. 5-19-06.)

Section 10. The Gas Revenue Tax Act is amended by changing Section 1 as follows:

(35 ILCS 615/1) (from Ch. 120, par. 467.16)

Sec. 1. For the purposes of this Act: "Gross receipts" means the consideration received for gas distributed, supplied, furnished or sold to persons for use or consumption and not for resale, and for all services (including the transportation or storage of gas for an end-user) rendered in connection therewith, and shall include cash, services and property of every kind or nature, and shall be determined without any deduction on account of the cost of the service, product or commodity supplied, the cost of materials used, labor or service costs, or any other expense whatsoever. However, "gross receipts" shall not include receipts from:

(i) any minimum or other charge for gas or gas service where the customer has taken no therms of gas;

(ii) any charge for a dishonored check;

(iii) any finance or credit charge, penalty or charge for delayed payment, or discount for prompt payment;

(iv) any charge for reconnection of service or for replacement or relocation of facilities;

(v) any advance or contribution in aid of construction;

(vi) repair, inspection or servicing of equipment located on customer premises;

(vii) leasing or rental of equipment, the leasing or rental of which is not necessary to distributing, furnishing, supplying, selling, transporting or storing gas;

(viii) any sale to a customer if the taxpayer is prohibited by federal or State constitution, treaty, convention, statute or court decision from recovering the related tax liability from such customer;

(ix) any charges added to customers' bills pursuant to the provisions of Section 9-221 or Section 9-222 of the Public Utilities Act, as amended, or any charges added to customers' bills by taxpayers who are not subject to rate regulation by the Illinois Commerce Commission for the purpose of recovering any of the tax liabilities or other amounts specified in such provisions of such Act; and

(x) prior to October 1, 2003, any charge for gas or gas services to a customer who acquired contractual rights for the direct purchase of gas or gas services originating from an out-of-state supplier or source on or before March 1, 1995, except for those charges solely related to the local distribution of gas by a public utility. This exemption includes any charge for gas or gas service, except for those charges solely related to the local distribution of gas by a public utility, to a customer who maintained an account with a public utility (as defined in Section 3-105 of the Public Utilities Act) for the transportation of customer-owned gas on or before March 1, 1995. The provisions of this amendatory Act of 1997 are intended to clarify, rather than change, existing law as to the meaning and scope of this exemption. This exemption (x) expires on September 30, 2003.

In case credit is extended, the amount thereof shall be included only as and when payments are received.

"Gross receipts" shall not include consideration received from business enterprises certified under Section 9-222.1 of the Public Utilities Act, as amended, to the extent of such exemption and during the period of time specified by the Department of Commerce and Economic Opportunity.

"Gross receipts" does not include consideration received from any business enterprise that is properly assigned or included within one of the following Standard Industrial Classifications, as designated in the 1987 Standard Industrial Classification Manual prepared by the federal Office of Management and Budget: 10; 12; 13; 14; 21; 22; 23; 24; 25; 26; 27; 28; 29; 30; 31; 32; 33; 34; 35; 36; 37; 38; or 39.

"Department" means the Department of Revenue of the State of Illinois.

"Director" means the Director of Revenue for the Department of Revenue of the State of Illinois.

"Taxpayer" means a person engaged in the business of distributing, supplying, furnishing or selling gas for use or consumption and not for resale.

"Person" means any natural individual, firm, trust, estate, partnership, association, joint stock company, joint adventure, corporation, limited liability company, or a receiver, trustee, guardian or other representative appointed by order of any court, or any city, town, county or other political subdivision of this State.

"Invested capital" means that amount equal to (i) the average of the balances at the beginning and end of each taxable period of the taxpayer's total stockholder's equity and total long-term debt, less investments in and advances to all corporations, as set forth on the balance sheets included in the taxpayer's annual report to the Illinois Commerce Commission for the taxable period; (ii) multiplied by a fraction determined under Sections 301 and 304(a) of the "Illinois Income Tax Act" and reported on the Illinois income tax return for the taxable period ending in or with the taxable period in question. However, notwithstanding the income tax return reporting requirement stated above, beginning July 1, 1979, no taxpayer's denominators used to compute the sales, property or payroll factors under subsection (a) of Section 304 of the Illinois Income Tax Act shall include payroll, property or sales of any corporate entity other than the taxpayer for the purposes of determining an allocation for the invested capital tax. This amendatory Act of 1982, Public Act 82-1024, is not intended to and does not make any change in the meaning of any provision of this Act, it having been the intent of the General Assembly in initially enacting the definition of "invested capital" to provide for apportionment of the invested capital of each company, based solely upon the sales, property and payroll of that company.

"Taxable period" means each period which ends after the effective date of this Act and which is covered by an annual report filed by the taxpayer with the Illinois Commerce Commission.

(Source: P.A. 93-31, eff. 10-1-03; 94-793, eff. 5-19-06.)

Section 15. The Electricity Excise Tax Law is amended by changing Section 2-4 as follows:

(35 ILCS 640/2-4)

Sec. 2-4. Tax imposed.

(a) Except as provided in subsection (b), a tax is imposed on the privilege of using in this State electricity purchased for use or consumption and not for resale, other than by municipal corporations owning and operating a local transportation system for public service, at the following rates per kilowatt-hour delivered to the purchaser:

(i) For the first 2000 kilowatt-hours used or consumed in a month: 0.330 cents per kilowatt-hour;

(ii) For the next 48,000 kilowatt-hours used or consumed in a month: 0.319 cents per kilowatt-hour;

(iii) For the next 50,000 kilowatt-hours used or consumed in a month: 0.303 cents per kilowatt-hour;

(iv) For the next 400,000 kilowatt-hours used or consumed in a month: 0.297 cents per kilowatt-hour;

(v) For the next 500,000 kilowatt-hours used or consumed in a month: 0.286 cents per kilowatt-hour;

(vi) For the next 2,000,000 kilowatt-hours used or consumed in a month: 0.270 cents per kilowatt-hour;

(vii) For the next 2,000,000 kilowatt-hours used or consumed in a month: 0.254 cents per kilowatt-hour;

(viii) For the next 5,000,000 kilowatt-hours used or consumed in a month: 0.233 cents per kilowatt-hour;

(ix) For the next 10,000,000 kilowatt-hours used or consumed in a month: 0.207 cents per kilowatt-hour;

(x) For all electricity in excess of 20,000,000 kilowatt-hours used or consumed in a month: 0.202 cents per kilowatt-hour.

Provided, that in lieu of the foregoing rates, the tax is imposed on a self-assessing purchaser at the rate of 5.1% of the self-assessing purchaser's purchase price for all electricity distributed, supplied, furnished, sold, transmitted and delivered to the self-assessing purchaser in a month.

(b) A tax is imposed on the privilege of using in this State electricity purchased from a municipal system or electric cooperative, as defined in Article XVII of the Public Utilities Act, which has not made an election as permitted by either Section 17-200 or Section 17-300 of such Act, at the lesser of 0.32 cents per kilowatt hour of all electricity distributed, supplied, furnished, sold, transmitted, and delivered by such municipal system or electric cooperative to the purchaser or 5% of each such purchaser's purchase price for all electricity distributed, supplied, furnished, sold, transmitted, and delivered by such municipal system or electric cooperative to the purchaser, whichever is the lower rate as applied to each purchaser in each billing period.

(c) The tax imposed by this Section 2-4 is not imposed with respect to any use of electricity by business enterprises certified under Section 9-222.1 or 9-222.1A of the Public Utilities Act, as amended, to the extent of such exemption and during the time specified by the Department of Commerce and Economic Opportunity; or with respect to any transaction in interstate commerce, or otherwise, to the extent to which such transaction may not, under the Constitution and statutes of the United States, be made the subject of taxation by this State.

(d) The tax imposed by this Section 2-4 is not imposed with respect to any use of electricity at a REV Illinois Project site that has received a certification for tax exemption from the Department of Commerce and Economic Opportunity pursuant to Section 95 of the Reimagining Energy and Vehicles in Illinois Act, to the extent of such exemption, which shall be no more than 10 years.

(e) The tax imposed by this Section 2-4 is not imposed with respect to any use of electricity at a project site that has received a certification for tax exemption from the Department of Commerce and Economic Opportunity pursuant to the Manufacturing Illinois Chips for Real Opportunity (MICRO) Act, to the extent of such exemption, which shall be no more than 10 years.

(f) The tax imposed by this Section 2-4 is not imposed with respect to any use by the purchaser in the process of manufacturing or assembling tangible personal property for wholesale or for retail sale or lease.

(Source: P.A. 102-669, eff. 11-16-21; 102-700, eff. 4-19-22; 102-1125, eff. 2-3-23.)

Section 99. Effective date. This Act takes effect upon becoming law.