SB1936ham002 93RD GENERAL ASSEMBLY

Rep. Careen Gordon

Filed: 5/31/2004

09300SB1936ham002 LRB093 08847 BDD 52004 a

AMENDMENT TO SENATE BILL 1936

AMENDMENT NO. ______. Amend Senate Bill 1936 by replacing everything after the enacting clause with the following:

4		"(35 ILCS 5/215 rep.)
5		Section 5. The Illinois Income Tax Act is amended by
6		repealing Section 215.

7		Section 10. The Use Tax Act is amended by changing Sections
8		3-5 and 3-61 as follows:
9		(35 ILCS 105/3-5) (from Ch. 120, par. 439.3-5)
10		Sec. 3-5. Exemptions. Use of the following tangible
11		personal property is exempt from the tax imposed by this Act:
12		(1) Personal property purchased from a corporation,
13		society, association, foundation, institution, or
14		organization, other than a limited liability company, that is
15		organized and operated as a not-for-profit service enterprise
16		for the benefit of persons 65 years of age or older if the
17		personal property was not purchased by the enterprise for the
18		purpose of resale by the enterprise.
19		(2) Personal property purchased by a not-for-profit
20		Illinois county fair association for use in conducting,
21		operating, or promoting the county fair.
22		(3) Personal property purchased by a not-for-profit arts or
23		cultural organization that establishes, by proof required by

1		the Department by rule, that it has received an exemption under
2		Section 501(c)(3) of the Internal Revenue Code and that is
3		organized and operated primarily for the presentation or
4		support of arts or cultural programming, activities, or
5		services. These organizations include, but are not limited to,
6		music and dramatic arts organizations such as symphony
7		orchestras and theatrical groups, arts and cultural service
8		organizations, local arts councils, visual arts organizations,
9		and media arts organizations. On and after the effective date
10		of this amendatory Act of the 92nd General Assembly, however,
11		an entity otherwise eligible for this exemption shall not make
12		tax-free purchases unless it has an active identification
13		number issued by the Department.
14		(4) Personal property purchased by a governmental body, by
15		a corporation, society, association, foundation, or
16		institution organized and operated exclusively for charitable,
17		religious, or educational purposes, or by a not-for-profit
18		corporation, society, association, foundation, institution, or
19		organization that has no compensated officers or employees and
20		that is organized and operated primarily for the recreation of
21		persons 55 years of age or older. A limited liability company
22		may qualify for the exemption under this paragraph only if the
23		limited liability company is organized and operated
24		exclusively for educational purposes. On and after July 1,
25		1987, however, no entity otherwise eligible for this exemption
26		shall make tax-free purchases unless it has an active exemption
27		identification number issued by the Department.
28		(5) Until July 1, 2003, a passenger car that is a
29		replacement vehicle to the extent that the purchase price of
30		the car is subject to the Replacement Vehicle Tax.
31		(6) Until July 1, 2003, graphic arts machinery and
32		equipment, including repair and replacement parts, both new and
33		used, and including that manufactured on special order,
34		certified by the purchaser to be used primarily for graphic

1		arts production, and including machinery and equipment
2		purchased for lease. Equipment includes chemicals or chemicals
3		acting as catalysts but only if the chemicals or chemicals
4		acting as catalysts effect a direct and immediate change upon a
5		graphic arts product.
6		(7) Farm chemicals.
7		(8) Legal tender, currency, medallions, or gold or silver
8		coinage issued by the State of Illinois, the government of the
9		United States of America, or the government of any foreign
10		country, and bullion.
11		(9) Personal property purchased from a teacher-sponsored
12		student organization affiliated with an elementary or
13		secondary school located in Illinois.
14		(10) A motor vehicle of the first division, a motor vehicle
15		of the second division that is a self-contained motor vehicle
16		designed or permanently converted to provide living quarters
17		for recreational, camping, or travel use, with direct walk
18		through to the living quarters from the driver's seat, or a
19		motor vehicle of the second division that is of the van
20		configuration designed for the transportation of not less than
21		7 nor more than 16 passengers, as defined in Section 1-146 of
22		the Illinois Vehicle Code, that is used for automobile renting,
23		as defined in the Automobile Renting Occupation and Use Tax
24		Act.
25		(11) Farm machinery and equipment, both new and used,
26		including that manufactured on special order, certified by the
27		purchaser to be used primarily for production agriculture or
28		State or federal agricultural programs, including individual
29		replacement parts for the machinery and equipment, including
30		machinery and equipment purchased for lease, and including
31		implements of husbandry defined in Section 1-130 of the
32		Illinois Vehicle Code, farm machinery and agricultural
33		chemical and fertilizer spreaders, and nurse wagons required to
34		be registered under Section 3-809 of the Illinois Vehicle Code,

1		but excluding other motor vehicles required to be registered
2		under the Illinois Vehicle Code. Horticultural polyhouses or
3		hoop houses used for propagating, growing, or overwintering
4		plants shall be considered farm machinery and equipment under
5		this item (11). Agricultural chemical tender tanks and dry
6		boxes shall include units sold separately from a motor vehicle
7		required to be licensed and units sold mounted on a motor
8		vehicle required to be licensed if the selling price of the
9		tender is separately stated.
10		Farm machinery and equipment shall include precision
11		farming equipment that is installed or purchased to be
12		installed on farm machinery and equipment including, but not
13		limited to, tractors, harvesters, sprayers, planters, seeders,
14		or spreaders. Precision farming equipment includes, but is not
15		limited to, soil testing sensors, computers, monitors,
16		software, global positioning and mapping systems, and other
17		such equipment.
18		Farm machinery and equipment also includes computers,
19		sensors, software, and related equipment used primarily in the
20		computer-assisted operation of production agriculture
21		facilities, equipment, and activities such as, but not limited
22		to, the collection, monitoring, and correlation of animal and
23		crop data for the purpose of formulating animal diets and
24		agricultural chemicals. This item (11) is exempt from the
25		provisions of Section 3-90.
26		(12) Fuel and petroleum products sold to or used by an air
27		common carrier, certified by the carrier to be used for
28		consumption, shipment, or storage in the conduct of its
29		business as an air common carrier, for a flight destined for or
30		returning from a location or locations outside the United
31		States without regard to previous or subsequent domestic
32		stopovers.
33		(13) Proceeds of mandatory service charges separately
34		stated on customers' bills for the purchase and consumption of

1		food and beverages purchased at retail from a retailer, to the
2		extent that the proceeds of the service charge are in fact
3		turned over as tips or as a substitute for tips to the
4		employees who participate directly in preparing, serving,
5		hosting or cleaning up the food or beverage function with
6		respect to which the service charge is imposed.
7		(14) Until July 1, 2003, oil field exploration, drilling,
8		and production equipment, including (i) rigs and parts of rigs,
9		rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
10		tubular goods, including casing and drill strings, (iii) pumps
11		and pump-jack units, (iv) storage tanks and flow lines, (v) any
12		individual replacement part for oil field exploration,
13		drilling, and production equipment, and (vi) machinery and
14		equipment purchased for lease; but excluding motor vehicles
15		required to be registered under the Illinois Vehicle Code.
16		(15) Photoprocessing machinery and equipment, including
17		repair and replacement parts, both new and used, including that
18		manufactured on special order, certified by the purchaser to be
19		used primarily for photoprocessing, and including
20		photoprocessing machinery and equipment purchased for lease.
21		(16) Until July 1, 2003, coal exploration, mining,
22		offhighway hauling, processing, maintenance, and reclamation
23		equipment, including replacement parts and equipment, and
24		including equipment purchased for lease, but excluding motor
25		vehicles required to be registered under the Illinois Vehicle
26		Code.
27		(17) Until July 1, 2003, distillation machinery and
28		equipment, sold as a unit or kit, assembled or installed by the
29		retailer, certified by the user to be used only for the
30		production of ethyl alcohol that will be used for consumption
31		as motor fuel or as a component of motor fuel for the personal
32		use of the user, and not subject to sale or resale.
33		(18) Manufacturing and assembling machinery and equipment
34		used primarily in the process of manufacturing or assembling

1		tangible personal property for wholesale or retail sale or
2		lease, whether that sale or lease is made directly by the
3		manufacturer or by some other person, whether the materials
4		used in the process are owned by the manufacturer or some other
5		person, or whether that sale or lease is made apart from or as
6		an incident to the seller's engaging in the service occupation
7		of producing machines, tools, dies, jigs, patterns, gauges, or
8		other similar items of no commercial value on special order for
9		a particular purchaser.
10		(19) Personal property delivered to a purchaser or
11		purchaser's donee inside Illinois when the purchase order for
12		that personal property was received by a florist located
13		outside Illinois who has a florist located inside Illinois
14		deliver the personal property.
15		(20) Semen used for artificial insemination of livestock
16		for direct agricultural production.
17		(21) Horses, or interests in horses, registered with and
18		meeting the requirements of any of the Arabian Horse Club
19		Registry of America, Appaloosa Horse Club, American Quarter
20		Horse Association, United States Trotting Association, or
21		Jockey Club, as appropriate, used for purposes of breeding or
22		racing for prizes.
23		(22) Computers and communications equipment utilized for
24		any hospital purpose and equipment used in the diagnosis,
25		analysis, or treatment of hospital patients purchased by a
26		lessor who leases the equipment, under a lease of one year or
27		longer executed or in effect at the time the lessor would
28		otherwise be subject to the tax imposed by this Act, to a
29		hospital that has been issued an active tax exemption
30		identification number by the Department under Section 1g of the
31		Retailers' Occupation Tax Act. If the equipment is leased in a
32		manner that does not qualify for this exemption or is used in
33		any other non-exempt manner, the lessor shall be liable for the
34		tax imposed under this Act or the Service Use Tax Act, as the

1		case may be, based on the fair market value of the property at
2		the time the non-qualifying use occurs. No lessor shall collect
3		or attempt to collect an amount (however designated) that
4		purports to reimburse that lessor for the tax imposed by this
5		Act or the Service Use Tax Act, as the case may be, if the tax
6		has not been paid by the lessor. If a lessor improperly
7		collects any such amount from the lessee, the lessee shall have
8		a legal right to claim a refund of that amount from the lessor.
9		If, however, that amount is not refunded to the lessee for any
10		reason, the lessor is liable to pay that amount to the
11		Department.
12		(23) Personal property purchased by a lessor who leases the
13		property, under a lease of one year or longer executed or in
14		effect at the time the lessor would otherwise be subject to the
15		tax imposed by this Act, to a governmental body that has been
16		issued an active sales tax exemption identification number by
17		the Department under Section 1g of the Retailers' Occupation
18		Tax Act. If the property is leased in a manner that does not
19		qualify for this exemption or used in any other non-exempt
20		manner, the lessor shall be liable for the tax imposed under
21		this Act or the Service Use Tax Act, as the case may be, based
22		on the fair market value of the property at the time the
23		non-qualifying use occurs. No lessor shall collect or attempt
24		to collect an amount (however designated) that purports to
25		reimburse that lessor for the tax imposed by this Act or the
26		Service Use Tax Act, as the case may be, if the tax has not been
27		paid by the lessor. If a lessor improperly collects any such
28		amount from the lessee, the lessee shall have a legal right to
29		claim a refund of that amount from the lessor. If, however,
30		that amount is not refunded to the lessee for any reason, the
31		lessor is liable to pay that amount to the Department.
32		(24) Beginning with taxable years ending on or after
33		December 31, 1995 and ending with taxable years ending on or
34		before December 31, 2004, personal property that is donated for

1		disaster relief to be used in a State or federally declared
2		disaster area in Illinois or bordering Illinois by a
3		manufacturer or retailer that is registered in this State to a
4		corporation, society, association, foundation, or institution
5		that has been issued a sales tax exemption identification
6		number by the Department that assists victims of the disaster
7		who reside within the declared disaster area.
8		(25) Beginning with taxable years ending on or after
9		December 31, 1995 and ending with taxable years ending on or
10		before December 31, 2004, personal property that is used in the
11		performance of infrastructure repairs in this State, including
12		but not limited to municipal roads and streets, access roads,
13		bridges, sidewalks, waste disposal systems, water and sewer
14		line extensions, water distribution and purification
15		facilities, storm water drainage and retention facilities, and
16		sewage treatment facilities, resulting from a State or
17		federally declared disaster in Illinois or bordering Illinois
18		when such repairs are initiated on facilities located in the
19		declared disaster area within 6 months after the disaster.
20		(26) Beginning July 1, 1999, game or game birds purchased
21		at a "game breeding and hunting preserve area" or an "exotic
22		game hunting area" as those terms are used in the Wildlife Code
23		or at a hunting enclosure approved through rules adopted by the
24		Department of Natural Resources. This paragraph is exempt from
25		the provisions of Section 3-90.
26		(27) A motor vehicle, as that term is defined in Section
27		1-146 of the Illinois Vehicle Code, that is donated to a
28		corporation, limited liability company, society, association,
29		foundation, or institution that is determined by the Department
30		to be organized and operated exclusively for educational
31		purposes. For purposes of this exemption, "a corporation,
32		limited liability company, society, association, foundation,
33		or institution organized and operated exclusively for
34		educational purposes" means all tax-supported public schools,

1		private schools that offer systematic instruction in useful
2		branches of learning by methods common to public schools and
3		that compare favorably in their scope and intensity with the
4		course of study presented in tax-supported schools, and
5		vocational or technical schools or institutes organized and
6		operated exclusively to provide a course of study of not less
7		than 6 weeks duration and designed to prepare individuals to
8		follow a trade or to pursue a manual, technical, mechanical,
9		industrial, business, or commercial occupation.
10		(28) Beginning January 1, 2000, personal property,
11		including food, purchased through fundraising events for the
12		benefit of a public or private elementary or secondary school,
13		a group of those schools, or one or more school districts if
14		the events are sponsored by an entity recognized by the school
15		district that consists primarily of volunteers and includes
16		parents and teachers of the school children. This paragraph
17		does not apply to fundraising events (i) for the benefit of
18		private home instruction or (ii) for which the fundraising
19		entity purchases the personal property sold at the events from
20		another individual or entity that sold the property for the
21		purpose of resale by the fundraising entity and that profits
22		from the sale to the fundraising entity. This paragraph is
23		exempt from the provisions of Section 3-90.
24		(29) Beginning January 1, 2000 and through December 31,
25		2001, new or used automatic vending machines that prepare and
26		serve hot food and beverages, including coffee, soup, and other
27		items, and replacement parts for these machines. Beginning
28		January 1, 2002 and through June 30, 2003, machines and parts
29		for machines used in commercial, coin-operated amusement and
30		vending business if a use or occupation tax is paid on the
31		gross receipts derived from the use of the commercial,
32		coin-operated amusement and vending machines. This paragraph
33		is exempt from the provisions of Section 3-90.
34		(30) Food for human consumption that is to be consumed off

1		the premises where it is sold (other than alcoholic beverages,
2		soft drinks, and food that has been prepared for immediate
3		consumption) and prescription and nonprescription medicines,
4		drugs, medical appliances, and insulin, urine testing
5		materials, syringes, and needles used by diabetics, for human
6		use, when purchased for use by a person receiving medical
7		assistance under Article 5 of the Illinois Public Aid Code who
8		resides in a licensed long-term care facility, as defined in
9		the Nursing Home Care Act.
10		(31) Beginning on the effective date of this amendatory Act
11		of the 92nd General Assembly, computers and communications
12		equipment utilized for any hospital purpose and equipment used
13		in the diagnosis, analysis, or treatment of hospital patients
14		purchased by a lessor who leases the equipment, under a lease
15		of one year or longer executed or in effect at the time the
16		lessor would otherwise be subject to the tax imposed by this
17		Act, to a hospital that has been issued an active tax exemption
18		identification number by the Department under Section 1g of the
19		Retailers' Occupation Tax Act. If the equipment is leased in a
20		manner that does not qualify for this exemption or is used in
21		any other nonexempt manner, the lessor shall be liable for the
22		tax imposed under this Act or the Service Use Tax Act, as the
23		case may be, based on the fair market value of the property at
24		the time the nonqualifying use occurs. No lessor shall collect
25		or attempt to collect an amount (however designated) that
26		purports to reimburse that lessor for the tax imposed by this
27		Act or the Service Use Tax Act, as the case may be, if the tax
28		has not been paid by the lessor. If a lessor improperly
29		collects any such amount from the lessee, the lessee shall have
30		a legal right to claim a refund of that amount from the lessor.
31		If, however, that amount is not refunded to the lessee for any
32		reason, the lessor is liable to pay that amount to the
33		Department. This paragraph is exempt from the provisions of
34		Section 3-90.

1		(32) Beginning on the effective date of this amendatory Act
2		of the 92nd General Assembly, personal property purchased by a
3		lessor who leases the property, under a lease of one year or
4		longer executed or in effect at the time the lessor would
5		otherwise be subject to the tax imposed by this Act, to a
6		governmental body that has been issued an active sales tax
7		exemption identification number by the Department under
8		Section 1g of the Retailers' Occupation Tax Act. If the
9		property is leased in a manner that does not qualify for this
10		exemption or used in any other nonexempt manner, the lessor
11		shall be liable for the tax imposed under this Act or the
12		Service Use Tax Act, as the case may be, based on the fair
13		market value of the property at the time the nonqualifying use
14		occurs. No lessor shall collect or attempt to collect an amount
15		(however designated) that purports to reimburse that lessor for
16		the tax imposed by this Act or the Service Use Tax Act, as the
17		case may be, if the tax has not been paid by the lessor. If a
18		lessor improperly collects any such amount from the lessee, the
19		lessee shall have a legal right to claim a refund of that
20		amount from the lessor. If, however, that amount is not
21		refunded to the lessee for any reason, the lessor is liable to
22		pay that amount to the Department. This paragraph is exempt
23		from the provisions of Section 3-90.
24		(33) On and after July 1, 2003 and through June 30, 2004,
25		the use in this State of motor vehicles of the second division
26		with a gross vehicle weight in excess of 8,000 pounds and that
27		are subject to the commercial distribution fee imposed under
28		Section 3-815.1 of the Illinois Vehicle Code. Beginning on July
29		1, 2004 and through June 30, 2005, the use in this State of
30		motor vehicles of the second division: (i) with a gross vehicle
31		weight rating in excess of 8,000 pounds; (ii) that are subject
32		to the commercial distribution fee imposed under Section
33		3-815.1 of the Illinois Vehicle Code; and (iii) that are
34		primarily used for commercial purposes. Through June 30, 2005,

1		this This exemption applies to repair and replacement parts
2		added after the initial purchase of such a motor vehicle if
3		that motor vehicle is used in a manner that would qualify for
4		the rolling stock exemption otherwise provided for in this Act.
5		For purposes of this paragraph, the term "used for commercial
6		purposes" means the transportation of persons or property in
7		furtherance of any commercial or industrial enterprise,
8		whether for-hire or not.
9		(Source: P.A. 92-35, eff. 7-1-01; 92-227, eff. 8-2-01; 92-337,
10		eff. 8-10-01; 92-484, eff. 8-23-01; 92-651, eff. 7-11-02;
11		93-23, eff. 6-20-03; 93-24, eff. 6-20-03; revised 9-11-03.)
12		(35 ILCS 105/3-61)
13		Sec. 3-61. Motor vehicles;trailers; use as rolling stock
14		definition.
15		(a) Through June 30, 2003, "use as rolling stock moving in
16		interstate commerce" in subsections (b) and (c) of Section 3-55
17		means for motor vehicles, as defined in Section 1-146 of the
18		Illinois Vehicle Code, and trailers, as defined in Section
19		1-209 of the Illinois Vehicle Code, when on 15 or more
20		occasions in a 12-month period the motor vehicle and trailer
21		has carried persons or property for hire in interstate
22		commerce, even just between points in Illinois, if the motor
23		vehicle and trailer transports persons whose journeys or
24		property whose shipments originate or terminate outside
25		Illinois. This definition applies to all property purchased for
26		the purpose of being attached to those motor vehicles or
27		trailers as a part thereof.
28		(b) On and after July 1, 2003 and through June 30, 2004,
29		"use as rolling stock moving in interstate commerce" in
30		paragraphs (b) and (c) of Section 3-55 occurs for motor
31		vehicles, as defined in Section 1-146 of the Illinois Vehicle
32		Code, when during a 12-month period the rolling stock has
33		carried persons or property for hire in interstate commerce for

1		51% of its total trips and transports persons whose journeys or
2		property whose shipments originate or terminate outside
3		Illinois. Trips that are only between points in Illinois shall
4		not be counted as interstate trips when calculating whether the
5		tangible personal property qualifies for the exemption but such
6		trips shall be included in total trips taken.
7		(c) Beginning July 1, 2004, "use as rolling stock moving in
8		interstate commerce" in paragraphs (b) and (c) of Section 3-55
9		occurs for motor vehicles, as defined in Section 1-146 of the
10		Illinois Vehicle Code, when during a 12-month period the
11		rolling stock has carried persons or property for hire in
12		interstate commerce for greater than 50% of its total trips for
13		that period or for greater than 50% of its total miles for that
14		period. The person claiming the exemption shall make an
15		election at the time of purchase to use either the trips or
16		mileage method. Persons who purchased motor vehicles prior to
17		July 1, 2004 shall make an election to use either the trips or
18		mileage method and document that election in their books and
19		records. If no election is made under this subsection to use
20		the trips or mileage method, the person shall be deemed to have
21		chosen the mileage method. Any election to use either the trips
22		or mileage method will remain in effect for that motor vehicle
23		for any period for which the Department may issue a notice of
24		tax liability under this Act.
25		For purposes of determining qualifying trips or miles,
26		motor vehicles that carry persons or property for hire, even
27		just between points in Illinois, will be considered used for
28		hire in interstate commerce if the motor vehicle transports
29		persons whose journeys or property whose shipments originate or
30		terminate outside Illinois. The exemption for motor vehicles
31		used as rolling stock moving in interstate commerce may be
32		claimed only for motor vehicles whose gross vehicle weight
33		rating exceeds 16,000 pounds. This definition applies to all
34		property purchased for the purpose of being attached to those

1		motor vehicles as a part thereof.
2		(d) Beginning July 1, 2004, "use as rolling stock moving in
3		interstate commerce" in paragraphs (b) and (c) of Section 3-55
4		occurs for trailers, as defined in Section 1-209 of the
5		Illinois Vehicle Code, semitrailers as defined in Section 1-187
6		of the Illinois Vehicle Code, and pole trailers as defined in
7		Section 1-161 of the Illinois Vehicle Code, when during a
8		12-month period the rolling stock has carried persons or
9		property for hire in interstate commerce for greater than 50%
10		of its total trips for that period or for greater than 50% of
11		its total miles for that period. The person claiming the
12		exemption for a trailer or trailers that will not be dedicated
13		to a motor vehicle or group of motor vehicles shall make an
14		election at the time of purchase to use either the trips or
15		mileage method. Persons who purchased trailers prior to July 1,
16		2004 that are not dedicated to a motor vehicle or group of
17		motor vehicles shall make an election to use either the trips
18		or mileage method and document that election in their books and
19		records. If no election is made under this subsection to use
20		the trips or mileage method, the person shall be deemed to have
21		chosen the mileage method. Any election to use either the trips
22		or mileage method will remain in effect for that trailer for
23		any period for which the Department may issue a notice of tax
24		liability under this Act.
25		For purposes of determining qualifying trips or miles,
26		trailers, semitrailers, or pole trailers that carry property
27		for hire, even just between points in Illinois, will be
28		considered used for hire in interstate commerce if the
29		trailers, semitrailers, or pole trailers transport property
30		whose shipments originate or terminate outside Illinois. This
31		definition applies to all property purchased for the purpose of
32		being attached to those trailers, semitrailers, or pole
33		trailers as a part thereof. In lieu of a person providing
34		documentation regarding the qualifying use of each individual

1		trailer, semitrailer, or pole trailer, that person may document
2		such qualifying use by providing documentation of the
3		following:
4		(1) If a trailer, semitrailer, or pole trailer is
5		dedicated to a motor vehicle that qualifies as rolling
6		stock moving in interstate commerce under subsection (c) of
7		this Section, then that trailer, semitrailer, or pole
8		trailer qualifies as rolling stock moving in interstate
9		commerce under this subsection.
10		(2) If a trailer, semitrailer, or pole trailer is
11		dedicated to a group of motor vehicles that all qualify as
12		rolling stock moving in interstate commerce under
13		subsection (c) of this Section, then that trailer,
14		semitrailer, or pole trailer qualifies as rolling stock
15		moving in interstate commerce under this subsection.
16		(3) If one or more trailers, semitrailers, or pole
17		trailers are dedicated to a group of motor vehicles and not
18		all of those motor vehicles in that group qualify as
19		rolling stock moving in interstate commerce under
20		subsection (c) of this Section, then the percentage of
21		those trailers, semitrailers, or pole trailers that
22		qualifies as rolling stock moving in interstate commerce
23		under this subsection is equal to the percentage of those
24		motor vehicles in that group that qualify as rolling stock
25		moving in interstate commerce under subsection (c) of this
26		Section to which those trailer, semitrailers, or pole
27		trailers are dedicated. However, to determine the
28		qualification for the exemption provided under this item
29		(3), the mathematical application of the qualifying
30		percentage to one or more trailers, semitrailers, or pole
31		trailers under this subpart shall not be allowed as to any
32		fraction of a trailer, semitrailer, or pole trailer.
33		(Source: P.A. 93-23, eff. 6-20-03.)

1		Section 15. The Service Use Tax Act is amended by changing
2		Sections 2 and 3-51 as follows:
3		(35 ILCS 110/2) (from Ch. 120, par. 439.32)
4		Sec. 2. "Use" means the exercise by any person of any right
5		or power over tangible personal property incident to the
6		ownership of that property, but does not include the sale or
7		use for demonstration by him of that property in any form as
8		tangible personal property in the regular course of business.
9		"Use" does not mean the interim use of tangible personal
10		property nor the physical incorporation of tangible personal
11		property, as an ingredient or constituent, into other tangible
12		personal property, (a) which is sold in the regular course of
13		business or (b) which the person incorporating such ingredient
14		or constituent therein has undertaken at the time of such
15		purchase to cause to be transported in interstate commerce to
16		destinations outside the State of Illinois.
17		"Purchased from a serviceman" means the acquisition of the
18		ownership of, or title to, tangible personal property through a
19		sale of service.
20		"Purchaser" means any person who, through a sale of
21		service, acquires the ownership of, or title to, any tangible
22		personal property.
23		"Cost price" means the consideration paid by the serviceman
24		for a purchase valued in money, whether paid in money or
25		otherwise, including cash, credits and services, and shall be
26		determined without any deduction on account of the supplier's
27		cost of the property sold or on account of any other expense
28		incurred by the supplier. When a serviceman contracts out part
29		or all of the services required in his sale of service, it
30		shall be presumed that the cost price to the serviceman of the
31		property transferred to him or her by his or her subcontractor
32		is equal to 50% of the subcontractor's charges to the
33		serviceman in the absence of proof of the consideration paid by

1		the subcontractor for the purchase of such property.
2		"Selling price" means the consideration for a sale valued
3		in money whether received in money or otherwise, including
4		cash, credits and service, and shall be determined without any
5		deduction on account of the serviceman's cost of the property
6		sold, the cost of materials used, labor or service cost or any
7		other expense whatsoever, but does not include interest or
8		finance charges which appear as separate items on the bill of
9		sale or sales contract nor charges that are added to prices by
10		sellers on account of the seller's duty to collect, from the
11		purchaser, the tax that is imposed by this Act.
12		"Department" means the Department of Revenue.
13		"Person" means any natural individual, firm, partnership,
14		association, joint stock company, joint venture, public or
15		private corporation, limited liability company, and any
16		receiver, executor, trustee, guardian or other representative
17		appointed by order of any court.
18		"Sale of service" means any transaction except:
19		(1) a retail sale of tangible personal property taxable
20		under the Retailers' Occupation Tax Act or under the Use
21		Tax Act.
22		(2) a sale of tangible personal property for the
23		purpose of resale made in compliance with Section 2c of the
24		Retailers' Occupation Tax Act.
25		(3) except as hereinafter provided, a sale or transfer
26		of tangible personal property as an incident to the
27		rendering of service for or by any governmental body, or
28		for or by any corporation, society, association,
29		foundation or institution organized and operated
30		exclusively for charitable, religious or educational
31		purposes or any not-for-profit corporation, society,
32		association, foundation, institution or organization which
33		has no compensated officers or employees and which is
34		organized and operated primarily for the recreation of

1		persons 55 years of age or older. A limited liability
2		company may qualify for the exemption under this paragraph
3		only if the limited liability company is organized and
4		operated exclusively for educational purposes.
5		(4) a sale or transfer of tangible personal property as
6		an incident to the rendering of service for interstate
7		carriers for hire for use as rolling stock moving in
8		interstate commerce or by lessors under a lease of one year
9		or longer, executed or in effect at the time of purchase of
10		personal property, to interstate carriers for hire for use
11		as rolling stock moving in interstate commerce so long as
12		so used by such interstate carriers for hire, and equipment
13		operated by a telecommunications provider, licensed as a
14		common carrier by the Federal Communications Commission,
15		which is permanently installed in or affixed to aircraft
16		moving in interstate commerce.
17		(4a) a sale or transfer of tangible personal property
18		as an incident to the rendering of service for owners,
19		lessors, or shippers of tangible personal property which is
20		utilized by interstate carriers for hire for use as rolling
21		stock moving in interstate commerce so long as so used by
22		interstate carriers for hire, and equipment operated by a
23		telecommunications provider, licensed as a common carrier
24		by the Federal Communications Commission, which is
25		permanently installed in or affixed to aircraft moving in
26		interstate commerce.
27		(4a-5) on and after July 1, 2003 and through June 30,
28		2004, a sale or transfer of a motor vehicle of the second
29		division with a gross vehicle weight in excess of 8,000
30		pounds as an incident to the rendering of service if that
31		motor vehicle is subject to the commercial distribution fee
32		imposed under Section 3-815.1 of the Illinois Vehicle Code.
33		Beginning on July 1, 2004 and through June 30, 2005, the
34		use in this State of motor vehicles of the second division:

1		(i) with a gross vehicle weight rating in excess of 8,000
2		pounds; (ii) that are subject to the commercial
3		distribution fee imposed under Section 3-815.1 of the
4		Illinois Vehicle Code; and (iii) that are primarily used
5		for commercial purposes. Through June 30, 2005, this This
6		exemption applies to repair and replacement parts added
7		after the initial purchase of such a motor vehicle if that
8		motor vehicle is used in a manner that would qualify for
9		the rolling stock exemption otherwise provided for in this
10		Act. For purposes of this paragraph, "used for commercial
11		purposes" means the transportation of persons or property
12		in furtherance of any commercial or industrial enterprise
13		whether for-hire or not.
14		(5) a sale or transfer of machinery and equipment used
15		primarily in the process of the manufacturing or
16		assembling, either in an existing, an expanded or a new
17		manufacturing facility, of tangible personal property for
18		wholesale or retail sale or lease, whether such sale or
19		lease is made directly by the manufacturer or by some other
20		person, whether the materials used in the process are owned
21		by the manufacturer or some other person, or whether such
22		sale or lease is made apart from or as an incident to the
23		seller's engaging in a service occupation and the
24		applicable tax is a Service Use Tax or Service Occupation
25		Tax, rather than Use Tax or Retailers' Occupation Tax.
26		(5a) the repairing, reconditioning or remodeling, for
27		a common carrier by rail, of tangible personal property
28		which belongs to such carrier for hire, and as to which
29		such carrier receives the physical possession of the
30		repaired, reconditioned or remodeled item of tangible
31		personal property in Illinois, and which such carrier
32		transports, or shares with another common carrier in the
33		transportation of such property, out of Illinois on a
34		standard uniform bill of lading showing the person who

1		repaired, reconditioned or remodeled the property to a
2		destination outside Illinois, for use outside Illinois.
3		(5b) a sale or transfer of tangible personal property
4		which is produced by the seller thereof on special order in
5		such a way as to have made the applicable tax the Service
6		Occupation Tax or the Service Use Tax, rather than the
7		Retailers' Occupation Tax or the Use Tax, for an interstate
8		carrier by rail which receives the physical possession of
9		such property in Illinois, and which transports such
10		property, or shares with another common carrier in the
11		transportation of such property, out of Illinois on a
12		standard uniform bill of lading showing the seller of the
13		property as the shipper or consignor of such property to a
14		destination outside Illinois, for use outside Illinois.
15		(6) until July 1, 2003, a sale or transfer of
16		distillation machinery and equipment, sold as a unit or kit
17		and assembled or installed by the retailer, which machinery
18		and equipment is certified by the user to be used only for
19		the production of ethyl alcohol that will be used for
20		consumption as motor fuel or as a component of motor fuel
21		for the personal use of such user and not subject to sale
22		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
27		price of tangible personal property transferred as an
28		incident to the sales of service is less than 35%, or 75%
29		in the case of servicemen transferring prescription drugs
30		or servicemen engaged in graphic arts production, of the
31		aggregate annual total gross receipts from all sales of
32		service. The purchase of such tangible personal property by
33		the serviceman shall be subject to tax under the Retailers'
34		Occupation Tax Act and the Use Tax Act. However, if a

1		primary serviceman who has made the election described in
2		this paragraph subcontracts service work to a secondary
3		serviceman who has also made the election described in this
4		paragraph, the primary serviceman does not incur a Use Tax
5		liability if the secondary serviceman (i) has paid or will
6		pay Use Tax on his or her cost price of any tangible
7		personal property transferred to the primary serviceman
8		and (ii) certifies that fact in writing to the primary
9		serviceman.
10		Tangible personal property transferred incident to the
11		completion of a maintenance agreement is exempt from the tax
12		imposed pursuant to this Act.
13		Exemption (5) also includes machinery and equipment used in
14		the general maintenance or repair of such exempt machinery and
15		equipment or for in-house manufacture of exempt machinery and
16		equipment. For the purposes of exemption (5), each of these
17		terms shall have the following meanings: (1) "manufacturing
18		process" shall mean the production of any article of tangible
19		personal property, whether such article is a finished product
20		or an article for use in the process of manufacturing or
21		assembling a different article of tangible personal property,
22		by procedures commonly regarded as manufacturing, processing,
23		fabricating, or refining which changes some existing material
24		or materials into a material with a different form, use or
25		name. In relation to a recognized integrated business composed
26		of a series of operations which collectively constitute
27		manufacturing, or individually constitute manufacturing
28		operations, the manufacturing process shall be deemed to
29		commence with the first operation or stage of production in the
30		series, and shall not be deemed to end until the completion of
31		the final product in the last operation or stage of production
32		in the series; and further, for purposes of exemption (5),
33		photoprocessing is deemed to be a manufacturing process of
34		tangible personal property for wholesale or retail sale; (2)

1		"assembling process" shall mean the production of any article
2		of tangible personal property, whether such article is a
3		finished product or an article for use in the process of
4		manufacturing or assembling a different article of tangible
5		personal property, by the combination of existing materials in
6		a manner commonly regarded as assembling which results in a
7		material of a different form, use or name; (3) "machinery"
8		shall mean major mechanical machines or major components of
9		such machines contributing to a manufacturing or assembling
10		process; and (4) "equipment" shall include any independent
11		device or tool separate from any machinery but essential to an
12		integrated manufacturing or assembly process; including
13		computers used primarily in a manufacturer's computer assisted
14		design, computer assisted manufacturing (CAD/CAM) system; or
15		any subunit or assembly comprising a component of any machinery
16		or auxiliary, adjunct or attachment parts of machinery, such as
17		tools, dies, jigs, fixtures, patterns and molds; or any parts
18		which require periodic replacement in the course of normal
19		operation; but shall not include hand tools. Equipment includes
20		chemicals or chemicals acting as catalysts but only if the
21		chemicals or chemicals acting as catalysts effect a direct and
22		immediate change upon a product being manufactured or assembled
23		for wholesale or retail sale or lease. The purchaser of such
24		machinery and equipment who has an active resale registration
25		number shall furnish such number to the seller at the time of
26		purchase. The user of such machinery and equipment and tools
27		without an active resale registration number shall prepare a
28		certificate of exemption for each transaction stating facts
29		establishing the exemption for that transaction, which
30		certificate shall be available to the Department for inspection
31		or audit. The Department shall prescribe the form of the
32		certificate.
33		Any informal rulings, opinions or letters issued by the
34		Department in response to an inquiry or request for any opinion

1		from any person regarding the coverage and applicability of
2		exemption (5) to specific devices shall be published,
3		maintained as a public record, and made available for public
4		inspection and copying. If the informal ruling, opinion or
5		letter contains trade secrets or other confidential
6		information, where possible the Department shall delete such
7		information prior to publication. Whenever such informal
8		rulings, opinions, or letters contain any policy of general
9		applicability, the Department shall formulate and adopt such
10		policy as a rule in accordance with the provisions of the
11		Illinois Administrative Procedure Act.
12		On and after July 1, 1987, no entity otherwise eligible
13		under exemption (3) of this Section shall make tax free
14		purchases unless it has an active exemption identification
15		number issued by the Department.
16		The purchase, employment and transfer of such tangible
17		personal property as newsprint and ink for the primary purpose
18		of conveying news (with or without other information) is not a
19		purchase, use or sale of service or of tangible personal
20		property within the meaning of this Act.
21		"Serviceman" means any person who is engaged in the
22		occupation of making sales of service.
23		"Sale at retail" means "sale at retail" as defined in the
24		Retailers' Occupation Tax Act.
25		"Supplier" means any person who makes sales of tangible
26		personal property to servicemen for the purpose of resale as an
27		incident to a sale of service.
28		"Serviceman maintaining a place of business in this State",
29		or any like term, means and includes any serviceman:
30		1. having or maintaining within this State, directly or
31		by a subsidiary, an office, distribution house, sales
32		house, warehouse or other place of business, or any agent
33		or other representative operating within this State under
34		the authority of the serviceman or its subsidiary,

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

1		engaging in such activities is located would constitute
2		maintaining a place of business in that state.
3		(Source: P.A. 92-484, eff. 8-23-01; 93-23, eff. 6-20-03; 93-24,
4		eff. 6-20-03; revised 8-21-03.)
5		(35 ILCS 110/3-51)
6		Sec. 3-51. Motor vehicles; trailers; use as rolling stock
7		definition.
8		(a) Through June 30, 2003, "use as rolling stock moving in
9		interstate commerce" in subsection (b) of Section 3-45 means
10		for motor vehicles, as defined in Section 1-46 of the Illinois
11		Vehicle Code, and trailers, as defined in Section 1-209 of the
12		Illinois Vehicle Code, when on 15 or more occasions in a
13		12-month period the motor vehicle and trailer has carried
14		persons or property for hire in interstate commerce, even just
15		between points in Illinois, if the motor vehicle and trailer
16		transports persons whose journeys or property whose shipments
17		originate or terminate outside Illinois. This definition
18		applies to all property purchased for the purpose of being
19		attached to those motor vehicles or trailers as a part thereof.
20		(b) On and after July 1, 2003 and through July 1, 2004,
21		"use as rolling stock moving in interstate commerce" in
22		paragraphs (4) and (4a) of the definition of "sale of service"
23		in Section 2 and subsection (b) of Section 3-45 occurs for
24		motor vehicles, as defined in Section 1-146 of the Illinois
25		Vehicle Code, when during a 12-month period the rolling stock
26		has carried persons or property for hire in interstate commerce
27		for 51% of its total trips and transports persons whose
28		journeys or property whose shipments originate or terminate
29		outside Illinois. Trips that are only between points in
30		Illinois shall not be counted as interstate trips when
31		calculating whether the tangible personal property qualifies
32		for the exemption but such trips shall be included in total
33		trips taken.

1		(c) Beginning July 1, 2004, "use as rolling stock moving in
2		interstate commerce" in paragraphs (b) and (c) of Section 3-55
3		occurs for motor vehicles, as defined in Section 1-146 of the
4		Illinois Vehicle Code, when during a 12-month period the
5		rolling stock has carried persons or property for hire in
6		interstate commerce for greater than 50% of its total trips for
7		that period or for greater than 50% of its total miles for that
8		period. The person claiming the exemption shall make an
9		election at the time of purchase to use either the trips or
10		mileage method. Persons who purchased motor vehicles prior to
11		July 1, 2004 shall make an election to use either the trips or
12		mileage method and document that election in their books and
13		records. If no election is made under this subsection to use
14		the trips or mileage method, the person shall be deemed to have
15		chosen the mileage method. Any election to use either the trips
16		or mileage method will remain in effect for that motor vehicle
17		for any period for which the Department may issue a notice of
18		tax liability under this Act.
19		For purposes of determining qualifying trips or miles,
20		motor vehicles that carry persons or property for hire, even
21		just between points in Illinois, will be considered used for
22		hire in interstate commerce if the motor vehicle transports
23		persons whose journeys or property whose shipments originate or
24		terminate outside Illinois. The exemption for motor vehicles
25		used as rolling stock moving in interstate commerce may be
26		claimed only for motor vehicles whose gross vehicle weight
27		rating exceeds 16,000 pounds. This definition applies to all
28		property purchased for the purpose of being attached to those
29		motor vehicles as a part thereof.
30		(d) Beginning July 1, 2004, "use as rolling stock moving in
31		interstate commerce" in paragraphs (b) and (c) of Section 3-55
32		occurs for trailers, as defined in Section 1-209 of the
33		Illinois Vehicle Code, semitrailers as defined in Section 1-187
34		of the Illinois Vehicle Code, and pole trailers as defined in

1		Section 1-161 of the Illinois Vehicle Code, when during a
2		12-month period the rolling stock has carried persons or
3		property for hire in interstate commerce for greater than 50%
4		of its total trips for that period or for greater than 50% of
5		its total miles for that period. The person claiming the
6		exemption for a trailer or trailers that will not be dedicated
7		to a motor vehicle or group of motor vehicles shall make an
8		election at the time of purchase to use either the trips or
9		mileage method. Persons who purchased trailers prior to July 1,
10		2004 that are not dedicated to a motor vehicle or group of
11		motor vehicles shall make an election to use either the trips
12		or mileage method and document that election in their books and
13		records. If no election is made under this subsection to use
14		the trips or mileage method, the person shall be deemed to have
15		chosen the mileage method. Any election to use either the trips
16		or mileage method will remain in effect for that trailer for
17		any period for which the Department may issue a notice of tax
18		liability under this Act.
19		For purposes of determining qualifying trips or miles,
20		trailers, semitrailers, or pole trailers that carry property
21		for hire, even just between points in Illinois, will be
22		considered used for hire in interstate commerce if the
23		trailers, semitrailers, or pole trailers transport property
24		whose shipments originate or terminate outside Illinois. This
25		definition applies to all property purchased for the purpose of
26		being attached to those trailers, semitrailers, or pole
27		trailers as a part thereof. In lieu of a person providing
28		documentation regarding the qualifying use of each individual
29		trailer, semitrailer, or pole trailer, that person may document
30		such qualifying use by providing documentation of the
31		following:
32		(1) If a trailer, semitrailer, or pole trailer is
33		dedicated to a motor vehicle that qualifies as rolling
34		stock moving in interstate commerce under subsection (c) of

1		this Section, then that trailer, semitrailer, or pole
2		trailer qualifies as rolling stock moving in interstate
3		commerce under this subsection.
4		(2) If a trailer, semitrailer, or pole trailer is
5		dedicated to a group of motor vehicles that all qualify as
6		rolling stock moving in interstate commerce under
7		subsection (c) of this Section, then that trailer,
8		semitrailer, or pole trailer qualifies as rolling stock
9		moving in interstate commerce under this subsection.
10		(3) If one or more trailers, semitrailers, or pole
11		trailers are dedicated to a group of motor vehicles and not
12		all of those motor vehicles in that group qualify as
13		rolling stock moving in interstate commerce under
14		subsection (c) of this Section, then the percentage of
15		those trailers, semitrailers, or pole trailers that
16		qualifies as rolling stock moving in interstate commerce
17		under this subsection is equal to the percentage of those
18		motor vehicles in that group that qualify as rolling stock
19		moving in interstate commerce under subsection (c) of this
20		Section to which those trailer, semitrailers, or pole
21		trailers are dedicated. However, to determine the
22		qualification for the exemption provided under this item
23		(3), the mathematical application of the qualifying
24		percentage to one or more trailers, semitrailers, or pole
25		trailers under this subpart shall not be allowed as to any
26		fraction of a trailer, semitrailer, or pole trailer.
27		(Source: P.A. 93-23, eff. 6-20-03.)

28		Section 20. The Service Occupation Tax Act is amended by
29		changing Sections 2 and 2d as follows:
30		(35 ILCS 115/2) (from Ch. 120, par. 439.102)
31		Sec. 2. "Transfer" means any transfer of the title to
32		property or of the ownership of property whether or not the

1		transferor retains title as security for the payment of amounts
2		due him from the transferee.
3		"Cost Price" means the consideration paid by the serviceman
4		for a purchase valued in money, whether paid in money or
5		otherwise, including cash, credits and services, and shall be
6		determined without any deduction on account of the supplier's
7		cost of the property sold or on account of any other expense
8		incurred by the supplier. When a serviceman contracts out part
9		or all of the services required in his sale of service, it
10		shall be presumed that the cost price to the serviceman of the
11		property transferred to him by his or her subcontractor is
12		equal to 50% of the subcontractor's charges to the serviceman
13		in the absence of proof of the consideration paid by the
14		subcontractor for the purchase of such property.
15		"Department" means the Department of Revenue.
16		"Person" means any natural individual, firm, partnership,
17		association, joint stock company, joint venture, public or
18		private corporation, limited liability company, and any
19		receiver, executor, trustee, guardian or other representative
20		appointed by order of any court.
21		"Sale of Service" means any transaction except:
22		(a) A retail sale of tangible personal property taxable
23		under the Retailers' Occupation Tax Act or under the Use Tax
24		Act.
25		(b) A sale of tangible personal property for the purpose of
26		resale made in compliance with Section 2c of the Retailers'
27		Occupation Tax Act.
28		(c) Except as hereinafter provided, a sale or transfer of
29		tangible personal property as an incident to the rendering of
30		service for or by any governmental body or for or by any
31		corporation, society, association, foundation or institution
32		organized and operated exclusively for charitable, religious
33		or educational purposes or any not-for-profit corporation,
34		society, association, foundation, institution or organization

1		which has no compensated officers or employees and which is
2		organized and operated primarily for the recreation of persons
3		55 years of age or older. A limited liability company may
4		qualify for the exemption under this paragraph only if the
5		limited liability company is organized and operated
6		exclusively for educational purposes.
7		(d) A sale or transfer of tangible personal property as an
8		incident to the rendering of service for interstate carriers
9		for hire for use as rolling stock moving in interstate commerce
10		or lessors under leases of one year or longer, executed or in
11		effect at the time of purchase, to interstate carriers for hire
12		for use as rolling stock moving in interstate commerce, and
13		equipment operated by a telecommunications provider, licensed
14		as a common carrier by the Federal Communications Commission,
15		which is permanently installed in or affixed to aircraft moving
16		in interstate commerce.
17		(d-1) A sale or transfer of tangible personal property as
18		an incident to the rendering of service for owners, lessors or
19		shippers of tangible personal property which is utilized by
20		interstate carriers for hire for use as rolling stock moving in
21		interstate commerce, and equipment operated by a
22		telecommunications provider, licensed as a common carrier by
23		the Federal Communications Commission, which is permanently
24		installed in or affixed to aircraft moving in interstate
25		commerce.
26		(d-1.1) On and after July 1, 2003 and through June 30,
27		2004, a sale or transfer of a motor vehicle of the second
28		division with a gross vehicle weight in excess of 8,000 pounds
29		as an incident to the rendering of service if that motor
30		vehicle is subject to the commercial distribution fee imposed
31		under Section 3-815.1 of the Illinois Vehicle Code. Beginning
32		on July 1, 2004 and through June 30, 2005, the use in this
33		State of motor vehicles of the second division: (i) with a
34		gross vehicle weight rating in excess of 8,000 pounds; (ii)

1		that are subject to the commercial distribution fee imposed
2		under Section 3-815.1 of the Illinois Vehicle Code; and (iii)
3		that are primarily used for commercial purposes. Through June
4		30, 2005, this This exemption applies to repair and replacement
5		parts added after the initial purchase of such a motor vehicle
6		if that motor vehicle is used in a manner that would qualify
7		for the rolling stock exemption otherwise provided for in this
8		Act. For purposes of this paragraph, "used for commercial
9		purposes" means the transportation of persons or property in
10		furtherance of any commercial or industrial enterprise whether
11		for-hire or not.
12		(d-2) The repairing, reconditioning or remodeling, for a
13		common carrier by rail, of tangible personal property which
14		belongs to such carrier for hire, and as to which such carrier
15		receives the physical possession of the repaired,
16		reconditioned or remodeled item of tangible personal property
17		in Illinois, and which such carrier transports, or shares with
18		another common carrier in the transportation of such property,
19		out of Illinois on a standard uniform bill of lading showing
20		the person who repaired, reconditioned or remodeled the
21		property as the shipper or consignor of such property to a
22		destination outside Illinois, for use outside Illinois.
23		(d-3) A sale or transfer of tangible personal property
24		which is produced by the seller thereof on special order in
25		such a way as to have made the applicable tax the Service
26		Occupation Tax or the Service Use Tax, rather than the
27		Retailers' Occupation Tax or the Use Tax, for an interstate
28		carrier by rail which receives the physical possession of such
29		property in Illinois, and which transports such property, or
30		shares with another common carrier in the transportation of
31		such property, out of Illinois on a standard uniform bill of
32		lading showing the seller of the property as the shipper or
33		consignor of such property to a destination outside Illinois,
34		for use outside Illinois.

1		(d-4) Until January 1, 1997, a sale, by a registered
2		serviceman paying tax under this Act to the Department, of
3		special order printed materials delivered outside Illinois and
4		which are not returned to this State, if delivery is made by
5		the seller or agent of the seller, including an agent who
6		causes the product to be delivered outside Illinois by a common
7		carrier or the U.S. postal service.
8		(e) A sale or transfer of machinery and equipment used
9		primarily in the process of the manufacturing or assembling,
10		either in an existing, an expanded or a new manufacturing
11		facility, of tangible personal property for wholesale or retail
12		sale or lease, whether such sale or lease is made directly by
13		the manufacturer or by some other person, whether the materials
14		used in the process are owned by the manufacturer or some other
15		person, or whether such sale or lease is made apart from or as
16		an incident to the seller's engaging in a service occupation
17		and the applicable tax is a Service Occupation Tax or Service
18		Use Tax, rather than Retailers' Occupation Tax or Use Tax.
19		(f) Until July 1, 2003, the sale or transfer of
20		distillation machinery and equipment, sold as a unit or kit and
21		assembled or installed by the retailer, which machinery and
22		equipment is certified by the user to be used only for the
23		production of ethyl alcohol that will be used for consumption
24		as motor fuel or as a component of motor fuel for the personal
25		use of such user and not subject to sale or resale.
26		(g) At the election of any serviceman not required to be
27		otherwise registered as a retailer under Section 2a of the
28		Retailers' Occupation Tax Act, made for each fiscal year sales
29		of service in which the aggregate annual cost price of tangible
30		personal property transferred as an incident to the sales of
31		service is less than 35% (75% in the case of servicemen
32		transferring prescription drugs or servicemen engaged in
33		graphic arts production) of the aggregate annual total gross
34		receipts from all sales of service. The purchase of such

1		tangible personal property by the serviceman shall be subject
2		to tax under the Retailers' Occupation Tax Act and the Use Tax
3		Act. However, if a primary serviceman who has made the election
4		described in this paragraph subcontracts service work to a
5		secondary serviceman who has also made the election described
6		in this paragraph, the primary serviceman does not incur a Use
7		Tax liability if the secondary serviceman (i) has paid or will
8		pay Use Tax on his or her cost price of any tangible personal
9		property transferred to the primary serviceman and (ii)
10		certifies that fact in writing to the primary serviceman.
11		Tangible personal property transferred incident to the
12		completion of a maintenance agreement is exempt from the tax
13		imposed pursuant to this Act.
14		Exemption (e) also includes machinery and equipment used in
15		the general maintenance or repair of such exempt machinery and
16		equipment or for in-house manufacture of exempt machinery and
17		equipment. For the purposes of exemption (e), each of these
18		terms shall have the following meanings: (1) "manufacturing
19		process" shall mean the production of any article of tangible
20		personal property, whether such article is a finished product
21		or an article for use in the process of manufacturing or
22		assembling a different article of tangible personal property,
23		by procedures commonly regarded as manufacturing, processing,
24		fabricating, or refining which changes some existing material
25		or materials into a material with a different form, use or
26		name. In relation to a recognized integrated business composed
27		of a series of operations which collectively constitute
28		manufacturing, or individually constitute manufacturing
29		operations, the manufacturing process shall be deemed to
30		commence with the first operation or stage of production in the
31		series, and shall not be deemed to end until the completion of
32		the final product in the last operation or stage of production
33		in the series; and further for purposes of exemption (e),
34		photoprocessing is deemed to be a manufacturing process of

1		tangible personal property for wholesale or retail sale; (2)
2		"assembling process" shall mean the production of any article
3		of tangible personal property, whether such article is a
4		finished product or an article for use in the process of
5		manufacturing or assembling a different article of tangible
6		personal property, by the combination of existing materials in
7		a manner commonly regarded as assembling which results in a
8		material of a different form, use or name; (3) "machinery"
9		shall mean major mechanical machines or major components of
10		such machines contributing to a manufacturing or assembling
11		process; and (4) "equipment" shall include any independent
12		device or tool separate from any machinery but essential to an
13		integrated manufacturing or assembly process; including
14		computers used primarily in a manufacturer's computer assisted
15		design, computer assisted manufacturing (CAD/CAM) system; or
16		any subunit or assembly comprising a component of any machinery
17		or auxiliary, adjunct or attachment parts of machinery, such as
18		tools, dies, jigs, fixtures, patterns and molds; or any parts
19		which require periodic replacement in the course of normal
20		operation; but shall not include hand tools. Equipment includes
21		chemicals or chemicals acting as catalysts but only if the
22		chemicals or chemicals acting as catalysts effect a direct and
23		immediate change upon a product being manufactured or assembled
24		for wholesale or retail sale or lease. The purchaser of such
25		machinery and equipment who has an active resale registration
26		number shall furnish such number to the seller at the time of
27		purchase. The purchaser of such machinery and equipment and
28		tools without an active resale registration number shall
29		furnish to the seller a certificate of exemption for each
30		transaction stating facts establishing the exemption for that
31		transaction, which certificate shall be available to the
32		Department for inspection or audit.
33		Except as provided in Section 2d of this Act, the rolling
34		stock exemption applies to rolling stock used by an interstate

1		carrier for hire, even just between points in Illinois, if such
2		rolling stock transports, for hire, persons whose journeys or
3		property whose shipments originate or terminate outside
4		Illinois.
5		Any informal rulings, opinions or letters issued by the
6		Department in response to an inquiry or request for any opinion
7		from any person regarding the coverage and applicability of
8		exemption (e) to specific devices shall be published,
9		maintained as a public record, and made available for public
10		inspection and copying. If the informal ruling, opinion or
11		letter contains trade secrets or other confidential
12		information, where possible the Department shall delete such
13		information prior to publication. Whenever such informal
14		rulings, opinions, or letters contain any policy of general
15		applicability, the Department shall formulate and adopt such
16		policy as a rule in accordance with the provisions of the
17		Illinois Administrative Procedure Act.
18		On and after July 1, 1987, no entity otherwise eligible
19		under exemption (c) of this Section shall make tax free
20		purchases unless it has an active exemption identification
21		number issued by the Department.
22		"Serviceman" means any person who is engaged in the
23		occupation of making sales of service.
24		"Sale at Retail" means "sale at retail" as defined in the
25		Retailers' Occupation Tax Act.
26		"Supplier" means any person who makes sales of tangible
27		personal property to servicemen for the purpose of resale as an
28		incident to a sale of service.
29		(Source: P.A. 92-484, eff. 8-23-01; 93-23, eff. 6-20-03; 93-24,
30		eff. 6-20-03; revised 8-21-03.)
31		(35 ILCS 115/2d)
32		Sec. 2d. Motor vehicles; trailers; use as rolling stock
33		definition.

1		(a) Through June 30, 2003, "use as rolling stock moving in
2		interstate commerce" in subsections (d) and (d-1) of the
3		definition of "sale of service" in Section 2 means for motor
4		vehicles, as defined in Section 1-146 of the Illinois Vehicle
5		Code, and trailers, as defined in Section 1-209 of the Illinois
6		Vehicle Code, when on 15 or more occasions in a 12-month period
7		the motor vehicle and trailer has carried persons or property
8		for hire in interstate commerce, even just between points in
9		Illinois, if the motor vehicle and trailer transports persons
10		whose journeys or property whose shipments originate or
11		terminate outside Illinois. This definition applies to all
12		property purchased for the purpose of being attached to those
13		motor vehicles or trailers as a part thereof.
14		(b) On and after July 1, 2003 and through June 30, 2004,
15		"use as rolling stock moving in interstate commerce" in
16		paragraphs (d) and (d-1) of the definition of "sale of service"
17		in Section 2 occurs for motor vehicles, as defined in Section
18		1-146 of the Illinois Vehicle Code, when during a 12-month
19		period the rolling stock has carried persons or property for
20		hire in interstate commerce for 51% of its total trips and
21		transports persons whose journeys or property whose shipments
22		originate or terminate outside Illinois. Trips that are only
23		between points in Illinois will not be counted as interstate
24		trips when calculating whether the tangible personal property
25		qualifies for the exemption but such trips will be included in
26		total trips taken.
27		(c) Beginning July 1, 2004, "use as rolling stock moving in
28		interstate commerce" in paragraphs (b) and (c) of Section 3-55
29		occurs for motor vehicles, as defined in Section 1-146 of the
30		Illinois Vehicle Code, when during a 12-month period the
31		rolling stock has carried persons or property for hire in
32		interstate commerce for greater than 50% of its total trips for
33		that period or for greater than 50% of its total miles for that
34		period. The person claiming the exemption shall make an

1		election at the time of purchase to use either the trips or
2		mileage method. Persons who purchased motor vehicles prior to
3		July 1, 2004 shall make an election to use either the trips or
4		mileage method and document that election in their books and
5		records. If no election is made under this subsection to use
6		the trips or mileage method, the person shall be deemed to have
7		chosen the mileage method. Any election to use either the trips
8		or mileage method will remain in effect for that motor vehicle
9		for any period for which the Department may issue a notice of
10		tax liability under this Act.
11		For purposes of determining qualifying trips or miles,
12		motor vehicles that carry persons or property for hire, even
13		just between points in Illinois, will be considered used for
14		hire in interstate commerce if the motor vehicle transports
15		persons whose journeys or property whose shipments originate or
16		terminate outside Illinois. The exemption for motor vehicles
17		used as rolling stock moving in interstate commerce may be
18		claimed only for motor vehicles whose gross vehicle weight
19		rating exceeds 16,000 pounds. This definition applies to all
20		property purchased for the purpose of being attached to those
21		motor vehicles as a part thereof.
22		(d) Beginning July 1, 2004, "use as rolling stock moving in
23		interstate commerce" in paragraphs (b) and (c) of Section 3-55
24		occurs for trailers, as defined in Section 1-209 of the
25		Illinois Vehicle Code, semitrailers as defined in Section 1-187
26		of the Illinois Vehicle Code, and pole trailers as defined in
27		Section 1-161 of the Illinois Vehicle Code, when during a
28		12-month period the rolling stock has carried persons or
29		property for hire in interstate commerce for greater than 50%
30		of its total trips for that period or for greater than 50% of
31		its total miles for that period. The person claiming the
32		exemption for a trailer or trailers that will not be dedicated
33		to a motor vehicle or group of motor vehicles shall make an
34		election at the time of purchase to use either the trips or

1		mileage method. Persons who purchased trailers prior to July 1,
2		2004 that are not dedicated to a motor vehicle or group of
3		motor vehicles shall make an election to use either the trips
4		or mileage method and document that election in their books and
5		records. If no election is made under this subsection to use
6		the trips or mileage method, the person shall be deemed to have
7		chosen the mileage method. Any election to use either the trips
8		or mileage method will remain in effect for that trailer for
9		any period for which the Department may issue a notice of tax
10		liability under this Act.
11		For purposes of determining qualifying trips or miles,
12		trailers, semitrailers, or pole trailers that carry property
13		for hire, even just between points in Illinois, will be
14		considered used for hire in interstate commerce if the
15		trailers, semitrailers, or pole trailers transport property
16		whose shipments originate or terminate outside Illinois. This
17		definition applies to all property purchased for the purpose of
18		being attached to those trailers, semitrailers, or pole
19		trailers as a part thereof. In lieu of a person providing
20		documentation regarding the qualifying use of each individual
21		trailer, semitrailer, or pole trailer, that person may document
22		such qualifying use by providing documentation of the
23		following:
24		(1) If a trailer, semitrailer, or pole trailer is
25		dedicated to a motor vehicle that qualifies as rolling
26		stock moving in interstate commerce under subsection (c) of
27		this Section, then that trailer, semitrailer, or pole
28		trailer qualifies as rolling stock moving in interstate
29		commerce under this subsection.
30		(2) If a trailer, semitrailer, or pole trailer is
31		dedicated to a group of motor vehicles that all qualify as
32		rolling stock moving in interstate commerce under
33		subsection (c) of this Section, then that trailer,
34		semitrailer, or pole trailer qualifies as rolling stock

1		moving in interstate commerce under this subsection.
2		(3) If one or more trailers, semitrailers, or pole
3		trailers are dedicated to a group of motor vehicles and not
4		all of those motor vehicles in that group qualify as
5		rolling stock moving in interstate commerce under
6		subsection (c) of this Section, then the percentage of
7		those trailers, semitrailers, or pole trailers that
8		qualifies as rolling stock moving in interstate commerce
9		under this subsection is equal to the percentage of those
10		motor vehicles in that group that qualify as rolling stock
11		moving in interstate commerce under subsection (c) of this
12		Section to which those trailer, semitrailers, or pole
13		trailers are dedicated. However, to determine the
14		qualification for the exemption provided under this item
15		(3), the mathematical application of the qualifying
16		percentage to one or more trailers, semitrailers, or pole
17		trailers under this subpart shall not be allowed as to any
18		fraction of a trailer, semitrailer, or pole trailer.
19		(Source: P.A. 93-23, eff. 6-20-03.)

20		Section 25. The Retailers' Occupation Tax Act is amended by
21		changing Sections 2-5 and 2-51 as follows:
22		(35 ILCS 120/2-5) (from Ch. 120, par. 441-5)
23		Sec. 2-5. Exemptions. Gross receipts from proceeds from the
24		sale of the following tangible personal property are exempt
25		from the tax imposed by this Act:
26		(1) Farm chemicals.
27		(2) Farm machinery and equipment, both new and used,
28		including that manufactured on special order, certified by the
29		purchaser to be used primarily for production agriculture or
30		State or federal agricultural programs, including individual
31		replacement parts for the machinery and equipment, including
32		machinery and equipment purchased for lease, and including

1		implements of husbandry defined in Section 1-130 of the
2		Illinois Vehicle Code, farm machinery and agricultural
3		chemical and fertilizer spreaders, and nurse wagons required to
4		be registered under Section 3-809 of the Illinois Vehicle Code,
5		but excluding other motor vehicles required to be registered
6		under the Illinois Vehicle Code. Horticultural polyhouses or
7		hoop houses used for propagating, growing, or overwintering
8		plants shall be considered farm machinery and equipment under
9		this item (2). Agricultural chemical tender tanks and dry boxes
10		shall include units sold separately from a motor vehicle
11		required to be licensed and units sold mounted on a motor
12		vehicle required to be licensed, if the selling price of the
13		tender is separately stated.
14		Farm machinery and equipment shall include precision
15		farming equipment that is installed or purchased to be
16		installed on farm machinery and equipment including, but not
17		limited to, tractors, harvesters, sprayers, planters, seeders,
18		or spreaders. Precision farming equipment includes, but is not
19		limited to, soil testing sensors, computers, monitors,
20		software, global positioning and mapping systems, and other
21		such equipment.
22		Farm machinery and equipment also includes computers,
23		sensors, software, and related equipment used primarily in the
24		computer-assisted operation of production agriculture
25		facilities, equipment, and activities such as, but not limited
26		to, the collection, monitoring, and correlation of animal and
27		crop data for the purpose of formulating animal diets and
28		agricultural chemicals. This item (7) is exempt from the
29		provisions of Section 2-70.
30		(3) Until July 1, 2003, distillation machinery and
31		equipment, sold as a unit or kit, assembled or installed by the
32		retailer, certified by the user to be used only for the
33		production of ethyl alcohol that will be used for consumption
34		as motor fuel or as a component of motor fuel for the personal

1		use of the user, and not subject to sale or resale.
2		(4) Until July 1, 2003, graphic arts machinery and
3		equipment, including repair and replacement parts, both new and
4		used, and including that manufactured on special order or
5		purchased for lease, certified by the purchaser to be used
6		primarily for graphic arts production. Equipment includes
7		chemicals or chemicals acting as catalysts but only if the
8		chemicals or chemicals acting as catalysts effect a direct and
9		immediate change upon a graphic arts product.
10		(5) A motor vehicle of the first division, a motor vehicle
11		of the second division that is a self-contained motor vehicle
12		designed or permanently converted to provide living quarters
13		for recreational, camping, or travel use, with direct walk
14		through access to the living quarters from the driver's seat,
15		or a motor vehicle of the second division that is of the van
16		configuration designed for the transportation of not less than
17		7 nor more than 16 passengers, as defined in Section 1-146 of
18		the Illinois Vehicle Code, that is used for automobile renting,
19		as defined in the Automobile Renting Occupation and Use Tax
20		Act.
21		(6) Personal property sold by a teacher-sponsored student
22		organization affiliated with an elementary or secondary school
23		located in Illinois.
24		(7) Until July 1, 2003, proceeds of that portion of the
25		selling price of a passenger car the sale of which is subject
26		to the Replacement Vehicle Tax.
27		(8) Personal property sold to an Illinois county fair
28		association for use in conducting, operating, or promoting the
29		county fair.
30		(9) Personal property sold to a not-for-profit arts or
31		cultural organization that establishes, by proof required by
32		the Department by rule, that it has received an exemption under
33		Section 501(c)(3) of the Internal Revenue Code and that is
34		organized and operated primarily for the presentation or

1		support of arts or cultural programming, activities, or
2		services. These organizations include, but are not limited to,
3		music and dramatic arts organizations such as symphony
4		orchestras and theatrical groups, arts and cultural service
5		organizations, local arts councils, visual arts organizations,
6		and media arts organizations. On and after the effective date
7		of this amendatory Act of the 92nd General Assembly, however,
8		an entity otherwise eligible for this exemption shall not make
9		tax-free purchases unless it has an active identification
10		number issued by the Department.
11		(10) Personal property sold by a corporation, society,
12		association, foundation, institution, or organization, other
13		than a limited liability company, that is organized and
14		operated as a not-for-profit service enterprise for the benefit
15		of persons 65 years of age or older if the personal property
16		was not purchased by the enterprise for the purpose of resale
17		by the enterprise.
18		(11) Personal property sold to a governmental body, to a
19		corporation, society, association, foundation, or institution
20		organized and operated exclusively for charitable, religious,
21		or educational purposes, or to a not-for-profit corporation,
22		society, association, foundation, institution, or organization
23		that has no compensated officers or employees and that is
24		organized and operated primarily for the recreation of persons
25		55 years of age or older. A limited liability company may
26		qualify for the exemption under this paragraph only if the
27		limited liability company is organized and operated
28		exclusively for educational purposes. On and after July 1,
29		1987, however, no entity otherwise eligible for this exemption
30		shall make tax-free purchases unless it has an active
31		identification number issued by the Department.
32		(12) Tangible personal property sold to interstate
33		carriers for hire for use as rolling stock moving in interstate
34		commerce or to lessors under leases of one year or longer

1		executed or in effect at the time of purchase by interstate
2		carriers for hire for use as rolling stock moving in interstate
3		commerce and equipment operated by a telecommunications
4		provider, licensed as a common carrier by the Federal
5		Communications Commission, which is permanently installed in
6		or affixed to aircraft moving in interstate commerce.
7		(12-5) On and after July 1, 2003 and through June 30, 2005,
8		motor vehicles of the second division with a gross vehicle
9		weight in excess of 8,000 pounds that are subject to the
10		commercial distribution fee imposed under Section 3-815.1 of
11		the Illinois Vehicle Code. Beginning on July 1, 2004 and
12		through June 30, 2005, the use in this State of motor vehicles
13		of the second division: (i) with a gross vehicle weight rating
14		in excess of 8,000 pounds; (ii) that are subject to the
15		commercial distribution fee imposed under Section 3-815.1 of
16		the Illinois Vehicle Code; and (iii) that are primarily used
17		for commercial purposes. Through June 30, 2005, this This
18		exemption applies to repair and replacement parts added after
19		the initial purchase of such a motor vehicle if that motor
20		vehicle is used in a manner that would qualify for the rolling
21		stock exemption otherwise provided for in this Act. For
22		purposes of this paragraph, "used for commercial purposes"
23		means the transportation of persons or property in furtherance
24		of any commercial or industrial enterprise whether for-hire or
25		not.
26		(13) Proceeds from sales to owners, lessors, or shippers of
27		tangible personal property that is utilized by interstate
28		carriers for hire for use as rolling stock moving in interstate
29		commerce and equipment operated by a telecommunications
30		provider, licensed as a common carrier by the Federal
31		Communications Commission, which is permanently installed in
32		or affixed to aircraft moving in interstate commerce.
33		(14) Machinery and equipment that will be used by the
34		purchaser, or a lessee of the purchaser, primarily in the

1		process of manufacturing or assembling tangible personal
2		property for wholesale or retail sale or lease, whether the
3		sale or lease is made directly by the manufacturer or by some
4		other person, whether the materials used in the process are
5		owned by the manufacturer or some other person, or whether the
6		sale or lease is made apart from or as an incident to the
7		seller's engaging in the service occupation of producing
8		machines, tools, dies, jigs, patterns, gauges, or other similar
9		items of no commercial value on special order for a particular
10		purchaser.
11		(15) Proceeds of mandatory service charges separately
12		stated on customers' bills for purchase and consumption of food
13		and beverages, to the extent that the proceeds of the service
14		charge are in fact turned over as tips or as a substitute for
15		tips to the employees who participate directly in preparing,
16		serving, hosting or cleaning up the food or beverage function
17		with respect to which the service charge is imposed.
18		(16) Petroleum products sold to a purchaser if the seller
19		is prohibited by federal law from charging tax to the
20		purchaser.
21		(17) Tangible personal property sold to a common carrier by
22		rail or motor that receives the physical possession of the
23		property in Illinois and that transports the property, or
24		shares with another common carrier in the transportation of the
25		property, out of Illinois on a standard uniform bill of lading
26		showing the seller of the property as the shipper or consignor
27		of the property to a destination outside Illinois, for use
28		outside Illinois.
29		(18) Legal tender, currency, medallions, or gold or silver
30		coinage issued by the State of Illinois, the government of the
31		United States of America, or the government of any foreign
32		country, and bullion.
33		(19) Until July 1 2003, oil field exploration, drilling,
34		and production equipment, including (i) rigs and parts of rigs,

1		rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
2		tubular goods, including casing and drill strings, (iii) pumps
3		and pump-jack units, (iv) storage tanks and flow lines, (v) any
4		individual replacement part for oil field exploration,
5		drilling, and production equipment, and (vi) machinery and
6		equipment purchased for lease; but excluding motor vehicles
7		required to be registered under the Illinois Vehicle Code.
8		(20) Photoprocessing machinery and equipment, including
9		repair and replacement parts, both new and used, including that
10		manufactured on special order, certified by the purchaser to be
11		used primarily for photoprocessing, and including
12		photoprocessing machinery and equipment purchased for lease.
13		(21) Until July 1, 2003, coal exploration, mining,
14		offhighway hauling, processing, maintenance, and reclamation
15		equipment, including replacement parts and equipment, and
16		including equipment purchased for lease, but excluding motor
17		vehicles required to be registered under the Illinois Vehicle
18		Code.
19		(22) Fuel and petroleum products sold to or used by an air
20		carrier, certified by the carrier to be used for consumption,
21		shipment, or storage in the conduct of its business as an air
22		common carrier, for a flight destined for or returning from a
23		location or locations outside the United States without regard
24		to previous or subsequent domestic stopovers.
25		(23) A transaction in which the purchase order is received
26		by a florist who is located outside Illinois, but who has a
27		florist located in Illinois deliver the property to the
28		purchaser or the purchaser's donee in Illinois.
29		(24) Fuel consumed or used in the operation of ships,
30		barges, or vessels that are used primarily in or for the
31		transportation of property or the conveyance of persons for
32		hire on rivers bordering on this State if the fuel is delivered
33		by the seller to the purchaser's barge, ship, or vessel while
34		it is afloat upon that bordering river.

1		(25) A motor vehicle sold in this State to a nonresident
2		even though the motor vehicle is delivered to the nonresident
3		in this State, if the motor vehicle is not to be titled in this
4		State, and if a drive-away permit is issued to the motor
5		vehicle as provided in Section 3-603 of the Illinois Vehicle
6		Code or if the nonresident purchaser has vehicle registration
7		plates to transfer to the motor vehicle upon returning to his
8		or her home state. The issuance of the drive-away permit or
9		having the out-of-state registration plates to be transferred
10		is prima facie evidence that the motor vehicle will not be
11		titled in this State.
12		(26) Semen used for artificial insemination of livestock
13		for direct agricultural production.
14		(27) Horses, or interests in horses, registered with and
15		meeting the requirements of any of the Arabian Horse Club
16		Registry of America, Appaloosa Horse Club, American Quarter
17		Horse Association, United States Trotting Association, or
18		Jockey Club, as appropriate, used for purposes of breeding or
19		racing for prizes.
20		(28) Computers and communications equipment utilized for
21		any hospital purpose and equipment used in the diagnosis,
22		analysis, or treatment of hospital patients sold to a lessor
23		who leases the equipment, under a lease of one year or longer
24		executed or in effect at the time of the purchase, to a
25		hospital that has been issued an active tax exemption
26		identification number by the Department under Section 1g of
27		this Act.
28		(29) Personal property sold to a lessor who leases the
29		property, under a lease of one year or longer executed or in
30		effect at the time of the purchase, to a governmental body that
31		has been issued an active tax exemption identification number
32		by the Department under Section 1g of this Act.
33		(30) Beginning with taxable years ending on or after
34		December 31, 1995 and ending with taxable years ending on or

1		before December 31, 2004, personal property that is donated for
2		disaster relief to be used in a State or federally declared
3		disaster area in Illinois or bordering Illinois by a
4		manufacturer or retailer that is registered in this State to a
5		corporation, society, association, foundation, or institution
6		that has been issued a sales tax exemption identification
7		number by the Department that assists victims of the disaster
8		who reside within the declared disaster area.
9		(31) Beginning with taxable years ending on or after
10		December 31, 1995 and ending with taxable years ending on or
11		before December 31, 2004, personal property that is used in the
12		performance of infrastructure repairs in this State, including
13		but not limited to municipal roads and streets, access roads,
14		bridges, sidewalks, waste disposal systems, water and sewer
15		line extensions, water distribution and purification
16		facilities, storm water drainage and retention facilities, and
17		sewage treatment facilities, resulting from a State or
18		federally declared disaster in Illinois or bordering Illinois
19		when such repairs are initiated on facilities located in the
20		declared disaster area within 6 months after the disaster.
21		(32) Beginning July 1, 1999, game or game birds sold at a
22		"game breeding and hunting preserve area" or an "exotic game
23		hunting area" as those terms are used in the Wildlife Code or
24		at a hunting enclosure approved through rules adopted by the
25		Department of Natural Resources. This paragraph is exempt from
26		the provisions of Section 2-70.
27		(33) A motor vehicle, as that term is defined in Section
28		1-146 of the Illinois Vehicle Code, that is donated to a
29		corporation, limited liability company, society, association,
30		foundation, or institution that is determined by the Department
31		to be organized and operated exclusively for educational
32		purposes. For purposes of this exemption, "a corporation,
33		limited liability company, society, association, foundation,
34		or institution organized and operated exclusively for

1		educational purposes" means all tax-supported public schools,
2		private schools that offer systematic instruction in useful
3		branches of learning by methods common to public schools and
4		that compare favorably in their scope and intensity with the
5		course of study presented in tax-supported schools, and
6		vocational or technical schools or institutes organized and
7		operated exclusively to provide a course of study of not less
8		than 6 weeks duration and designed to prepare individuals to
9		follow a trade or to pursue a manual, technical, mechanical,
10		industrial, business, or commercial occupation.
11		(34) Beginning January 1, 2000, personal property,
12		including food, purchased through fundraising events for the
13		benefit of a public or private elementary or secondary school,
14		a group of those schools, or one or more school districts if
15		the events are sponsored by an entity recognized by the school
16		district that consists primarily of volunteers and includes
17		parents and teachers of the school children. This paragraph
18		does not apply to fundraising events (i) for the benefit of
19		private home instruction or (ii) for which the fundraising
20		entity purchases the personal property sold at the events from
21		another individual or entity that sold the property for the
22		purpose of resale by the fundraising entity and that profits
23		from the sale to the fundraising entity. This paragraph is
24		exempt from the provisions of Section 2-70.
25		(35) Beginning January 1, 2000 and through December 31,
26		2001, new or used automatic vending machines that prepare and
27		serve hot food and beverages, including coffee, soup, and other
28		items, and replacement parts for these machines. Beginning
29		January 1, 2002 and through June 30, 2003, machines and parts
30		for machines used in commercial, coin-operated amusement and
31		vending business if a use or occupation tax is paid on the
32		gross receipts derived from the use of the commercial,
33		coin-operated amusement and vending machines. This paragraph
34		is exempt from the provisions of Section 2-70.

1		(35-5) Food for human consumption that is to be consumed
2		off the premises where it is sold (other than alcoholic
3		beverages, soft drinks, and food that has been prepared for
4		immediate consumption) and prescription and nonprescription
5		medicines, drugs, medical appliances, and insulin, urine
6		testing materials, syringes, and needles used by diabetics, for
7		human use, when purchased for use by a person receiving medical
8		assistance under Article 5 of the Illinois Public Aid Code who
9		resides in a licensed long-term care facility, as defined in
10		the Nursing Home Care Act.
11		(36) Beginning August 2, 2001, computers and
12		communications equipment utilized for any hospital purpose and
13		equipment used in the diagnosis, analysis, or treatment of
14		hospital patients sold to a lessor who leases the equipment,
15		under a lease of one year or longer executed or in effect at
16		the time of the purchase, to a hospital that has been issued an
17		active tax exemption identification number by the Department
18		under Section 1g of this Act. This paragraph is exempt from the
19		provisions of Section 2-70.
20		(37) Beginning August 2, 2001, personal property sold to a
21		lessor who leases the property, under a lease of one year or
22		longer executed or in effect at the time of the purchase, to a
23		governmental body that has been issued an active tax exemption
24		identification number by the Department under Section 1g of
25		this Act. This paragraph is exempt from the provisions of
26		Section 2-70.
27		(38) Beginning on January 1, 2002, tangible personal
28		property purchased from an Illinois retailer by a taxpayer
29		engaged in centralized purchasing activities in Illinois who
30		will, upon receipt of the property in Illinois, temporarily
31		store the property in Illinois (i) for the purpose of
32		subsequently transporting it outside this State for use or
33		consumption thereafter solely outside this State or (ii) for
34		the purpose of being processed, fabricated, or manufactured

1		into, attached to, or incorporated into other tangible personal
2		property to be transported outside this State and thereafter
3		used or consumed solely outside this State. The Director of
4		Revenue shall, pursuant to rules adopted in accordance with the
5		Illinois Administrative Procedure Act, issue a permit to any
6		taxpayer in good standing with the Department who is eligible
7		for the exemption under this paragraph (38). The permit issued
8		under this paragraph (38) shall authorize the holder, to the
9		extent and in the manner specified in the rules adopted under
10		this Act, to purchase tangible personal property from a
11		retailer exempt from the taxes imposed by this Act. Taxpayers
12		shall maintain all necessary books and records to substantiate
13		the use and consumption of all such tangible personal property
14		outside of the State of Illinois.
15		(Source: P.A. 92-16, eff. 6-28-01; 92-35, eff. 7-1-01; 92-227,
16		eff. 8-2-01; 92-337, eff. 8-10-01; 92-484, eff. 8-23-01;
17		92-488, eff. 8-23-01; 92-651, eff. 7-11-02; 92-680, eff.
18		7-16-02; 93-23, eff. 6-20-03; 93-24, eff. 6-20-03; revised
19		9-11-03.)
20		(35 ILCS 120/2-51)
21		Sec. 2-51. Motor vehicles; trailers; use as rolling stock
22		definition.
23		(a) Through June 30, 2003, "use as rolling stock moving in
24		interstate commerce" in paragraphs (12) and (13) of Section 2-5
25		means for motor vehicles, as defined in Section 1-146 of the
26		Illinois Vehicle Code, and trailers, as defined in Section
27		1-209 of the Illinois Vehicle Code, when on 15 or more
28		occasions in a 12-month period the motor vehicle and trailer
29		has carried persons or property for hire in interstate
30		commerce, even just between points in Illinois, if the motor
31		vehicle and trailer transports persons whose journeys or
32		property whose shipments originate or terminate outside
33		Illinois. This definition applies to all property purchased for

1		the purpose of being attached to those motor vehicles or
2		trailers as a part thereof.
3		(b) On and after July 1, 2003 and through June 30, 2004,
4		"use as rolling stock moving in interstate commerce" in
5		paragraphs (12) and (13) of Section 2-5 occurs for motor
6		vehicles, as defined in Section 1-146 of the Illinois Vehicle
7		Code, when during a 12-month period the rolling stock has
8		carried persons or property for hire in interstate commerce for
9		51% of its total trips and transports persons whose journeys or
10		property whose shipments originate or terminate outside
11		Illinois. Trips that are only between points in Illinois shall
12		not be counted as interstate trips when calculating whether the
13		tangible personal property qualifies for the exemption but such
14		trips shall be included in total trips taken.
15		(c) Beginning July 1, 2004, "use as rolling stock moving in
16		interstate commerce" in paragraphs (b) and (c) of Section 3-55
17		occurs for motor vehicles, as defined in Section 1-146 of the
18		Illinois Vehicle Code, when during a 12-month period the
19		rolling stock has carried persons or property for hire in
20		interstate commerce for greater than 50% of its total trips for
21		that period or for greater than 50% of its total miles for that
22		period. The person claiming the exemption shall make an
23		election at the time of purchase to use either the trips or
24		mileage method. Persons who purchased motor vehicles prior to
25		July 1, 2004 shall make an election to use either the trips or
26		mileage method and document that election in their books and
27		records. If no election is made under this subsection to use
28		the trips or mileage method, the person shall be deemed to have
29		chosen the mileage method. Any election to use either the trips
30		or mileage method will remain in effect for that motor vehicle
31		for any period for which the Department may issue a notice of
32		tax liability under this Act.
33		For purposes of determining qualifying trips or miles,
34		motor vehicles that carry persons or property for hire, even

1		just between points in Illinois, will be considered used for
2		hire in interstate commerce if the motor vehicle transports
3		persons whose journeys or property whose shipments originate or
4		terminate outside Illinois. The exemption for motor vehicles
5		used as rolling stock moving in interstate commerce may be
6		claimed only for motor vehicles whose gross vehicle weight
7		rating exceeds 16,000 pounds. This definition applies to all
8		property purchased for the purpose of being attached to those
9		motor vehicles as a part thereof.
10		(d) Beginning July 1, 2004, "use as rolling stock moving in
11		interstate commerce" in paragraphs (b) and (c) of Section 3-55
12		occurs for trailers, as defined in Section 1-209 of the
13		Illinois Vehicle Code, semitrailers as defined in Section 1-187
14		of the Illinois Vehicle Code, and pole trailers as defined in
15		Section 1-161 of the Illinois Vehicle Code, when during a
16		12-month period the rolling stock has carried persons or
17		property for hire in interstate commerce for greater than 50%
18		of its total trips for that period or for greater than 50% of
19		its total miles for that period. The person claiming the
20		exemption for a trailer or trailers that will not be dedicated
21		to a motor vehicle or group of motor vehicles shall make an
22		election at the time of purchase to use either the trips or
23		mileage method. Persons who purchased trailers prior to July 1,
24		2004 that are not dedicated to a motor vehicle or group of
25		motor vehicles shall make an election to use either the trips
26		or mileage method and document that election in their books and
27		records. If no election is made under this subsection to use
28		the trips or mileage method, the person shall be deemed to have
29		chosen the mileage method. Any election to use either the trips
30		or mileage method will remain in effect for that trailer for
31		any period for which the Department may issue a notice of tax
32		liability under this Act.
33		For purposes of determining qualifying trips or miles,
34		trailers, semitrailers, or pole trailers that carry property

1		for hire, even just between points in Illinois, will be
2		considered used for hire in interstate commerce if the
3		trailers, semitrailers, or pole trailers transport property
4		whose shipments originate or terminate outside Illinois. This
5		definition applies to all property purchased for the purpose of
6		being attached to those trailers, semitrailers, or pole
7		trailers as a part thereof. In lieu of a person providing
8		documentation regarding the qualifying use of each individual
9		trailer, semitrailer, or pole trailer, that person may document
10		such qualifying use by providing documentation of the
11		following:
12		(1) If a trailer, semitrailer, or pole trailer is
13		dedicated to a motor vehicle that qualifies as rolling
14		stock moving in interstate commerce under subsection (c) of
15		this Section, then that trailer, semitrailer, or pole
16		trailer qualifies as rolling stock moving in interstate
17		commerce under this subsection.
18		(2) If a trailer, semitrailer, or pole trailer is
19		dedicated to a group of motor vehicles that all qualify as
20		rolling stock moving in interstate commerce under
21		subsection (c) of this Section, then that trailer,
22		semitrailer, or pole trailer qualifies as rolling stock
23		moving in interstate commerce under this subsection.
24		(3) If one or more trailers, semitrailers, or pole
25		trailers are dedicated to a group of motor vehicles and not
26		all of those motor vehicles in that group qualify as
27		rolling stock moving in interstate commerce under
28		subsection (c) of this Section, then the percentage of
29		those trailers, semitrailers, or pole trailers that
30		qualifies as rolling stock moving in interstate commerce
31		under this subsection is equal to the percentage of those
32		motor vehicles in that group that qualify as rolling stock
33		moving in interstate commerce under subsection (c) of this
34		Section to which those trailer, semitrailers, or pole

1		trailers are dedicated. However, to determine the
2		qualification for the exemption provided under this item
3		(3), the mathematical application of the qualifying
4		percentage to one or more trailers, semitrailers, or pole
5		trailers under this subpart shall not be allowed as to any
6		fraction of a trailer, semitrailer, or pole trailer.
7		(Source: P.A. 93-23, eff. 6-20-03.)

8		Section 30. The Illinois Vehicle Code is amended by
9		changing Section 3-815.1 as follows:
10		(625 ILCS 5/3-815.1)
11		Sec. 3-815.1. Commercial distribution fee. Beginning July
12		1, 2003, in addition to any tax or fee imposed under this Code:
13		(a) Vehicles of the second division with a gross
14		vehicle weight that exceeds 8,000 pounds and that incur any
15		tax or fee under subsection (a) of Section 3-815 of this
16		Code or subsection (a) of Section 3-818 of this Code, as
17		applicable, and shall pay to the Secretary of State a
18		commercial distribution fee, for each registration year,
19		for the use of the public highways, State infrastructure,
20		and State services, in an amount equal to: (i) for a
21		registration year beginning on or after July 1, 2003 and
22		before July 1, 2005, 36% of the taxes and fees incurred
23		under subsection (a) of Section 3-815 of this Code, or
24		subsection (a) of Section 3-818 of this Code, as
25		applicable, rounded up to the nearest whole dollar; (ii)
26		for a registration year beginning on or after July 1, 2005
27		and before July 1, 2006, 21.5% of the taxes and fees
28		incurred under subsection (a) of Section 3-815 of this
29		Code, or subsection (a) of Section 3-818 of this Code, as
30		applicable, rounded up to the nearest whole dollar; and
31		(iii) for a registration year beginning on or after July 1,
32		2006, 14.35% of the taxes and fees incurred under

1		subsection (a) of Section 3-815 of this Code, or subsection
2		(a) of Section 3-818 of this Code, as applicable, rounded
3		up to the nearest whole dollar.
4		(b) Until June 30, 2004, vehicles Vehicles of the
5		second division with a gross vehicle weight of 8,000 pounds
6		or less and that incur any tax or fee under subsection (a)
7		of Section 3-815 of this Code or subsection (a) of Section
8		3-818 of this Code, as applicable, and have claimed the
9		rolling stock exemption under the Retailers' Occupation
10		Tax Act, Use Tax Act, Service Occupation Tax Act, or
11		Service Use Tax Act shall pay to the Illinois Department of
12		Revenue (or the Secretary of State under an
13		intergovernmental agreement) a commercial distribution
14		fee, for each registration year, for the use of the public
15		highways, State infrastructure, and State services, in an
16		amount equal to 36% of the taxes and fees incurred under
17		subsection (a) of Section 3-815 of this Code or subsection
18		(a) of Section 3-818 of this Code, as applicable, rounded
19		up to the nearest whole dollar.
20		The fees paid under this Section shall be deposited by the
21		Secretary of State into the General Revenue Fund.
22		(Source: P.A. 93-23, eff. 6-20-03; revised 10-9-03.)

Section 99. Effective date. This Act takes effect July 1, 2004.".