100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
HB5735

 

Introduced , by Rep. Joe Sosnowski

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 105/3-5
35 ILCS 105/3-85
35 ILCS 110/3-5
35 ILCS 110/3-70
35 ILCS 115/3-5
35 ILCS 120/2-5

    Amends the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, and the Retailers' Occupation Tax Act. Reinstates the graphic arts machinery and equipment exemption and the corresponding Manufacturer's Purchase Credit on and after January 1, 2019. Provides that those credits are exempt from the Acts' automatic sunset provisions. Effective immediately.


LRB100 19659 HLH 34932 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB5735LRB100 19659 HLH 34932 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Use Tax Act is amended by changing Sections
53-5 and 3-85 as follows:
 
6    (35 ILCS 105/3-5)
7    Sec. 3-5. Exemptions. Use of the following tangible
8personal property is exempt from the tax imposed by this Act:
9    (1) Personal property purchased from a corporation,
10society, association, foundation, institution, or
11organization, other than a limited liability company, that is
12organized and operated as a not-for-profit service enterprise
13for the benefit of persons 65 years of age or older if the
14personal property was not purchased by the enterprise for the
15purpose of resale by the enterprise.
16    (2) Personal property purchased by a not-for-profit
17Illinois county fair association for use in conducting,
18operating, or promoting the county fair.
19    (3) Personal property purchased by a not-for-profit arts or
20cultural organization that establishes, by proof required by
21the Department by rule, that it has received an exemption under
22Section 501(c)(3) of the Internal Revenue Code and that is
23organized and operated primarily for the presentation or

 

 

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1support of arts or cultural programming, activities, or
2services. These organizations include, but are not limited to,
3music and dramatic arts organizations such as symphony
4orchestras and theatrical groups, arts and cultural service
5organizations, local arts councils, visual arts organizations,
6and media arts organizations. On and after July 1, 2001 (the
7effective date of Public Act 92-35) this amendatory Act of the
892nd General Assembly, however, an entity otherwise eligible
9for this exemption shall not make tax-free purchases unless it
10has an active identification number issued by the Department.
11    (4) Personal property purchased by a governmental body, by
12a corporation, society, association, foundation, or
13institution organized and operated exclusively for charitable,
14religious, or educational purposes, or by a not-for-profit
15corporation, society, association, foundation, institution, or
16organization that has no compensated officers or employees and
17that is organized and operated primarily for the recreation of
18persons 55 years of age or older. A limited liability company
19may qualify for the exemption under this paragraph only if the
20limited liability company is organized and operated
21exclusively for educational purposes. On and after July 1,
221987, however, no entity otherwise eligible for this exemption
23shall make tax-free purchases unless it has an active exemption
24identification number issued by the Department.
25    (5) Until July 1, 2003, a passenger car that is a
26replacement vehicle to the extent that the purchase price of

 

 

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1the car is subject to the Replacement Vehicle Tax.
2    (6) Until July 1, 2003, and beginning again on September 1,
32004 through August 30, 2014, and beginning again on January 1,
42019, graphic arts machinery and equipment, including repair
5and replacement parts, both new and used, and including that
6manufactured on special order, certified by the purchaser to be
7used primarily for graphic arts production, and including
8machinery and equipment purchased for lease. Equipment
9includes chemicals or chemicals acting as catalysts but only if
10the chemicals or chemicals acting as catalysts effect a direct
11and immediate change upon a graphic arts product. Beginning on
12July 1, 2017, graphic arts machinery and equipment is included
13in the manufacturing and assembling machinery and equipment
14exemption under paragraph (18). This item (6) is exempt from
15the provisions of Section 3-90.
16    (7) Farm chemicals.
17    (8) Legal tender, currency, medallions, or gold or silver
18coinage issued by the State of Illinois, the government of the
19United States of America, or the government of any foreign
20country, and bullion.
21    (9) Personal property purchased from a teacher-sponsored
22student organization affiliated with an elementary or
23secondary school located in Illinois.
24    (10) A motor vehicle that is used for automobile renting,
25as defined in the Automobile Renting Occupation and Use Tax
26Act.

 

 

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1    (11) Farm machinery and equipment, both new and used,
2including that manufactured on special order, certified by the
3purchaser to be used primarily for production agriculture or
4State or federal agricultural programs, including individual
5replacement parts for the machinery and equipment, including
6machinery and equipment purchased for lease, and including
7implements of husbandry defined in Section 1-130 of the
8Illinois Vehicle Code, farm machinery and agricultural
9chemical and fertilizer spreaders, and nurse wagons required to
10be registered under Section 3-809 of the Illinois Vehicle Code,
11but excluding other motor vehicles required to be registered
12under the Illinois Vehicle Code. Horticultural polyhouses or
13hoop houses used for propagating, growing, or overwintering
14plants shall be considered farm machinery and equipment under
15this item (11). Agricultural chemical tender tanks and dry
16boxes shall include units sold separately from a motor vehicle
17required to be licensed and units sold mounted on a motor
18vehicle required to be licensed if the selling price of the
19tender is separately stated.
20    Farm machinery and equipment shall include precision
21farming equipment that is installed or purchased to be
22installed on farm machinery and equipment including, but not
23limited to, tractors, harvesters, sprayers, planters, seeders,
24or spreaders. Precision farming equipment includes, but is not
25limited to, soil testing sensors, computers, monitors,
26software, global positioning and mapping systems, and other

 

 

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1such equipment.
2    Farm machinery and equipment also includes computers,
3sensors, software, and related equipment used primarily in the
4computer-assisted operation of production agriculture
5facilities, equipment, and activities such as, but not limited
6to, the collection, monitoring, and correlation of animal and
7crop data for the purpose of formulating animal diets and
8agricultural chemicals. This item (11) is exempt from the
9provisions of Section 3-90.
10    (12) Until June 30, 2013, fuel and petroleum products sold
11to or used by an air common carrier, certified by the carrier
12to be used for consumption, shipment, or storage in the conduct
13of its business as an air common carrier, for a flight destined
14for or returning from a location or locations outside the
15United States without regard to previous or subsequent domestic
16stopovers.
17    Beginning July 1, 2013, fuel and petroleum products sold to
18or used by an air carrier, certified by the carrier to be used
19for consumption, shipment, or storage in the conduct of its
20business as an air common carrier, for a flight that (i) is
21engaged in foreign trade or is engaged in trade between the
22United States and any of its possessions and (ii) transports at
23least one individual or package for hire from the city of
24origination to the city of final destination on the same
25aircraft, without regard to a change in the flight number of
26that aircraft.

 

 

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1    (13) Proceeds of mandatory service charges separately
2stated on customers' bills for the purchase and consumption of
3food and beverages purchased at retail from a retailer, to the
4extent that the proceeds of the service charge are in fact
5turned over as tips or as a substitute for tips to the
6employees who participate directly in preparing, serving,
7hosting or cleaning up the food or beverage function with
8respect to which the service charge is imposed.
9    (14) Until July 1, 2003, oil field exploration, drilling,
10and production equipment, including (i) rigs and parts of rigs,
11rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
12tubular goods, including casing and drill strings, (iii) pumps
13and pump-jack units, (iv) storage tanks and flow lines, (v) any
14individual replacement part for oil field exploration,
15drilling, and production equipment, and (vi) machinery and
16equipment purchased for lease; but excluding motor vehicles
17required to be registered under the Illinois Vehicle Code.
18    (15) Photoprocessing machinery and equipment, including
19repair and replacement parts, both new and used, including that
20manufactured on special order, certified by the purchaser to be
21used primarily for photoprocessing, and including
22photoprocessing machinery and equipment purchased for lease.
23    (16) Coal and aggregate exploration, mining, off-highway
24hauling, processing, maintenance, and reclamation equipment,
25including replacement parts and equipment, and including
26equipment purchased for lease, but excluding motor vehicles

 

 

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1required to be registered under the Illinois Vehicle Code. The
2changes made to this Section by Public Act 97-767 apply on and
3after July 1, 2003, but no claim for credit or refund is
4allowed on or after August 16, 2013 (the effective date of
5Public Act 98-456) for such taxes paid during the period
6beginning July 1, 2003 and ending on August 16, 2013 (the
7effective date of Public Act 98-456).
8    (17) Until July 1, 2003, distillation machinery and
9equipment, sold as a unit or kit, assembled or installed by the
10retailer, certified by the user to be used only for the
11production of ethyl alcohol that will be used for consumption
12as motor fuel or as a component of motor fuel for the personal
13use of the user, and not subject to sale or resale.
14    (18) Manufacturing and assembling machinery and equipment
15used primarily in the process of manufacturing or assembling
16tangible personal property for wholesale or retail sale or
17lease, whether that sale or lease is made directly by the
18manufacturer or by some other person, whether the materials
19used in the process are owned by the manufacturer or some other
20person, or whether that sale or lease is made apart from or as
21an incident to the seller's engaging in the service occupation
22of producing machines, tools, dies, jigs, patterns, gauges, or
23other similar items of no commercial value on special order for
24a particular purchaser. The exemption provided by this
25paragraph (18) does not include machinery and equipment used in
26(i) the generation of electricity for wholesale or retail sale;

 

 

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1(ii) the generation or treatment of natural or artificial gas
2for wholesale or retail sale that is delivered to customers
3through pipes, pipelines, or mains; or (iii) the treatment of
4water for wholesale or retail sale that is delivered to
5customers through pipes, pipelines, or mains. The provisions of
6Public Act 98-583 are declaratory of existing law as to the
7meaning and scope of this exemption. Beginning on July 1, 2017,
8the exemption provided by this paragraph (18) includes, but is
9not limited to, graphic arts machinery and equipment, as
10defined in paragraph (6) of this Section.
11    (19) Personal property delivered to a purchaser or
12purchaser's donee inside Illinois when the purchase order for
13that personal property was received by a florist located
14outside Illinois who has a florist located inside Illinois
15deliver the personal property.
16    (20) Semen used for artificial insemination of livestock
17for direct agricultural production.
18    (21) Horses, or interests in horses, registered with and
19meeting the requirements of any of the Arabian Horse Club
20Registry of America, Appaloosa Horse Club, American Quarter
21Horse Association, United States Trotting Association, or
22Jockey Club, as appropriate, used for purposes of breeding or
23racing for prizes. This item (21) is exempt from the provisions
24of Section 3-90, and the exemption provided for under this item
25(21) applies for all periods beginning May 30, 1995, but no
26claim for credit or refund is allowed on or after January 1,

 

 

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12008 for such taxes paid during the period beginning May 30,
22000 and ending on January 1, 2008.
3    (22) Computers and communications equipment utilized for
4any hospital purpose and equipment used in the diagnosis,
5analysis, or treatment of hospital patients purchased by a
6lessor who leases the equipment, under a lease of one year or
7longer executed or in effect at the time the lessor would
8otherwise be subject to the tax imposed by this Act, to a
9hospital that has been issued an active tax exemption
10identification number by the Department under Section 1g of the
11Retailers' Occupation Tax Act. If the equipment is leased in a
12manner that does not qualify for this exemption or is used in
13any other non-exempt manner, the lessor shall be liable for the
14tax imposed under this Act or the Service Use Tax Act, as the
15case may be, based on the fair market value of the property at
16the time the non-qualifying use occurs. No lessor shall collect
17or attempt to collect an amount (however designated) that
18purports to reimburse that lessor for the tax imposed by this
19Act or the Service Use Tax Act, as the case may be, if the tax
20has not been paid by the lessor. If a lessor improperly
21collects any such amount from the lessee, the lessee shall have
22a legal right to claim a refund of that amount from the lessor.
23If, however, that amount is not refunded to the lessee for any
24reason, the lessor is liable to pay that amount to the
25Department.
26    (23) Personal property purchased by a lessor who leases the

 

 

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

 

 

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1that has been issued a sales tax exemption identification
2number by the Department that assists victims of the disaster
3who reside within the declared disaster area.
4    (25) Beginning with taxable years ending on or after
5December 31, 1995 and ending with taxable years ending on or
6before December 31, 2004, personal property that is used in the
7performance of infrastructure repairs in this State, including
8but not limited to municipal roads and streets, access roads,
9bridges, sidewalks, waste disposal systems, water and sewer
10line extensions, water distribution and purification
11facilities, storm water drainage and retention facilities, and
12sewage treatment facilities, resulting from a State or
13federally declared disaster in Illinois or bordering Illinois
14when such repairs are initiated on facilities located in the
15declared disaster area within 6 months after the disaster.
16    (26) Beginning July 1, 1999, game or game birds purchased
17at a "game breeding and hunting preserve area" as that term is
18used in the Wildlife Code. This paragraph is exempt from the
19provisions of Section 3-90.
20    (27) A motor vehicle, as that term is defined in Section
211-146 of the Illinois Vehicle Code, that is donated to a
22corporation, limited liability company, society, association,
23foundation, or institution that is determined by the Department
24to be organized and operated exclusively for educational
25purposes. For purposes of this exemption, "a corporation,
26limited liability company, society, association, foundation,

 

 

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1or institution organized and operated exclusively for
2educational purposes" means all tax-supported public schools,
3private schools that offer systematic instruction in useful
4branches of learning by methods common to public schools and
5that compare favorably in their scope and intensity with the
6course of study presented in tax-supported schools, and
7vocational or technical schools or institutes organized and
8operated exclusively to provide a course of study of not less
9than 6 weeks duration and designed to prepare individuals to
10follow a trade or to pursue a manual, technical, mechanical,
11industrial, business, or commercial occupation.
12    (28) Beginning January 1, 2000, personal property,
13including food, purchased through fundraising events for the
14benefit of a public or private elementary or secondary school,
15a group of those schools, or one or more school districts if
16the events are sponsored by an entity recognized by the school
17district that consists primarily of volunteers and includes
18parents and teachers of the school children. This paragraph
19does not apply to fundraising events (i) for the benefit of
20private home instruction or (ii) for which the fundraising
21entity purchases the personal property sold at the events from
22another individual or entity that sold the property for the
23purpose of resale by the fundraising entity and that profits
24from the sale to the fundraising entity. This paragraph is
25exempt from the provisions of Section 3-90.
26    (29) Beginning January 1, 2000 and through December 31,

 

 

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12001, new or used automatic vending machines that prepare and
2serve hot food and beverages, including coffee, soup, and other
3items, and replacement parts for these machines. Beginning
4January 1, 2002 and through June 30, 2003, machines and parts
5for machines used in commercial, coin-operated amusement and
6vending business if a use or occupation tax is paid on the
7gross receipts derived from the use of the commercial,
8coin-operated amusement and vending machines. This paragraph
9is exempt from the provisions of Section 3-90.
10    (30) Beginning January 1, 2001 and through June 30, 2016,
11food for human consumption that is to be consumed off the
12premises where it is sold (other than alcoholic beverages, soft
13drinks, and food that has been prepared for immediate
14consumption) and prescription and nonprescription medicines,
15drugs, medical appliances, and insulin, urine testing
16materials, syringes, and needles used by diabetics, for human
17use, when purchased for use by a person receiving medical
18assistance under Article V of the Illinois Public Aid Code who
19resides in a licensed long-term care facility, as defined in
20the Nursing Home Care Act, or in a licensed facility as defined
21in the ID/DD Community Care Act, the MC/DD Act, or the
22Specialized Mental Health Rehabilitation Act of 2013.
23    (31) Beginning on August 2, 2001 (the effective date of
24Public Act 92-227) this amendatory Act of the 92nd General
25Assembly, computers and communications equipment utilized for
26any hospital purpose and equipment used in the diagnosis,

 

 

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1analysis, or treatment of hospital patients purchased by a
2lessor who leases the equipment, under a lease of one year or
3longer executed or in effect at the time the lessor would
4otherwise be subject to the tax imposed by this Act, to a
5hospital that has been issued an active tax exemption
6identification number by the Department under Section 1g of the
7Retailers' Occupation Tax Act. If the equipment is leased in a
8manner that does not qualify for this exemption or is used in
9any other nonexempt manner, the lessor shall be liable for the
10tax imposed under this Act or the Service Use Tax Act, as the
11case may be, based on the fair market value of the property at
12the time the nonqualifying use occurs. No lessor shall collect
13or attempt to collect an amount (however designated) that
14purports to reimburse that lessor for the tax imposed by this
15Act or the Service Use Tax Act, as the case may be, if the tax
16has not been paid by the lessor. If a lessor improperly
17collects any such amount from the lessee, the lessee shall have
18a legal right to claim a refund of that amount from the lessor.
19If, however, that amount is not refunded to the lessee for any
20reason, the lessor is liable to pay that amount to the
21Department. This paragraph is exempt from the provisions of
22Section 3-90.
23    (32) Beginning on August 2, 2001 (the effective date of
24Public Act 92-227) this amendatory Act of the 92nd General
25Assembly, personal property purchased by a lessor who leases
26the property, under a lease of one year or longer executed or

 

 

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1in effect at the time the lessor would otherwise be subject to
2the tax imposed by this Act, to a governmental body that has
3been issued an active sales tax exemption identification number
4by the Department under Section 1g of the Retailers' Occupation
5Tax Act. If the property is leased in a manner that does not
6qualify for this exemption or used in any other nonexempt
7manner, the lessor shall be liable for the tax imposed under
8this Act or the Service Use Tax Act, as the case may be, based
9on the fair market value of the property at the time the
10nonqualifying use occurs. No lessor shall collect or attempt to
11collect an amount (however designated) that purports to
12reimburse that lessor for the tax imposed by this Act or the
13Service Use Tax Act, as the case may be, if the tax has not been
14paid by the lessor. If a lessor improperly collects any such
15amount from the lessee, the lessee shall have a legal right to
16claim a refund of that amount from the lessor. If, however,
17that amount is not refunded to the lessee for any reason, the
18lessor is liable to pay that amount to the Department. This
19paragraph is exempt from the provisions of Section 3-90.
20    (33) On and after July 1, 2003 and through June 30, 2004,
21the use in this State of motor vehicles of the second division
22with a gross vehicle weight in excess of 8,000 pounds and that
23are subject to the commercial distribution fee imposed under
24Section 3-815.1 of the Illinois Vehicle Code. Beginning on July
251, 2004 and through June 30, 2005, the use in this State of
26motor vehicles of the second division: (i) with a gross vehicle

 

 

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1weight rating in excess of 8,000 pounds; (ii) that are subject
2to the commercial distribution fee imposed under Section
33-815.1 of the Illinois Vehicle Code; and (iii) that are
4primarily used for commercial purposes. Through June 30, 2005,
5this exemption applies to repair and replacement parts added
6after the initial purchase of such a motor vehicle if that
7motor vehicle is used in a manner that would qualify for the
8rolling stock exemption otherwise provided for in this Act. For
9purposes of this paragraph, the term "used for commercial
10purposes" means the transportation of persons or property in
11furtherance of any commercial or industrial enterprise,
12whether for-hire or not.
13    (34) Beginning January 1, 2008, tangible personal property
14used in the construction or maintenance of a community water
15supply, as defined under Section 3.145 of the Environmental
16Protection Act, that is operated by a not-for-profit
17corporation that holds a valid water supply permit issued under
18Title IV of the Environmental Protection Act. This paragraph is
19exempt from the provisions of Section 3-90.
20    (35) Beginning January 1, 2010, materials, parts,
21equipment, components, and furnishings incorporated into or
22upon an aircraft as part of the modification, refurbishment,
23completion, replacement, repair, or maintenance of the
24aircraft. This exemption includes consumable supplies used in
25the modification, refurbishment, completion, replacement,
26repair, and maintenance of aircraft, but excludes any

 

 

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1materials, parts, equipment, components, and consumable
2supplies used in the modification, replacement, repair, and
3maintenance of aircraft engines or power plants, whether such
4engines or power plants are installed or uninstalled upon any
5such aircraft. "Consumable supplies" include, but are not
6limited to, adhesive, tape, sandpaper, general purpose
7lubricants, cleaning solution, latex gloves, and protective
8films. This exemption applies only to the use of qualifying
9tangible personal property by persons who modify, refurbish,
10complete, repair, replace, or maintain aircraft and who (i)
11hold an Air Agency Certificate and are empowered to operate an
12approved repair station by the Federal Aviation
13Administration, (ii) have a Class IV Rating, and (iii) conduct
14operations in accordance with Part 145 of the Federal Aviation
15Regulations. The exemption does not include aircraft operated
16by a commercial air carrier providing scheduled passenger air
17service pursuant to authority issued under Part 121 or Part 129
18of the Federal Aviation Regulations. The changes made to this
19paragraph (35) by Public Act 98-534 are declarative of existing
20law.
21    (36) Tangible personal property purchased by a
22public-facilities corporation, as described in Section
2311-65-10 of the Illinois Municipal Code, for purposes of
24constructing or furnishing a municipal convention hall, but
25only if the legal title to the municipal convention hall is
26transferred to the municipality without any further

 

 

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1consideration by or on behalf of the municipality at the time
2of the completion of the municipal convention hall or upon the
3retirement or redemption of any bonds or other debt instruments
4issued by the public-facilities corporation in connection with
5the development of the municipal convention hall. This
6exemption includes existing public-facilities corporations as
7provided in Section 11-65-25 of the Illinois Municipal Code.
8This paragraph is exempt from the provisions of Section 3-90.
9    (37) Beginning January 1, 2017, menstrual pads, tampons,
10and menstrual cups.
11    (38) Merchandise that is subject to the Rental Purchase
12Agreement Occupation and Use Tax. The purchaser must certify
13that the item is purchased to be rented subject to a rental
14purchase agreement, as defined in the Rental Purchase Agreement
15Act, and provide proof of registration under the Rental
16Purchase Agreement Occupation and Use Tax Act. This paragraph
17is exempt from the provisions of Section 3-90.
18(Source: P.A. 99-180, eff. 7-29-15; 99-855, eff. 8-19-16;
19100-22, eff. 7-6-17; 100-437, eff. 1-1-18; revised 9-27-17.)
 
20    (35 ILCS 105/3-85)
21    Sec. 3-85. Manufacturer's Purchase Credit. For purchases
22of machinery and equipment made on and after January 1, 1995
23through June 30, 2003, and on and after September 1, 2004
24through August 30, 2014, and on and after January 1, 2019, a
25purchaser of manufacturing machinery and equipment that

 

 

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1qualifies for the exemption provided by paragraph (18) of
2Section 3-5 of this Act earns a credit in an amount equal to a
3fixed percentage of the tax which would have been incurred
4under this Act on those purchases. For purchases of graphic
5arts machinery and equipment made on or after July 1, 1996 and
6through June 30, 2003, and on and after September 1, 2004
7through August 30, 2014, and on and after January 1, 2019, a
8purchaser of graphic arts machinery and equipment that
9qualifies for the exemption provided by paragraph (6) of
10Section 3-5 of this Act earns a credit in an amount equal to a
11fixed percentage of the tax that would have been incurred under
12this Act on those purchases. The credit earned for purchases of
13manufacturing machinery and equipment or graphic arts
14machinery and equipment shall be referred to as the
15Manufacturer's Purchase Credit. A graphic arts producer is a
16person engaged in graphic arts production as defined in Section
172-30 of the Retailers' Occupation Tax Act. Beginning July 1,
181996, all references in this Section to manufacturers or
19manufacturing shall also be deemed to refer to graphic arts
20producers or graphic arts production.
21    The amount of credit shall be a percentage of the tax that
22would have been incurred on the purchase of manufacturing
23machinery and equipment or graphic arts machinery and equipment
24if the exemptions provided by paragraph (6) or paragraph (18)
25of Section 3-5 of this Act had not been applicable. The
26percentage shall be as follows:

 

 

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1        (1) 15% for purchases made on or before June 30, 1995.
2        (2) 25% for purchases made after June 30, 1995, and on
3    or before June 30, 1996.
4        (3) 40% for purchases made after June 30, 1996, and on
5    or before June 30, 1997.
6        (4) 50% for purchases made on or after July 1, 1997.
7    (a) Manufacturer's Purchase Credit earned prior to July 1,
82003. This subsection (a) applies to Manufacturer's Purchase
9Credit earned prior to July 1, 2003. A purchaser of production
10related tangible personal property desiring to use the
11Manufacturer's Purchase Credit shall certify to the seller
12prior to October 1, 2003 that the purchaser is satisfying all
13or part of the liability under the Use Tax Act or the Service
14Use Tax Act that is due on the purchase of the production
15related tangible personal property by use of Manufacturer's
16Purchase Credit. The Manufacturer's Purchase Credit
17certification must be dated and shall include the name and
18address of the purchaser, the purchaser's registration number,
19if registered, the credit being applied, and a statement that
20the State Use Tax or Service Use Tax liability is being
21satisfied with the manufacturer's or graphic arts producer's
22accumulated purchase credit. Certification may be incorporated
23into the manufacturer's or graphic arts producer's purchase
24order. Manufacturer's Purchase Credit certification provided
25by the manufacturer or graphic arts producer prior to October
261, 2003 may be used to satisfy the retailer's or serviceman's

 

 

HB5735- 21 -LRB100 19659 HLH 34932 b

1liability under the Retailers' Occupation Tax Act or Service
2Occupation Tax Act for the credit claimed, not to exceed 6.25%
3of the receipts subject to tax from a qualifying purchase, but
4only if the retailer or serviceman reports the Manufacturer's
5Purchase Credit claimed as required by the Department. A
6Manufacturer's Purchase Credit reported on any original or
7amended return filed under this Act after October 20, 2003
8shall be disallowed. The Manufacturer's Purchase Credit earned
9by purchase of exempt manufacturing machinery and equipment or
10graphic arts machinery and equipment is a non-transferable
11credit. A manufacturer or graphic arts producer that enters
12into a contract involving the installation of tangible personal
13property into real estate within a manufacturing or graphic
14arts production facility may, prior to October 1, 2003,
15authorize a construction contractor to utilize credit
16accumulated by the manufacturer or graphic arts producer to
17purchase the tangible personal property. A manufacturer or
18graphic arts producer intending to use accumulated credit to
19purchase such tangible personal property shall execute a
20written contract authorizing the contractor to utilize a
21specified dollar amount of credit. The contractor shall
22furnish, prior to October 1, 2003, the supplier with the
23manufacturer's or graphic arts producer's name, registration
24or resale number, and a statement that a specific amount of the
25Use Tax or Service Use Tax liability, not to exceed 6.25% of
26the selling price, is being satisfied with the credit. The

 

 

HB5735- 22 -LRB100 19659 HLH 34932 b

1manufacturer or graphic arts producer shall remain liable to
2timely report all information required by the annual Report of
3Manufacturer's Purchase Credit Used for all credit utilized by
4a construction contractor.
5    No Manufacturer's Purchase Credit earned prior to July 1,
62003 may be used after October 1, 2003. The Manufacturer's
7Purchase Credit may be used to satisfy liability under the Use
8Tax Act or the Service Use Tax Act due on the purchase of
9production related tangible personal property (including
10purchases by a manufacturer, by a graphic arts producer, or by
11a lessor who rents or leases the use of the property to a
12manufacturer or graphic arts producer) that does not otherwise
13qualify for the manufacturing machinery and equipment
14exemption or the graphic arts machinery and equipment
15exemption. "Production related tangible personal property"
16means (i) all tangible personal property used or consumed by
17the purchaser in a manufacturing facility in which a
18manufacturing process described in Section 2-45 of the
19Retailers' Occupation Tax Act takes place, including tangible
20personal property purchased for incorporation into real estate
21within a manufacturing facility and including, but not limited
22to, tangible personal property used or consumed in activities
23such as preproduction material handling, receiving, quality
24control, inventory control, storage, staging, and packaging
25for shipping and transportation purposes; (ii) all tangible
26personal property used or consumed by the purchaser in a

 

 

HB5735- 23 -LRB100 19659 HLH 34932 b

1graphic arts facility in which graphic arts production as
2described in Section 2-30 of the Retailers' Occupation Tax Act
3takes place, including tangible personal property purchased
4for incorporation into real estate within a graphic arts
5facility and including, but not limited to, all tangible
6personal property used or consumed in activities such as
7graphic arts preliminary or pre-press production,
8pre-production material handling, receiving, quality control,
9inventory control, storage, staging, sorting, labeling,
10mailing, tying, wrapping, and packaging; and (iii) all tangible
11personal property used or consumed by the purchaser for
12research and development. "Production related tangible
13personal property" does not include (i) tangible personal
14property used, within or without a manufacturing facility, in
15sales, purchasing, accounting, fiscal management, marketing,
16personnel recruitment or selection, or landscaping or (ii)
17tangible personal property required to be titled or registered
18with a department, agency, or unit of federal, state, or local
19government. The Manufacturer's Purchase Credit may be used,
20prior to October 1, 2003, to satisfy the tax arising either
21from the purchase of machinery and equipment on or after
22January 1, 1995 for which the exemption provided by paragraph
23(18) of Section 3-5 of this Act was erroneously claimed, or the
24purchase of machinery and equipment on or after July 1, 1996
25for which the exemption provided by paragraph (6) of Section
263-5 of this Act was erroneously claimed, but not in

 

 

HB5735- 24 -LRB100 19659 HLH 34932 b

1satisfaction of penalty, if any, and interest for failure to
2pay the tax when due. A purchaser of production related
3tangible personal property who is required to pay Illinois Use
4Tax or Service Use Tax on the purchase directly to the
5Department may, prior to October 1, 2003, utilize the
6Manufacturer's Purchase Credit in satisfaction of the tax
7arising from that purchase, but not in satisfaction of penalty
8and interest. A purchaser who uses the Manufacturer's Purchase
9Credit to purchase property which is later determined not to be
10production related tangible personal property may be liable for
11tax, penalty, and interest on the purchase of that property as
12of the date of purchase but shall be entitled to use the
13disallowed Manufacturer's Purchase Credit, so long as it has
14not expired and is used prior to October 1, 2003, on qualifying
15purchases of production related tangible personal property not
16previously subject to credit usage. The Manufacturer's
17Purchase Credit earned by a manufacturer or graphic arts
18producer expires the last day of the second calendar year
19following the calendar year in which the credit arose. No
20Manufacturer's Purchase Credit may be used after September 30,
212003 regardless of when that credit was earned.
22    A purchaser earning Manufacturer's Purchase Credit shall
23sign and file an annual Report of Manufacturer's Purchase
24Credit Earned for each calendar year no later than the last day
25of the sixth month following the calendar year in which a
26Manufacturer's Purchase Credit is earned. A Report of

 

 

HB5735- 25 -LRB100 19659 HLH 34932 b

1Manufacturer's Purchase Credit Earned shall be filed on forms
2as prescribed or approved by the Department and shall state,
3for each month of the calendar year: (i) the total purchase
4price of all purchases of exempt manufacturing or graphic arts
5machinery on which the credit was earned; (ii) the total State
6Use Tax or Service Use Tax which would have been due on those
7items; (iii) the percentage used to calculate the amount of
8credit earned; (iv) the amount of credit earned; and (v) such
9other information as the Department may reasonably require. A
10purchaser earning Manufacturer's Purchase Credit shall
11maintain records which identify, as to each purchase of
12manufacturing or graphic arts machinery and equipment on which
13the purchaser earned Manufacturer's Purchase Credit, the
14vendor (including, if applicable, either the vendor's
15registration number or Federal Employer Identification
16Number), the purchase price, and the amount of Manufacturer's
17Purchase Credit earned on each purchase.
18    A purchaser using Manufacturer's Purchase Credit shall
19sign and file an annual Report of Manufacturer's Purchase
20Credit Used for each calendar year no later than the last day
21of the sixth month following the calendar year in which a
22Manufacturer's Purchase Credit is used. A Report of
23Manufacturer's Purchase Credit Used shall be filed on forms as
24prescribed or approved by the Department and shall state, for
25each month of the calendar year: (i) the total purchase price
26of production related tangible personal property purchased

 

 

HB5735- 26 -LRB100 19659 HLH 34932 b

1from Illinois suppliers; (ii) the total purchase price of
2production related tangible personal property purchased from
3out-of-state suppliers; (iii) the total amount of credit used
4during such month; and (iv) such other information as the
5Department may reasonably require. A purchaser using
6Manufacturer's Purchase Credit shall maintain records that
7identify, as to each purchase of production related tangible
8personal property on which the purchaser used Manufacturer's
9Purchase Credit, the vendor (including, if applicable, either
10the vendor's registration number or Federal Employer
11Identification Number), the purchase price, and the amount of
12Manufacturer's Purchase Credit used on each purchase.
13    No annual report shall be filed before May 1, 1996 or after
14June 30, 2004. A purchaser that fails to file an annual Report
15of Manufacturer's Purchase Credit Earned or an annual Report of
16Manufacturer's Purchase Credit Used by the last day of the
17sixth month following the end of the calendar year shall
18forfeit all Manufacturer's Purchase Credit for that calendar
19year unless it establishes that its failure to file was due to
20reasonable cause. Manufacturer's Purchase Credit reports may
21be amended to report and claim credit on qualifying purchases
22not previously reported at any time before the credit would
23have expired, unless both the Department and the purchaser have
24agreed to an extension of the statute of limitations for the
25issuance of a notice of tax liability as provided in Section 4
26of the Retailers' Occupation Tax Act. If the time for

 

 

HB5735- 27 -LRB100 19659 HLH 34932 b

1assessment or refund has been extended, then amended reports
2for a calendar year may be filed at any time prior to the date
3to which the statute of limitations for the calendar year or
4portion thereof has been extended. No Manufacturer's Purchase
5Credit report filed with the Department for periods prior to
6January 1, 1995 shall be approved. Manufacturer's Purchase
7Credit claimed on an amended report may be used, until October
81, 2003, to satisfy tax liability under the Use Tax Act or the
9Service Use Tax Act (i) on qualifying purchases of production
10related tangible personal property made after the date the
11amended report is filed or (ii) assessed by the Department on
12qualifying purchases of production related tangible personal
13property made in the case of manufacturers on or after January
141, 1995, or in the case of graphic arts producers on or after
15July 1, 1996.
16    If the purchaser is not the manufacturer or a graphic arts
17producer, but rents or leases the use of the property to a
18manufacturer or graphic arts producer, the purchaser may earn,
19report, and use Manufacturer's Purchase Credit in the same
20manner as a manufacturer or graphic arts producer.
21    A purchaser shall not be entitled to any Manufacturer's
22Purchase Credit for a purchase that is required to be reported
23and is not timely reported as provided in this Section. A
24purchaser remains liable for (i) any tax that was satisfied by
25use of a Manufacturer's Purchase Credit, as of the date of
26purchase, if that use is not timely reported as required in

 

 

HB5735- 28 -LRB100 19659 HLH 34932 b

1this Section and (ii) for any applicable penalties and interest
2for failing to pay the tax when due. No Manufacturer's Purchase
3Credit may be used after September 30, 2003 to satisfy any tax
4liability imposed under this Act, including any audit
5liability.
6    (b) Manufacturer's Purchase Credit earned on and after
7September 1, 2004. This subsection (b) applies to
8Manufacturer's Purchase Credit earned on and after September 1,
92004. Manufacturer's Purchase Credit earned on or after
10September 1, 2004 may only be used to satisfy the Use Tax or
11Service Use Tax liability incurred on production related
12tangible personal property purchased on or after September 1,
132004. A purchaser of production related tangible personal
14property desiring to use the Manufacturer's Purchase Credit
15shall certify to the seller that the purchaser is satisfying
16all or part of the liability under the Use Tax Act or the
17Service Use Tax Act that is due on the purchase of the
18production related tangible personal property by use of
19Manufacturer's Purchase Credit. The Manufacturer's Purchase
20Credit certification must be dated and shall include the name
21and address of the purchaser, the purchaser's registration
22number, if registered, the credit being applied, and a
23statement that the State Use Tax or Service Use Tax liability
24is being satisfied with the manufacturer's or graphic arts
25producer's accumulated purchase credit. Certification may be
26incorporated into the manufacturer's or graphic arts

 

 

HB5735- 29 -LRB100 19659 HLH 34932 b

1producer's purchase order. Manufacturer's Purchase Credit
2certification provided by the manufacturer or graphic arts
3producer may be used to satisfy the retailer's or serviceman's
4liability under the Retailers' Occupation Tax Act or Service
5Occupation Tax Act for the credit claimed, not to exceed 6.25%
6of the receipts subject to tax from a qualifying purchase, but
7only if the retailer or serviceman reports the Manufacturer's
8Purchase Credit claimed as required by the Department. The
9Manufacturer's Purchase Credit earned by purchase of exempt
10manufacturing machinery and equipment or graphic arts
11machinery and equipment is a non-transferable credit. A
12manufacturer or graphic arts producer that enters into a
13contract involving the installation of tangible personal
14property into real estate within a manufacturing or graphic
15arts production facility may, on or after September 1, 2004,
16authorize a construction contractor to utilize credit
17accumulated by the manufacturer or graphic arts producer to
18purchase the tangible personal property. A manufacturer or
19graphic arts producer intending to use accumulated credit to
20purchase such tangible personal property shall execute a
21written contract authorizing the contractor to utilize a
22specified dollar amount of credit. The contractor shall furnish
23the supplier with the manufacturer's or graphic arts producer's
24name, registration or resale number, and a statement that a
25specific amount of the Use Tax or Service Use Tax liability,
26not to exceed 6.25% of the selling price, is being satisfied

 

 

HB5735- 30 -LRB100 19659 HLH 34932 b

1with the credit. The manufacturer or graphic arts producer
2shall remain liable to timely report all information required
3by the annual Report of Manufacturer's Purchase Credit Used for
4all credit utilized by a construction contractor.
5    The Manufacturer's Purchase Credit may be used to satisfy
6liability under the Use Tax Act or the Service Use Tax Act due
7on the purchase, made on or after September 1, 2004, of
8production related tangible personal property (including
9purchases by a manufacturer, by a graphic arts producer, or by
10a lessor who rents or leases the use of the property to a
11manufacturer or graphic arts producer) that does not otherwise
12qualify for the manufacturing machinery and equipment
13exemption or the graphic arts machinery and equipment
14exemption. "Production related tangible personal property"
15means (i) all tangible personal property used or consumed by
16the purchaser in a manufacturing facility in which a
17manufacturing process described in Section 2-45 of the
18Retailers' Occupation Tax Act takes place, including tangible
19personal property purchased for incorporation into real estate
20within a manufacturing facility and including, but not limited
21to, tangible personal property used or consumed in activities
22such as preproduction material handling, receiving, quality
23control, inventory control, storage, staging, and packaging
24for shipping and transportation purposes; (ii) all tangible
25personal property used or consumed by the purchaser in a
26graphic arts facility in which graphic arts production as

 

 

HB5735- 31 -LRB100 19659 HLH 34932 b

1described in Section 2-30 of the Retailers' Occupation Tax Act
2takes place, including tangible personal property purchased
3for incorporation into real estate within a graphic arts
4facility and including, but not limited to, all tangible
5personal property used or consumed in activities such as
6graphic arts preliminary or pre-press production,
7pre-production material handling, receiving, quality control,
8inventory control, storage, staging, sorting, labeling,
9mailing, tying, wrapping, and packaging; and (iii) all tangible
10personal property used or consumed by the purchaser for
11research and development. "Production related tangible
12personal property" does not include (i) tangible personal
13property used, within or without a manufacturing facility, in
14sales, purchasing, accounting, fiscal management, marketing,
15personnel recruitment or selection, or landscaping or (ii)
16tangible personal property required to be titled or registered
17with a department, agency, or unit of federal, state, or local
18government. The Manufacturer's Purchase Credit may be used to
19satisfy the tax arising either from the purchase of machinery
20and equipment on or after September 1, 2004 for which the
21exemption provided by paragraph (18) of Section 3-5 of this Act
22was erroneously claimed, or the purchase of machinery and
23equipment on or after September 1, 2004 for which the exemption
24provided by paragraph (6) of Section 3-5 of this Act was
25erroneously claimed, but not in satisfaction of penalty, if
26any, and interest for failure to pay the tax when due. A

 

 

HB5735- 32 -LRB100 19659 HLH 34932 b

1purchaser of production related tangible personal property
2that is purchased on or after September 1, 2004 who is required
3to pay Illinois Use Tax or Service Use Tax on the purchase
4directly to the Department may utilize the Manufacturer's
5Purchase Credit in satisfaction of the tax arising from that
6purchase, but not in satisfaction of penalty and interest. A
7purchaser who uses the Manufacturer's Purchase Credit to
8purchase property on and after September 1, 2004 which is later
9determined not to be production related tangible personal
10property may be liable for tax, penalty, and interest on the
11purchase of that property as of the date of purchase but shall
12be entitled to use the disallowed Manufacturer's Purchase
13Credit, so long as it has not expired and is used on qualifying
14purchases of production related tangible personal property not
15previously subject to credit usage. The Manufacturer's
16Purchase Credit earned by a manufacturer or graphic arts
17producer expires the last day of the second calendar year
18following the calendar year in which the credit arose. A
19purchaser earning Manufacturer's Purchase Credit shall sign
20and file an annual Report of Manufacturer's Purchase Credit
21Earned for each calendar year no later than the last day of the
22sixth month following the calendar year in which a
23Manufacturer's Purchase Credit is earned. A Report of
24Manufacturer's Purchase Credit Earned shall be filed on forms
25as prescribed or approved by the Department and shall state,
26for each month of the calendar year: (i) the total purchase

 

 

HB5735- 33 -LRB100 19659 HLH 34932 b

1price of all purchases of exempt manufacturing or graphic arts
2machinery on which the credit was earned; (ii) the total State
3Use Tax or Service Use Tax which would have been due on those
4items; (iii) the percentage used to calculate the amount of
5credit earned; (iv) the amount of credit earned; and (v) such
6other information as the Department may reasonably require. A
7purchaser earning Manufacturer's Purchase Credit shall
8maintain records which identify, as to each purchase of
9manufacturing or graphic arts machinery and equipment on which
10the purchaser earned Manufacturer's Purchase Credit, the
11vendor (including, if applicable, either the vendor's
12registration number or Federal Employer Identification
13Number), the purchase price, and the amount of Manufacturer's
14Purchase Credit earned on each purchase. A purchaser using
15Manufacturer's Purchase Credit shall sign and file an annual
16Report of Manufacturer's Purchase Credit Used for each calendar
17year no later than the last day of the sixth month following
18the calendar year in which a Manufacturer's Purchase Credit is
19used. A Report of Manufacturer's Purchase Credit Used shall be
20filed on forms as prescribed or approved by the Department and
21shall state, for each month of the calendar year: (i) the total
22purchase price of production related tangible personal
23property purchased from Illinois suppliers; (ii) the total
24purchase price of production related tangible personal
25property purchased from out-of-state suppliers; (iii) the
26total amount of credit used during such month; and (iv) such

 

 

HB5735- 34 -LRB100 19659 HLH 34932 b

1other information as the Department may reasonably require. A
2purchaser using Manufacturer's Purchase Credit shall maintain
3records that identify, as to each purchase of production
4related tangible personal property on which the purchaser used
5Manufacturer's Purchase Credit, the vendor (including, if
6applicable, either the vendor's registration number or Federal
7Employer Identification Number), the purchase price, and the
8amount of Manufacturer's Purchase Credit used on each purchase.
9    A purchaser that fails to file an annual Report of
10Manufacturer's Purchase Credit Earned or an annual Report of
11Manufacturer's Purchase Credit Used by the last day of the
12sixth month following the end of the calendar year shall
13forfeit all Manufacturer's Purchase Credit for that calendar
14year unless it establishes that its failure to file was due to
15reasonable cause. Manufacturer's Purchase Credit reports may
16be amended to report and claim credit on qualifying purchases
17not previously reported at any time before the credit would
18have expired, unless both the Department and the purchaser have
19agreed to an extension of the statute of limitations for the
20issuance of a notice of tax liability as provided in Section 4
21of the Retailers' Occupation Tax Act. If the time for
22assessment or refund has been extended, then amended reports
23for a calendar year may be filed at any time prior to the date
24to which the statute of limitations for the calendar year or
25portion thereof has been extended. Manufacturer's Purchase
26Credit claimed on an amended report may be used to satisfy tax

 

 

HB5735- 35 -LRB100 19659 HLH 34932 b

1liability under the Use Tax Act or the Service Use Tax Act (i)
2on qualifying purchases of production related tangible
3personal property made after the date the amended report is
4filed or (ii) assessed by the Department on qualifying
5production related tangible personal property purchased on or
6after September 1, 2004. If the purchaser is not the
7manufacturer or a graphic arts producer, but rents or leases
8the use of the property to a manufacturer or graphic arts
9producer, the purchaser may earn, report, and use
10Manufacturer's Purchase Credit in the same manner as a
11manufacturer or graphic arts producer. A purchaser shall not be
12entitled to any Manufacturer's Purchase Credit for a purchase
13that is required to be reported and is not timely reported as
14provided in this Section. A purchaser remains liable for (i)
15any tax that was satisfied by use of a Manufacturer's Purchase
16Credit, as of the date of purchase, if that use is not timely
17reported as required in this Section and (ii) for any
18applicable penalties and interest for failing to pay the tax
19when due.
20    This Section is exempt from the provisions of Section 3-90.
21(Source: P.A. 96-116, eff. 7-31-09.)
 
22    Section 10. The Service Use Tax Act is amended by changing
23Sections 3-5 and 3-70 as follows:
 
24    (35 ILCS 110/3-5)

 

 

HB5735- 36 -LRB100 19659 HLH 34932 b

1    Sec. 3-5. Exemptions. Use of the following tangible
2personal property is exempt from the tax imposed by this Act:
3    (1) Personal property purchased from a corporation,
4society, association, foundation, institution, or
5organization, other than a limited liability company, that is
6organized and operated as a not-for-profit service enterprise
7for the benefit of persons 65 years of age or older if the
8personal property was not purchased by the enterprise for the
9purpose of resale by the enterprise.
10    (2) Personal property purchased by a non-profit Illinois
11county fair association for use in conducting, operating, or
12promoting the county fair.
13    (3) Personal property purchased by a not-for-profit arts or
14cultural organization that establishes, by proof required by
15the Department by rule, that it has received an exemption under
16Section 501(c)(3) of the Internal Revenue Code and that is
17organized and operated primarily for the presentation or
18support of arts or cultural programming, activities, or
19services. These organizations include, but are not limited to,
20music and dramatic arts organizations such as symphony
21orchestras and theatrical groups, arts and cultural service
22organizations, local arts councils, visual arts organizations,
23and media arts organizations. On and after the effective date
24of this amendatory Act of the 92nd General Assembly, however,
25an entity otherwise eligible for this exemption shall not make
26tax-free purchases unless it has an active identification

 

 

HB5735- 37 -LRB100 19659 HLH 34932 b

1number issued by the Department.
2    (4) Legal tender, currency, medallions, or gold or silver
3coinage issued by the State of Illinois, the government of the
4United States of America, or the government of any foreign
5country, and bullion.
6    (5) Until July 1, 2003, and beginning again on September 1,
72004 through August 30, 2014, and beginning again on January 1,
82019, graphic arts machinery and equipment, including repair
9and replacement parts, both new and used, and including that
10manufactured on special order or purchased for lease, certified
11by the purchaser to be used primarily for graphic arts
12production. Equipment includes chemicals or chemicals acting
13as catalysts but only if the chemicals or chemicals acting as
14catalysts effect a direct and immediate change upon a graphic
15arts product. Beginning on July 1, 2017, graphic arts machinery
16and equipment is included in the manufacturing and assembling
17machinery and equipment exemption under Section 2 of this Act.
18This item (5) is exempt from the provisions of Section 3-75.
19    (6) Personal property purchased from a teacher-sponsored
20student organization affiliated with an elementary or
21secondary school located in Illinois.
22    (7) Farm machinery and equipment, both new and used,
23including that manufactured on special order, certified by the
24purchaser to be used primarily for production agriculture or
25State or federal agricultural programs, including individual
26replacement parts for the machinery and equipment, including

 

 

HB5735- 38 -LRB100 19659 HLH 34932 b

1machinery and equipment purchased for lease, and including
2implements of husbandry defined in Section 1-130 of the
3Illinois Vehicle Code, farm machinery and agricultural
4chemical and fertilizer spreaders, and nurse wagons required to
5be registered under Section 3-809 of the Illinois Vehicle Code,
6but excluding other motor vehicles required to be registered
7under the Illinois Vehicle Code. Horticultural polyhouses or
8hoop houses used for propagating, growing, or overwintering
9plants shall be considered farm machinery and equipment under
10this item (7). Agricultural chemical tender tanks and dry boxes
11shall include units sold separately from a motor vehicle
12required to be licensed and units sold mounted on a motor
13vehicle required to be licensed if the selling price of the
14tender is separately stated.
15    Farm machinery and equipment shall include precision
16farming equipment that is installed or purchased to be
17installed on farm machinery and equipment including, but not
18limited to, tractors, harvesters, sprayers, planters, seeders,
19or spreaders. Precision farming equipment includes, but is not
20limited to, soil testing sensors, computers, monitors,
21software, global positioning and mapping systems, and other
22such equipment.
23    Farm machinery and equipment also includes computers,
24sensors, software, and related equipment used primarily in the
25computer-assisted operation of production agriculture
26facilities, equipment, and activities such as, but not limited

 

 

HB5735- 39 -LRB100 19659 HLH 34932 b

1to, the collection, monitoring, and correlation of animal and
2crop data for the purpose of formulating animal diets and
3agricultural chemicals. This item (7) is exempt from the
4provisions of Section 3-75.
5    (8) Until June 30, 2013, fuel and petroleum products sold
6to or used by an air common carrier, certified by the carrier
7to be used for consumption, shipment, or storage in the conduct
8of its business as an air common carrier, for a flight destined
9for or returning from a location or locations outside the
10United States without regard to previous or subsequent domestic
11stopovers.
12    Beginning July 1, 2013, fuel and petroleum products sold to
13or used by an air carrier, certified by the carrier to be used
14for consumption, shipment, or storage in the conduct of its
15business as an air common carrier, for a flight that (i) is
16engaged in foreign trade or is engaged in trade between the
17United States and any of its possessions and (ii) transports at
18least one individual or package for hire from the city of
19origination to the city of final destination on the same
20aircraft, without regard to a change in the flight number of
21that aircraft.
22    (9) Proceeds of mandatory service charges separately
23stated on customers' bills for the purchase and consumption of
24food and beverages acquired as an incident to the purchase of a
25service from a serviceman, to the extent that the proceeds of
26the service charge are in fact turned over as tips or as a

 

 

HB5735- 40 -LRB100 19659 HLH 34932 b

1substitute for tips to the employees who participate directly
2in preparing, serving, hosting or cleaning up the food or
3beverage function with respect to which the service charge is
4imposed.
5    (10) Until July 1, 2003, oil field exploration, drilling,
6and production equipment, including (i) rigs and parts of rigs,
7rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
8tubular goods, including casing and drill strings, (iii) pumps
9and pump-jack units, (iv) storage tanks and flow lines, (v) any
10individual replacement part for oil field exploration,
11drilling, and production equipment, and (vi) machinery and
12equipment purchased for lease; but excluding motor vehicles
13required to be registered under the Illinois Vehicle Code.
14    (11) Proceeds from the sale of photoprocessing machinery
15and equipment, including repair and replacement parts, both new
16and used, including that manufactured on special order,
17certified by the purchaser to be used primarily for
18photoprocessing, and including photoprocessing machinery and
19equipment purchased for lease.
20    (12) Coal and aggregate exploration, mining, off-highway
21hauling, processing, maintenance, and reclamation equipment,
22including replacement parts and equipment, and including
23equipment purchased for lease, but excluding motor vehicles
24required to be registered under the Illinois Vehicle Code. The
25changes made to this Section by Public Act 97-767 apply on and
26after July 1, 2003, but no claim for credit or refund is

 

 

HB5735- 41 -LRB100 19659 HLH 34932 b

1allowed on or after August 16, 2013 (the effective date of
2Public Act 98-456) for such taxes paid during the period
3beginning July 1, 2003 and ending on August 16, 2013 (the
4effective date of Public Act 98-456).
5    (13) Semen used for artificial insemination of livestock
6for direct agricultural production.
7    (14) Horses, or interests in horses, registered with and
8meeting the requirements of any of the Arabian Horse Club
9Registry of America, Appaloosa Horse Club, American Quarter
10Horse Association, United States Trotting Association, or
11Jockey Club, as appropriate, used for purposes of breeding or
12racing for prizes. This item (14) is exempt from the provisions
13of Section 3-75, and the exemption provided for under this item
14(14) applies for all periods beginning May 30, 1995, but no
15claim for credit or refund is allowed on or after the effective
16date of this amendatory Act of the 95th General Assembly for
17such taxes paid during the period beginning May 30, 2000 and
18ending on the effective date of this amendatory Act of the 95th
19General Assembly.
20    (15) Computers and communications equipment utilized for
21any hospital purpose and equipment used in the diagnosis,
22analysis, or treatment of hospital patients purchased by a
23lessor who leases the equipment, under a lease of one year or
24longer executed or in effect at the time the lessor would
25otherwise be subject to the tax imposed by this Act, to a
26hospital that has been issued an active tax exemption

 

 

HB5735- 42 -LRB100 19659 HLH 34932 b

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

 

 

HB5735- 43 -LRB100 19659 HLH 34932 b

1non-qualifying use occurs. No lessor shall collect or attempt
2to collect an amount (however designated) that purports to
3reimburse that lessor for the tax imposed by this Act or the
4Use Tax Act, as the case may be, if the tax has not been paid by
5the lessor. If a lessor improperly collects any such amount
6from the lessee, the lessee shall have a legal right to claim a
7refund of that amount from the lessor. If, however, that amount
8is not refunded to the lessee for any reason, the lessor is
9liable to pay that amount to the Department.
10    (17) Beginning with taxable years ending on or after
11December 31, 1995 and ending with taxable years ending on or
12before December 31, 2004, personal property that is donated for
13disaster relief to be used in a State or federally declared
14disaster area in Illinois or bordering Illinois by a
15manufacturer or retailer that is registered in this State to a
16corporation, society, association, foundation, or institution
17that has been issued a sales tax exemption identification
18number by the Department that assists victims of the disaster
19who reside within the declared disaster area.
20    (18) Beginning with taxable years ending on or after
21December 31, 1995 and ending with taxable years ending on or
22before December 31, 2004, personal property that is used in the
23performance of infrastructure repairs in this State, including
24but not limited to municipal roads and streets, access roads,
25bridges, sidewalks, waste disposal systems, water and sewer
26line extensions, water distribution and purification

 

 

HB5735- 44 -LRB100 19659 HLH 34932 b

1facilities, storm water drainage and retention facilities, and
2sewage treatment facilities, resulting from a State or
3federally declared disaster in Illinois or bordering Illinois
4when such repairs are initiated on facilities located in the
5declared disaster area within 6 months after the disaster.
6    (19) Beginning July 1, 1999, game or game birds purchased
7at a "game breeding and hunting preserve area" as that term is
8used in the Wildlife Code. This paragraph is exempt from the
9provisions of Section 3-75.
10    (20) A motor vehicle, as that term is defined in Section
111-146 of the Illinois Vehicle Code, that is donated to a
12corporation, limited liability company, society, association,
13foundation, or institution that is determined by the Department
14to be organized and operated exclusively for educational
15purposes. For purposes of this exemption, "a corporation,
16limited liability company, society, association, foundation,
17or institution organized and operated exclusively for
18educational purposes" means all tax-supported public schools,
19private schools that offer systematic instruction in useful
20branches of learning by methods common to public schools and
21that compare favorably in their scope and intensity with the
22course of study presented in tax-supported schools, and
23vocational or technical schools or institutes organized and
24operated exclusively to provide a course of study of not less
25than 6 weeks duration and designed to prepare individuals to
26follow a trade or to pursue a manual, technical, mechanical,

 

 

HB5735- 45 -LRB100 19659 HLH 34932 b

1industrial, business, or commercial occupation.
2    (21) Beginning January 1, 2000, personal property,
3including food, purchased through fundraising events for the
4benefit of a public or private elementary or secondary school,
5a group of those schools, or one or more school districts if
6the events are sponsored by an entity recognized by the school
7district that consists primarily of volunteers and includes
8parents and teachers of the school children. This paragraph
9does not apply to fundraising events (i) for the benefit of
10private home instruction or (ii) for which the fundraising
11entity purchases the personal property sold at the events from
12another individual or entity that sold the property for the
13purpose of resale by the fundraising entity and that profits
14from the sale to the fundraising entity. This paragraph is
15exempt from the provisions of Section 3-75.
16    (22) Beginning January 1, 2000 and through December 31,
172001, new or used automatic vending machines that prepare and
18serve hot food and beverages, including coffee, soup, and other
19items, and replacement parts for these machines. Beginning
20January 1, 2002 and through June 30, 2003, machines and parts
21for machines used in commercial, coin-operated amusement and
22vending business if a use or occupation tax is paid on the
23gross receipts derived from the use of the commercial,
24coin-operated amusement and vending machines. This paragraph
25is exempt from the provisions of Section 3-75.
26    (23) Beginning August 23, 2001 and through June 30, 2016,

 

 

HB5735- 46 -LRB100 19659 HLH 34932 b

1food for human consumption that is to be consumed off the
2premises where it is sold (other than alcoholic beverages, soft
3drinks, and food that has been prepared for immediate
4consumption) and prescription and nonprescription medicines,
5drugs, medical appliances, and insulin, urine testing
6materials, syringes, and needles used by diabetics, for human
7use, when purchased for use by a person receiving medical
8assistance under Article V of the Illinois Public Aid Code who
9resides in a licensed long-term care facility, as defined in
10the Nursing Home Care Act, or in a licensed facility as defined
11in the ID/DD Community Care Act, the MC/DD Act, or the
12Specialized Mental Health Rehabilitation Act of 2013.
13    (24) Beginning on the effective date of this amendatory Act
14of the 92nd General Assembly, computers and communications
15equipment utilized for any hospital purpose and equipment used
16in the diagnosis, analysis, or treatment of hospital patients
17purchased by a lessor who leases the equipment, under a lease
18of one year or longer executed or in effect at the time the
19lessor would otherwise be subject to the tax imposed by this
20Act, to a hospital that has been issued an active tax exemption
21identification number by the Department under Section 1g of the
22Retailers' Occupation Tax Act. If the equipment is leased in a
23manner that does not qualify for this exemption or is used in
24any other nonexempt manner, the lessor shall be liable for the
25tax imposed under this Act or the Use Tax Act, as the case may
26be, based on the fair market value of the property at the time

 

 

HB5735- 47 -LRB100 19659 HLH 34932 b

1the nonqualifying use occurs. No lessor shall collect or
2attempt to collect an amount (however designated) that purports
3to reimburse that lessor for the tax imposed by this Act or the
4Use Tax Act, as the case may be, if the tax has not been paid by
5the lessor. If a lessor improperly collects any such amount
6from the lessee, the lessee shall have a legal right to claim a
7refund of that amount from the lessor. If, however, that amount
8is not refunded to the lessee for any reason, the lessor is
9liable to pay that amount to the Department. This paragraph is
10exempt from the provisions of Section 3-75.
11    (25) Beginning on the effective date of this amendatory Act
12of the 92nd General Assembly, personal property purchased by a
13lessor who leases the property, under a lease of one year or
14longer executed or in effect at the time the lessor would
15otherwise be subject to the tax imposed by this Act, to a
16governmental body that has been issued an active tax exemption
17identification number by the Department under Section 1g of the
18Retailers' Occupation Tax Act. If the property is leased in a
19manner that does not qualify for this exemption or is used in
20any other nonexempt manner, the lessor shall be liable for the
21tax imposed under this Act or the Use Tax Act, as the case may
22be, based on the fair market value of the property at the time
23the nonqualifying use occurs. No lessor shall collect or
24attempt to collect an amount (however designated) that purports
25to reimburse that lessor for the tax imposed by this Act or the
26Use Tax Act, as the case may be, if the tax has not been paid by

 

 

HB5735- 48 -LRB100 19659 HLH 34932 b

1the lessor. If a lessor improperly collects any such amount
2from the lessee, the lessee shall have a legal right to claim a
3refund of that amount from the lessor. If, however, that amount
4is not refunded to the lessee for any reason, the lessor is
5liable to pay that amount to the Department. This paragraph is
6exempt from the provisions of Section 3-75.
7    (26) Beginning January 1, 2008, tangible personal property
8used in the construction or maintenance of a community water
9supply, as defined under Section 3.145 of the Environmental
10Protection Act, that is operated by a not-for-profit
11corporation that holds a valid water supply permit issued under
12Title IV of the Environmental Protection Act. This paragraph is
13exempt from the provisions of Section 3-75.
14    (27) Beginning January 1, 2010, materials, parts,
15equipment, components, and furnishings incorporated into or
16upon an aircraft as part of the modification, refurbishment,
17completion, replacement, repair, or maintenance of the
18aircraft. This exemption includes consumable supplies used in
19the modification, refurbishment, completion, replacement,
20repair, and maintenance of aircraft, but excludes any
21materials, parts, equipment, components, and consumable
22supplies used in the modification, replacement, repair, and
23maintenance of aircraft engines or power plants, whether such
24engines or power plants are installed or uninstalled upon any
25such aircraft. "Consumable supplies" include, but are not
26limited to, adhesive, tape, sandpaper, general purpose

 

 

HB5735- 49 -LRB100 19659 HLH 34932 b

1lubricants, cleaning solution, latex gloves, and protective
2films. This exemption applies only to the use of qualifying
3tangible personal property transferred incident to the
4modification, refurbishment, completion, replacement, repair,
5or maintenance of aircraft by persons who (i) hold an Air
6Agency Certificate and are empowered to operate an approved
7repair station by the Federal Aviation Administration, (ii)
8have a Class IV Rating, and (iii) conduct operations in
9accordance with Part 145 of the Federal Aviation Regulations.
10The exemption does not include aircraft operated by a
11commercial air carrier providing scheduled passenger air
12service pursuant to authority issued under Part 121 or Part 129
13of the Federal Aviation Regulations. The changes made to this
14paragraph (27) by Public Act 98-534 are declarative of existing
15law.
16    (28) Tangible personal property purchased by a
17public-facilities corporation, as described in Section
1811-65-10 of the Illinois Municipal Code, for purposes of
19constructing or furnishing a municipal convention hall, but
20only if the legal title to the municipal convention hall is
21transferred to the municipality without any further
22consideration by or on behalf of the municipality at the time
23of the completion of the municipal convention hall or upon the
24retirement or redemption of any bonds or other debt instruments
25issued by the public-facilities corporation in connection with
26the development of the municipal convention hall. This

 

 

HB5735- 50 -LRB100 19659 HLH 34932 b

1exemption includes existing public-facilities corporations as
2provided in Section 11-65-25 of the Illinois Municipal Code.
3This paragraph is exempt from the provisions of Section 3-75.
4    (29) Beginning January 1, 2017, menstrual pads, tampons,
5and menstrual cups.
6(Source: P.A. 99-180, eff. 7-29-15; 99-855, eff. 8-19-16;
7100-22, eff. 7-6-17.)
 
8    (35 ILCS 110/3-70)
9    Sec. 3-70. Manufacturer's Purchase Credit. For purchases
10of machinery and equipment made on and after January 1, 1995
11and through June 30, 2003, and on and after September 1, 2004
12through August 30, 2014, and on and after January 1, 2019, a
13purchaser of manufacturing machinery and equipment that
14qualifies for the exemption provided by Section 2 of this Act
15earns a credit in an amount equal to a fixed percentage of the
16tax which would have been incurred under this Act on those
17purchases. For purchases of graphic arts machinery and
18equipment made on or after July 1, 1996 through June 30, 2003,
19and on and after September 1, 2004 through August 30, 2014, and
20on and after January 1, 2019, a purchase of graphic arts
21machinery and equipment that qualifies for the exemption
22provided by paragraph (5) of Section 3-5 of this Act earns a
23credit in an amount equal to a fixed percentage of the tax that
24would have been incurred under this Act on those purchases. The
25credit earned for the purchase of manufacturing machinery and

 

 

HB5735- 51 -LRB100 19659 HLH 34932 b

1equipment and graphic arts machinery and equipment shall be
2referred to as the Manufacturer's Purchase Credit. A graphic
3arts producer is a person engaged in graphic arts production as
4defined in Section 3-30 of the Service Occupation Tax Act.
5Beginning July 1, 1996, all references in this Section to
6manufacturers or manufacturing shall also refer to graphic arts
7producers or graphic arts production.
8    The amount of credit shall be a percentage of the tax that
9would have been incurred on the purchase of the manufacturing
10machinery and equipment or graphic arts machinery and equipment
11if the exemptions provided by Section 2 or paragraph (5) of
12Section 3-5 of this Act had not been applicable.
13    All purchases prior to October 1, 2003 of manufacturing
14machinery and equipment and graphic arts machinery and
15equipment that qualify for the exemptions provided by paragraph
16(5) of Section 2 or paragraph (5) of Section 3-5 of this Act
17qualify for the credit without regard to whether the serviceman
18elected, or could have elected, under paragraph (7) of Section
192 of this Act to exclude the transaction from this Act. If the
20serviceman's billing to the service customer separately states
21a selling price for the exempt manufacturing machinery or
22equipment or the exempt graphic arts machinery and equipment,
23the credit shall be calculated, as otherwise provided herein,
24based on that selling price. If the serviceman's billing does
25not separately state a selling price for the exempt
26manufacturing machinery and equipment or the exempt graphic

 

 

HB5735- 52 -LRB100 19659 HLH 34932 b

1arts machinery and equipment, the credit shall be calculated,
2as otherwise provided herein, based on 50% of the entire
3billing. If the serviceman contracts to design, develop, and
4produce special order manufacturing machinery and equipment or
5special order graphic arts machinery and equipment, and the
6billing does not separately state a selling price for such
7special order machinery and equipment, the credit shall be
8calculated, as otherwise provided herein, based on 50% of the
9entire billing. The provisions of this paragraph are effective
10for purchases made on or after January 1, 1995.
11    The percentage shall be as follows:
12        (1) 15% for purchases made on or before June 30, 1995.
13        (2) 25% for purchases made after June 30, 1995, and on
14    or before June 30, 1996.
15        (3) 40% for purchases made after June 30, 1996, and on
16    or before June 30, 1997.
17        (4) 50% for purchases made on or after July 1, 1997.
18    (a) Manufacturer's Purchase Credit earned prior to July 1,
192003. This subsection (a) applies to Manufacturer's Purchase
20Credit earned prior to July 1, 2003. A purchaser of production
21related tangible personal property desiring to use the
22Manufacturer's Purchase Credit shall certify to the seller
23prior to October 1, 2003 that the purchaser is satisfying all
24or part of the liability under the Use Tax Act or the Service
25Use Tax Act that is due on the purchase of the production
26related tangible personal property by use of a Manufacturer's

 

 

HB5735- 53 -LRB100 19659 HLH 34932 b

1Purchase Credit. The Manufacturer's Purchase Credit
2certification must be dated and shall include the name and
3address of the purchaser, the purchaser's registration number,
4if registered, the credit being applied, and a statement that
5the State Use Tax or Service Use Tax liability is being
6satisfied with the manufacturer's or graphic arts producer's
7accumulated purchase credit. Certification may be incorporated
8into the manufacturer's or graphic arts producer's purchase
9order. Manufacturer's Purchase Credit certification provided
10by the manufacturer or graphic arts producer prior to October
111, 2003 may be used to satisfy the retailer's or serviceman's
12liability under the Retailers' Occupation Tax Act or Service
13Occupation Tax Act for the credit claimed, not to exceed 6.25%
14of the receipts subject to tax from a qualifying purchase, but
15only if the retailer or serviceman reports the Manufacturer's
16Purchase Credit claimed as required by the Department. A
17Manufacturer's Purchase Credit reported on any original or
18amended return filed under this Act after October 20, 2003
19shall be disallowed. The Manufacturer's Purchase Credit earned
20by purchase of exempt manufacturing machinery and equipment or
21graphic arts machinery and equipment is a non-transferable
22credit. A manufacturer or graphic arts producer that enters
23into a contract involving the installation of tangible personal
24property into real estate within a manufacturing or graphic
25arts production facility, prior to October 1, 2003, may
26authorize a construction contractor to utilize credit

 

 

HB5735- 54 -LRB100 19659 HLH 34932 b

1accumulated by the manufacturer or graphic arts producer to
2purchase the tangible personal property. A manufacturer or
3graphic arts producer intending to use accumulated credit to
4purchase such tangible personal property shall execute a
5written contract authorizing the contractor to utilize a
6specified dollar amount of credit. The contractor shall
7furnish, prior to October 1, 2003, the supplier with the
8manufacturer's or graphic arts producer's name, registration
9or resale number, and a statement that a specific amount of the
10Use Tax or Service Use Tax liability, not to exceed 6.25% of
11the selling price, is being satisfied with the credit. The
12manufacturer or graphic arts producer shall remain liable to
13timely report all information required by the annual Report of
14Manufacturer's Purchase Credit Used for credit utilized by a
15construction contractor.
16    No Manufacturer's Purchase Credit earned prior to July 1,
172003 may be used after October 1, 2003. The Manufacturer's
18Purchase Credit may be used to satisfy liability under the Use
19Tax Act or the Service Use Tax Act due on the purchase of
20production related tangible personal property (including
21purchases by a manufacturer, by a graphic arts producer, or a
22lessor who rents or leases the use of the property to a
23manufacturer or graphic arts producer) that does not otherwise
24qualify for the manufacturing machinery and equipment
25exemption or the graphic arts machinery and equipment
26exemption. "Production related tangible personal property"

 

 

HB5735- 55 -LRB100 19659 HLH 34932 b

1means (i) all tangible personal property used or consumed by
2the purchaser in a manufacturing facility in which a
3manufacturing process described in Section 2-45 of the
4Retailers' Occupation Tax Act takes place, including tangible
5personal property purchased for incorporation into real estate
6within a manufacturing facility and including, but not limited
7to, tangible personal property used or consumed in activities
8such as pre-production material handling, receiving, quality
9control, inventory control, storage, staging, and packaging
10for shipping and transportation purposes; (ii) all tangible
11personal property used or consumed by the purchaser in a
12graphic arts facility in which graphic arts production as
13described in Section 2-30 of the Retailers' Occupation Tax Act
14takes place, including tangible personal property purchased
15for incorporation into real estate within a graphic arts
16facility and including, but not limited to, all tangible
17personal property used or consumed in activities such as
18graphic arts preliminary or pre-press production,
19pre-production material handling, receiving, quality control,
20inventory control, storage, staging, sorting, labeling,
21mailing, tying, wrapping, and packaging; and (iii) all tangible
22personal property used or consumed by the purchaser for
23research and development. "Production related tangible
24personal property" does not include (i) tangible personal
25property used, within or without a manufacturing or graphic
26arts facility, in sales, purchasing, accounting, fiscal

 

 

HB5735- 56 -LRB100 19659 HLH 34932 b

1management, marketing, personnel recruitment or selection, or
2landscaping or (ii) tangible personal property required to be
3titled or registered with a department, agency, or unit of
4federal, state, or local government. The Manufacturer's
5Purchase Credit may be used, prior to October 1, 2003, to
6satisfy the tax arising either from the purchase of machinery
7and equipment on or after January 1, 1995 for which the
8manufacturing machinery and equipment exemption provided by
9Section 2 of this Act was erroneously claimed, or the purchase
10of machinery and equipment on or after July 1, 1996 for which
11the exemption provided by paragraph (5) of Section 3-5 of this
12Act was erroneously claimed, but not in satisfaction of
13penalty, if any, and interest for failure to pay the tax when
14due. A purchaser of production related tangible personal
15property who is required to pay Illinois Use Tax or Service Use
16Tax on the purchase directly to the Department may, prior to
17October 1, 2003, utilize the Manufacturer's Purchase Credit in
18satisfaction of the tax arising from that purchase, but not in
19satisfaction of penalty and interest. A purchaser who uses the
20Manufacturer's Purchase Credit to purchase property which is
21later determined not to be production related tangible personal
22property may be liable for tax, penalty, and interest on the
23purchase of that property as of the date of purchase but shall
24be entitled to use the disallowed Manufacturer's Purchase
25Credit, so long as it has not expired and is used prior to
26October 1, 2003, on qualifying purchases of production related

 

 

HB5735- 57 -LRB100 19659 HLH 34932 b

1tangible personal property not previously subject to credit
2usage. The Manufacturer's Purchase Credit earned by a
3manufacturer or graphic arts producer expires the last day of
4the second calendar year following the calendar year in which
5the credit arose. No Manufacturer's Purchase Credit may be used
6after September 30, 2003 regardless of when that credit was
7earned.
8    A purchaser earning Manufacturer's Purchase Credit shall
9sign and file an annual Report of Manufacturer's Purchase
10Credit Earned for each calendar year no later than the last day
11of the sixth month following the calendar year in which a
12Manufacturer's Purchase Credit is earned. A Report of
13Manufacturer's Purchase Credit Earned shall be filed on forms
14as prescribed or approved by the Department and shall state,
15for each month of the calendar year: (i) the total purchase
16price of all purchases of exempt manufacturing or graphic arts
17machinery on which the credit was earned; (ii) the total State
18Use Tax or Service Use Tax which would have been due on those
19items; (iii) the percentage used to calculate the amount of
20credit earned; (iv) the amount of credit earned; and (v) such
21other information as the Department may reasonably require. A
22purchaser earning Manufacturer's Purchase Credit shall
23maintain records which identify, as to each purchase of
24manufacturing or graphic arts machinery and equipment on which
25the purchaser earned Manufacturer's Purchase Credit, the
26vendor (including, if applicable, either the vendor's

 

 

HB5735- 58 -LRB100 19659 HLH 34932 b

1registration number or Federal Employer Identification
2Number), the purchase price, and the amount of Manufacturer's
3Purchase Credit earned on each purchase.
4    A purchaser using Manufacturer's Purchase Credit shall
5sign and file an annual Report of Manufacturer's Purchase
6Credit Used for each calendar year no later than the last day
7of the sixth month following the calendar year in which a
8Manufacturer's Purchase Credit is used. A Report of
9Manufacturer's Purchase Credit Used shall be filed on forms as
10prescribed or approved by the Department and shall state, for
11each month of the calendar year: (i) the total purchase price
12of production related tangible personal property purchased
13from Illinois suppliers; (ii) the total purchase price of
14production related tangible personal property purchased from
15out-of-state suppliers; (iii) the total amount of credit used
16during such month; and (iv) such other information as the
17Department may reasonably require. A purchaser using
18Manufacturer's Purchase Credit shall maintain records that
19identify, as to each purchase of production related tangible
20personal property on which the purchaser used Manufacturer's
21Purchase Credit, the vendor (including, if applicable, either
22the vendor's registration number or Federal Employer
23Identification Number), the purchase price, and the amount of
24Manufacturer's Purchase Credit used on each purchase.
25    No annual report shall be filed before May 1, 1996 or after
26June 30, 2004. A purchaser that fails to file an annual Report

 

 

HB5735- 59 -LRB100 19659 HLH 34932 b

1of Manufacturer's Purchase Credit Earned or an annual Report of
2Manufacturer's Purchase Credit Used by the last day of the
3sixth month following the end of the calendar year shall
4forfeit all Manufacturer's Purchase Credit for that calendar
5year unless it establishes that its failure to file was due to
6reasonable cause. Manufacturer's Purchase Credit reports may
7be amended to report and claim credit on qualifying purchases
8not previously reported at any time before the credit would
9have expired, unless both the Department and the purchaser have
10agreed to an extension of the statute of limitations for the
11issuance of a notice of tax liability as provided in Section 4
12of the Retailers' Occupation Tax Act. If the time for
13assessment or refund has been extended, then amended reports
14for a calendar year may be filed at any time prior to the date
15to which the statute of limitations for the calendar year or
16portion thereof has been extended. No Manufacturer's Purchase
17Credit report filed with the Department for periods prior to
18January 1, 1995 shall be approved. Manufacturer's Purchase
19Credit claimed on an amended report may be used, prior to
20October 1, 2003, to satisfy tax liability under the Use Tax Act
21or the Service Use Tax Act (i) on qualifying purchases of
22production related tangible personal property made after the
23date the amended report is filed or (ii) assessed by the
24Department on qualifying purchases of production related
25tangible personal property made in the case of manufacturers on
26or after January 1, 1995, or in the case of graphic arts

 

 

HB5735- 60 -LRB100 19659 HLH 34932 b

1producers on or after July 1, 1996.
2    If the purchaser is not the manufacturer or a graphic arts
3producer, but rents or leases the use of the property to a
4manufacturer or a graphic arts producer, the purchaser may
5earn, report, and use Manufacturer's Purchase Credit in the
6same manner as a manufacturer or graphic arts producer.
7    A purchaser shall not be entitled to any Manufacturer's
8Purchase Credit for a purchase that is required to be reported
9and is not timely reported as provided in this Section. A
10purchaser remains liable for (i) any tax that was satisfied by
11use of a Manufacturer's Purchase Credit, as of the date of
12purchase, if that use is not timely reported as required in
13this Section and (ii) for any applicable penalties and interest
14for failing to pay the tax when due. No Manufacturer's Purchase
15Credit may be used after September 30, 2003 to satisfy any tax
16liability imposed under this Act, including any audit
17liability.
18    (b) Manufacturer's Purchase Credit earned on and after
19September 1, 2004. This subsection (b) applies to
20Manufacturer's Purchase Credit earned on or after September 1,
212004. Manufacturer's Purchase Credit earned on or after
22September 1, 2004 may only be used to satisfy the Use Tax or
23Service Use Tax liability incurred on production related
24tangible personal property purchased on or after September 1,
252004. A purchaser of production related tangible personal
26property desiring to use the Manufacturer's Purchase Credit

 

 

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1shall certify to the seller that the purchaser is satisfying
2all or part of the liability under the Use Tax Act or the
3Service Use Tax Act that is due on the purchase of the
4production related tangible personal property by use of a
5Manufacturer's Purchase Credit. The Manufacturer's Purchase
6Credit certification must be dated and shall include the name
7and address of the purchaser, the purchaser's registration
8number, if registered, the credit being applied, and a
9statement that the State Use Tax or Service Use Tax liability
10is being satisfied with the manufacturer's or graphic arts
11producer's accumulated purchase credit. Certification may be
12incorporated into the manufacturer's or graphic arts
13producer's purchase order. Manufacturer's Purchase Credit
14certification provided by the manufacturer or graphic arts
15producer may be used to satisfy the retailer's or serviceman's
16liability under the Retailers' Occupation Tax Act or Service
17Occupation Tax Act for the credit claimed, not to exceed 6.25%
18of the receipts subject to tax from a qualifying purchase, but
19only if the retailer or serviceman reports the Manufacturer's
20Purchase Credit claimed as required by the Department. The
21Manufacturer's Purchase Credit earned by purchase of exempt
22manufacturing machinery and equipment or graphic arts
23machinery and equipment is a non-transferable credit. A
24manufacturer or graphic arts producer that enters into a
25contract involving the installation of tangible personal
26property into real estate within a manufacturing or graphic

 

 

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1arts production facility may, on or after September 1, 2004,
2authorize a construction contractor to utilize credit
3accumulated by the manufacturer or graphic arts producer to
4purchase the tangible personal property. A manufacturer or
5graphic arts producer intending to use accumulated credit to
6purchase such tangible personal property shall execute a
7written contract authorizing the contractor to utilize a
8specified dollar amount of credit. The contractor shall furnish
9the supplier with the manufacturer's or graphic arts producer's
10name, registration or resale number, and a statement that a
11specific amount of the Use Tax or Service Use Tax liability,
12not to exceed 6.25% of the selling price, is being satisfied
13with the credit. The manufacturer or graphic arts producer
14shall remain liable to timely report all information required
15by the annual Report of Manufacturer's Purchase Credit Used for
16credit utilized by a construction contractor.
17    The Manufacturer's Purchase Credit may be used to satisfy
18liability under the Use Tax Act or the Service Use Tax Act due
19on the purchase, made on or after September 1, 2004, of
20production related tangible personal property (including
21purchases by a manufacturer, by a graphic arts producer, or a
22lessor who rents or leases the use of the property to a
23manufacturer or graphic arts producer) that does not otherwise
24qualify for the manufacturing machinery and equipment
25exemption or the graphic arts machinery and equipment
26exemption. "Production related tangible personal property"

 

 

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1means (i) all tangible personal property used or consumed by
2the purchaser in a manufacturing facility in which a
3manufacturing process described in Section 2-45 of the
4Retailers' Occupation Tax Act takes place, including tangible
5personal property purchased for incorporation into real estate
6within a manufacturing facility and including, but not limited
7to, tangible personal property used or consumed in activities
8such as pre-production material handling, receiving, quality
9control, inventory control, storage, staging, and packaging
10for shipping and transportation purposes; (ii) all tangible
11personal property used or consumed by the purchaser in a
12graphic arts facility in which graphic arts production as
13described in Section 2-30 of the Retailers' Occupation Tax Act
14takes place, including tangible personal property purchased
15for incorporation into real estate within a graphic arts
16facility and including, but not limited to, all tangible
17personal property used or consumed in activities such as
18graphic arts preliminary or pre-press production,
19pre-production material handling, receiving, quality control,
20inventory control, storage, staging, sorting, labeling,
21mailing, tying, wrapping, and packaging; and (iii) all tangible
22personal property used or consumed by the purchaser for
23research and development. "Production related tangible
24personal property" does not include (i) tangible personal
25property used, within or without a manufacturing or graphic
26arts facility, in sales, purchasing, accounting, fiscal

 

 

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1management, marketing, personnel recruitment or selection, or
2landscaping or (ii) tangible personal property required to be
3titled or registered with a department, agency, or unit of
4federal, state, or local government. The Manufacturer's
5Purchase Credit may be used to satisfy the tax arising either
6from the purchase of machinery and equipment on or after
7September 1, 2004 for which the manufacturing machinery and
8equipment exemption provided by Section 2 of this Act was
9erroneously claimed, or the purchase of machinery and equipment
10on or after September 1, 2004 for which the exemption provided
11by paragraph (5) of Section 3-5 of this Act was erroneously
12claimed, but not in satisfaction of penalty, if any, and
13interest for failure to pay the tax when due. A purchaser of
14production related tangible personal property that is
15purchased on or after September 1, 2004 who is required to pay
16Illinois Use Tax or Service Use Tax on the purchase directly to
17the Department may utilize the Manufacturer's Purchase Credit
18in satisfaction of the tax arising from that purchase, but not
19in satisfaction of penalty and interest. A purchaser who uses
20the Manufacturer's Purchase Credit to purchase property on and
21after September 1, 2004 which is later determined not to be
22production related tangible personal property may be liable for
23tax, penalty, and interest on the purchase of that property as
24of the date of purchase but shall be entitled to use the
25disallowed Manufacturer's Purchase Credit, so long as it has
26not expired, on qualifying purchases of production related

 

 

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1tangible personal property not previously subject to credit
2usage. The Manufacturer's Purchase Credit earned by a
3manufacturer or graphic arts producer expires the last day of
4the second calendar year following the calendar year in which
5the credit arose.
6    A purchaser earning Manufacturer's Purchase Credit shall
7sign and file an annual Report of Manufacturer's Purchase
8Credit Earned for each calendar year no later than the last day
9of the sixth month following the calendar year in which a
10Manufacturer's Purchase Credit is earned. A Report of
11Manufacturer's Purchase Credit Earned shall be filed on forms
12as prescribed or approved by the Department and shall state,
13for each month of the calendar year: (i) the total purchase
14price of all purchases of exempt manufacturing or graphic arts
15machinery on which the credit was earned; (ii) the total State
16Use Tax or Service Use Tax which would have been due on those
17items; (iii) the percentage used to calculate the amount of
18credit earned; (iv) the amount of credit earned; and (v) such
19other information as the Department may reasonably require. A
20purchaser earning Manufacturer's Purchase Credit shall
21maintain records which identify, as to each purchase of
22manufacturing or graphic arts machinery and equipment on which
23the purchaser earned Manufacturer's Purchase Credit, the
24vendor (including, if applicable, either the vendor's
25registration number or Federal Employer Identification
26Number), the purchase price, and the amount of Manufacturer's

 

 

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1Purchase Credit earned on each purchase.
2    A purchaser using Manufacturer's Purchase Credit shall
3sign and file an annual Report of Manufacturer's Purchase
4Credit Used for each calendar year no later than the last day
5of the sixth month following the calendar year in which a
6Manufacturer's Purchase Credit is used. A Report of
7Manufacturer's Purchase Credit Used shall be filed on forms as
8prescribed or approved by the Department and shall state, for
9each month of the calendar year: (i) the total purchase price
10of production related tangible personal property purchased
11from Illinois suppliers; (ii) the total purchase price of
12production related tangible personal property purchased from
13out-of-state suppliers; (iii) the total amount of credit used
14during such month; and (iv) such other information as the
15Department may reasonably require. A purchaser using
16Manufacturer's Purchase Credit shall maintain records that
17identify, as to each purchase of production related tangible
18personal property on which the purchaser used Manufacturer's
19Purchase Credit, the vendor (including, if applicable, either
20the vendor's registration number or Federal Employer
21Identification Number), the purchase price, and the amount of
22Manufacturer's Purchase Credit used on each purchase.
23    A purchaser that fails to file an annual Report of
24Manufacturer's Purchase Credit Earned or an annual Report of
25Manufacturer's Purchase Credit Used by the last day of the
26sixth month following the end of the calendar year shall

 

 

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1forfeit all Manufacturer's Purchase Credit for that calendar
2year unless it establishes that its failure to file was due to
3reasonable cause. Manufacturer's Purchase Credit reports may
4be amended to report and claim credit on qualifying purchases
5not previously reported at any time before the credit would
6have expired, unless both the Department and the purchaser have
7agreed to an extension of the statute of limitations for the
8issuance of a notice of tax liability as provided in Section 4
9of the Retailers' Occupation Tax Act. If the time for
10assessment or refund has been extended, then amended reports
11for a calendar year may be filed at any time prior to the date
12to which the statute of limitations for the calendar year or
13portion thereof has been extended. Manufacturer's Purchase
14Credit claimed on an amended report may be used to satisfy tax
15liability under the Use Tax Act or the Service Use Tax Act (i)
16on qualifying purchases of production related tangible
17personal property made after the date the amended report is
18filed or (ii) assessed by the Department on qualifying
19production related tangible personal property purchased on or
20after September 1, 2004.
21    If the purchaser is not the manufacturer or a graphic arts
22producer, but rents or leases the use of the property to a
23manufacturer or a graphic arts producer, the purchaser may
24earn, report, and use Manufacturer's Purchase Credit in the
25same manner as a manufacturer or graphic arts producer. A
26purchaser shall not be entitled to any Manufacturer's Purchase

 

 

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1Credit for a purchase that is required to be reported and is
2not timely reported as provided in this Section. A purchaser
3remains liable for (i) any tax that was satisfied by use of a
4Manufacturer's Purchase Credit, as of the date of purchase, if
5that use is not timely reported as required in this Section and
6(ii) for any applicable penalties and interest for failing to
7pay the tax when due.
8    This Section is exempt from the provisions of Section 3-75.
9(Source: P.A. 96-116, eff. 7-31-09.)
 
10    Section 15. The Service Occupation Tax Act is amended by
11changing Section 3-5 as follows:
 
12    (35 ILCS 115/3-5)
13    Sec. 3-5. Exemptions. The following tangible personal
14property is exempt from the tax imposed by this Act:
15    (1) Personal property sold by a corporation, society,
16association, foundation, institution, or organization, other
17than a limited liability company, that is organized and
18operated as a not-for-profit service enterprise for the benefit
19of persons 65 years of age or older if the personal property
20was not purchased by the enterprise for the purpose of resale
21by the enterprise.
22    (2) Personal property purchased by a not-for-profit
23Illinois county fair association for use in conducting,
24operating, or promoting the county fair.

 

 

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1    (3) Personal property purchased by any not-for-profit arts
2or cultural organization that establishes, by proof required by
3the Department by rule, that it has received an exemption under
4Section 501(c)(3) of the Internal Revenue Code and that is
5organized and operated primarily for the presentation or
6support of arts or cultural programming, activities, or
7services. These organizations include, but are not limited to,
8music and dramatic arts organizations such as symphony
9orchestras and theatrical groups, arts and cultural service
10organizations, local arts councils, visual arts organizations,
11and media arts organizations. On and after the effective date
12of this amendatory Act of the 92nd General Assembly, however,
13an entity otherwise eligible for this exemption shall not make
14tax-free purchases unless it has an active identification
15number issued by the Department.
16    (4) Legal tender, currency, medallions, or gold or silver
17coinage issued by the State of Illinois, the government of the
18United States of America, or the government of any foreign
19country, and bullion.
20    (5) Until July 1, 2003, and beginning again on September 1,
212004 through August 30, 2014, and beginning again on January 1,
222019, graphic arts machinery and equipment, including repair
23and replacement parts, both new and used, and including that
24manufactured on special order or purchased for lease, certified
25by the purchaser to be used primarily for graphic arts
26production. Equipment includes chemicals or chemicals acting

 

 

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1as catalysts but only if the chemicals or chemicals acting as
2catalysts effect a direct and immediate change upon a graphic
3arts product. Beginning on July 1, 2017, graphic arts machinery
4and equipment is included in the manufacturing and assembling
5machinery and equipment exemption under Section 2 of this Act.
6This item (5) is exempt form the provisions of Section 3-55.
7    (6) Personal property sold by a teacher-sponsored student
8organization affiliated with an elementary or secondary school
9located in Illinois.
10    (7) Farm machinery and equipment, both new and used,
11including that manufactured on special order, certified by the
12purchaser to be used primarily for production agriculture or
13State or federal agricultural programs, including individual
14replacement parts for the machinery and equipment, including
15machinery and equipment purchased for lease, and including
16implements of husbandry defined in Section 1-130 of the
17Illinois Vehicle Code, farm machinery and agricultural
18chemical and fertilizer spreaders, and nurse wagons required to
19be registered under Section 3-809 of the Illinois Vehicle Code,
20but excluding other motor vehicles required to be registered
21under the Illinois Vehicle Code. Horticultural polyhouses or
22hoop houses used for propagating, growing, or overwintering
23plants shall be considered farm machinery and equipment under
24this item (7). Agricultural chemical tender tanks and dry boxes
25shall include units sold separately from a motor vehicle
26required to be licensed and units sold mounted on a motor

 

 

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1vehicle required to be licensed if the selling price of the
2tender is separately stated.
3    Farm machinery and equipment shall include precision
4farming equipment that is installed or purchased to be
5installed on farm machinery and equipment including, but not
6limited to, tractors, harvesters, sprayers, planters, seeders,
7or spreaders. Precision farming equipment includes, but is not
8limited to, soil testing sensors, computers, monitors,
9software, global positioning and mapping systems, and other
10such equipment.
11    Farm machinery and equipment also includes computers,
12sensors, software, and related equipment used primarily in the
13computer-assisted operation of production agriculture
14facilities, equipment, and activities such as, but not limited
15to, the collection, monitoring, and correlation of animal and
16crop data for the purpose of formulating animal diets and
17agricultural chemicals. This item (7) is exempt from the
18provisions of Section 3-55.
19    (8) Until June 30, 2013, fuel and petroleum products sold
20to or used by an air common carrier, certified by the carrier
21to be used for consumption, shipment, or storage in the conduct
22of its business as an air common carrier, for a flight destined
23for or returning from a location or locations outside the
24United States without regard to previous or subsequent domestic
25stopovers.
26    Beginning July 1, 2013, fuel and petroleum products sold to

 

 

HB5735- 72 -LRB100 19659 HLH 34932 b

1or used by an air carrier, certified by the carrier to be used
2for consumption, shipment, or storage in the conduct of its
3business as an air common carrier, for a flight that (i) is
4engaged in foreign trade or is engaged in trade between the
5United States and any of its possessions and (ii) transports at
6least one individual or package for hire from the city of
7origination to the city of final destination on the same
8aircraft, without regard to a change in the flight number of
9that aircraft.
10    (9) Proceeds of mandatory service charges separately
11stated on customers' bills for the purchase and consumption of
12food and beverages, to the extent that the proceeds of the
13service charge are in fact turned over as tips or as a
14substitute for tips to the employees who participate directly
15in preparing, serving, hosting or cleaning up the food or
16beverage function with respect to which the service charge is
17imposed.
18    (10) Until July 1, 2003, oil field exploration, drilling,
19and production equipment, including (i) rigs and parts of rigs,
20rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
21tubular goods, including casing and drill strings, (iii) pumps
22and pump-jack units, (iv) storage tanks and flow lines, (v) any
23individual replacement part for oil field exploration,
24drilling, and production equipment, and (vi) machinery and
25equipment purchased for lease; but excluding motor vehicles
26required to be registered under the Illinois Vehicle Code.

 

 

HB5735- 73 -LRB100 19659 HLH 34932 b

1    (11) Photoprocessing machinery and equipment, including
2repair and replacement parts, both new and used, including that
3manufactured on special order, certified by the purchaser to be
4used primarily for photoprocessing, and including
5photoprocessing machinery and equipment purchased for lease.
6    (12) Coal and aggregate exploration, mining, off-highway
7hauling, processing, maintenance, and reclamation equipment,
8including replacement parts and equipment, and including
9equipment purchased for lease, but excluding motor vehicles
10required to be registered under the Illinois Vehicle Code. The
11changes made to this Section by Public Act 97-767 apply on and
12after July 1, 2003, but no claim for credit or refund is
13allowed on or after August 16, 2013 (the effective date of
14Public Act 98-456) for such taxes paid during the period
15beginning July 1, 2003 and ending on August 16, 2013 (the
16effective date of Public Act 98-456).
17    (13) Beginning January 1, 1992 and through June 30, 2016,
18food for human consumption that is to be consumed off the
19premises where it is sold (other than alcoholic beverages, soft
20drinks and food that has been prepared for immediate
21consumption) and prescription and non-prescription medicines,
22drugs, medical appliances, and insulin, urine testing
23materials, syringes, and needles used by diabetics, for human
24use, when purchased for use by a person receiving medical
25assistance under Article V of the Illinois Public Aid Code who
26resides in a licensed long-term care facility, as defined in

 

 

HB5735- 74 -LRB100 19659 HLH 34932 b

1the Nursing Home Care Act, or in a licensed facility as defined
2in the ID/DD Community Care Act, the MC/DD Act, or the
3Specialized Mental Health Rehabilitation Act of 2013.
4    (14) Semen used for artificial insemination of livestock
5for direct agricultural production.
6    (15) Horses, or interests in horses, registered with and
7meeting the requirements of any of the Arabian Horse Club
8Registry of America, Appaloosa Horse Club, American Quarter
9Horse Association, United States Trotting Association, or
10Jockey Club, as appropriate, used for purposes of breeding or
11racing for prizes. This item (15) is exempt from the provisions
12of Section 3-55, and the exemption provided for under this item
13(15) applies for all periods beginning May 30, 1995, but no
14claim for credit or refund is allowed on or after January 1,
152008 (the effective date of Public Act 95-88) for such taxes
16paid during the period beginning May 30, 2000 and ending on
17January 1, 2008 (the effective date of Public Act 95-88).
18    (16) Computers and communications equipment utilized for
19any hospital purpose and equipment used in the diagnosis,
20analysis, or treatment of hospital patients sold to a lessor
21who leases the equipment, under a lease of one year or longer
22executed or in effect at the time of the purchase, to a
23hospital that has been issued an active tax exemption
24identification number by the Department under Section 1g of the
25Retailers' Occupation Tax Act.
26    (17) Personal property sold to a lessor who leases the

 

 

HB5735- 75 -LRB100 19659 HLH 34932 b

1property, under a lease of one year or longer executed or in
2effect at the time of the purchase, to a governmental body that
3has been issued an active tax exemption identification number
4by the Department under Section 1g of the Retailers' Occupation
5Tax Act.
6    (18) Beginning with taxable years ending on or after
7December 31, 1995 and ending with taxable years ending on or
8before December 31, 2004, personal property that is donated for
9disaster relief to be used in a State or federally declared
10disaster area in Illinois or bordering Illinois by a
11manufacturer or retailer that is registered in this State to a
12corporation, society, association, foundation, or institution
13that has been issued a sales tax exemption identification
14number by the Department that assists victims of the disaster
15who reside within the declared disaster area.
16    (19) Beginning with taxable years ending on or after
17December 31, 1995 and ending with taxable years ending on or
18before December 31, 2004, personal property that is used in the
19performance of infrastructure repairs in this State, including
20but not limited to municipal roads and streets, access roads,
21bridges, sidewalks, waste disposal systems, water and sewer
22line extensions, water distribution and purification
23facilities, storm water drainage and retention facilities, and
24sewage treatment facilities, resulting from a State or
25federally declared disaster in Illinois or bordering Illinois
26when such repairs are initiated on facilities located in the

 

 

HB5735- 76 -LRB100 19659 HLH 34932 b

1declared disaster area within 6 months after the disaster.
2    (20) Beginning July 1, 1999, game or game birds sold at a
3"game breeding and hunting preserve area" as that term is used
4in the Wildlife Code. This paragraph is exempt from the
5provisions of Section 3-55.
6    (21) A motor vehicle, as that term is defined in Section
71-146 of the Illinois Vehicle Code, that is donated to a
8corporation, limited liability company, society, association,
9foundation, or institution that is determined by the Department
10to be organized and operated exclusively for educational
11purposes. For purposes of this exemption, "a corporation,
12limited liability company, society, association, foundation,
13or institution organized and operated exclusively for
14educational purposes" means all tax-supported public schools,
15private schools that offer systematic instruction in useful
16branches of learning by methods common to public schools and
17that compare favorably in their scope and intensity with the
18course of study presented in tax-supported schools, and
19vocational or technical schools or institutes organized and
20operated exclusively to provide a course of study of not less
21than 6 weeks duration and designed to prepare individuals to
22follow a trade or to pursue a manual, technical, mechanical,
23industrial, business, or commercial occupation.
24    (22) Beginning January 1, 2000, personal property,
25including food, purchased through fundraising events for the
26benefit of a public or private elementary or secondary school,

 

 

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1a group of those schools, or one or more school districts if
2the events are sponsored by an entity recognized by the school
3district that consists primarily of volunteers and includes
4parents and teachers of the school children. This paragraph
5does not apply to fundraising events (i) for the benefit of
6private home instruction or (ii) for which the fundraising
7entity purchases the personal property sold at the events from
8another individual or entity that sold the property for the
9purpose of resale by the fundraising entity and that profits
10from the sale to the fundraising entity. This paragraph is
11exempt from the provisions of Section 3-55.
12    (23) Beginning January 1, 2000 and through December 31,
132001, new or used automatic vending machines that prepare and
14serve hot food and beverages, including coffee, soup, and other
15items, and replacement parts for these machines. Beginning
16January 1, 2002 and through June 30, 2003, machines and parts
17for machines used in commercial, coin-operated amusement and
18vending business if a use or occupation tax is paid on the
19gross receipts derived from the use of the commercial,
20coin-operated amusement and vending machines. This paragraph
21is exempt from the provisions of Section 3-55.
22    (24) Beginning on the effective date of this amendatory Act
23of the 92nd General Assembly, computers and communications
24equipment utilized for any hospital purpose and equipment used
25in the diagnosis, analysis, or treatment of hospital patients
26sold to a lessor who leases the equipment, under a lease of one

 

 

HB5735- 78 -LRB100 19659 HLH 34932 b

1year or longer executed or in effect at the time of the
2purchase, to a hospital that has been issued an active tax
3exemption identification number by the Department under
4Section 1g of the Retailers' Occupation Tax Act. This paragraph
5is exempt from the provisions of Section 3-55.
6    (25) Beginning on the effective date of this amendatory Act
7of the 92nd General Assembly, personal property sold to a
8lessor who leases the property, under a lease of one year or
9longer executed or in effect at the time of the purchase, to a
10governmental body that has been issued an active tax exemption
11identification number by the Department under Section 1g of the
12Retailers' Occupation Tax Act. This paragraph is exempt from
13the provisions of Section 3-55.
14    (26) Beginning on January 1, 2002 and through June 30,
152016, tangible personal property purchased from an Illinois
16retailer by a taxpayer engaged in centralized purchasing
17activities in Illinois who will, upon receipt of the property
18in Illinois, temporarily store the property in Illinois (i) for
19the purpose of subsequently transporting it outside this State
20for use or consumption thereafter solely outside this State or
21(ii) for the purpose of being processed, fabricated, or
22manufactured into, attached to, or incorporated into other
23tangible personal property to be transported outside this State
24and thereafter used or consumed solely outside this State. The
25Director of Revenue shall, pursuant to rules adopted in
26accordance with the Illinois Administrative Procedure Act,

 

 

HB5735- 79 -LRB100 19659 HLH 34932 b

1issue a permit to any taxpayer in good standing with the
2Department who is eligible for the exemption under this
3paragraph (26). The permit issued under this paragraph (26)
4shall authorize the holder, to the extent and in the manner
5specified in the rules adopted under this Act, to purchase
6tangible personal property from a retailer exempt from the
7taxes imposed by this Act. Taxpayers shall maintain all
8necessary books and records to substantiate the use and
9consumption of all such tangible personal property outside of
10the State of Illinois.
11    (27) Beginning January 1, 2008, tangible personal property
12used in the construction or maintenance of a community water
13supply, as defined under Section 3.145 of the Environmental
14Protection Act, that is operated by a not-for-profit
15corporation that holds a valid water supply permit issued under
16Title IV of the Environmental Protection Act. This paragraph is
17exempt from the provisions of Section 3-55.
18    (28) Tangible personal property sold to a
19public-facilities corporation, as described in Section
2011-65-10 of the Illinois Municipal Code, for purposes of
21constructing or furnishing a municipal convention hall, but
22only if the legal title to the municipal convention hall is
23transferred to the municipality without any further
24consideration by or on behalf of the municipality at the time
25of the completion of the municipal convention hall or upon the
26retirement or redemption of any bonds or other debt instruments

 

 

HB5735- 80 -LRB100 19659 HLH 34932 b

1issued by the public-facilities corporation in connection with
2the development of the municipal convention hall. This
3exemption includes existing public-facilities corporations as
4provided in Section 11-65-25 of the Illinois Municipal Code.
5This paragraph is exempt from the provisions of Section 3-55.
6    (29) Beginning January 1, 2010, materials, parts,
7equipment, components, and furnishings incorporated into or
8upon an aircraft as part of the modification, refurbishment,
9completion, replacement, repair, or maintenance of the
10aircraft. This exemption includes consumable supplies used in
11the modification, refurbishment, completion, replacement,
12repair, and maintenance of aircraft, but excludes any
13materials, parts, equipment, components, and consumable
14supplies used in the modification, replacement, repair, and
15maintenance of aircraft engines or power plants, whether such
16engines or power plants are installed or uninstalled upon any
17such aircraft. "Consumable supplies" include, but are not
18limited to, adhesive, tape, sandpaper, general purpose
19lubricants, cleaning solution, latex gloves, and protective
20films. This exemption applies only to the transfer of
21qualifying tangible personal property incident to the
22modification, refurbishment, completion, replacement, repair,
23or maintenance of an aircraft by persons who (i) hold an Air
24Agency Certificate and are empowered to operate an approved
25repair station by the Federal Aviation Administration, (ii)
26have a Class IV Rating, and (iii) conduct operations in

 

 

HB5735- 81 -LRB100 19659 HLH 34932 b

1accordance with Part 145 of the Federal Aviation Regulations.
2The exemption does not include aircraft operated by a
3commercial air carrier providing scheduled passenger air
4service pursuant to authority issued under Part 121 or Part 129
5of the Federal Aviation Regulations. The changes made to this
6paragraph (29) by Public Act 98-534 are declarative of existing
7law.
8    (30) Beginning January 1, 2017, menstrual pads, tampons,
9and menstrual cups.
10(Source: P.A. 99-180, eff. 7-29-15; 99-855, eff. 8-19-16;
11100-22, eff. 7-6-17.)
 
12    Section 20. The Retailers' Occupation Tax Act is amended by
13changing Section 2-5 as follows:
 
14    (35 ILCS 120/2-5)
15    Sec. 2-5. Exemptions. Gross receipts from proceeds from the
16sale of the following tangible personal property are exempt
17from the tax imposed by this Act:
18        (1) Farm chemicals.
19        (2) Farm machinery and equipment, both new and used,
20    including that manufactured on special order, certified by
21    the purchaser to be used primarily for production
22    agriculture or State or federal agricultural programs,
23    including individual replacement parts for the machinery
24    and equipment, including machinery and equipment purchased

 

 

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1    for lease, and including implements of husbandry defined in
2    Section 1-130 of the Illinois Vehicle Code, farm machinery
3    and agricultural chemical and fertilizer spreaders, and
4    nurse wagons required to be registered under Section 3-809
5    of the Illinois Vehicle Code, but excluding other motor
6    vehicles required to be registered under the Illinois
7    Vehicle Code. Horticultural polyhouses or hoop houses used
8    for propagating, growing, or overwintering plants shall be
9    considered farm machinery and equipment under this item
10    (2). Agricultural chemical tender tanks and dry boxes shall
11    include units sold separately from a motor vehicle required
12    to be licensed and units sold mounted on a motor vehicle
13    required to be licensed, if the selling price of the tender
14    is separately stated.
15        Farm machinery and equipment shall include precision
16    farming equipment that is installed or purchased to be
17    installed on farm machinery and equipment including, but
18    not limited to, tractors, harvesters, sprayers, planters,
19    seeders, or spreaders. Precision farming equipment
20    includes, but is not limited to, soil testing sensors,
21    computers, monitors, software, global positioning and
22    mapping systems, and other such equipment.
23        Farm machinery and equipment also includes computers,
24    sensors, software, and related equipment used primarily in
25    the computer-assisted operation of production agriculture
26    facilities, equipment, and activities such as, but not

 

 

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1    limited to, the collection, monitoring, and correlation of
2    animal and crop data for the purpose of formulating animal
3    diets and agricultural chemicals. This item (2) is exempt
4    from the provisions of Section 2-70.
5        (3) Until July 1, 2003, distillation machinery and
6    equipment, sold as a unit or kit, assembled or installed by
7    the retailer, certified by the user to be used only for the
8    production of ethyl alcohol that will be used for
9    consumption as motor fuel or as a component of motor fuel
10    for the personal use of the user, and not subject to sale
11    or resale.
12        (4) Until July 1, 2003, and beginning again September
13    1, 2004 through August 30, 2014, and beginning again on
14    January 1, 2019, graphic arts machinery and equipment,
15    including repair and replacement parts, both new and used,
16    and including that manufactured on special order or
17    purchased for lease, certified by the purchaser to be used
18    primarily for graphic arts production. Equipment includes
19    chemicals or chemicals acting as catalysts but only if the
20    chemicals or chemicals acting as catalysts effect a direct
21    and immediate change upon a graphic arts product. Beginning
22    on July 1, 2017, graphic arts machinery and equipment is
23    included in the manufacturing and assembling machinery and
24    equipment exemption under paragraph (14). This item (4) is
25    exempt from the provisions of Section 2-70.
26        (5) A motor vehicle that is used for automobile

 

 

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1    renting, as defined in the Automobile Renting Occupation
2    and Use Tax Act. This paragraph is exempt from the
3    provisions of Section 2-70.
4        (6) Personal property sold by a teacher-sponsored
5    student organization affiliated with an elementary or
6    secondary school located in Illinois.
7        (7) Until July 1, 2003, proceeds of that portion of the
8    selling price of a passenger car the sale of which is
9    subject to the Replacement Vehicle Tax.
10        (8) Personal property sold to an Illinois county fair
11    association for use in conducting, operating, or promoting
12    the county fair.
13        (9) Personal property sold to a not-for-profit arts or
14    cultural organization that establishes, by proof required
15    by the Department by rule, that it has received an
16    exemption under Section 501(c)(3) of the Internal Revenue
17    Code and that is organized and operated primarily for the
18    presentation or support of arts or cultural programming,
19    activities, or services. These organizations include, but
20    are not limited to, music and dramatic arts organizations
21    such as symphony orchestras and theatrical groups, arts and
22    cultural service organizations, local arts councils,
23    visual arts organizations, and media arts organizations.
24    On and after July 1, 2001 (the effective date of Public Act
25    92-35) this amendatory Act of the 92nd General Assembly,
26    however, an entity otherwise eligible for this exemption

 

 

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1    shall not make tax-free purchases unless it has an active
2    identification number issued by the Department.
3        (10) Personal property sold by a corporation, society,
4    association, foundation, institution, or organization,
5    other than a limited liability company, that is organized
6    and operated as a not-for-profit service enterprise for the
7    benefit of persons 65 years of age or older if the personal
8    property was not purchased by the enterprise for the
9    purpose of resale by the enterprise.
10        (11) Personal property sold to a governmental body, to
11    a corporation, society, association, foundation, or
12    institution organized and operated exclusively for
13    charitable, religious, or educational purposes, or to a
14    not-for-profit corporation, society, association,
15    foundation, institution, or organization that has no
16    compensated officers or employees and that is organized and
17    operated primarily for the recreation of persons 55 years
18    of age or older. A limited liability company may qualify
19    for the exemption under this paragraph only if the limited
20    liability company is organized and operated exclusively
21    for educational purposes. On and after July 1, 1987,
22    however, no entity otherwise eligible for this exemption
23    shall make tax-free purchases unless it has an active
24    identification number issued by the Department.
25        (12) (Blank).
26        (12-5) On and after July 1, 2003 and through June 30,

 

 

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

 

 

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1    interstate commerce.
2        (14) Machinery and equipment that will be used by the
3    purchaser, or a lessee of the purchaser, primarily in the
4    process of manufacturing or assembling tangible personal
5    property for wholesale or retail sale or lease, whether the
6    sale or lease is made directly by the manufacturer or by
7    some other person, whether the materials used in the
8    process are owned by the manufacturer or some other person,
9    or whether the sale or lease is made apart from or as an
10    incident to the seller's engaging in the service occupation
11    of producing machines, tools, dies, jigs, patterns,
12    gauges, or other similar items of no commercial value on
13    special order for a particular purchaser. The exemption
14    provided by this paragraph (14) does not include machinery
15    and equipment used in (i) the generation of electricity for
16    wholesale or retail sale; (ii) the generation or treatment
17    of natural or artificial gas for wholesale or retail sale
18    that is delivered to customers through pipes, pipelines, or
19    mains; or (iii) the treatment of water for wholesale or
20    retail sale that is delivered to customers through pipes,
21    pipelines, or mains. The provisions of Public Act 98-583
22    are declaratory of existing law as to the meaning and scope
23    of this exemption. Beginning on July 1, 2017, the exemption
24    provided by this paragraph (14) includes, but is not
25    limited to, graphic arts machinery and equipment, as
26    defined in paragraph (4) of this Section.

 

 

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1        (15) Proceeds of mandatory service charges separately
2    stated on customers' bills for purchase and consumption of
3    food and beverages, to the extent that the proceeds of the
4    service charge are in fact turned over as tips or as a
5    substitute for tips to the employees who participate
6    directly in preparing, serving, hosting or cleaning up the
7    food or beverage function with respect to which the service
8    charge is imposed.
9        (16) Petroleum products sold to a purchaser if the
10    seller is prohibited by federal law from charging tax to
11    the purchaser.
12        (17) Tangible personal property sold to a common
13    carrier by rail or motor that receives the physical
14    possession of the property in Illinois and that transports
15    the property, or shares with another common carrier in the
16    transportation of the property, out of Illinois on a
17    standard uniform bill of lading showing the seller of the
18    property as the shipper or consignor of the property to a
19    destination outside Illinois, for use outside Illinois.
20        (18) Legal tender, currency, medallions, or gold or
21    silver coinage issued by the State of Illinois, the
22    government of the United States of America, or the
23    government of any foreign country, and bullion.
24        (19) Until July 1, 2003, oil field exploration,
25    drilling, and production equipment, including (i) rigs and
26    parts of rigs, rotary rigs, cable tool rigs, and workover

 

 

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1    rigs, (ii) pipe and tubular goods, including casing and
2    drill strings, (iii) pumps and pump-jack units, (iv)
3    storage tanks and flow lines, (v) any individual
4    replacement part for oil field exploration, drilling, and
5    production equipment, and (vi) machinery and equipment
6    purchased for lease; but excluding motor vehicles required
7    to be registered under the Illinois Vehicle Code.
8        (20) Photoprocessing machinery and equipment,
9    including repair and replacement parts, both new and used,
10    including that manufactured on special order, certified by
11    the purchaser to be used primarily for photoprocessing, and
12    including photoprocessing machinery and equipment
13    purchased for lease.
14        (21) Coal and aggregate exploration, mining,
15    off-highway hauling, processing, maintenance, and
16    reclamation equipment, including replacement parts and
17    equipment, and including equipment purchased for lease,
18    but excluding motor vehicles required to be registered
19    under the Illinois Vehicle Code. The changes made to this
20    Section by Public Act 97-767 apply on and after July 1,
21    2003, but no claim for credit or refund is allowed on or
22    after August 16, 2013 (the effective date of Public Act
23    98-456) for such taxes paid during the period beginning
24    July 1, 2003 and ending on August 16, 2013 (the effective
25    date of Public Act 98-456).
26        (22) Until June 30, 2013, fuel and petroleum products

 

 

HB5735- 90 -LRB100 19659 HLH 34932 b

1    sold to or used by an air carrier, certified by the carrier
2    to be used for consumption, shipment, or storage in the
3    conduct of its business as an air common carrier, for a
4    flight destined for or returning from a location or
5    locations outside the United States without regard to
6    previous or subsequent domestic stopovers.
7        Beginning July 1, 2013, fuel and petroleum products
8    sold to or used by an air carrier, certified by the carrier
9    to be used for consumption, shipment, or storage in the
10    conduct of its business as an air common carrier, for a
11    flight that (i) is engaged in foreign trade or is engaged
12    in trade between the United States and any of its
13    possessions and (ii) transports at least one individual or
14    package for hire from the city of origination to the city
15    of final destination on the same aircraft, without regard
16    to a change in the flight number of that aircraft.
17        (23) A transaction in which the purchase order is
18    received by a florist who is located outside Illinois, but
19    who has a florist located in Illinois deliver the property
20    to the purchaser or the purchaser's donee in Illinois.
21        (24) Fuel consumed or used in the operation of ships,
22    barges, or vessels that are used primarily in or for the
23    transportation of property or the conveyance of persons for
24    hire on rivers bordering on this State if the fuel is
25    delivered by the seller to the purchaser's barge, ship, or
26    vessel while it is afloat upon that bordering river.

 

 

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1        (25) Except as provided in item (25-5) of this Section,
2    a motor vehicle sold in this State to a nonresident even
3    though the motor vehicle is delivered to the nonresident in
4    this State, if the motor vehicle is not to be titled in
5    this State, and if a drive-away permit is issued to the
6    motor vehicle as provided in Section 3-603 of the Illinois
7    Vehicle Code or if the nonresident purchaser has vehicle
8    registration plates to transfer to the motor vehicle upon
9    returning to his or her home state. The issuance of the
10    drive-away permit or having the out-of-state registration
11    plates to be transferred is prima facie evidence that the
12    motor vehicle will not be titled in this State.
13        (25-5) The exemption under item (25) does not apply if
14    the state in which the motor vehicle will be titled does
15    not allow a reciprocal exemption for a motor vehicle sold
16    and delivered in that state to an Illinois resident but
17    titled in Illinois. The tax collected under this Act on the
18    sale of a motor vehicle in this State to a resident of
19    another state that does not allow a reciprocal exemption
20    shall be imposed at a rate equal to the state's rate of tax
21    on taxable property in the state in which the purchaser is
22    a resident, except that the tax shall not exceed the tax
23    that would otherwise be imposed under this Act. At the time
24    of the sale, the purchaser shall execute a statement,
25    signed under penalty of perjury, of his or her intent to
26    title the vehicle in the state in which the purchaser is a

 

 

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1    resident within 30 days after the sale and of the fact of
2    the payment to the State of Illinois of tax in an amount
3    equivalent to the state's rate of tax on taxable property
4    in his or her state of residence and shall submit the
5    statement to the appropriate tax collection agency in his
6    or her state of residence. In addition, the retailer must
7    retain a signed copy of the statement in his or her
8    records. Nothing in this item shall be construed to require
9    the removal of the vehicle from this state following the
10    filing of an intent to title the vehicle in the purchaser's
11    state of residence if the purchaser titles the vehicle in
12    his or her state of residence within 30 days after the date
13    of sale. The tax collected under this Act in accordance
14    with this item (25-5) shall be proportionately distributed
15    as if the tax were collected at the 6.25% general rate
16    imposed under this Act.
17        (25-7) Beginning on July 1, 2007, no tax is imposed
18    under this Act on the sale of an aircraft, as defined in
19    Section 3 of the Illinois Aeronautics Act, if all of the
20    following conditions are met:
21            (1) the aircraft leaves this State within 15 days
22        after the later of either the issuance of the final
23        billing for the sale of the aircraft, or the authorized
24        approval for return to service, completion of the
25        maintenance record entry, and completion of the test
26        flight and ground test for inspection, as required by

 

 

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1        14 C.F.R. 91.407;
2            (2) the aircraft is not based or registered in this
3        State after the sale of the aircraft; and
4            (3) the seller retains in his or her books and
5        records and provides to the Department a signed and
6        dated certification from the purchaser, on a form
7        prescribed by the Department, certifying that the
8        requirements of this item (25-7) are met. The
9        certificate must also include the name and address of
10        the purchaser, the address of the location where the
11        aircraft is to be titled or registered, the address of
12        the primary physical location of the aircraft, and
13        other information that the Department may reasonably
14        require.
15        For purposes of this item (25-7):
16        "Based in this State" means hangared, stored, or
17    otherwise used, excluding post-sale customizations as
18    defined in this Section, for 10 or more days in each
19    12-month period immediately following the date of the sale
20    of the aircraft.
21        "Registered in this State" means an aircraft
22    registered with the Department of Transportation,
23    Aeronautics Division, or titled or registered with the
24    Federal Aviation Administration to an address located in
25    this State.
26        This paragraph (25-7) is exempt from the provisions of

 

 

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1    Section 2-70.
2        (26) Semen used for artificial insemination of
3    livestock for direct agricultural production.
4        (27) Horses, or interests in horses, registered with
5    and meeting the requirements of any of the Arabian Horse
6    Club Registry of America, Appaloosa Horse Club, American
7    Quarter Horse Association, United States Trotting
8    Association, or Jockey Club, as appropriate, used for
9    purposes of breeding or racing for prizes. This item (27)
10    is exempt from the provisions of Section 2-70, and the
11    exemption provided for under this item (27) applies for all
12    periods beginning May 30, 1995, but no claim for credit or
13    refund is allowed on or after January 1, 2008 (the
14    effective date of Public Act 95-88) for such taxes paid
15    during the period beginning May 30, 2000 and ending on
16    January 1, 2008 (the effective date of Public Act 95-88).
17        (28) Computers and communications equipment utilized
18    for any hospital purpose and equipment used in the
19    diagnosis, analysis, or treatment of hospital patients
20    sold to a lessor who leases the equipment, under a lease of
21    one year or longer executed or in effect at the time of the
22    purchase, to a hospital that has been issued an active tax
23    exemption identification number by the Department under
24    Section 1g of this Act.
25        (29) Personal property sold to a lessor who leases the
26    property, under a lease of one year or longer executed or

 

 

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1    in effect at the time of the purchase, to a governmental
2    body that has been issued an active tax exemption
3    identification number by the Department under Section 1g of
4    this Act.
5        (30) Beginning with taxable years ending on or after
6    December 31, 1995 and ending with taxable years ending on
7    or before December 31, 2004, personal property that is
8    donated for disaster relief to be used in a State or
9    federally declared disaster area in Illinois or bordering
10    Illinois by a manufacturer or retailer that is registered
11    in this State to a corporation, society, association,
12    foundation, or institution that has been issued a sales tax
13    exemption identification number by the Department that
14    assists victims of the disaster who reside within the
15    declared disaster area.
16        (31) Beginning with taxable years ending on or after
17    December 31, 1995 and ending with taxable years ending on
18    or before December 31, 2004, personal property that is used
19    in the performance of infrastructure repairs in this State,
20    including but not limited to municipal roads and streets,
21    access roads, bridges, sidewalks, waste disposal systems,
22    water and sewer line extensions, water distribution and
23    purification facilities, storm water drainage and
24    retention facilities, and sewage treatment facilities,
25    resulting from a State or federally declared disaster in
26    Illinois or bordering Illinois when such repairs are

 

 

HB5735- 96 -LRB100 19659 HLH 34932 b

1    initiated on facilities located in the declared disaster
2    area within 6 months after the disaster.
3        (32) Beginning July 1, 1999, game or game birds sold at
4    a "game breeding and hunting preserve area" as that term is
5    used in the Wildlife Code. This paragraph is exempt from
6    the provisions of Section 2-70.
7        (33) A motor vehicle, as that term is defined in
8    Section 1-146 of the Illinois Vehicle Code, that is donated
9    to a corporation, limited liability company, society,
10    association, foundation, or institution that is determined
11    by the Department to be organized and operated exclusively
12    for educational purposes. For purposes of this exemption,
13    "a corporation, limited liability company, society,
14    association, foundation, or institution organized and
15    operated exclusively for educational purposes" means all
16    tax-supported public schools, private schools that offer
17    systematic instruction in useful branches of learning by
18    methods common to public schools and that compare favorably
19    in their scope and intensity with the course of study
20    presented in tax-supported schools, and vocational or
21    technical schools or institutes organized and operated
22    exclusively to provide a course of study of not less than 6
23    weeks duration and designed to prepare individuals to
24    follow a trade or to pursue a manual, technical,
25    mechanical, industrial, business, or commercial
26    occupation.

 

 

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1        (34) Beginning January 1, 2000, personal property,
2    including food, purchased through fundraising events for
3    the benefit of a public or private elementary or secondary
4    school, a group of those schools, or one or more school
5    districts if the events are sponsored by an entity
6    recognized by the school district that consists primarily
7    of volunteers and includes parents and teachers of the
8    school children. This paragraph does not apply to
9    fundraising events (i) for the benefit of private home
10    instruction or (ii) for which the fundraising entity
11    purchases the personal property sold at the events from
12    another individual or entity that sold the property for the
13    purpose of resale by the fundraising entity and that
14    profits from the sale to the fundraising entity. This
15    paragraph is exempt from the provisions of Section 2-70.
16        (35) Beginning January 1, 2000 and through December 31,
17    2001, new or used automatic vending machines that prepare
18    and serve hot food and beverages, including coffee, soup,
19    and other items, and replacement parts for these machines.
20    Beginning January 1, 2002 and through June 30, 2003,
21    machines and parts for machines used in commercial,
22    coin-operated amusement and vending business if a use or
23    occupation tax is paid on the gross receipts derived from
24    the use of the commercial, coin-operated amusement and
25    vending machines. This paragraph is exempt from the
26    provisions of Section 2-70.

 

 

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1        (35-5) Beginning August 23, 2001 and through June 30,
2    2016, food for human consumption that is to be consumed off
3    the premises where it is sold (other than alcoholic
4    beverages, soft drinks, and food that has been prepared for
5    immediate consumption) and prescription and
6    nonprescription medicines, drugs, medical appliances, and
7    insulin, urine testing materials, syringes, and needles
8    used by diabetics, for human use, when purchased for use by
9    a person receiving medical assistance under Article V of
10    the Illinois Public Aid Code who resides in a licensed
11    long-term care facility, as defined in the Nursing Home
12    Care Act, or a licensed facility as defined in the ID/DD
13    Community Care Act, the MC/DD Act, or the Specialized
14    Mental Health Rehabilitation Act of 2013.
15        (36) Beginning August 2, 2001, computers and
16    communications equipment utilized for any hospital purpose
17    and equipment used in the diagnosis, analysis, or treatment
18    of hospital patients sold to a lessor who leases the
19    equipment, under a lease of one year or longer executed or
20    in effect at the time of the purchase, to a hospital that
21    has been issued an active tax exemption identification
22    number by the Department under Section 1g of this Act. This
23    paragraph is exempt from the provisions of Section 2-70.
24        (37) Beginning August 2, 2001, personal property sold
25    to a lessor who leases the property, under a lease of one
26    year or longer executed or in effect at the time of the

 

 

HB5735- 99 -LRB100 19659 HLH 34932 b

1    purchase, to a governmental body that has been issued an
2    active tax exemption identification number by the
3    Department under Section 1g of this Act. This paragraph is
4    exempt from the provisions of Section 2-70.
5        (38) Beginning on January 1, 2002 and through June 30,
6    2016, tangible personal property purchased from an
7    Illinois retailer by a taxpayer engaged in centralized
8    purchasing activities in Illinois who will, upon receipt of
9    the property in Illinois, temporarily store the property in
10    Illinois (i) for the purpose of subsequently transporting
11    it outside this State for use or consumption thereafter
12    solely outside this State or (ii) for the purpose of being
13    processed, fabricated, or manufactured into, attached to,
14    or incorporated into other tangible personal property to be
15    transported outside this State and thereafter used or
16    consumed solely outside this State. The Director of Revenue
17    shall, pursuant to rules adopted in accordance with the
18    Illinois Administrative Procedure Act, issue a permit to
19    any taxpayer in good standing with the Department who is
20    eligible for the exemption under this paragraph (38). The
21    permit issued under this paragraph (38) shall authorize the
22    holder, to the extent and in the manner specified in the
23    rules adopted under this Act, to purchase tangible personal
24    property from a retailer exempt from the taxes imposed by
25    this Act. Taxpayers shall maintain all necessary books and
26    records to substantiate the use and consumption of all such

 

 

HB5735- 100 -LRB100 19659 HLH 34932 b

1    tangible personal property outside of the State of
2    Illinois.
3        (39) Beginning January 1, 2008, tangible personal
4    property used in the construction or maintenance of a
5    community water supply, as defined under Section 3.145 of
6    the Environmental Protection Act, that is operated by a
7    not-for-profit corporation that holds a valid water supply
8    permit issued under Title IV of the Environmental
9    Protection Act. This paragraph is exempt from the
10    provisions of Section 2-70.
11        (40) Beginning January 1, 2010, materials, parts,
12    equipment, components, and furnishings incorporated into
13    or upon an aircraft as part of the modification,
14    refurbishment, completion, replacement, repair, or
15    maintenance of the aircraft. This exemption includes
16    consumable supplies used in the modification,
17    refurbishment, completion, replacement, repair, and
18    maintenance of aircraft, but excludes any materials,
19    parts, equipment, components, and consumable supplies used
20    in the modification, replacement, repair, and maintenance
21    of aircraft engines or power plants, whether such engines
22    or power plants are installed or uninstalled upon any such
23    aircraft. "Consumable supplies" include, but are not
24    limited to, adhesive, tape, sandpaper, general purpose
25    lubricants, cleaning solution, latex gloves, and
26    protective films. This exemption applies only to the sale

 

 

HB5735- 101 -LRB100 19659 HLH 34932 b

1    of qualifying tangible personal property to persons who
2    modify, refurbish, complete, replace, or maintain an
3    aircraft and who (i) hold an Air Agency Certificate and are
4    empowered to operate an approved repair station by the
5    Federal Aviation Administration, (ii) have a Class IV
6    Rating, and (iii) conduct operations in accordance with
7    Part 145 of the Federal Aviation Regulations. The exemption
8    does not include aircraft operated by a commercial air
9    carrier providing scheduled passenger air service pursuant
10    to authority issued under Part 121 or Part 129 of the
11    Federal Aviation Regulations. The changes made to this
12    paragraph (40) by Public Act 98-534 are declarative of
13    existing law.
14        (41) Tangible personal property sold to a
15    public-facilities corporation, as described in Section
16    11-65-10 of the Illinois Municipal Code, for purposes of
17    constructing or furnishing a municipal convention hall,
18    but only if the legal title to the municipal convention
19    hall is transferred to the municipality without any further
20    consideration by or on behalf of the municipality at the
21    time of the completion of the municipal convention hall or
22    upon the retirement or redemption of any bonds or other
23    debt instruments issued by the public-facilities
24    corporation in connection with the development of the
25    municipal convention hall. This exemption includes
26    existing public-facilities corporations as provided in

 

 

HB5735- 102 -LRB100 19659 HLH 34932 b

1    Section 11-65-25 of the Illinois Municipal Code. This
2    paragraph is exempt from the provisions of Section 2-70.
3        (42) Beginning January 1, 2017, menstrual pads,
4    tampons, and menstrual cups.
5        (43) Merchandise that is subject to the Rental Purchase
6    Agreement Occupation and Use Tax. The purchaser must
7    certify that the item is purchased to be rented subject to
8    a rental purchase agreement, as defined in the Rental
9    Purchase Agreement Act, and provide proof of registration
10    under the Rental Purchase Agreement Occupation and Use Tax
11    Act. This paragraph is exempt from the provisions of
12    Section 2-70.
13(Source: P.A. 99-180, eff. 7-29-15; 99-855, eff. 8-19-16;
14100-22, eff. 7-6-17; 100-321, eff. 8-24-17; 100-437, eff.
151-1-18; revised 9-26-17.)
 
16    Section 99. Effective date. This Act takes effect upon
17becoming law.