101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
SB2521

 

Introduced 1/28/2020, by Sen. Dan McConchie

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 105/3-55  from Ch. 120, par. 439.3-55
35 ILCS 110/3-45  from Ch. 120, par. 439.33-45

    Amends the Use Tax Act and the Service Use Tax Act. Provides that the multistate exemption includes the return of property of an out-of-State lessor or purchaser to this State for storage, repair, or refurbishment, so long as the property is not used by a lessee or purchaser in this State. Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB2521LRB101 18080 HLH 67519 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Use Tax Act is amended by changing Section
53-55 as follows:
 
6    (35 ILCS 105/3-55)  (from Ch. 120, par. 439.3-55)
7    Sec. 3-55. Multistate exemption. To prevent actual or
8likely multistate taxation, the tax imposed by this Act does
9not apply to the use of tangible personal property in this
10State under the following circumstances:
11    (a) The use, in this State, of tangible personal property
12acquired outside this State by a nonresident individual and
13brought into this State by the individual for his or her own
14use while temporarily within this State or while passing
15through this State.
16    (b) (Blank).
17    (c) The use, in this State, by owners, lessors, or shippers
18of tangible personal property that is utilized by interstate
19carriers for hire for use as rolling stock moving in interstate
20commerce as long as so used by the interstate carriers for
21hire, and equipment operated by a telecommunications provider,
22licensed as a common carrier by the Federal Communications
23Commission, which is permanently installed in or affixed to

 

 

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1aircraft moving in interstate commerce.
2    (d) The use, in this State, of tangible personal property
3that is acquired outside this State and caused to be brought
4into this State by a person who has already paid a tax in
5another State in respect to the sale, purchase, or use of that
6property, to the extent of the amount of the tax properly due
7and paid in the other State.
8    (e) The temporary storage, in this State, of tangible
9personal property that is acquired outside this State and that,
10after being brought into this State and stored here
11temporarily, is used solely outside this State or is physically
12attached to or incorporated into other tangible personal
13property that is used solely outside this State, or is altered
14by converting, fabricating, manufacturing, printing,
15processing, or shaping, and, as altered, is used solely outside
16this State. For purposes of this subsection, use in this State
17does not include the return of the property of a lessor or
18purchaser to this state for storage, repair or refurbishment so
19long as the property is not utilized by a lessee or purchaser
20in this State. Refurbishment includes the replacement of
21component parts as well as upgrades.
22    (e-5) The return of property of an out-of-State lessor or
23purchaser to this State for storage, repair, or refurbishment,
24so long as the property is not used by a lessee or purchaser in
25this State. As used in this subsection (e-5), refurbishment
26includes the replacement of component parts as well as

 

 

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1upgrades.
2    (f) The temporary storage in this State of building
3materials and fixtures that are acquired either in this State
4or outside this State by an Illinois registered combination
5retailer and construction contractor, and that the purchaser
6thereafter uses outside this State by incorporating that
7property into real estate located outside this State.
8    (g) The use or purchase of tangible personal property by a
9common carrier by rail or motor that receives the physical
10possession of the property in Illinois, and that transports the
11property, or shares with another common carrier in the
12transportation of the property, out of Illinois on a standard
13uniform bill of lading showing the seller of the property as
14the shipper or consignor of the property to a destination
15outside Illinois, for use outside Illinois.
16    (h) Except as provided in subsection (h-1), the use, in
17this State, of a motor vehicle that was sold in this State to a
18nonresident, even though the motor vehicle is delivered to the
19nonresident in this State, if the motor vehicle is not to be
20titled in this State, and if a drive-away permit is issued to
21the motor vehicle as provided in Section 3-603 of the Illinois
22Vehicle Code or if the nonresident purchaser has vehicle
23registration plates to transfer to the motor vehicle upon
24returning to his or her home state. The issuance of the
25drive-away permit or having the out-of-state registration
26plates to be transferred shall be prima facie evidence that the

 

 

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1motor vehicle will not be titled in this State.
2    (h-1) The exemption under subsection (h) does not apply if
3the state in which the motor vehicle will be titled does not
4allow a reciprocal exemption for the use in that state of a
5motor vehicle sold and delivered in that state to an Illinois
6resident but titled in Illinois. The tax collected under this
7Act on the sale of a motor vehicle in this State to a resident
8of another state that does not allow a reciprocal exemption
9shall be imposed at a rate equal to the state's rate of tax on
10taxable property in the state in which the purchaser is a
11resident, except that the tax shall not exceed the tax that
12would otherwise be imposed under this Act. At the time of the
13sale, the purchaser shall execute a statement, signed under
14penalty of perjury, of his or her intent to title the vehicle
15in the state in which the purchaser is a resident within 30
16days after the sale and of the fact of the payment to the State
17of Illinois of tax in an amount equivalent to the state's rate
18of tax on taxable property in his or her state of residence and
19shall submit the statement to the appropriate tax collection
20agency in his or her state of residence. In addition, the
21retailer must retain a signed copy of the statement in his or
22her records. Nothing in this subsection shall be construed to
23require the removal of the vehicle from this state following
24the filing of an intent to title the vehicle in the purchaser's
25state of residence if the purchaser titles the vehicle in his
26or her state of residence within 30 days after the date of

 

 

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1sale. The tax collected under this Act in accordance with this
2subsection (h-1) shall be proportionately distributed as if the
3tax were collected at the 6.25% general rate imposed under this
4Act.
5    (h-2) The following exemptions apply with respect to
6certain aircraft:
7        (1) Beginning on July 1, 2007, no tax is imposed under
8    this Act on the purchase of an aircraft, as defined in
9    Section 3 of the Illinois Aeronautics Act, if all of the
10    following conditions are met:
11            (A) the aircraft leaves this State within 15 days
12        after the later of either the issuance of the final
13        billing for the purchase of the aircraft or the
14        authorized approval for return to service, completion
15        of the maintenance record entry, and completion of the
16        test flight and ground test for inspection, as required
17        by 14 C.F.R. 91.407;
18            (B) the aircraft is not based or registered in this
19        State after the purchase of the aircraft; and
20            (C) the purchaser provides the Department with a
21        signed and dated certification, on a form prescribed by
22        the Department, certifying that the requirements of
23        this item (1) are met. The certificate must also
24        include the name and address of the purchaser, the
25        address of the location where the aircraft is to be
26        titled or registered, the address of the primary

 

 

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1        physical location of the aircraft, and other
2        information that the Department may reasonably
3        require.
4        (2) Beginning on July 1, 2007, no tax is imposed under
5    this Act on the use of an aircraft, as defined in Section 3
6    of the Illinois Aeronautics Act, that is temporarily
7    located in this State for the purpose of a prepurchase
8    evaluation if all of the following conditions are met:
9            (A) the aircraft is not based or registered in this
10        State after the prepurchase evaluation; and
11            (B) the purchaser provides the Department with a
12        signed and dated certification, on a form prescribed by
13        the Department, certifying that the requirements of
14        this item (2) are met. The certificate must also
15        include the name and address of the purchaser, the
16        address of the location where the aircraft is to be
17        titled or registered, the address of the primary
18        physical location of the aircraft, and other
19        information that the Department may reasonably
20        require.
21        (3) Beginning on July 1, 2007, no tax is imposed under
22    this Act on the use of an aircraft, as defined in Section 3
23    of the Illinois Aeronautics Act, that is temporarily
24    located in this State for the purpose of a post-sale
25    customization if all of the following conditions are met:
26            (A) the aircraft leaves this State within 15 days

 

 

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1        after the authorized approval for return to service,
2        completion of the maintenance record entry, and
3        completion of the test flight and ground test for
4        inspection, as required by 14 C.F.R. 91.407;
5            (B) the aircraft is not based or registered in this
6        State either before or after the post-sale
7        customization; and
8            (C) the purchaser provides the Department with a
9        signed and dated certification, on a form prescribed by
10        the Department, certifying that the requirements of
11        this item (3) are met. The certificate must also
12        include the name and address of the purchaser, the
13        address of the location where the aircraft is to be
14        titled or registered, the address of the primary
15        physical location of the aircraft, and other
16        information that the Department may reasonably
17        require.
18    If tax becomes due under this subsection (h-2) because of
19the purchaser's use of the aircraft in this State, the
20purchaser shall file a return with the Department and pay the
21tax on the fair market value of the aircraft. This return and
22payment of the tax must be made no later than 30 days after the
23aircraft is used in a taxable manner in this State. The tax is
24based on the fair market value of the aircraft on the date that
25it is first used in a taxable manner in this State.
26    For purposes of this subsection (h-2):

 

 

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1    "Based in this State" means hangared, stored, or otherwise
2used, excluding post-sale customizations as defined in this
3Section, for 10 or more days in each 12-month period
4immediately following the date of the sale of the aircraft.
5    "Post-sale customization" means any improvement,
6maintenance, or repair that is performed on an aircraft
7following a transfer of ownership of the aircraft.
8    "Prepurchase evaluation" means an examination of an
9aircraft to provide a potential purchaser with information
10relevant to the potential purchase.
11    "Registered in this State" means an aircraft registered
12with the Department of Transportation, Aeronautics Division,
13or titled or registered with the Federal Aviation
14Administration to an address located in this State.
15    This subsection (h-2) is exempt from the provisions of
16Section 3-90.
17    (i) Beginning July 1, 1999, the use, in this State, of fuel
18acquired outside this State and brought into this State in the
19fuel supply tanks of locomotives engaged in freight hauling and
20passenger service for interstate commerce. This subsection is
21exempt from the provisions of Section 3-90.
22    (j) Beginning on January 1, 2002 and through June 30, 2016,
23the use of tangible personal property purchased from an
24Illinois retailer by a taxpayer engaged in centralized
25purchasing activities in Illinois who will, upon receipt of the
26property in Illinois, temporarily store the property in

 

 

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1Illinois (i) for the purpose of subsequently transporting it
2outside this State for use or consumption thereafter solely
3outside this State or (ii) for the purpose of being processed,
4fabricated, or manufactured into, attached to, or incorporated
5into other tangible personal property to be transported outside
6this State and thereafter used or consumed solely outside this
7State. The Director of Revenue shall, pursuant to rules adopted
8in accordance with the Illinois Administrative Procedure Act,
9issue a permit to any taxpayer in good standing with the
10Department who is eligible for the exemption under this
11subsection (j). The permit issued under this subsection (j)
12shall authorize the holder, to the extent and in the manner
13specified in the rules adopted under this Act, to purchase
14tangible personal property from a retailer exempt from the
15taxes imposed by this Act. Taxpayers shall maintain all
16necessary books and records to substantiate the use and
17consumption of all such tangible personal property outside of
18the State of Illinois.
19(Source: P.A. 100-321, eff. 8-24-17.)
 
20    Section 10. The Service Use Tax Act is amended by changing
21Section 3-45 as follows:
 
22    (35 ILCS 110/3-45)  (from Ch. 120, par. 439.33-45)
23    Sec. 3-45. Multistate exemption. To prevent actual or
24likely multistate taxation, the tax imposed by this Act does

 

 

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1not apply to the use of tangible personal property in this
2State under the following circumstances:
3    (a) The use, in this State, of property acquired outside
4this State by a nonresident individual and brought into this
5State by the individual for his or her own use while
6temporarily within this State or while passing through this
7State.
8    (b) The use, in this State, of property that is acquired
9outside this State and that is moved into this State for use as
10rolling stock moving in interstate commerce.
11    (c) The use, in this State, of property that is acquired
12outside this State and caused to be brought into this State by
13a person who has already paid a tax in another state in respect
14to the sale, purchase, or use of that property, to the extent
15of the amount of the tax properly due and paid in the other
16state.
17    (d) The temporary storage, in this State, of property that
18is acquired outside this State and that after being brought
19into this State and stored here temporarily, is used solely
20outside this State or is physically attached to or incorporated
21into other property that is used solely outside this State, or
22is altered by converting, fabricating, manufacturing,
23printing, processing, or shaping, and, as altered, is used
24solely outside this State.
25    (d-5) The return of property of an out-of-State lessor or
26purchaser to this State for storage, repair, or refurbishment,

 

 

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1so long as the property is not used by a lessee or purchaser in
2this State. As used in this subsection (d-5), refurbishment
3includes the replacement of component parts as well as
4upgrades.
5    (e) Beginning July 1, 1999, the use, in this State, of fuel
6acquired outside this State and brought into this State in the
7fuel supply tanks of locomotives engaged in freight hauling and
8passenger service for interstate commerce. This subsection is
9exempt from the provisions of Section 3-75.
10    (f) Beginning on January 1, 2002 and through June 30, 2016,
11the use of tangible personal property purchased from an
12Illinois retailer by a taxpayer engaged in centralized
13purchasing activities in Illinois who will, upon receipt of the
14property in Illinois, temporarily store the property in
15Illinois (i) for the purpose of subsequently transporting it
16outside this State for use or consumption thereafter solely
17outside this State or (ii) for the purpose of being processed,
18fabricated, or manufactured into, attached to, or incorporated
19into other tangible personal property to be transported outside
20this State and thereafter used or consumed solely outside this
21State. The Director of Revenue shall, pursuant to rules adopted
22in accordance with the Illinois Administrative Procedure Act,
23issue a permit to any taxpayer in good standing with the
24Department who is eligible for the exemption under this
25subsection (f). The permit issued under this subsection (f)
26shall authorize the holder, to the extent and in the manner

 

 

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1specified in the rules adopted under this Act, to purchase
2tangible personal property from a retailer exempt from the
3taxes imposed by this Act. Taxpayers shall maintain all
4necessary books and records to substantiate the use and
5consumption of all such tangible personal property outside of
6the State of Illinois.
7(Source: P.A. 97-73, eff. 6-30-11.)
 
8    Section 99. Effective date. This Act takes effect upon
9becoming law.