102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
HB1938

 

Introduced 2/17/2021, by Rep. Tony McCombie

 

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

 

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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
18shippers of tangible personal property that is utilized by
19interstate carriers for hire for use as rolling stock moving
20in interstate commerce as long as so used by the interstate
21carriers for hire, and equipment operated by a
22telecommunications provider, licensed as a common carrier by
23the Federal Communications Commission, which is permanently

 

 

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

 

 

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

 

 

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1motor vehicle sold and delivered in that state to an Illinois
2resident but titled in Illinois. The tax collected under this
3Act on the sale of a motor vehicle in this State to a resident
4of another state that does not allow a reciprocal exemption
5shall be imposed at a rate equal to the state's rate of tax on
6taxable property in the state in which the purchaser is a
7resident, except that the tax shall not exceed the tax that
8would otherwise be imposed under this Act. At the time of the
9sale, the purchaser shall execute a statement, signed under
10penalty of perjury, of his or her intent to title the vehicle
11in the state in which the purchaser is a resident within 30
12days after the sale and of the fact of the payment to the State
13of Illinois of tax in an amount equivalent to the state's rate
14of tax on taxable property in his or her state of residence and
15shall submit the statement to the appropriate tax collection
16agency in his or her state of residence. In addition, the
17retailer must retain a signed copy of the statement in his or
18her records. Nothing in this subsection shall be construed to
19require the removal of the vehicle from this state following
20the filing of an intent to title the vehicle in the purchaser's
21state of residence if the purchaser titles the vehicle in his
22or her state of residence within 30 days after the date of
23sale. The tax collected under this Act in accordance with this
24subsection (h-1) shall be proportionately distributed as if
25the tax were collected at the 6.25% general rate imposed under
26this Act.

 

 

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

 

 

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1    this Act on the use of an aircraft, as defined in Section 3
2    of the Illinois Aeronautics Act, that is temporarily
3    located in this State for the purpose of a prepurchase
4    evaluation if all of the following conditions are met:
5            (A) the aircraft is not based or registered in
6        this State after the prepurchase evaluation; and
7            (B) the purchaser provides the Department with a
8        signed and dated certification, on a form prescribed
9        by the Department, certifying that the requirements of
10        this item (2) are met. The certificate must also
11        include the name and address of the purchaser, the
12        address of the location where the aircraft is to be
13        titled or registered, the address of the primary
14        physical location of the aircraft, and other
15        information that the Department may reasonably
16        require.
17        (3) Beginning on July 1, 2007, no tax is imposed under
18    this Act on the use of an aircraft, as defined in Section 3
19    of the Illinois Aeronautics Act, that is temporarily
20    located in this State for the purpose of a post-sale
21    customization if all of the following conditions are met:
22            (A) the aircraft leaves this State within 15 days
23        after the authorized approval for return to service,
24        completion of the maintenance record entry, and
25        completion of the test flight and ground test for
26        inspection, as required by 14 C.F.R. 91.407;

 

 

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

 

 

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1    "Post-sale customization" means any improvement,
2maintenance, or repair that is performed on an aircraft
3following a transfer of ownership of the aircraft.
4    "Prepurchase evaluation" means an examination of an
5aircraft to provide a potential purchaser with information
6relevant to the potential purchase.
7    "Registered in this State" means an aircraft registered
8with the Department of Transportation, Aeronautics Division,
9or titled or registered with the Federal Aviation
10Administration to an address located in this State.
11    This subsection (h-2) is exempt from the provisions of
12Section 3-90.
13    (i) Beginning July 1, 1999, the use, in this State, of fuel
14acquired outside this State and brought into this State in the
15fuel supply tanks of locomotives engaged in freight hauling
16and passenger service for interstate commerce. This subsection
17is exempt from the provisions of Section 3-90.
18    (j) Beginning on January 1, 2002 and through June 30,
192016, the use of tangible personal property purchased from an
20Illinois retailer by a taxpayer engaged in centralized
21purchasing activities in Illinois who will, upon receipt of
22the property in Illinois, temporarily store the property in
23Illinois (i) for the purpose of subsequently transporting it
24outside this State for use or consumption thereafter solely
25outside this State or (ii) for the purpose of being processed,
26fabricated, or manufactured into, attached to, or incorporated

 

 

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1into other tangible personal property to be transported
2outside this State and thereafter used or consumed solely
3outside this State. The Director of Revenue shall, pursuant to
4rules adopted in accordance with the Illinois Administrative
5Procedure Act, issue a permit to any taxpayer in good standing
6with the Department who is eligible for the exemption under
7this subsection (j). The permit issued under this subsection
8(j) shall authorize the holder, to the extent and in the manner
9specified in the rules adopted under this Act, to purchase
10tangible personal property from a retailer exempt from the
11taxes imposed by this Act. Taxpayers shall maintain all
12necessary books and records to substantiate the use and
13consumption of all such tangible personal property outside of
14the State of Illinois.
15(Source: P.A. 100-321, eff. 8-24-17.)
 
16    Section 10. The Service Use Tax Act is amended by changing
17Section 3-45 as follows:
 
18    (35 ILCS 110/3-45)  (from Ch. 120, par. 439.33-45)
19    Sec. 3-45. Multistate exemption. To prevent actual or
20likely multistate taxation, the tax imposed by this Act does
21not apply to the use of tangible personal property in this
22State under the following circumstances:
23    (a) The use, in this State, of property acquired outside
24this State by a nonresident individual and brought into this

 

 

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

 

 

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1    (e) Beginning July 1, 1999, the use, in this State, of fuel
2acquired outside this State and brought into this State in the
3fuel supply tanks of locomotives engaged in freight hauling
4and passenger service for interstate commerce. This subsection
5is exempt from the provisions of Section 3-75.
6    (f) Beginning on January 1, 2002 and through June 30,
72016, the use of tangible personal property purchased from an
8Illinois retailer by a taxpayer engaged in centralized
9purchasing activities in Illinois who will, upon receipt of
10the property in Illinois, temporarily store the property in
11Illinois (i) for the purpose of subsequently transporting it
12outside this State for use or consumption thereafter solely
13outside this State or (ii) for the purpose of being processed,
14fabricated, or manufactured into, attached to, or incorporated
15into other tangible personal property to be transported
16outside this State and thereafter used or consumed solely
17outside this State. The Director of Revenue shall, pursuant to
18rules adopted in accordance with the Illinois Administrative
19Procedure Act, issue a permit to any taxpayer in good standing
20with the Department who is eligible for the exemption under
21this subsection (f). The permit issued under this subsection
22(f) shall authorize the holder, to the extent and in the manner
23specified in the rules adopted under this Act, to purchase
24tangible personal property from a retailer exempt from the
25taxes imposed by this Act. Taxpayers shall maintain all
26necessary books and records to substantiate the use and

 

 

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1consumption of all such tangible personal property outside of
2the State of Illinois.
3(Source: P.A. 97-73, eff. 6-30-11.)
 
4    Section 99. Effective date. This Act takes effect upon
5becoming law.