103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB3532

 

Introduced 2/17/2023, by Rep. Tony M. 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, for the purpose of the multistate exemption, use in this State does not include the return of the property of a 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.


LRB103 05919 HLH 50940 b

 

 

A BILL FOR

 

HB3532LRB103 05919 HLH 50940 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
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

 

 

HB3532- 2 -LRB103 05919 HLH 50940 b

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. For purposes of this subsection,
18use in this State does not include the return of the property
19of a lessor or purchaser to this State for storage, repair, or
20refurbishment so long as the property is not used by a lessee
21or purchaser in this State. Refurbishment includes the
22replacement of component parts as well as upgrades.
23    (f) The temporary storage in this State of building
24materials and fixtures that are acquired either in this State
25or outside this State by an Illinois registered combination
26retailer and construction contractor, and that the purchaser

 

 

HB3532- 3 -LRB103 05919 HLH 50940 b

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

 

 

HB3532- 4 -LRB103 05919 HLH 50940 b

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

 

 

HB3532- 5 -LRB103 05919 HLH 50940 b

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

 

 

HB3532- 6 -LRB103 05919 HLH 50940 b

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

 

 

HB3532- 7 -LRB103 05919 HLH 50940 b

1        this State either before or after the post-sale
2        customization; and
3            (C) the purchaser provides the Department with a
4        signed and dated certification, on a form prescribed
5        by the Department, certifying that the requirements of
6        this item (3) are met. The certificate must also
7        include the name and address of the purchaser, the
8        address of the location where the aircraft is to be
9        titled or registered, the address of the primary
10        physical location of the aircraft, and other
11        information that the Department may reasonably
12        require.
13    If tax becomes due under this subsection (h-2) because of
14the purchaser's use of the aircraft in this State, the
15purchaser shall file a return with the Department and pay the
16tax on the fair market value of the aircraft. This return and
17payment of the tax must be made no later than 30 days after the
18aircraft is used in a taxable manner in this State. The tax is
19based on the fair market value of the aircraft on the date that
20it is first used in a taxable manner in this State.
21    For purposes of this subsection (h-2):
22    "Based in this State" means hangared, stored, or otherwise
23used, excluding post-sale customizations as defined in this
24Section, for 10 or more days in each 12-month period
25immediately following the date of the sale of the aircraft.
26    "Post-sale customization" means any improvement,

 

 

HB3532- 8 -LRB103 05919 HLH 50940 b

1maintenance, or repair that is performed on an aircraft
2following a transfer of ownership of the aircraft.
3    "Prepurchase evaluation" means an examination of an
4aircraft to provide a potential purchaser with information
5relevant to the potential purchase.
6    "Registered in this State" means an aircraft registered
7with the Department of Transportation, Aeronautics Division,
8or titled or registered with the Federal Aviation
9Administration to an address located in this State.
10    This subsection (h-2) is exempt from the provisions of
11Section 3-90.
12    (i) Beginning July 1, 1999, the use, in this State, of fuel
13acquired outside this State and brought into this State in the
14fuel supply tanks of locomotives engaged in freight hauling
15and passenger service for interstate commerce. This subsection
16is exempt from the provisions of Section 3-90.
17    (j) Beginning on January 1, 2002 and through June 30,
182016, the use of tangible personal property purchased from an
19Illinois retailer by a taxpayer engaged in centralized
20purchasing activities in Illinois who will, upon receipt of
21the property in Illinois, temporarily store the property in
22Illinois (i) for the purpose of subsequently transporting it
23outside this State for use or consumption thereafter solely
24outside this State or (ii) for the purpose of being processed,
25fabricated, or manufactured into, attached to, or incorporated
26into other tangible personal property to be transported

 

 

HB3532- 9 -LRB103 05919 HLH 50940 b

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

 

 

HB3532- 10 -LRB103 05919 HLH 50940 b

1temporarily within this State or while passing through this
2State.
3    (b) The use, in this State, of property that is acquired
4outside this State and that is moved into this State for use as
5rolling stock moving in interstate commerce.
6    (c) The use, in this State, of property that is acquired
7outside this State and caused to be brought into this State by
8a person who has already paid a tax in another state in respect
9to the sale, purchase, or use of that property, to the extent
10of the amount of the tax properly due and paid in the other
11state.
12    (d) The temporary storage, in this State, of property that
13is acquired outside this State and that after being brought
14into this State and stored here temporarily, is used solely
15outside this State or is physically attached to or
16incorporated into other property that is used solely outside
17this State, or is altered by converting, fabricating,
18manufacturing, printing, processing, or shaping, and, as
19altered, is used solely outside this State. For purposes of
20this subsection, use in this State does not include the return
21of the property of a lessor or purchaser to this State for
22storage, repair, or refurbishment so long as the property is
23not used by a lessee or purchaser in this State. Refurbishment
24includes the replacement of component parts as well as
25upgrades.
26    (e) Beginning July 1, 1999, the use, in this State, of fuel

 

 

HB3532- 11 -LRB103 05919 HLH 50940 b

1acquired outside this State and brought into this State in the
2fuel supply tanks of locomotives engaged in freight hauling
3and passenger service for interstate commerce. This subsection
4is exempt from the provisions of Section 3-75.
5    (f) Beginning on January 1, 2002 and through June 30,
62016, the use of tangible personal property purchased from an
7Illinois retailer by a taxpayer engaged in centralized
8purchasing activities in Illinois who will, upon receipt of
9the property in Illinois, temporarily store the property in
10Illinois (i) for the purpose of subsequently transporting it
11outside this State for use or consumption thereafter solely
12outside this State or (ii) for the purpose of being processed,
13fabricated, or manufactured into, attached to, or incorporated
14into other tangible personal property to be transported
15outside this State and thereafter used or consumed solely
16outside this State. The Director of Revenue shall, pursuant to
17rules adopted in accordance with the Illinois Administrative
18Procedure Act, issue a permit to any taxpayer in good standing
19with the Department who is eligible for the exemption under
20this subsection (f). The permit issued under this subsection
21(f) shall authorize the holder, to the extent and in the manner
22specified in the rules adopted under this Act, to purchase
23tangible personal property from a retailer exempt from the
24taxes imposed by this Act. Taxpayers shall maintain all
25necessary books and records to substantiate the use and
26consumption of all such tangible personal property outside of

 

 

HB3532- 12 -LRB103 05919 HLH 50940 b

1the State of Illinois.
2(Source: P.A. 97-73, eff. 6-30-11.)