99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
HB4017

 

Introduced , by Rep. Frank J. Mautino

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 105/2d new
35 ILCS 120/1  from Ch. 120, par. 440

    Amends the Use Tax Act. Provides that the "selling price" shall not include any rebate from a manufacturer to reduce prices to a customer where the seller directly passes the rebate onto the customer and the rebate is deducted by the manufacturer from the price paid by the seller for the item. Amends the Retailers' Occupation Tax Act. Specifies that "sale at retail" shall not include any rebate from a manufacturer to reduce prices to a customer where the seller directly passes the rebate onto the customer and the rebate is deducted by the manufacturer from the price paid by the seller for the item. 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 adding Section 2d
5as follows:
 
6    (35 ILCS 105/2d new)
7    Sec. 2d. Retail incentives, rebate. "Selling price" shall
8not include any rebate from a manufacturer to reduce prices to
9a customer where the seller directly passes the rebate onto the
10customer and the rebate is deducted by the manufacturer from
11the price paid by the seller for the item.
 
12    Section 10. The Retailers' Occupation Tax Act is amended by
13changing Section 1 as follows:
 
14    (35 ILCS 120/1)  (from Ch. 120, par. 440)
15    Sec. 1. Definitions. "Sale at retail" means any transfer of
16the ownership of or title to tangible personal property to a
17purchaser, for the purpose of use or consumption, and not for
18the purpose of resale in any form as tangible personal property
19to the extent not first subjected to a use for which it was
20purchased, for a valuable consideration: Provided that the
21property purchased is deemed to be purchased for the purpose of

 

 

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1resale, despite first being used, to the extent to which it is
2resold as an ingredient of an intentionally produced product or
3byproduct of manufacturing. For this purpose, slag produced as
4an incident to manufacturing pig iron or steel and sold is
5considered to be an intentionally produced byproduct of
6manufacturing. Transactions whereby the possession of the
7property is transferred but the seller retains the title as
8security for payment of the selling price shall be deemed to be
9sales.
10    "Sale at retail" shall be construed to include any transfer
11of the ownership of or title to tangible personal property to a
12purchaser, for use or consumption by any other person to whom
13such purchaser may transfer the tangible personal property
14without a valuable consideration, and to include any transfer,
15whether made for or without a valuable consideration, for
16resale in any form as tangible personal property unless made in
17compliance with Section 2c of this Act.
18    Sales of tangible personal property, which property, to the
19extent not first subjected to a use for which it was purchased,
20as an ingredient or constituent, goes into and forms a part of
21tangible personal property subsequently the subject of a "Sale
22at retail", are not sales at retail as defined in this Act:
23Provided that the property purchased is deemed to be purchased
24for the purpose of resale, despite first being used, to the
25extent to which it is resold as an ingredient of an
26intentionally produced product or byproduct of manufacturing.

 

 

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1    "Sale at retail" shall be construed to include any Illinois
2florist's sales transaction in which the purchase order is
3received in Illinois by a florist and the sale is for use or
4consumption, but the Illinois florist has a florist in another
5state deliver the property to the purchaser or the purchaser's
6donee in such other state.
7    "Sale at retail" shall not include any rebate from a
8manufacturer to reduce prices to a customer where the seller
9directly passes the rebate onto the customer and the rebate is
10deducted by the manufacturer from the price paid by the seller
11for the item.
12    Nonreusable tangible personal property that is used by
13persons engaged in the business of operating a restaurant,
14cafeteria, or drive-in is a sale for resale when it is
15transferred to customers in the ordinary course of business as
16part of the sale of food or beverages and is used to deliver,
17package, or consume food or beverages, regardless of where
18consumption of the food or beverages occurs. Examples of those
19items include, but are not limited to nonreusable, paper and
20plastic cups, plates, baskets, boxes, sleeves, buckets or other
21containers, utensils, straws, placemats, napkins, doggie bags,
22and wrapping or packaging materials that are transferred to
23customers as part of the sale of food or beverages in the
24ordinary course of business.
25    The purchase, employment and transfer of such tangible
26personal property as newsprint and ink for the primary purpose

 

 

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1of conveying news (with or without other information) is not a
2purchase, use or sale of tangible personal property.
3    A person whose activities are organized and conducted
4primarily as a not-for-profit service enterprise, and who
5engages in selling tangible personal property at retail
6(whether to the public or merely to members and their guests)
7is engaged in the business of selling tangible personal
8property at retail with respect to such transactions, excepting
9only a person organized and operated exclusively for
10charitable, religious or educational purposes either (1), to
11the extent of sales by such person to its members, students,
12patients or inmates of tangible personal property to be used
13primarily for the purposes of such person, or (2), to the
14extent of sales by such person of tangible personal property
15which is not sold or offered for sale by persons organized for
16profit. The selling of school books and school supplies by
17schools at retail to students is not "primarily for the
18purposes of" the school which does such selling. The provisions
19of this paragraph shall not apply to nor subject to taxation
20occasional dinners, socials or similar activities of a person
21organized and operated exclusively for charitable, religious
22or educational purposes, whether or not such activities are
23open to the public.
24    A person who is the recipient of a grant or contract under
25Title VII of the Older Americans Act of 1965 (P.L. 92-258) and
26serves meals to participants in the federal Nutrition Program

 

 

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1for the Elderly in return for contributions established in
2amount by the individual participant pursuant to a schedule of
3suggested fees as provided for in the federal Act is not
4engaged in the business of selling tangible personal property
5at retail with respect to such transactions.
6    "Purchaser" means anyone who, through a sale at retail,
7acquires the ownership of or title to tangible personal
8property for a valuable consideration.
9    "Reseller of motor fuel" means any person engaged in the
10business of selling or delivering or transferring title of
11motor fuel to another person other than for use or consumption.
12No person shall act as a reseller of motor fuel within this
13State without first being registered as a reseller pursuant to
14Section 2c or a retailer pursuant to Section 2a.
15    "Selling price" or the "amount of sale" means the
16consideration for a sale valued in money whether received in
17money or otherwise, including cash, credits, property, other
18than as hereinafter provided, and services, but not including
19the value of or credit given for traded-in tangible personal
20property where the item that is traded-in is of like kind and
21character as that which is being sold, and shall be determined
22without any deduction on account of the cost of the property
23sold, the cost of materials used, labor or service cost or any
24other expense whatsoever, but does not include charges that are
25added to prices by sellers on account of the seller's tax
26liability under this Act, or on account of the seller's duty to

 

 

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1collect, from the purchaser, the tax that is imposed by the Use
2Tax Act, or, except as otherwise provided with respect to any
3cigarette tax imposed by a home rule unit, on account of the
4seller's tax liability under any local occupation tax
5administered by the Department, or, except as otherwise
6provided with respect to any cigarette tax imposed by a home
7rule unit on account of the seller's duty to collect, from the
8purchasers, the tax that is imposed under any local use tax
9administered by the Department. Effective December 1, 1985,
10"selling price" shall include charges that are added to prices
11by sellers on account of the seller's tax liability under the
12Cigarette Tax Act, on account of the sellers' duty to collect,
13from the purchaser, the tax imposed under the Cigarette Use Tax
14Act, and on account of the seller's duty to collect, from the
15purchaser, any cigarette tax imposed by a home rule unit.
16    Notwithstanding any law to the contrary, for any motor
17vehicle, as defined in Section 1-146 of the Vehicle Code, that
18is sold on or after January 1, 2015 for the purpose of leasing
19the vehicle for a defined period that is longer than one year
20and (1) is a motor vehicle of the second division that: (A) is
21a self-contained motor vehicle designed or permanently
22converted to provide living quarters for recreational,
23camping, or travel use, with direct walk through access to the
24living quarters from the driver's seat; (B) is of the van
25configuration designed for the transportation of not less than
267 nor more than 16 passengers; or (C) has a gross vehicle

 

 

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1weight rating of 8,000 pounds or less or (2) is a motor vehicle
2of the first division, "selling price" or "amount of sale"
3means the consideration received by the lessor pursuant to the
4lease contract, including amounts due at lease signing and all
5monthly or other regular payments charged over the term of the
6lease. Also included in the selling price is any amount
7received by the lessor from the lessee for the leased vehicle
8that is not calculated at the time the lease is executed,
9including, but not limited to, excess mileage charges and
10charges for excess wear and tear. For sales that occur in
11Illinois, with respect to any amount received by the lessor
12from the lessee for the leased vehicle that is not calculated
13at the time the lease is executed, the lessor who purchased the
14motor vehicle does not incur the tax imposed by the Use Tax Act
15on those amounts, and the retailer who makes the retail sale of
16the motor vehicle to the lessor is not required to collect the
17tax imposed by the Use Tax Act or to pay the tax imposed by this
18Act on those amounts. However, the lessor who purchased the
19motor vehicle assumes the liability for reporting and paying
20the tax on those amounts directly to the Department in the same
21form (Illinois Retailers' Occupation Tax, and local retailers'
22occupation taxes, if applicable) in which the retailer would
23have reported and paid such tax if the retailer had accounted
24for the tax to the Department. For amounts received by the
25lessor from the lessee that are not calculated at the time the
26lease is executed, the lessor must file the return and pay the

 

 

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1tax to the Department by the due date otherwise required by
2this Act for returns other than transaction returns. If the
3retailer is entitled under this Act to a discount for
4collecting and remitting the tax imposed under this Act to the
5Department with respect to the sale of the motor vehicle to the
6lessor, then the right to the discount provided in this Act
7shall be transferred to the lessor with respect to the tax paid
8by the lessor for any amount received by the lessor from the
9lessee for the leased vehicle that is not calculated at the
10time the lease is executed; provided that the discount is only
11allowed if the return is timely filed and for amounts timely
12paid. The "selling price" of a motor vehicle that is sold on or
13after January 1, 2015 for the purpose of leasing for a defined
14period of longer than one year shall not be reduced by the
15value of or credit given for traded-in tangible personal
16property owned by the lessor, nor shall it be reduced by the
17value of or credit given for traded-in tangible personal
18property owned by the lessee, regardless of whether the
19trade-in value thereof is assigned by the lessee to the lessor.
20In the case of a motor vehicle that is sold for the purpose of
21leasing for a defined period of longer than one year, the sale
22occurs at the time of the delivery of the vehicle, regardless
23of the due date of any lease payments. A lessor who incurs a
24Retailers' Occupation Tax liability on the sale of a motor
25vehicle coming off lease may not take a credit against that
26liability for the Use Tax the lessor paid upon the purchase of

 

 

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1the motor vehicle (or for any tax the lessor paid with respect
2to any amount received by the lessor from the lessee for the
3leased vehicle that was not calculated at the time the lease
4was executed) if the selling price of the motor vehicle at the
5time of purchase was calculated using the definition of
6"selling price" as defined in this paragraph. Notwithstanding
7any other provision of this Act to the contrary, lessors shall
8file all returns and make all payments required under this
9paragraph to the Department by electronic means in the manner
10and form as required by the Department. This paragraph does not
11apply to leases of motor vehicles for which, at the time the
12lease is entered into, the term of the lease is not a defined
13period, including leases with a defined initial period with the
14option to continue the lease on a month-to-month or other basis
15beyond the initial defined period.
16    The phrase "like kind and character" shall be liberally
17construed (including but not limited to any form of motor
18vehicle for any form of motor vehicle, or any kind of farm or
19agricultural implement for any other kind of farm or
20agricultural implement), while not including a kind of item
21which, if sold at retail by that retailer, would be exempt from
22retailers' occupation tax and use tax as an isolated or
23occasional sale.
24    "Gross receipts" from the sales of tangible personal
25property at retail means the total selling price or the amount
26of such sales, as hereinbefore defined. In the case of charge

 

 

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1and time sales, the amount thereof shall be included only as
2and when payments are received by the seller. Receipts or other
3consideration derived by a seller from the sale, transfer or
4assignment of accounts receivable to a wholly owned subsidiary
5will not be deemed payments prior to the time the purchaser
6makes payment on such accounts.
7    "Department" means the Department of Revenue.
8    "Person" means any natural individual, firm, partnership,
9association, joint stock company, joint adventure, public or
10private corporation, limited liability company, or a receiver,
11executor, trustee, guardian or other representative appointed
12by order of any court.
13    The isolated or occasional sale of tangible personal
14property at retail by a person who does not hold himself out as
15being engaged (or who does not habitually engage) in selling
16such tangible personal property at retail, or a sale through a
17bulk vending machine, does not constitute engaging in a
18business of selling such tangible personal property at retail
19within the meaning of this Act; provided that any person who is
20engaged in a business which is not subject to the tax imposed
21by this Act because of involving the sale of or a contract to
22sell real estate or a construction contract to improve real
23estate or a construction contract to engineer, install, and
24maintain an integrated system of products, but who, in the
25course of conducting such business, transfers tangible
26personal property to users or consumers in the finished form in

 

 

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1which it was purchased, and which does not become real estate
2or was not engineered and installed, under any provision of a
3construction contract or real estate sale or real estate sales
4agreement entered into with some other person arising out of or
5because of such nontaxable business, is engaged in the business
6of selling tangible personal property at retail to the extent
7of the value of the tangible personal property so transferred.
8If, in such a transaction, a separate charge is made for the
9tangible personal property so transferred, the value of such
10property, for the purpose of this Act, shall be the amount so
11separately charged, but not less than the cost of such property
12to the transferor; if no separate charge is made, the value of
13such property, for the purposes of this Act, is the cost to the
14transferor of such tangible personal property. Construction
15contracts for the improvement of real estate consisting of
16engineering, installation, and maintenance of voice, data,
17video, security, and all telecommunication systems do not
18constitute engaging in a business of selling tangible personal
19property at retail within the meaning of this Act if they are
20sold at one specified contract price.
21    A person who holds himself or herself out as being engaged
22(or who habitually engages) in selling tangible personal
23property at retail is a person engaged in the business of
24selling tangible personal property at retail hereunder with
25respect to such sales (and not primarily in a service
26occupation) notwithstanding the fact that such person designs

 

 

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1and produces such tangible personal property on special order
2for the purchaser and in such a way as to render the property
3of value only to such purchaser, if such tangible personal
4property so produced on special order serves substantially the
5same function as stock or standard items of tangible personal
6property that are sold at retail.
7    Persons who engage in the business of transferring tangible
8personal property upon the redemption of trading stamps are
9engaged in the business of selling such property at retail and
10shall be liable for and shall pay the tax imposed by this Act
11on the basis of the retail value of the property transferred
12upon redemption of such stamps.
13    "Bulk vending machine" means a vending machine, containing
14unsorted confections, nuts, toys, or other items designed
15primarily to be used or played with by children which, when a
16coin or coins of a denomination not larger than $0.50 are
17inserted, are dispensed in equal portions, at random and
18without selection by the customer.
19(Source: P.A. 98-628, eff. 1-1-15; 98-1080, eff. 8-26-14.)
 
20    Section 99. Effective date. This Act takes effect upon
21becoming law.