Sen. John G. Mulroe

Filed: 3/19/2015

 

 


 

 


 
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1
AMENDMENT TO SENATE BILL 88

2    AMENDMENT NO. ______. Amend Senate Bill 88 by replacing
3everything after the enacting clause with the following:
 
4    "Section 5. The Use Tax Act is amended by changing Sections
53-5 and 3-50 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

 

 

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1Illinois county fair association for use in conducting,
2operating, or promoting the county fair.
3    (3) Personal property purchased by a not-for-profit arts or
4cultural organization that establishes, by proof required by
5the Department by rule, that it has received an exemption under
6Section 501(c)(3) of the Internal Revenue Code and that is
7organized and operated primarily for the presentation or
8support of arts or cultural programming, activities, or
9services. These organizations include, but are not limited to,
10music and dramatic arts organizations such as symphony
11orchestras and theatrical groups, arts and cultural service
12organizations, local arts councils, visual arts organizations,
13and media arts organizations. On and after the effective date
14of this amendatory Act of the 92nd General Assembly, however,
15an entity otherwise eligible for this exemption shall not make
16tax-free purchases unless it has an active identification
17number issued by the Department.
18    (4) Personal property purchased by a governmental body, by
19a corporation, society, association, foundation, or
20institution organized and operated exclusively for charitable,
21religious, or educational purposes, or by a not-for-profit
22corporation, society, association, foundation, institution, or
23organization that has no compensated officers or employees and
24that is organized and operated primarily for the recreation of
25persons 55 years of age or older. A limited liability company
26may qualify for the exemption under this paragraph only if the

 

 

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1limited liability company is organized and operated
2exclusively for educational purposes. On and after July 1,
31987, however, no entity otherwise eligible for this exemption
4shall make tax-free purchases unless it has an active exemption
5identification number issued by the Department.
6    (5) Until July 1, 2003, a passenger car that is a
7replacement vehicle to the extent that the purchase price of
8the car is subject to the Replacement Vehicle Tax.
9    (6) Until July 1, 2003 and beginning again on September 1,
102004 through August 30, 2014, graphic arts machinery and
11equipment, including repair and replacement parts, both new and
12used, and including that manufactured on special order,
13certified by the purchaser to be used primarily for graphic
14arts production, and including machinery and equipment
15purchased for lease. Equipment includes chemicals or chemicals
16acting as catalysts but only if the chemicals or chemicals
17acting as catalysts effect a direct and immediate change upon a
18graphic arts product. Beginning on August 31, 2014, graphic
19arts machinery and equipment is included in the manufacturing
20and assembling machinery and equipment exemption under
21paragraph (18).
22    (7) Farm chemicals.
23    (8) Legal tender, currency, medallions, or gold or silver
24coinage issued by the State of Illinois, the government of the
25United States of America, or the government of any foreign
26country, and bullion.

 

 

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1    (9) Personal property purchased from a teacher-sponsored
2student organization affiliated with an elementary or
3secondary school located in Illinois.
4    (10) A motor vehicle that is used for automobile renting,
5as defined in the Automobile Renting Occupation and Use Tax
6Act.
7    (11) Farm machinery and equipment, both new and used,
8including that manufactured on special order, certified by the
9purchaser to be used primarily for production agriculture or
10State or federal agricultural programs, including individual
11replacement parts for the machinery and equipment, including
12machinery and equipment purchased for lease, and including
13implements of husbandry defined in Section 1-130 of the
14Illinois Vehicle Code, farm machinery and agricultural
15chemical and fertilizer spreaders, and nurse wagons required to
16be registered under Section 3-809 of the Illinois Vehicle Code,
17but excluding other motor vehicles required to be registered
18under the Illinois Vehicle Code. Horticultural polyhouses or
19hoop houses used for propagating, growing, or overwintering
20plants shall be considered farm machinery and equipment under
21this item (11). Agricultural chemical tender tanks and dry
22boxes shall include units sold separately from a motor vehicle
23required to be licensed and units sold mounted on a motor
24vehicle required to be licensed if the selling price of the
25tender is separately stated.
26    Farm machinery and equipment shall include precision

 

 

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1farming equipment that is installed or purchased to be
2installed on farm machinery and equipment including, but not
3limited to, tractors, harvesters, sprayers, planters, seeders,
4or spreaders. Precision farming equipment includes, but is not
5limited to, soil testing sensors, computers, monitors,
6software, global positioning and mapping systems, and other
7such equipment.
8    Farm machinery and equipment also includes computers,
9sensors, software, and related equipment used primarily in the
10computer-assisted operation of production agriculture
11facilities, equipment, and activities such as, but not limited
12to, the collection, monitoring, and correlation of animal and
13crop data for the purpose of formulating animal diets and
14agricultural chemicals. This item (11) is exempt from the
15provisions of Section 3-90.
16    (12) Until June 30, 2013, fuel and petroleum products sold
17to or used by an air common carrier, certified by the carrier
18to be used for consumption, shipment, or storage in the conduct
19of its business as an air common carrier, for a flight destined
20for or returning from a location or locations outside the
21United States without regard to previous or subsequent domestic
22stopovers.
23    Beginning July 1, 2013, fuel and petroleum products sold to
24or used by an air carrier, certified by the carrier to be used
25for consumption, shipment, or storage in the conduct of its
26business as an air common carrier, for a flight that (i) is

 

 

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

 

 

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1used primarily for photoprocessing, and including
2photoprocessing machinery and equipment purchased for lease.
3    (16) Coal and aggregate exploration, mining, off-highway
4hauling, processing, maintenance, and reclamation equipment,
5including replacement parts and equipment, and including
6equipment purchased for lease, but excluding motor vehicles
7required to be registered under the Illinois Vehicle Code. The
8changes made to this Section by Public Act 97-767 apply on and
9after July 1, 2003, but no claim for credit or refund is
10allowed on or after August 16, 2013 (the effective date of
11Public Act 98-456) for such taxes paid during the period
12beginning July 1, 2003 and ending on August 16, 2013 (the
13effective date of Public Act 98-456).
14    (17) Until July 1, 2003, distillation machinery and
15equipment, sold as a unit or kit, assembled or installed by the
16retailer, certified by the user to be used only for the
17production of ethyl alcohol that will be used for consumption
18as motor fuel or as a component of motor fuel for the personal
19use of the user, and not subject to sale or resale.
20    (18) Manufacturing and assembling machinery and equipment
21used primarily in the process of manufacturing or assembling
22tangible personal property for wholesale or retail sale or
23lease, whether that sale or lease is made directly by the
24manufacturer or by some other person, whether the materials
25used in the process are owned by the manufacturer or some other
26person, or whether that sale or lease is made apart from or as

 

 

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1an incident to the seller's engaging in the service occupation
2of producing machines, tools, dies, jigs, patterns, gauges, or
3other similar items of no commercial value on special order for
4a particular purchaser. The exemption provided by this
5paragraph (18) does not include machinery and equipment used in
6(i) the generation of electricity for wholesale or retail sale;
7(ii) the generation or treatment of natural or artificial gas
8for wholesale or retail sale that is delivered to customers
9through pipes, pipelines, or mains; or (iii) the treatment of
10water for wholesale or retail sale that is delivered to
11customers through pipes, pipelines, or mains. The provisions of
12Public Act 98-583 are declaratory of existing law as to the
13meaning and scope of this exemption. Beginning on August 31,
142014, the exemption provided by this paragraph (18) includes,
15but is not limited to, graphic arts machinery and equipment, as
16defined in paragraph (6) of this Section. Beginning on August
1731, 2014 and until December 31, 2019, the exemption provided by
18this paragraph (18) includes, but is not limited to, production
19related tangible personal property, as defined in Section 3-50
20of this Act. The exemption provided by this paragraph (18),
21except with respect to production related tangible personal
22property, is exempt from the provisions of Section 3-90.
23    (19) Personal property delivered to a purchaser or
24purchaser's donee inside Illinois when the purchase order for
25that personal property was received by a florist located
26outside Illinois who has a florist located inside Illinois

 

 

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1deliver the personal property.
2    (20) Semen used for artificial insemination of livestock
3for direct agricultural production.
4    (21) Horses, or interests in horses, registered with and
5meeting the requirements of any of the Arabian Horse Club
6Registry of America, Appaloosa Horse Club, American Quarter
7Horse Association, United States Trotting Association, or
8Jockey Club, as appropriate, used for purposes of breeding or
9racing for prizes. This item (21) is exempt from the provisions
10of Section 3-90, and the exemption provided for under this item
11(21) applies for all periods beginning May 30, 1995, but no
12claim for credit or refund is allowed on or after January 1,
132008 for such taxes paid during the period beginning May 30,
142000 and ending on January 1, 2008.
15    (22) Computers and communications equipment utilized for
16any hospital purpose and equipment used in the diagnosis,
17analysis, or treatment of hospital patients purchased by a
18lessor who leases the equipment, under a lease of one year or
19longer executed or in effect at the time the lessor would
20otherwise be subject to the tax imposed by this Act, to a
21hospital that has been issued an active tax exemption
22identification number by the Department under Section 1g of the
23Retailers' Occupation Tax Act. If the equipment is leased in a
24manner that does not qualify for this exemption or is used in
25any other non-exempt manner, the lessor shall be liable for the
26tax imposed under this Act or the Service Use Tax Act, as the

 

 

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

 

 

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1paid by the lessor. If a lessor improperly collects any such
2amount from the lessee, the lessee shall have a legal right to
3claim a refund of that amount from the lessor. If, however,
4that amount is not refunded to the lessee for any reason, the
5lessor is liable to pay that amount to the Department.
6    (24) 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    (25) 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

 

 

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1declared disaster area within 6 months after the disaster.
2    (26) Beginning July 1, 1999, game or game birds purchased
3at a "game breeding and hunting preserve area" as that term is
4used in the Wildlife Code. This paragraph is exempt from the
5provisions of Section 3-90.
6    (27) 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    (28) 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 3-90.
12    (29) 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 3-90.
22    (30) Beginning January 1, 2001 and through June 30, 2016,
23food for human consumption that is to be consumed off the
24premises where it is sold (other than alcoholic beverages, soft
25drinks, and food that has been prepared for immediate
26consumption) and prescription and nonprescription medicines,

 

 

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1drugs, medical appliances, and insulin, urine testing
2materials, syringes, and needles used by diabetics, for human
3use, when purchased for use by a person receiving medical
4assistance under Article V of the Illinois Public Aid Code who
5resides in a licensed long-term care facility, as defined in
6the Nursing Home Care Act, or in a licensed facility as defined
7in the ID/DD Community Care Act or the Specialized Mental
8Health Rehabilitation Act of 2013.
9    (31) Beginning on the effective date of this amendatory Act
10of the 92nd General Assembly, computers and communications
11equipment utilized for any hospital purpose and equipment used
12in the diagnosis, analysis, or treatment of hospital patients
13purchased by a lessor who leases the equipment, under a lease
14of one year or longer executed or in effect at the time the
15lessor would otherwise be subject to the tax imposed by this
16Act, to a hospital that has been issued an active tax exemption
17identification number by the Department under Section 1g of the
18Retailers' Occupation Tax Act. If the equipment 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 Service Use Tax Act, as the
22case may be, based on the fair market value of the property at
23the time the nonqualifying use occurs. No lessor shall collect
24or attempt to collect an amount (however designated) that
25purports to reimburse that lessor for the tax imposed by this
26Act or the Service Use Tax Act, as the case may be, if the tax

 

 

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

 

 

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1amount from the lessor. If, however, that amount is not
2refunded to the lessee for any reason, the lessor is liable to
3pay that amount to the Department. This paragraph is exempt
4from the provisions of Section 3-90.
5    (33) On and after July 1, 2003 and through June 30, 2004,
6the use in this State of motor vehicles of the second division
7with a gross vehicle weight in excess of 8,000 pounds and that
8are subject to the commercial distribution fee imposed under
9Section 3-815.1 of the Illinois Vehicle Code. Beginning on July
101, 2004 and through June 30, 2005, the use in this State of
11motor vehicles of the second division: (i) with a gross vehicle
12weight rating in excess of 8,000 pounds; (ii) that are subject
13to the commercial distribution fee imposed under Section
143-815.1 of the Illinois Vehicle Code; and (iii) that are
15primarily used for commercial purposes. Through June 30, 2005,
16this exemption applies to repair and replacement parts added
17after the initial purchase of such a motor vehicle if that
18motor vehicle is used in a manner that would qualify for the
19rolling stock exemption otherwise provided for in this Act. For
20purposes of this paragraph, the term "used for commercial
21purposes" means the transportation of persons or property in
22furtherance of any commercial or industrial enterprise,
23whether for-hire or not.
24    (34) Beginning January 1, 2008, tangible personal property
25used in the construction or maintenance of a community water
26supply, as defined under Section 3.145 of the Environmental

 

 

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1Protection Act, that is operated by a not-for-profit
2corporation that holds a valid water supply permit issued under
3Title IV of the Environmental Protection Act. This paragraph is
4exempt from the provisions of Section 3-90.
5    (35) Beginning January 1, 2010, materials, parts,
6equipment, components, and furnishings incorporated into or
7upon an aircraft as part of the modification, refurbishment,
8completion, replacement, repair, or maintenance of the
9aircraft. This exemption includes consumable supplies used in
10the modification, refurbishment, completion, replacement,
11repair, and maintenance of aircraft, but excludes any
12materials, parts, equipment, components, and consumable
13supplies used in the modification, replacement, repair, and
14maintenance of aircraft engines or power plants, whether such
15engines or power plants are installed or uninstalled upon any
16such aircraft. "Consumable supplies" include, but are not
17limited to, adhesive, tape, sandpaper, general purpose
18lubricants, cleaning solution, latex gloves, and protective
19films. This exemption applies only to the use of qualifying
20tangible personal property by persons who modify, refurbish,
21complete, repair, replace, or maintain aircraft and who (i)
22hold an Air Agency Certificate and are empowered to operate an
23approved repair station by the Federal Aviation
24Administration, (ii) have a Class IV Rating, and (iii) conduct
25operations in accordance with Part 145 of the Federal Aviation
26Regulations. The exemption does not include aircraft operated

 

 

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1by a commercial air carrier providing scheduled passenger air
2service pursuant to authority issued under Part 121 or Part 129
3of the Federal Aviation Regulations. The changes made to this
4paragraph (35) by Public Act 98-534 are declarative of existing
5law.
6    (36) Tangible personal property purchased by a
7public-facilities corporation, as described in Section
811-65-10 of the Illinois Municipal Code, for purposes of
9constructing or furnishing a municipal convention hall, but
10only if the legal title to the municipal convention hall is
11transferred to the municipality without any further
12consideration by or on behalf of the municipality at the time
13of the completion of the municipal convention hall or upon the
14retirement or redemption of any bonds or other debt instruments
15issued by the public-facilities corporation in connection with
16the development of the municipal convention hall. This
17exemption includes existing public-facilities corporations as
18provided in Section 11-65-25 of the Illinois Municipal Code.
19This paragraph is exempt from the provisions of Section 3-90.
20(Source: P.A. 97-38, eff. 6-28-11; 97-227, eff. 1-1-12; 97-431,
21eff. 8-16-11; 97-636, eff. 6-1-12; 97-767, eff. 7-9-12; 98-104,
22eff. 7-22-13; 98-422, eff. 8-16-13; 98-456, eff. 8-16-13;
2398-534, eff. 8-23-13; 98-574, eff. 1-1-14; 98-583, eff. 1-1-14;
2498-756, eff. 7-16-14.)
 
25    (35 ILCS 105/3-50)  (from Ch. 120, par. 439.3-50)

 

 

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1    Sec. 3-50. Manufacturing and assembly exemption. The
2manufacturing and assembling machinery and equipment exemption
3includes machinery and equipment that replaces machinery and
4equipment in an existing manufacturing facility as well as
5machinery and equipment that are for use in an expanded or new
6manufacturing facility. The machinery and equipment exemption
7also includes machinery and equipment used in the general
8maintenance or repair of exempt machinery and equipment or for
9in-house manufacture of exempt machinery and equipment.
10Beginning on August 31, 2014, the manufacturing and assembling
11machinery and equipment exemption also includes graphic arts
12machinery and equipment, as defined in paragraph (6) of Section
133-5. Beginning on August 31, 2014 and until December 31, 2019,
14the manufacturing and assembling machinery and equipment
15exemption also includes production related tangible personal
16property, as defined in this Section. The machinery and
17equipment exemption does not include machinery and equipment
18used in (i) the generation of electricity for wholesale or
19retail sale; (ii) the generation or treatment of natural or
20artificial gas for wholesale or retail sale that is delivered
21to customers through pipes, pipelines, or mains; or (iii) the
22treatment of water for wholesale or retail sale that is
23delivered to customers through pipes, pipelines, or mains. The
24provisions of this amendatory Act of the 98th General Assembly
25are declaratory of existing law as to the meaning and scope of
26this exemption. For the purposes of this exemption, terms have

 

 

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1the following meanings:
2        (1) "Manufacturing process" means the production of an
3    article of tangible personal property, whether the article
4    is a finished product or an article for use in the process
5    of manufacturing or assembling a different article of
6    tangible personal property, by a procedure commonly
7    regarded as manufacturing, processing, fabricating, or
8    refining that changes some existing material into a
9    material with a different form, use, or name. In relation
10    to a recognized integrated business composed of a series of
11    operations that collectively constitute manufacturing, or
12    individually constitute manufacturing operations, the
13    manufacturing process commences with the first operation
14    or stage of production in the series and does not end until
15    the completion of the final product in the last operation
16    or stage of production in the series. For purposes of this
17    exemption, photoprocessing is a manufacturing process of
18    tangible personal property for wholesale or retail sale.
19        (2) "Assembling process" means the production of an
20    article of tangible personal property, whether the article
21    is a finished product or an article for use in the process
22    of manufacturing or assembling a different article of
23    tangible personal property, by the combination of existing
24    materials in a manner commonly regarded as assembling that
25    results in an article or material of a different form, use,
26    or name.

 

 

09900SB0088sam001- 21 -LRB099 06105 HLH 32366 a

1        (3) "Machinery" means major mechanical machines or
2    major components of those machines contributing to a
3    manufacturing or assembling process.
4        (4) "Equipment" includes an independent device or tool
5    separate from machinery but essential to an integrated
6    manufacturing or assembly process; including computers
7    used primarily in a manufacturer's computer assisted
8    design, computer assisted manufacturing (CAD/CAM) system;
9    any subunit or assembly comprising a component of any
10    machinery or auxiliary, adjunct, or attachment parts of
11    machinery, such as tools, dies, jigs, fixtures, patterns,
12    and molds; and any parts that require periodic replacement
13    in the course of normal operation; but does not include
14    hand tools. Equipment includes chemicals or chemicals
15    acting as catalysts but only if the chemicals or chemicals
16    acting as catalysts effect a direct and immediate change
17    upon a product being manufactured or assembled for
18    wholesale or retail sale or lease.
19        (5) "Production related tangible personal property"
20    means all tangible personal property that is used or
21    consumed by the purchaser in a manufacturing facility in
22    which a manufacturing process takes place and includes,
23    without limitation, tangible personal property that is
24    purchased for incorporation into real estate within a
25    manufacturing facility and tangible personal property that
26    is used or consumed in activities such as research and

 

 

09900SB0088sam001- 22 -LRB099 06105 HLH 32366 a

1    development, preproduction material handling, receiving,
2    quality control, inventory control, storage, staging, and
3    packaging for shipping and transportation purposes.
4    "Production related tangible personal property" does not
5    include (i) tangible personal property that is used, within
6    or without a manufacturing facility, in sales, purchasing,
7    accounting, fiscal management, marketing, personnel
8    recruitment or selection, or landscaping or (ii) tangible
9    personal property that is required to be titled or
10    registered with a department, agency, or unit of federal,
11    State, or local government.
12    The manufacturing and assembling machinery and equipment
13exemption includes production related tangible personal
14property that is purchased (i) on or after July 1, 2007 and on
15or before June 30, 2008 or (ii) on and after August 31, 2014
16and on or before December 31, 2019. The exemption for
17production related tangible personal property purchased on or
18after July 1, 2007 and on or before June 30, 2008 is subject to
19both of the following limitations:
20        (1) The maximum amount of the exemption for any one
21    taxpayer may not exceed 5% of the purchase price of
22    production related tangible personal property that is
23    purchased on or after July 1, 2007 and on or before June
24    30, 2008. A credit under Section 3-85 of this Act may not
25    be earned by the purchase of production related tangible
26    personal property for which an exemption is received under

 

 

09900SB0088sam001- 23 -LRB099 06105 HLH 32366 a

1    this Section.
2        (2) The maximum aggregate amount of the exemptions for
3    production related tangible personal property awarded
4    under this Act and the Retailers' Occupation Tax Act to all
5    taxpayers may not exceed $10,000,000. If the claims for the
6    exemption exceed $10,000,000, then the Department shall
7    reduce the amount of the exemption to each taxpayer on a
8    pro rata basis.
9The Department may adopt rules to implement and administer the
10exemption for production related tangible personal property.
11    The manufacturing and assembling machinery and equipment
12exemption includes the sale of materials to a purchaser who
13produces exempted types of machinery, equipment, or tools and
14who rents or leases that machinery, equipment, or tools to a
15manufacturer of tangible personal property. This exemption
16also includes the sale of materials to a purchaser who
17manufactures those materials into an exempted type of
18machinery, equipment, or tools that the purchaser uses himself
19or herself in the manufacturing of tangible personal property.
20This exemption includes the sale of exempted types of machinery
21or equipment to a purchaser who is not the manufacturer, but
22who rents or leases the use of the property to a manufacturer.
23The purchaser of the machinery and equipment who has an active
24resale registration number shall furnish that number to the
25seller at the time of purchase. A user of the machinery,
26equipment, or tools without an active resale registration

 

 

09900SB0088sam001- 24 -LRB099 06105 HLH 32366 a

1number shall prepare a certificate of exemption for each
2transaction stating facts establishing the exemption for that
3transaction, and that certificate shall be available to the
4Department for inspection or audit. The Department shall
5prescribe the form of the certificate. Informal rulings,
6opinions, or letters issued by the Department in response to an
7inquiry or request for an opinion from any person regarding the
8coverage and applicability of this exemption to specific
9devices shall be published, maintained as a public record, and
10made available for public inspection and copying. If the
11informal ruling, opinion, or letter contains trade secrets or
12other confidential information, where possible, the Department
13shall delete that information before publication. Whenever
14informal rulings, opinions, or letters contain a policy of
15general applicability, the Department shall formulate and
16adopt that policy as a rule in accordance with the Illinois
17Administrative Procedure Act.
18    The manufacturing and assembling machinery and equipment
19exemption, except with respect to production related tangible
20personal property, is exempt from the provisions of Section
213-90.
22(Source: P.A. 98-583, eff. 1-1-14.)
 
23    Section 10. The Service Use Tax Act is amended by changing
24Sections 2 and 3-5 as follows:
 

 

 

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1    (35 ILCS 110/2)  (from Ch. 120, par. 439.32)
2    Sec. 2. Definitions.
3    "Use" means the exercise by any person of any right or
4power over tangible personal property incident to the ownership
5of that property, but does not include the sale or use for
6demonstration by him of that property in any form as tangible
7personal property in the regular course of business. "Use" does
8not mean the interim use of tangible personal property nor the
9physical incorporation of tangible personal property, as an
10ingredient or constituent, into other tangible personal
11property, (a) which is sold in the regular course of business
12or (b) which the person incorporating such ingredient or
13constituent therein has undertaken at the time of such purchase
14to cause to be transported in interstate commerce to
15destinations outside the State of Illinois.
16    "Purchased from a serviceman" means the acquisition of the
17ownership of, or title to, tangible personal property through a
18sale of service.
19    "Purchaser" means any person who, through a sale of
20service, acquires the ownership of, or title to, any tangible
21personal property.
22    "Cost price" means the consideration paid by the serviceman
23for a purchase valued in money, whether paid in money or
24otherwise, including cash, credits and services, and shall be
25determined without any deduction on account of the supplier's
26cost of the property sold or on account of any other expense

 

 

09900SB0088sam001- 26 -LRB099 06105 HLH 32366 a

1incurred by the supplier. When a serviceman contracts out part
2or all of the services required in his sale of service, it
3shall be presumed that the cost price to the serviceman of the
4property transferred to him or her by his or her subcontractor
5is equal to 50% of the subcontractor's charges to the
6serviceman in the absence of proof of the consideration paid by
7the subcontractor for the purchase of such property.
8    "Selling price" means the consideration for a sale valued
9in money whether received in money or otherwise, including
10cash, credits and service, and shall be determined without any
11deduction on account of the serviceman's cost of the property
12sold, the cost of materials used, labor or service cost or any
13other expense whatsoever, but does not include interest or
14finance charges which appear as separate items on the bill of
15sale or sales contract nor charges that are added to prices by
16sellers on account of the seller's duty to collect, from the
17purchaser, the tax that is imposed by this Act.
18    "Department" means the Department of Revenue.
19    "Person" means any natural individual, firm, partnership,
20association, joint stock company, joint venture, public or
21private corporation, limited liability company, and any
22receiver, executor, trustee, guardian or other representative
23appointed by order of any court.
24    "Sale of service" means any transaction except:
25        (1) a retail sale of tangible personal property taxable
26    under the Retailers' Occupation Tax Act or under the Use

 

 

09900SB0088sam001- 27 -LRB099 06105 HLH 32366 a

1    Tax Act.
2        (2) a sale of tangible personal property for the
3    purpose of resale made in compliance with Section 2c of the
4    Retailers' Occupation Tax Act.
5        (3) except as hereinafter provided, a sale or transfer
6    of tangible personal property as an incident to the
7    rendering of service for or by any governmental body, or
8    for or by any corporation, society, association,
9    foundation or institution organized and operated
10    exclusively for charitable, religious or educational
11    purposes or any not-for-profit corporation, society,
12    association, foundation, institution or organization which
13    has no compensated officers or employees and which is
14    organized and operated primarily for the recreation of
15    persons 55 years of age or older. A limited liability
16    company may qualify for the exemption under this paragraph
17    only if the limited liability company is organized and
18    operated exclusively for educational purposes.
19        (4) a sale or transfer of tangible personal property as
20    an incident to the rendering of service for interstate
21    carriers for hire for use as rolling stock moving in
22    interstate commerce or by lessors under a lease of one year
23    or longer, executed or in effect at the time of purchase of
24    personal property, to interstate carriers for hire for use
25    as rolling stock moving in interstate commerce so long as
26    so used by such interstate carriers for hire, and equipment

 

 

09900SB0088sam001- 28 -LRB099 06105 HLH 32366 a

1    operated by a telecommunications provider, licensed as a
2    common carrier by the Federal Communications Commission,
3    which is permanently installed in or affixed to aircraft
4    moving in interstate commerce.
5        (4a) a sale or transfer of tangible personal property
6    as an incident to the rendering of service for owners,
7    lessors, or shippers of tangible personal property which is
8    utilized by interstate carriers for hire for use as rolling
9    stock moving in interstate commerce so long as so used by
10    interstate carriers for hire, and equipment operated by a
11    telecommunications provider, licensed as a common carrier
12    by the Federal Communications Commission, which is
13    permanently installed in or affixed to aircraft moving in
14    interstate commerce.
15        (4a-5) on and after July 1, 2003 and through June 30,
16    2004, a sale or transfer of a motor vehicle of the second
17    division with a gross vehicle weight in excess of 8,000
18    pounds as an incident to the rendering of service if that
19    motor vehicle is subject to the commercial distribution fee
20    imposed under Section 3-815.1 of the Illinois Vehicle Code.
21    Beginning on July 1, 2004 and through June 30, 2005, the
22    use in this State of motor vehicles of the second division:
23    (i) with a gross vehicle weight rating in excess of 8,000
24    pounds; (ii) that are subject to the commercial
25    distribution fee imposed under Section 3-815.1 of the
26    Illinois Vehicle Code; and (iii) that are primarily used

 

 

09900SB0088sam001- 29 -LRB099 06105 HLH 32366 a

1    for commercial purposes. Through June 30, 2005, this
2    exemption applies to repair and replacement parts added
3    after the initial purchase of such a motor vehicle if that
4    motor vehicle is used in a manner that would qualify for
5    the rolling stock exemption otherwise provided for in this
6    Act. For purposes of this paragraph, "used for commercial
7    purposes" means the transportation of persons or property
8    in furtherance of any commercial or industrial enterprise
9    whether for-hire or not.
10        (5) a sale or transfer of machinery and equipment used
11    primarily in the process of the manufacturing or
12    assembling, either in an existing, an expanded or a new
13    manufacturing facility, of tangible personal property for
14    wholesale or retail sale or lease, whether such sale or
15    lease is made directly by the manufacturer or by some other
16    person, whether the materials used in the process are owned
17    by the manufacturer or some other person, or whether such
18    sale or lease is made apart from or as an incident to the
19    seller's engaging in a service occupation and the
20    applicable tax is a Service Use Tax or Service Occupation
21    Tax, rather than Use Tax or Retailers' Occupation Tax. The
22    exemption provided by this paragraph (5) does not include
23    machinery and equipment used in (i) the generation of
24    electricity for wholesale or retail sale; (ii) the
25    generation or treatment of natural or artificial gas for
26    wholesale or retail sale that is delivered to customers

 

 

09900SB0088sam001- 30 -LRB099 06105 HLH 32366 a

1    through pipes, pipelines, or mains; or (iii) the treatment
2    of water for wholesale or retail sale that is delivered to
3    customers through pipes, pipelines, or mains. The
4    provisions of this amendatory Act of the 98th General
5    Assembly are declaratory of existing law as to the meaning
6    and scope of this exemption. The exemption under this
7    paragraph (5), except with respect to production related
8    tangible personal property, is exempt from the provisions
9    of Section 3-75.
10        (5a) the repairing, reconditioning or remodeling, for
11    a common carrier by rail, of tangible personal property
12    which belongs to such carrier for hire, and as to which
13    such carrier receives the physical possession of the
14    repaired, reconditioned or remodeled item of tangible
15    personal property in Illinois, and which such carrier
16    transports, or shares with another common carrier in the
17    transportation of such property, out of Illinois on a
18    standard uniform bill of lading showing the person who
19    repaired, reconditioned or remodeled the property to a
20    destination outside Illinois, for use outside Illinois.
21        (5b) a sale or transfer of tangible personal property
22    which is produced by the seller thereof on special order in
23    such a way as to have made the applicable tax the Service
24    Occupation Tax or the Service Use Tax, rather than the
25    Retailers' Occupation Tax or the Use Tax, for an interstate
26    carrier by rail which receives the physical possession of

 

 

09900SB0088sam001- 31 -LRB099 06105 HLH 32366 a

1    such property in Illinois, and which transports such
2    property, or shares with another common carrier in the
3    transportation of such property, out of Illinois on a
4    standard uniform bill of lading showing the seller of the
5    property as the shipper or consignor of such property to a
6    destination outside Illinois, for use outside Illinois.
7        (6) until July 1, 2003, a sale or transfer of
8    distillation machinery and equipment, sold as a unit or kit
9    and assembled or installed by the retailer, which machinery
10    and equipment is certified by the user to be used only for
11    the production of ethyl alcohol that will be used for
12    consumption as motor fuel or as a component of motor fuel
13    for the personal use of such user and not subject to sale
14    or resale.
15        (7) at the election of any serviceman not required to
16    be otherwise registered as a retailer under Section 2a of
17    the Retailers' Occupation Tax Act, made for each fiscal
18    year sales of service in which the aggregate annual cost
19    price of tangible personal property transferred as an
20    incident to the sales of service is less than 35%, or 75%
21    in the case of servicemen transferring prescription drugs
22    or servicemen engaged in graphic arts production, of the
23    aggregate annual total gross receipts from all sales of
24    service. The purchase of such tangible personal property by
25    the serviceman shall be subject to tax under the Retailers'
26    Occupation Tax Act and the Use Tax Act. However, if a

 

 

09900SB0088sam001- 32 -LRB099 06105 HLH 32366 a

1    primary serviceman who has made the election described in
2    this paragraph subcontracts service work to a secondary
3    serviceman who has also made the election described in this
4    paragraph, the primary serviceman does not incur a Use Tax
5    liability if the secondary serviceman (i) has paid or will
6    pay Use Tax on his or her cost price of any tangible
7    personal property transferred to the primary serviceman
8    and (ii) certifies that fact in writing to the primary
9    serviceman.
10    Tangible personal property transferred incident to the
11completion of a maintenance agreement is exempt from the tax
12imposed pursuant to this Act.
13    Exemption (5) also includes machinery and equipment used in
14the general maintenance or repair of such exempt machinery and
15equipment or for in-house manufacture of exempt machinery and
16equipment. On and after August 31, 2014 and through December
1731, 2019, exemption (5) also includes production related
18tangible personal property, as defined in Section 3-50 of the
19Use Tax Act. On and after August 31, 2019, exemption (5) also
20includes graphic arts machinery and equipment, as defined in
21paragraph (5) of Section 3-5. The machinery and equipment
22exemption does not include machinery and equipment used in (i)
23the generation of electricity for wholesale or retail sale;
24(ii) the generation or treatment of natural or artificial gas
25for wholesale or retail sale that is delivered to customers
26through pipes, pipelines, or mains; or (iii) the treatment of

 

 

09900SB0088sam001- 33 -LRB099 06105 HLH 32366 a

1water for wholesale or retail sale that is delivered to
2customers through pipes, pipelines, or mains. The provisions of
3this amendatory Act of the 98th General Assembly are
4declaratory of existing law as to the meaning and scope of this
5exemption. For the purposes of exemption (5), each of these
6terms shall have the following meanings: (1) "manufacturing
7process" shall mean the production of any article of tangible
8personal property, whether such article is a finished product
9or an article for use in the process of manufacturing or
10assembling a different article of tangible personal property,
11by procedures commonly regarded as manufacturing, processing,
12fabricating, or refining which changes some existing material
13or materials into a material with a different form, use or
14name. In relation to a recognized integrated business composed
15of a series of operations which collectively constitute
16manufacturing, or individually constitute manufacturing
17operations, the manufacturing process shall be deemed to
18commence with the first operation or stage of production in the
19series, and shall not be deemed to end until the completion of
20the final product in the last operation or stage of production
21in the series; and further, for purposes of exemption (5),
22photoprocessing is deemed to be a manufacturing process of
23tangible personal property for wholesale or retail sale; (2)
24"assembling process" shall mean the production of any article
25of tangible personal property, whether such article is a
26finished product or an article for use in the process of

 

 

09900SB0088sam001- 34 -LRB099 06105 HLH 32366 a

1manufacturing or assembling a different article of tangible
2personal property, by the combination of existing materials in
3a manner commonly regarded as assembling which results in a
4material of a different form, use or name; (3) "machinery"
5shall mean major mechanical machines or major components of
6such machines contributing to a manufacturing or assembling
7process; and (4) "equipment" shall include any independent
8device or tool separate from any machinery but essential to an
9integrated manufacturing or assembly process; including
10computers used primarily in a manufacturer's computer assisted
11design, computer assisted manufacturing (CAD/CAM) system; or
12any subunit or assembly comprising a component of any machinery
13or auxiliary, adjunct or attachment parts of machinery, such as
14tools, dies, jigs, fixtures, patterns and molds; or any parts
15which require periodic replacement in the course of normal
16operation; but shall not include hand tools. Equipment includes
17chemicals or chemicals acting as catalysts but only if the
18chemicals or chemicals acting as catalysts effect a direct and
19immediate change upon a product being manufactured or assembled
20for wholesale or retail sale or lease. The purchaser of such
21machinery and equipment who has an active resale registration
22number shall furnish such number to the seller at the time of
23purchase. The user of such machinery and equipment and tools
24without an active resale registration number shall prepare a
25certificate of exemption for each transaction stating facts
26establishing the exemption for that transaction, which

 

 

09900SB0088sam001- 35 -LRB099 06105 HLH 32366 a

1certificate shall be available to the Department for inspection
2or audit. The Department shall prescribe the form of the
3certificate.
4    Any informal rulings, opinions or letters issued by the
5Department in response to an inquiry or request for any opinion
6from any person regarding the coverage and applicability of
7exemption (5) to specific devices shall be published,
8maintained as a public record, and made available for public
9inspection and copying. If the informal ruling, opinion or
10letter contains trade secrets or other confidential
11information, where possible the Department shall delete such
12information prior to publication. Whenever such informal
13rulings, opinions, or letters contain any policy of general
14applicability, the Department shall formulate and adopt such
15policy as a rule in accordance with the provisions of the
16Illinois Administrative Procedure Act.
17    On and after July 1, 1987, no entity otherwise eligible
18under exemption (3) of this Section shall make tax free
19purchases unless it has an active exemption identification
20number issued by the Department.
21    The purchase, employment and transfer of such tangible
22personal property as newsprint and ink for the primary purpose
23of conveying news (with or without other information) is not a
24purchase, use or sale of service or of tangible personal
25property within the meaning of this Act.
26    "Serviceman" means any person who is engaged in the

 

 

09900SB0088sam001- 36 -LRB099 06105 HLH 32366 a

1occupation of making sales of service.
2    "Sale at retail" means "sale at retail" as defined in the
3Retailers' Occupation Tax Act.
4    "Supplier" means any person who makes sales of tangible
5personal property to servicemen for the purpose of resale as an
6incident to a sale of service.
7    "Serviceman maintaining a place of business in this State",
8or any like term, means and includes any serviceman:
9        1. having or maintaining within this State, directly or
10    by a subsidiary, an office, distribution house, sales
11    house, warehouse or other place of business, or any agent
12    or other representative operating within this State under
13    the authority of the serviceman or its subsidiary,
14    irrespective of whether such place of business or agent or
15    other representative is located here permanently or
16    temporarily, or whether such serviceman or subsidiary is
17    licensed to do business in this State;
18        1.1. having a contract with a person located in this
19    State under which the person, for a commission or other
20    consideration based on the sale of service by the
21    serviceman, directly or indirectly refers potential
22    customers to the serviceman by providing to the potential
23    customers a promotional code or other mechanism that allows
24    the serviceman to track purchases referred by such persons.
25    Examples of mechanisms that allow the serviceman to track
26    purchases referred by such persons include but are not

 

 

09900SB0088sam001- 37 -LRB099 06105 HLH 32366 a

1    limited to the use of a link on the person's Internet
2    website, promotional codes distributed through the
3    person's hand-delivered or mailed material, and
4    promotional codes distributed by the person through radio
5    or other broadcast media. The provisions of this paragraph
6    1.1 shall apply only if the cumulative gross receipts from
7    sales of service by the serviceman to customers who are
8    referred to the serviceman by all persons in this State
9    under such contracts exceed $10,000 during the preceding 4
10    quarterly periods ending on the last day of March, June,
11    September, and December; a serviceman meeting the
12    requirements of this paragraph 1.1 shall be presumed to be
13    maintaining a place of business in this State but may rebut
14    this presumption by submitting proof that the referrals or
15    other activities pursued within this State by such persons
16    were not sufficient to meet the nexus standards of the
17    United States Constitution during the preceding 4
18    quarterly periods;
19        1.2. beginning July 1, 2011, having a contract with a
20    person located in this State under which:
21            A. the serviceman sells the same or substantially
22        similar line of services as the person located in this
23        State and does so using an identical or substantially
24        similar name, trade name, or trademark as the person
25        located in this State; and
26            B. the serviceman provides a commission or other

 

 

09900SB0088sam001- 38 -LRB099 06105 HLH 32366 a

1        consideration to the person located in this State based
2        upon the sale of services by the serviceman.
3    The provisions of this paragraph 1.2 shall apply only if
4    the cumulative gross receipts from sales of service by the
5    serviceman to customers in this State under all such
6    contracts exceed $10,000 during the preceding 4 quarterly
7    periods ending on the last day of March, June, September,
8    and December;
9        2. soliciting orders for tangible personal property by
10    means of a telecommunication or television shopping system
11    (which utilizes toll free numbers) which is intended by the
12    retailer to be broadcast by cable television or other means
13    of broadcasting, to consumers located in this State;
14        3. pursuant to a contract with a broadcaster or
15    publisher located in this State, soliciting orders for
16    tangible personal property by means of advertising which is
17    disseminated primarily to consumers located in this State
18    and only secondarily to bordering jurisdictions;
19        4. soliciting orders for tangible personal property by
20    mail if the solicitations are substantial and recurring and
21    if the retailer benefits from any banking, financing, debt
22    collection, telecommunication, or marketing activities
23    occurring in this State or benefits from the location in
24    this State of authorized installation, servicing, or
25    repair facilities;
26        5. being owned or controlled by the same interests

 

 

09900SB0088sam001- 39 -LRB099 06105 HLH 32366 a

1    which own or control any retailer engaging in business in
2    the same or similar line of business in this State;
3        6. having a franchisee or licensee operating under its
4    trade name if the franchisee or licensee is required to
5    collect the tax under this Section;
6        7. pursuant to a contract with a cable television
7    operator located in this State, soliciting orders for
8    tangible personal property by means of advertising which is
9    transmitted or distributed over a cable television system
10    in this State; or
11        8. engaging in activities in Illinois, which
12    activities in the state in which the supply business
13    engaging in such activities is located would constitute
14    maintaining a place of business in that state.
15(Source: P.A. 98-583, eff. 1-1-14; 98-1089, eff. 1-1-15.)
 
16    (35 ILCS 110/3-5)
17    Sec. 3-5. Exemptions. Use of the following tangible
18personal property is exempt from the tax imposed by this Act:
19    (1) Personal property purchased from a corporation,
20society, association, foundation, institution, or
21organization, other than a limited liability company, that is
22organized and operated as a not-for-profit service enterprise
23for the benefit of persons 65 years of age or older if the
24personal property was not purchased by the enterprise for the
25purpose of resale by the enterprise.

 

 

09900SB0088sam001- 40 -LRB099 06105 HLH 32366 a

1    (2) Personal property purchased by a non-profit Illinois
2county fair association for use in conducting, operating, or
3promoting the county fair.
4    (3) Personal property purchased by a not-for-profit arts or
5cultural organization that establishes, by proof required by
6the Department by rule, that it has received an exemption under
7Section 501(c)(3) of the Internal Revenue Code and that is
8organized and operated primarily for the presentation or
9support of arts or cultural programming, activities, or
10services. These organizations include, but are not limited to,
11music and dramatic arts organizations such as symphony
12orchestras and theatrical groups, arts and cultural service
13organizations, local arts councils, visual arts organizations,
14and media arts organizations. On and after the effective date
15of this amendatory Act of the 92nd General Assembly, however,
16an entity otherwise eligible for this exemption shall not make
17tax-free purchases unless it has an active identification
18number issued by the Department.
19    (4) Legal tender, currency, medallions, or gold or silver
20coinage issued by the State of Illinois, the government of the
21United States of America, or the government of any foreign
22country, and bullion.
23    (5) Until July 1, 2003 and beginning again on September 1,
242004 through August 30, 2014, graphic arts machinery and
25equipment, including repair and replacement parts, both new and
26used, and including that manufactured on special order or

 

 

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1purchased for lease, certified by the purchaser to be used
2primarily for graphic arts production. Equipment includes
3chemicals or chemicals acting as catalysts but only if the
4chemicals or chemicals acting as catalysts effect a direct and
5immediate change upon a graphic arts product. Beginning on
6August 31, 2014, graphic arts machinery and equipment is
7included in the manufacturing and assembling machinery and
8equipment exemption under Section 2 of this Act.
9    (6) Personal property purchased from a teacher-sponsored
10student organization affiliated with an elementary or
11secondary school located in Illinois.
12    (7) Farm machinery and equipment, both new and used,
13including that manufactured on special order, certified by the
14purchaser to be used primarily for production agriculture or
15State or federal agricultural programs, including individual
16replacement parts for the machinery and equipment, including
17machinery and equipment purchased for lease, and including
18implements of husbandry defined in Section 1-130 of the
19Illinois Vehicle Code, farm machinery and agricultural
20chemical and fertilizer spreaders, and nurse wagons required to
21be registered under Section 3-809 of the Illinois Vehicle Code,
22but excluding other motor vehicles required to be registered
23under the Illinois Vehicle Code. Horticultural polyhouses or
24hoop houses used for propagating, growing, or overwintering
25plants shall be considered farm machinery and equipment under
26this item (7). Agricultural chemical tender tanks and dry boxes

 

 

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1shall include units sold separately from a motor vehicle
2required to be licensed and units sold mounted on a motor
3vehicle required to be licensed if the selling price of the
4tender is separately stated.
5    Farm machinery and equipment shall include precision
6farming equipment that is installed or purchased to be
7installed on farm machinery and equipment including, but not
8limited to, tractors, harvesters, sprayers, planters, seeders,
9or spreaders. Precision farming equipment includes, but is not
10limited to, soil testing sensors, computers, monitors,
11software, global positioning and mapping systems, and other
12such equipment.
13    Farm machinery and equipment also includes computers,
14sensors, software, and related equipment used primarily in the
15computer-assisted operation of production agriculture
16facilities, equipment, and activities such as, but not limited
17to, the collection, monitoring, and correlation of animal and
18crop data for the purpose of formulating animal diets and
19agricultural chemicals. This item (7) is exempt from the
20provisions of Section 3-75.
21    (8) Until June 30, 2013, fuel and petroleum products sold
22to or used by an air common carrier, certified by the carrier
23to be used for consumption, shipment, or storage in the conduct
24of its business as an air common carrier, for a flight destined
25for or returning from a location or locations outside the
26United States without regard to previous or subsequent domestic

 

 

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1stopovers.
2    Beginning July 1, 2013, fuel and petroleum products sold to
3or used by an air carrier, certified by the carrier to be used
4for consumption, shipment, or storage in the conduct of its
5business as an air common carrier, for a flight that (i) is
6engaged in foreign trade or is engaged in trade between the
7United States and any of its possessions and (ii) transports at
8least one individual or package for hire from the city of
9origination to the city of final destination on the same
10aircraft, without regard to a change in the flight number of
11that aircraft.
12    (9) Proceeds of mandatory service charges separately
13stated on customers' bills for the purchase and consumption of
14food and beverages acquired as an incident to the purchase of a
15service from a serviceman, to the extent that the proceeds of
16the service charge are in fact turned over as tips or as a
17substitute for tips to the employees who participate directly
18in preparing, serving, hosting or cleaning up the food or
19beverage function with respect to which the service charge is
20imposed.
21    (10) Until July 1, 2003, oil field exploration, drilling,
22and production equipment, including (i) rigs and parts of rigs,
23rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
24tubular goods, including casing and drill strings, (iii) pumps
25and pump-jack units, (iv) storage tanks and flow lines, (v) any
26individual replacement part for oil field exploration,

 

 

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1drilling, and production equipment, and (vi) machinery and
2equipment purchased for lease; but excluding motor vehicles
3required to be registered under the Illinois Vehicle Code.
4    (11) Proceeds from the sale of photoprocessing machinery
5and equipment, including repair and replacement parts, both new
6and used, including that manufactured on special order,
7certified by the purchaser to be used primarily for
8photoprocessing, and including photoprocessing machinery and
9equipment purchased for lease.
10    (12) Coal and aggregate exploration, mining, off-highway
11hauling, processing, maintenance, and reclamation equipment,
12including replacement parts and equipment, and including
13equipment purchased for lease, but excluding motor vehicles
14required to be registered under the Illinois Vehicle Code. The
15changes made to this Section by Public Act 97-767 apply on and
16after July 1, 2003, but no claim for credit or refund is
17allowed on or after August 16, 2013 (the effective date of
18Public Act 98-456) for such taxes paid during the period
19beginning July 1, 2003 and ending on August 16, 2013 (the
20effective date of Public Act 98-456).
21    (13) Semen used for artificial insemination of livestock
22for direct agricultural production.
23    (14) Horses, or interests in horses, registered with and
24meeting the requirements of any of the Arabian Horse Club
25Registry of America, Appaloosa Horse Club, American Quarter
26Horse Association, United States Trotting Association, or

 

 

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1Jockey Club, as appropriate, used for purposes of breeding or
2racing for prizes. This item (14) is exempt from the provisions
3of Section 3-75, and the exemption provided for under this item
4(14) applies for all periods beginning May 30, 1995, but no
5claim for credit or refund is allowed on or after the effective
6date of this amendatory Act of the 95th General Assembly for
7such taxes paid during the period beginning May 30, 2000 and
8ending on the effective date of this amendatory Act of the 95th
9General Assembly.
10    (15) Computers and communications equipment utilized for
11any hospital purpose and equipment used in the diagnosis,
12analysis, or treatment of hospital patients purchased by a
13lessor who leases the equipment, 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
16hospital that has been issued an active tax exemption
17identification number by the Department under Section 1g of the
18Retailers' Occupation Tax Act. If the equipment is leased in a
19manner that does not qualify for this exemption or is used in
20any other non-exempt 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 non-qualifying 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

 

 

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

 

 

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1December 31, 1995 and ending with taxable years ending on or
2before December 31, 2004, personal property that is donated for
3disaster relief to be used in a State or federally declared
4disaster area in Illinois or bordering Illinois by a
5manufacturer or retailer that is registered in this State to a
6corporation, society, association, foundation, or institution
7that has been issued a sales tax exemption identification
8number by the Department that assists victims of the disaster
9who reside within the declared disaster area.
10    (18) 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 used in the
13performance of infrastructure repairs in this State, including
14but not limited to municipal roads and streets, access roads,
15bridges, sidewalks, waste disposal systems, water and sewer
16line extensions, water distribution and purification
17facilities, storm water drainage and retention facilities, and
18sewage treatment facilities, resulting from a State or
19federally declared disaster in Illinois or bordering Illinois
20when such repairs are initiated on facilities located in the
21declared disaster area within 6 months after the disaster.
22    (19) Beginning July 1, 1999, game or game birds purchased
23at a "game breeding and hunting preserve area" as that term is
24used in the Wildlife Code. This paragraph is exempt from the
25provisions of Section 3-75.
26    (20) A motor vehicle, as that term is defined in Section

 

 

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11-146 of the Illinois Vehicle Code, that is donated to a
2corporation, limited liability company, society, association,
3foundation, or institution that is determined by the Department
4to be organized and operated exclusively for educational
5purposes. For purposes of this exemption, "a corporation,
6limited liability company, society, association, foundation,
7or institution organized and operated exclusively for
8educational purposes" means all tax-supported public schools,
9private schools that offer systematic instruction in useful
10branches of learning by methods common to public schools and
11that compare favorably in their scope and intensity with the
12course of study presented in tax-supported schools, and
13vocational or technical schools or institutes organized and
14operated exclusively to provide a course of study of not less
15than 6 weeks duration and designed to prepare individuals to
16follow a trade or to pursue a manual, technical, mechanical,
17industrial, business, or commercial occupation.
18    (21) Beginning January 1, 2000, personal property,
19including food, purchased through fundraising events for the
20benefit of a public or private elementary or secondary school,
21a group of those schools, or one or more school districts if
22the events are sponsored by an entity recognized by the school
23district that consists primarily of volunteers and includes
24parents and teachers of the school children. This paragraph
25does not apply to fundraising events (i) for the benefit of
26private home instruction or (ii) for which the fundraising

 

 

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1entity purchases the personal property sold at the events from
2another individual or entity that sold the property for the
3purpose of resale by the fundraising entity and that profits
4from the sale to the fundraising entity. This paragraph is
5exempt from the provisions of Section 3-75.
6    (22) Beginning January 1, 2000 and through December 31,
72001, new or used automatic vending machines that prepare and
8serve hot food and beverages, including coffee, soup, and other
9items, and replacement parts for these machines. Beginning
10January 1, 2002 and through June 30, 2003, machines and parts
11for machines used in commercial, coin-operated amusement and
12vending business if a use or occupation tax is paid on the
13gross receipts derived from the use of the commercial,
14coin-operated amusement and vending machines. This paragraph
15is exempt from the provisions of Section 3-75.
16    (23) Beginning August 23, 2001 and through June 30, 2016,
17food for human consumption that is to be consumed off the
18premises where it is sold (other than alcoholic beverages, soft
19drinks, and food that has been prepared for immediate
20consumption) and prescription and nonprescription medicines,
21drugs, medical appliances, and insulin, urine testing
22materials, syringes, and needles used by diabetics, for human
23use, when purchased for use by a person receiving medical
24assistance under Article V of the Illinois Public Aid Code who
25resides in a licensed long-term care facility, as defined in
26the Nursing Home Care Act, or in a licensed facility as defined

 

 

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1in the ID/DD Community Care Act or the Specialized Mental
2Health Rehabilitation Act of 2013.
3    (24) Beginning on the effective date of this amendatory Act
4of the 92nd General Assembly, computers and communications
5equipment utilized for any hospital purpose and equipment used
6in the diagnosis, analysis, or treatment of hospital patients
7purchased by a lessor who leases the equipment, under a lease
8of one year or longer executed or in effect at the time the
9lessor would otherwise be subject to the tax imposed by this
10Act, to a hospital that has been issued an active tax exemption
11identification number by the Department under Section 1g of the
12Retailers' Occupation Tax Act. If the equipment is leased in a
13manner that does not qualify for this exemption or is used in
14any other nonexempt manner, the lessor shall be liable for the
15tax imposed under this Act or the Use Tax Act, as the case may
16be, based on the fair market value of the property at the time
17the nonqualifying use occurs. No lessor shall collect or
18attempt to collect an amount (however designated) that purports
19to reimburse that lessor for the tax imposed by this Act or the
20Use Tax Act, as the case may be, if the tax has not been paid by
21the lessor. If a lessor improperly collects any such amount
22from the lessee, the lessee shall have a legal right to claim a
23refund of that amount from the lessor. If, however, that amount
24is not refunded to the lessee for any reason, the lessor is
25liable to pay that amount to the Department. This paragraph is
26exempt from the provisions of Section 3-75.

 

 

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1    (25) Beginning on the effective date of this amendatory Act
2of the 92nd General Assembly, personal property purchased by a
3lessor who leases the property, under a lease of one year or
4longer executed or in effect at the time the lessor would
5otherwise be subject to the tax imposed by this Act, to a
6governmental body that has been issued an active tax exemption
7identification number by the Department under Section 1g of the
8Retailers' Occupation Tax Act. If the property is leased in a
9manner that does not qualify for this exemption or is used in
10any other nonexempt manner, the lessor shall be liable for the
11tax imposed under this Act or the Use Tax Act, as the case may
12be, based on the fair market value of the property at the time
13the nonqualifying use occurs. No lessor shall collect or
14attempt to collect an amount (however designated) that purports
15to reimburse that lessor for the tax imposed by this Act or the
16Use Tax Act, as the case may be, if the tax has not been paid by
17the lessor. If a lessor improperly collects any such amount
18from the lessee, the lessee shall have a legal right to claim a
19refund of that amount from the lessor. If, however, that amount
20is not refunded to the lessee for any reason, the lessor is
21liable to pay that amount to the Department. This paragraph is
22exempt from the provisions of Section 3-75.
23    (26) Beginning January 1, 2008, tangible personal property
24used in the construction or maintenance of a community water
25supply, as defined under Section 3.145 of the Environmental
26Protection Act, that is operated by a not-for-profit

 

 

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1corporation that holds a valid water supply permit issued under
2Title IV of the Environmental Protection Act. This paragraph is
3exempt from the provisions of Section 3-75.
4    (27) Beginning January 1, 2010, materials, parts,
5equipment, components, and furnishings incorporated into or
6upon an aircraft as part of the modification, refurbishment,
7completion, replacement, repair, or maintenance of the
8aircraft. This exemption includes consumable supplies used in
9the modification, refurbishment, completion, replacement,
10repair, and maintenance of aircraft, but excludes any
11materials, parts, equipment, components, and consumable
12supplies used in the modification, replacement, repair, and
13maintenance of aircraft engines or power plants, whether such
14engines or power plants are installed or uninstalled upon any
15such aircraft. "Consumable supplies" include, but are not
16limited to, adhesive, tape, sandpaper, general purpose
17lubricants, cleaning solution, latex gloves, and protective
18films. This exemption applies only to the use of qualifying
19tangible personal property transferred incident to the
20modification, refurbishment, completion, replacement, repair,
21or maintenance of aircraft by persons who (i) hold an Air
22Agency Certificate and are empowered to operate an approved
23repair station by the Federal Aviation Administration, (ii)
24have a Class IV Rating, and (iii) conduct operations in
25accordance with Part 145 of the Federal Aviation Regulations.
26The exemption does not include aircraft operated by a

 

 

09900SB0088sam001- 53 -LRB099 06105 HLH 32366 a

1commercial air carrier providing scheduled passenger air
2service pursuant to authority issued under Part 121 or Part 129
3of the Federal Aviation Regulations. The changes made to this
4paragraph (27) by Public Act 98-534 are declarative of existing
5law.
6    (28) Tangible personal property purchased by a
7public-facilities corporation, as described in Section
811-65-10 of the Illinois Municipal Code, for purposes of
9constructing or furnishing a municipal convention hall, but
10only if the legal title to the municipal convention hall is
11transferred to the municipality without any further
12consideration by or on behalf of the municipality at the time
13of the completion of the municipal convention hall or upon the
14retirement or redemption of any bonds or other debt instruments
15issued by the public-facilities corporation in connection with
16the development of the municipal convention hall. This
17exemption includes existing public-facilities corporations as
18provided in Section 11-65-25 of the Illinois Municipal Code.
19This paragraph is exempt from the provisions of Section 3-75.
20(Source: P.A. 97-38, eff. 6-28-11; 97-227, eff. 1-1-12; 97-431,
21eff. 8-16-11; 97-636, eff. 6-1-12; 97-767, eff. 7-9-12; 98-104,
22eff. 7-22-13; 98-422, eff. 8-16-13; 98-456, eff. 8-16-13;
2398-534, eff. 8-23-13; 98-756, eff. 7-16-14.)
 
24    Section 15. The Service Occupation Tax Act is amended by
25changing Sections 2 and 3-5 as follows:
 

 

 

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1    (35 ILCS 115/2)  (from Ch. 120, par. 439.102)
2    Sec. 2. "Transfer" means any transfer of the title to
3property or of the ownership of property whether or not the
4transferor retains title as security for the payment of amounts
5due him from the transferee.
6    "Cost Price" means the consideration paid by the serviceman
7for a purchase valued in money, whether paid in money or
8otherwise, including cash, credits and services, and shall be
9determined without any deduction on account of the supplier's
10cost of the property sold or on account of any other expense
11incurred by the supplier. When a serviceman contracts out part
12or all of the services required in his sale of service, it
13shall be presumed that the cost price to the serviceman of the
14property transferred to him by his or her subcontractor is
15equal to 50% of the subcontractor's charges to the serviceman
16in the absence of proof of the consideration paid by the
17subcontractor for the purchase of such property.
18    "Department" means the Department of Revenue.
19    "Person" means any natural individual, firm, partnership,
20association, joint stock company, joint venture, public or
21private corporation, limited liability company, and any
22receiver, executor, trustee, guardian or other representative
23appointed by order of any court.
24    "Sale of Service" means any transaction except:
25    (a) A retail sale of tangible personal property taxable

 

 

09900SB0088sam001- 55 -LRB099 06105 HLH 32366 a

1under the Retailers' Occupation Tax Act or under the Use Tax
2Act.
3    (b) A sale of tangible personal property for the purpose of
4resale made in compliance with Section 2c of the Retailers'
5Occupation Tax Act.
6    (c) Except as hereinafter provided, a sale or transfer of
7tangible personal property as an incident to the rendering of
8service for or by any governmental body or for or by any
9corporation, society, association, foundation or institution
10organized and operated exclusively for charitable, religious
11or educational purposes or any not-for-profit corporation,
12society, association, foundation, institution or organization
13which has no compensated officers or employees and which is
14organized and operated primarily for the recreation of persons
1555 years of age or older. A limited liability company may
16qualify for the exemption under this paragraph only if the
17limited liability company is organized and operated
18exclusively for educational purposes.
19    (d) A sale or transfer of tangible personal property as an
20incident to the rendering of service for interstate carriers
21for hire for use as rolling stock moving in interstate commerce
22or lessors under leases of one year or longer, executed or in
23effect at the time of purchase, to interstate carriers for hire
24for use as rolling stock moving in interstate commerce, and
25equipment operated by a telecommunications provider, licensed
26as a common carrier by the Federal Communications Commission,

 

 

09900SB0088sam001- 56 -LRB099 06105 HLH 32366 a

1which is permanently installed in or affixed to aircraft moving
2in interstate commerce.
3    (d-1) A sale or transfer of tangible personal property as
4an incident to the rendering of service for owners, lessors or
5shippers of tangible personal property which is utilized by
6interstate carriers for hire for use as rolling stock moving in
7interstate commerce, and equipment operated by a
8telecommunications provider, licensed as a common carrier by
9the Federal Communications Commission, which is permanently
10installed in or affixed to aircraft moving in interstate
11commerce.
12    (d-1.1) On and after July 1, 2003 and through June 30,
132004, a sale or transfer of a motor vehicle of the second
14division with a gross vehicle weight in excess of 8,000 pounds
15as an incident to the rendering of service if that motor
16vehicle is subject to the commercial distribution fee imposed
17under Section 3-815.1 of the Illinois Vehicle Code. Beginning
18on July 1, 2004 and through June 30, 2005, the use in this
19State of motor vehicles of the second division: (i) with a
20gross vehicle weight rating in excess of 8,000 pounds; (ii)
21that are subject to the commercial distribution fee imposed
22under Section 3-815.1 of the Illinois Vehicle Code; and (iii)
23that are primarily used for commercial purposes. Through June
2430, 2005, this exemption applies to repair and replacement
25parts added after the initial purchase of such a motor vehicle
26if that motor vehicle is used in a manner that would qualify

 

 

09900SB0088sam001- 57 -LRB099 06105 HLH 32366 a

1for the rolling stock exemption otherwise provided for in this
2Act. For purposes of this paragraph, "used for commercial
3purposes" means the transportation of persons or property in
4furtherance of any commercial or industrial enterprise whether
5for-hire or not.
6    (d-2) The repairing, reconditioning or remodeling, for a
7common carrier by rail, of tangible personal property which
8belongs to such carrier for hire, and as to which such carrier
9receives the physical possession of the repaired,
10reconditioned or remodeled item of tangible personal property
11in Illinois, and which such carrier transports, or shares with
12another common carrier in the transportation of such property,
13out of Illinois on a standard uniform bill of lading showing
14the person who repaired, reconditioned or remodeled the
15property as the shipper or consignor of such property to a
16destination outside Illinois, for use outside Illinois.
17    (d-3) A sale or transfer of tangible personal property
18which is produced by the seller thereof on special order in
19such a way as to have made the applicable tax the Service
20Occupation Tax or the Service Use Tax, rather than the
21Retailers' Occupation Tax or the Use Tax, for an interstate
22carrier by rail which receives the physical possession of such
23property in Illinois, and which transports such property, or
24shares with another common carrier in the transportation of
25such property, out of Illinois on a standard uniform bill of
26lading showing the seller of the property as the shipper or

 

 

09900SB0088sam001- 58 -LRB099 06105 HLH 32366 a

1consignor of such property to a destination outside Illinois,
2for use outside Illinois.
3    (d-4) Until January 1, 1997, a sale, by a registered
4serviceman paying tax under this Act to the Department, of
5special order printed materials delivered outside Illinois and
6which are not returned to this State, if delivery is made by
7the seller or agent of the seller, including an agent who
8causes the product to be delivered outside Illinois by a common
9carrier or the U.S. postal service.
10    (e) A sale or transfer of machinery and equipment used
11primarily in the process of the manufacturing or assembling,
12either in an existing, an expanded or a new manufacturing
13facility, of tangible personal property for wholesale or retail
14sale or lease, whether such sale or lease is made directly by
15the manufacturer or by some other person, whether the materials
16used in the process are owned by the manufacturer or some other
17person, or whether such sale or lease is made apart from or as
18an incident to the seller's engaging in a service occupation
19and the applicable tax is a Service Occupation Tax or Service
20Use Tax, rather than Retailers' Occupation Tax or Use Tax. The
21exemption provided by this paragraph (e) does not include
22machinery and equipment used in (i) the generation of
23electricity for wholesale or retail sale; (ii) the generation
24or treatment of natural or artificial gas for wholesale or
25retail sale that is delivered to customers through pipes,
26pipelines, or mains; or (iii) the treatment of water for

 

 

09900SB0088sam001- 59 -LRB099 06105 HLH 32366 a

1wholesale or retail sale that is delivered to customers through
2pipes, pipelines, or mains. The provisions of this amendatory
3Act of the 98th General Assembly are declaratory of existing
4law as to the meaning and scope of this exemption. The
5exemption under this subsection (e), except with respect to
6production related tangible personal property, is exempt from
7the provisions of Section 3-75.
8    (f) Until July 1, 2003, the sale or transfer of
9distillation machinery and equipment, sold as a unit or kit and
10assembled or installed by the retailer, which machinery and
11equipment is certified by the user to be used only for the
12production of ethyl alcohol that will be used for consumption
13as motor fuel or as a component of motor fuel for the personal
14use of such user and not subject to sale or resale.
15    (g) At the election of any serviceman not required to be
16otherwise registered as a retailer under Section 2a of the
17Retailers' Occupation Tax Act, made for each fiscal year sales
18of service in which the aggregate annual cost price of tangible
19personal property transferred as an incident to the sales of
20service is less than 35% (75% in the case of servicemen
21transferring prescription drugs or servicemen engaged in
22graphic arts production) of the aggregate annual total gross
23receipts from all sales of service. The purchase of such
24tangible personal property by the serviceman shall be subject
25to tax under the Retailers' Occupation Tax Act and the Use Tax
26Act. However, if a primary serviceman who has made the election

 

 

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1described in this paragraph subcontracts service work to a
2secondary serviceman who has also made the election described
3in this paragraph, the primary serviceman does not incur a Use
4Tax liability if the secondary serviceman (i) has paid or will
5pay Use Tax on his or her cost price of any tangible personal
6property transferred to the primary serviceman and (ii)
7certifies that fact in writing to the primary serviceman.
8    Tangible personal property transferred incident to the
9completion of a maintenance agreement is exempt from the tax
10imposed pursuant to this Act.
11    Exemption (e) also includes machinery and equipment used in
12the general maintenance or repair of such exempt machinery and
13equipment or for in-house manufacture of exempt machinery and
14equipment. On and after August 31, 2014 and through December
1531, 2019, exemption (e) also includes production related
16tangible personal property, as defined in Section 2-45 of the
17Retailers' Occupation Tax Act. On and after August 31, 2019,
18exemption (e) also includes graphic arts machinery and
19equipment, as defined in paragraph (5) of Section 3-5. The
20machinery and equipment exemption does not include machinery
21and equipment used in (i) the generation of electricity for
22wholesale or retail sale; (ii) the generation or treatment of
23natural or artificial gas for wholesale or retail sale that is
24delivered to customers through pipes, pipelines, or mains; or
25(iii) the treatment of water for wholesale or retail sale that
26is delivered to customers through pipes, pipelines, or mains.

 

 

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1The provisions of this amendatory Act of the 98th General
2Assembly are declaratory of existing law as to the meaning and
3scope of this exemption. For the purposes of exemption (e),
4each of these terms shall have the following meanings: (1)
5"manufacturing process" shall mean the production of any
6article of tangible personal property, whether such article is
7a finished product or an article for use in the process of
8manufacturing or assembling a different article of tangible
9personal property, by procedures commonly regarded as
10manufacturing, processing, fabricating, or refining which
11changes some existing material or materials into a material
12with a different form, use or name. In relation to a recognized
13integrated business composed of a series of operations which
14collectively constitute manufacturing, or individually
15constitute manufacturing operations, the manufacturing process
16shall be deemed to commence with the first operation or stage
17of production in the series, and shall not be deemed to end
18until the completion of the final product in the last operation
19or stage of production in the series; and further for purposes
20of exemption (e), photoprocessing is deemed to be a
21manufacturing process of tangible personal property for
22wholesale or retail sale; (2) "assembling process" shall mean
23the production of any article of tangible personal property,
24whether such article is a finished product or an article for
25use in the process of manufacturing or assembling a different
26article of tangible personal property, by the combination of

 

 

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1existing materials in a manner commonly regarded as assembling
2which results in a material of a different form, use or name;
3(3) "machinery" shall mean major mechanical machines or major
4components of such machines contributing to a manufacturing or
5assembling process; and (4) "equipment" shall include any
6independent device or tool separate from any machinery but
7essential to an integrated manufacturing or assembly process;
8including computers used primarily in a manufacturer's
9computer assisted design, computer assisted manufacturing
10(CAD/CAM) system; or any subunit or assembly comprising a
11component of any machinery or auxiliary, adjunct or attachment
12parts of machinery, such as tools, dies, jigs, fixtures,
13patterns and molds; or any parts which require periodic
14replacement in the course of normal operation; but shall not
15include hand tools. Equipment includes chemicals or chemicals
16acting as catalysts but only if the chemicals or chemicals
17acting as catalysts effect a direct and immediate change upon a
18product being manufactured or assembled for wholesale or retail
19sale or lease. The purchaser of such machinery and equipment
20who has an active resale registration number shall furnish such
21number to the seller at the time of purchase. The purchaser of
22such machinery and equipment and tools without an active resale
23registration number shall furnish to the seller a certificate
24of exemption for each transaction stating facts establishing
25the exemption for that transaction, which certificate shall be
26available to the Department for inspection or audit.

 

 

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1    Except as provided in Section 2d of this Act, the rolling
2stock exemption applies to rolling stock used by an interstate
3carrier for hire, even just between points in Illinois, if such
4rolling stock transports, for hire, persons whose journeys or
5property whose shipments originate or terminate outside
6Illinois.
7    Any informal rulings, opinions or letters issued by the
8Department in response to an inquiry or request for any opinion
9from any person regarding the coverage and applicability of
10exemption (e) to specific devices shall be published,
11maintained as a public record, and made available for public
12inspection and copying. If the informal ruling, opinion or
13letter contains trade secrets or other confidential
14information, where possible the Department shall delete such
15information prior to publication. Whenever such informal
16rulings, opinions, or letters contain any policy of general
17applicability, the Department shall formulate and adopt such
18policy as a rule in accordance with the provisions of the
19Illinois Administrative Procedure Act.
20    On and after July 1, 1987, no entity otherwise eligible
21under exemption (c) of this Section shall make tax free
22purchases unless it has an active exemption identification
23number issued by the Department.
24    "Serviceman" means any person who is engaged in the
25occupation of making sales of service.
26    "Sale at Retail" means "sale at retail" as defined in the

 

 

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1Retailers' Occupation Tax Act.
2    "Supplier" means any person who makes sales of tangible
3personal property to servicemen for the purpose of resale as an
4incident to a sale of service.
5(Source: P.A. 98-583, eff. 1-1-14.)
 
6    (35 ILCS 115/3-5)
7    Sec. 3-5. Exemptions. The following tangible personal
8property is exempt from the tax imposed by this Act:
9    (1) Personal property sold by a corporation, society,
10association, foundation, institution, or organization, other
11than a limited liability company, that is organized and
12operated as a not-for-profit service enterprise for the benefit
13of persons 65 years of age or older if the personal property
14was not purchased by the enterprise for the purpose of resale
15by 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 any not-for-profit arts
20or cultural 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
24support of arts or cultural programming, activities, or
25services. These organizations include, but are not limited to,

 

 

09900SB0088sam001- 65 -LRB099 06105 HLH 32366 a

1music and dramatic arts organizations such as symphony
2orchestras and theatrical groups, arts and cultural service
3organizations, local arts councils, visual arts organizations,
4and media arts organizations. On and after the effective date
5of this amendatory Act of the 92nd General Assembly, however,
6an entity otherwise eligible for this exemption shall not make
7tax-free purchases unless it has an active identification
8number issued by the Department.
9    (4) Legal tender, currency, medallions, or gold or silver
10coinage issued by the State of Illinois, the government of the
11United States of America, or the government of any foreign
12country, and bullion.
13    (5) Until July 1, 2003 and beginning again on September 1,
142004 through August 30, 2014, graphic arts machinery and
15equipment, including repair and replacement parts, both new and
16used, and including that manufactured on special order or
17purchased for lease, certified by the purchaser to be used
18primarily for graphic arts production. Equipment includes
19chemicals or chemicals acting as catalysts but only if the
20chemicals or chemicals acting as catalysts effect a direct and
21immediate change upon a graphic arts product. Beginning on
22August 31, 2014, graphic arts machinery and equipment is
23included in the manufacturing and assembling machinery and
24equipment exemption under Section 2 of this Act.
25    (6) Personal property sold by a teacher-sponsored student
26organization affiliated with an elementary or secondary school

 

 

09900SB0088sam001- 66 -LRB099 06105 HLH 32366 a

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

 

 

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1software, global positioning and mapping systems, and other
2such equipment.
3    Farm machinery and equipment also includes computers,
4sensors, software, and related equipment used primarily in the
5computer-assisted operation of production agriculture
6facilities, equipment, and activities such as, but not limited
7to, the collection, monitoring, and correlation of animal and
8crop data for the purpose of formulating animal diets and
9agricultural chemicals. This item (7) is exempt from the
10provisions of Section 3-55.
11    (8) Until June 30, 2013, fuel and petroleum products sold
12to or used by an air common carrier, certified by the carrier
13to be used for consumption, shipment, or storage in the conduct
14of its business as an air common carrier, for a flight destined
15for or returning from a location or locations outside the
16United States without regard to previous or subsequent domestic
17stopovers.
18    Beginning July 1, 2013, fuel and petroleum products sold to
19or used by an air carrier, certified by the carrier to be used
20for consumption, shipment, or storage in the conduct of its
21business as an air common carrier, for a flight that (i) is
22engaged in foreign trade or is engaged in trade between the
23United States and any of its possessions and (ii) transports at
24least one individual or package for hire from the city of
25origination to the city of final destination on the same
26aircraft, without regard to a change in the flight number of

 

 

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

 

 

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1equipment purchased for lease, but excluding motor vehicles
2required to be registered under the Illinois Vehicle Code. The
3changes made to this Section by Public Act 97-767 apply on and
4after July 1, 2003, but no claim for credit or refund is
5allowed on or after August 16, 2013 (the effective date of
6Public Act 98-456) for such taxes paid during the period
7beginning July 1, 2003 and ending on August 16, 2013 (the
8effective date of Public Act 98-456).
9    (13) Beginning January 1, 1992 and through June 30, 2016,
10food for human consumption that is to be consumed off the
11premises where it is sold (other than alcoholic beverages, soft
12drinks and food that has been prepared for immediate
13consumption) and prescription and non-prescription medicines,
14drugs, medical appliances, and insulin, urine testing
15materials, syringes, and needles used by diabetics, for human
16use, when purchased for use by a person receiving medical
17assistance under Article V of the Illinois Public Aid Code who
18resides in a licensed long-term care facility, as defined in
19the Nursing Home Care Act, or in a licensed facility as defined
20in the ID/DD Community Care Act or the Specialized Mental
21Health Rehabilitation Act of 2013.
22    (14) Semen used for artificial insemination of livestock
23for direct agricultural production.
24    (15) Horses, or interests in horses, registered with and
25meeting the requirements of any of the Arabian Horse Club
26Registry of America, Appaloosa Horse Club, American Quarter

 

 

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1Horse Association, United States Trotting Association, or
2Jockey Club, as appropriate, used for purposes of breeding or
3racing for prizes. This item (15) is exempt from the provisions
4of Section 3-55, and the exemption provided for under this item
5(15) applies for all periods beginning May 30, 1995, but no
6claim for credit or refund is allowed on or after January 1,
72008 (the effective date of Public Act 95-88) for such taxes
8paid during the period beginning May 30, 2000 and ending on
9January 1, 2008 (the effective date of Public Act 95-88).
10    (16) Computers and communications equipment utilized for
11any hospital purpose and equipment used in the diagnosis,
12analysis, or treatment of hospital patients sold to a lessor
13who leases the equipment, under a lease of one year or longer
14executed or in effect at the time of the purchase, to a
15hospital that has been issued an active tax exemption
16identification number by the Department under Section 1g of the
17Retailers' Occupation Tax Act.
18    (17) Personal property sold to a lessor who leases the
19property, under a lease of one year or longer executed or in
20effect at the time of the purchase, to a governmental body that
21has been issued an active tax exemption identification number
22by the Department under Section 1g of the Retailers' Occupation
23Tax Act.
24    (18) Beginning with taxable years ending on or after
25December 31, 1995 and ending with taxable years ending on or
26before December 31, 2004, personal property that is donated for

 

 

09900SB0088sam001- 71 -LRB099 06105 HLH 32366 a

1disaster relief to be used in a State or federally declared
2disaster area in Illinois or bordering Illinois by a
3manufacturer or retailer that is registered in this State to a
4corporation, society, association, foundation, or institution
5that has been issued a sales tax exemption identification
6number by the Department that assists victims of the disaster
7who reside within the declared disaster area.
8    (19) Beginning with taxable years ending on or after
9December 31, 1995 and ending with taxable years ending on or
10before December 31, 2004, personal property that is used in the
11performance of infrastructure repairs in this State, including
12but not limited to municipal roads and streets, access roads,
13bridges, sidewalks, waste disposal systems, water and sewer
14line extensions, water distribution and purification
15facilities, storm water drainage and retention facilities, and
16sewage treatment facilities, resulting from a State or
17federally declared disaster in Illinois or bordering Illinois
18when such repairs are initiated on facilities located in the
19declared disaster area within 6 months after the disaster.
20    (20) Beginning July 1, 1999, game or game birds sold at a
21"game breeding and hunting preserve area" as that term is used
22in the Wildlife Code. This paragraph is exempt from the
23provisions of Section 3-55.
24    (21) A motor vehicle, as that term is defined in Section
251-146 of the Illinois Vehicle Code, that is donated to a
26corporation, limited liability company, society, association,

 

 

09900SB0088sam001- 72 -LRB099 06105 HLH 32366 a

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

 

 

09900SB0088sam001- 73 -LRB099 06105 HLH 32366 a

1purpose of resale by the fundraising entity and that profits
2from the sale to the fundraising entity. This paragraph is
3exempt from the provisions of Section 3-55.
4    (23) Beginning January 1, 2000 and through December 31,
52001, new or used automatic vending machines that prepare and
6serve hot food and beverages, including coffee, soup, and other
7items, and replacement parts for these machines. Beginning
8January 1, 2002 and through June 30, 2003, machines and parts
9for machines used in commercial, coin-operated amusement and
10vending business if a use or occupation tax is paid on the
11gross receipts derived from the use of the commercial,
12coin-operated amusement and vending machines. This paragraph
13is exempt from the provisions of Section 3-55.
14    (24) Beginning on the effective date of this amendatory Act
15of the 92nd General Assembly, computers and communications
16equipment utilized for any hospital purpose and equipment used
17in the diagnosis, analysis, or treatment of hospital patients
18sold to a lessor who leases the equipment, under a lease of one
19year or longer executed or in effect at the time of the
20purchase, to a hospital that has been issued an active tax
21exemption identification number by the Department under
22Section 1g of the Retailers' Occupation Tax Act. This paragraph
23is exempt from the provisions of Section 3-55.
24    (25) Beginning on the effective date of this amendatory Act
25of the 92nd General Assembly, personal property sold to a
26lessor who leases the property, under a lease of one year or

 

 

09900SB0088sam001- 74 -LRB099 06105 HLH 32366 a

1longer executed or in effect at the time of the purchase, to a
2governmental body that has been issued an active tax exemption
3identification number by the Department under Section 1g of the
4Retailers' Occupation Tax Act. This paragraph is exempt from
5the provisions of Section 3-55.
6    (26) Beginning on January 1, 2002 and through June 30,
72016, tangible personal property purchased from an Illinois
8retailer by a taxpayer engaged in centralized purchasing
9activities in Illinois who will, upon receipt of the property
10in Illinois, temporarily store the property in Illinois (i) for
11the purpose of subsequently transporting it outside this State
12for use or consumption thereafter solely outside this State or
13(ii) for the purpose of being processed, fabricated, or
14manufactured into, attached to, or incorporated into other
15tangible personal property to be transported outside this State
16and thereafter used or consumed solely outside this State. The
17Director of Revenue shall, pursuant to rules adopted in
18accordance with the Illinois Administrative Procedure Act,
19issue a permit to any taxpayer in good standing with the
20Department who is eligible for the exemption under this
21paragraph (26). The permit issued under this paragraph (26)
22shall 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

 

 

09900SB0088sam001- 75 -LRB099 06105 HLH 32366 a

1consumption of all such tangible personal property outside of
2the State of Illinois.
3    (27) Beginning January 1, 2008, tangible personal property
4used in the construction or maintenance of a community water
5supply, as defined under Section 3.145 of the Environmental
6Protection Act, that is operated by a not-for-profit
7corporation that holds a valid water supply permit issued under
8Title IV of the Environmental Protection Act. This paragraph is
9exempt from the provisions of Section 3-55.
10    (28) Tangible personal property sold to a
11public-facilities corporation, as described in Section
1211-65-10 of the Illinois Municipal Code, for purposes of
13constructing or furnishing a municipal convention hall, but
14only if the legal title to the municipal convention hall is
15transferred to the municipality without any further
16consideration by or on behalf of the municipality at the time
17of the completion of the municipal convention hall or upon the
18retirement or redemption of any bonds or other debt instruments
19issued by the public-facilities corporation in connection with
20the development of the municipal convention hall. This
21exemption includes existing public-facilities corporations as
22provided in Section 11-65-25 of the Illinois Municipal Code.
23This paragraph is exempt from the provisions of Section 3-55.
24    (29) Beginning January 1, 2010, materials, parts,
25equipment, components, and furnishings incorporated into or
26upon an aircraft as part of the modification, refurbishment,

 

 

09900SB0088sam001- 76 -LRB099 06105 HLH 32366 a

1completion, replacement, repair, or maintenance of the
2aircraft. This exemption includes consumable supplies used in
3the modification, refurbishment, completion, replacement,
4repair, and maintenance of aircraft, but excludes any
5materials, parts, equipment, components, and consumable
6supplies used in the modification, replacement, repair, and
7maintenance of aircraft engines or power plants, whether such
8engines or power plants are installed or uninstalled upon any
9such aircraft. "Consumable supplies" include, but are not
10limited to, adhesive, tape, sandpaper, general purpose
11lubricants, cleaning solution, latex gloves, and protective
12films. This exemption applies only to the transfer of
13qualifying tangible personal property incident to the
14modification, refurbishment, completion, replacement, repair,
15or maintenance of an aircraft by persons who (i) hold an Air
16Agency Certificate and are empowered to operate an approved
17repair station by the Federal Aviation Administration, (ii)
18have a Class IV Rating, and (iii) conduct operations in
19accordance with Part 145 of the Federal Aviation Regulations.
20The exemption does not include aircraft operated by a
21commercial air carrier providing scheduled passenger air
22service pursuant to authority issued under Part 121 or Part 129
23of the Federal Aviation Regulations. The changes made to this
24paragraph (29) by Public Act 98-534 are declarative of existing
25law.
26(Source: P.A. 97-38, eff. 6-28-11; 97-73, eff. 6-30-11; 97-227,

 

 

09900SB0088sam001- 77 -LRB099 06105 HLH 32366 a

1eff. 1-1-12; 97-431, eff. 8-16-11; 97-636, eff. 6-1-12; 97-767,
2eff. 7-9-12; 98-104, eff. 7-22-13; 98-422, eff. 8-16-13;
398-456, eff. 8-16-13; 98-534, eff. 8-23-13; 98-756, eff.
47-16-14.)
 
5    Section 20. The Retailers' Occupation Tax Act is amended by
6changing Sections 2-5 and 2-45 as follows:
 
7    (35 ILCS 120/2-5)
8    Sec. 2-5. Exemptions. Gross receipts from proceeds from the
9sale of the following tangible personal property are exempt
10from the tax imposed by this Act:
11    (1) Farm chemicals.
12    (2) Farm machinery and equipment, both new and used,
13including that manufactured on special order, certified by the
14purchaser to be used primarily for production agriculture or
15State or federal agricultural programs, including individual
16replacement parts for the machinery and equipment, including
17machinery and equipment purchased for lease, and including
18implements of husbandry defined in Section 1-130 of the
19Illinois Vehicle Code, farm machinery and agricultural
20chemical and fertilizer spreaders, and nurse wagons required to
21be registered under Section 3-809 of the Illinois Vehicle Code,
22but excluding other motor vehicles required to be registered
23under the Illinois Vehicle Code. Horticultural polyhouses or
24hoop houses used for propagating, growing, or overwintering

 

 

09900SB0088sam001- 78 -LRB099 06105 HLH 32366 a

1plants shall be considered farm machinery and equipment under
2this item (2). Agricultural chemical tender tanks and dry boxes
3shall include units sold separately from a motor vehicle
4required to be licensed and units sold mounted on a motor
5vehicle required to be licensed, if the selling price of the
6tender is separately stated.
7    Farm machinery and equipment shall include precision
8farming equipment that is installed or purchased to be
9installed on farm machinery and equipment including, but not
10limited to, tractors, harvesters, sprayers, planters, seeders,
11or spreaders. Precision farming equipment includes, but is not
12limited to, soil testing sensors, computers, monitors,
13software, global positioning and mapping systems, and other
14such equipment.
15    Farm machinery and equipment also includes computers,
16sensors, software, and related equipment used primarily in the
17computer-assisted operation of production agriculture
18facilities, equipment, and activities such as, but not limited
19to, the collection, monitoring, and correlation of animal and
20crop data for the purpose of formulating animal diets and
21agricultural chemicals. This item (2) is exempt from the
22provisions of Section 2-70.
23    (3) Until July 1, 2003, distillation machinery and
24equipment, sold as a unit or kit, assembled or installed by the
25retailer, certified by the user to be used only for the
26production of ethyl alcohol that will be used for consumption

 

 

09900SB0088sam001- 79 -LRB099 06105 HLH 32366 a

1as motor fuel or as a component of motor fuel for the personal
2use of the user, and not subject to sale or resale.
3    (4) Until July 1, 2003 and beginning again September 1,
42004 through August 30, 2014, graphic arts machinery and
5equipment, including repair and replacement parts, both new and
6used, and including that manufactured on special order or
7purchased for lease, certified by the purchaser to be used
8primarily for graphic arts production. Equipment includes
9chemicals or chemicals acting as catalysts but only if the
10chemicals or chemicals acting as catalysts effect a direct and
11immediate change upon a graphic arts product. Beginning on
12August 31, 2014, graphic arts machinery and equipment is
13included in the manufacturing and assembling machinery and
14equipment exemption under paragraph (14).
15    (5) A motor vehicle that is used for automobile renting, as
16defined in the Automobile Renting Occupation and Use Tax Act.
17This paragraph is exempt from the provisions of Section 2-70.
18    (6) Personal property sold by a teacher-sponsored student
19organization affiliated with an elementary or secondary school
20located in Illinois.
21    (7) Until July 1, 2003, proceeds of that portion of the
22selling price of a passenger car the sale of which is subject
23to the Replacement Vehicle Tax.
24    (8) Personal property sold to an Illinois county fair
25association for use in conducting, operating, or promoting the
26county fair.

 

 

09900SB0088sam001- 80 -LRB099 06105 HLH 32366 a

1    (9) Personal property sold to a not-for-profit arts or
2cultural 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    (10) Personal property sold by a corporation, society,
17association, foundation, institution, or organization, other
18than a limited liability company, that is organized and
19operated as a not-for-profit service enterprise for the benefit
20of persons 65 years of age or older if the personal property
21was not purchased by the enterprise for the purpose of resale
22by the enterprise.
23    (11) Personal property sold to a governmental body, to a
24corporation, society, association, foundation, or institution
25organized and operated exclusively for charitable, religious,
26or educational purposes, or to a not-for-profit corporation,

 

 

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1society, association, foundation, institution, or organization
2that has no compensated officers or employees and that is
3organized and operated primarily for the recreation of persons
455 years of age or older. A limited liability company may
5qualify for the exemption under this paragraph only if the
6limited liability company is organized and operated
7exclusively for educational purposes. On and after July 1,
81987, however, no entity otherwise eligible for this exemption
9shall make tax-free purchases unless it has an active
10identification number issued by the Department.
11    (12) Tangible personal property sold to interstate
12carriers for hire for use as rolling stock moving in interstate
13commerce or to lessors under leases of one year or longer
14executed or in effect at the time of purchase by interstate
15carriers for hire for use as rolling stock moving in interstate
16commerce and equipment operated by a telecommunications
17provider, licensed as a common carrier by the Federal
18Communications Commission, which is permanently installed in
19or affixed to aircraft moving in interstate commerce.
20    (12-5) On and after July 1, 2003 and through June 30, 2004,
21motor vehicles of the second division with a gross vehicle
22weight in excess of 8,000 pounds that are subject to the
23commercial distribution fee imposed under Section 3-815.1 of
24the Illinois Vehicle Code. Beginning on July 1, 2004 and
25through June 30, 2005, the use in this State of motor vehicles
26of the second division: (i) with a gross vehicle weight rating

 

 

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1in excess of 8,000 pounds; (ii) that are subject to the
2commercial distribution fee imposed under Section 3-815.1 of
3the Illinois Vehicle Code; and (iii) that are primarily used
4for commercial purposes. Through June 30, 2005, this exemption
5applies to repair and replacement parts added after the initial
6purchase of such a motor vehicle if that motor vehicle is used
7in a manner that would qualify for the rolling stock exemption
8otherwise provided for in this Act. For purposes of this
9paragraph, "used for commercial purposes" means the
10transportation of persons or property in furtherance of any
11commercial or industrial enterprise whether for-hire or not.
12    (13) Proceeds from sales to owners, lessors, or shippers of
13tangible personal property that is utilized by interstate
14carriers for hire for use as rolling stock moving in interstate
15commerce and equipment operated by a telecommunications
16provider, licensed as a common carrier by the Federal
17Communications Commission, which is permanently installed in
18or affixed to aircraft moving in interstate commerce.
19    (14) Machinery and equipment that will be used by the
20purchaser, or a lessee of the purchaser, primarily in the
21process of manufacturing or assembling tangible personal
22property for wholesale or retail sale or lease, whether the
23sale or lease is made directly by the manufacturer or by some
24other person, whether the materials used in the process are
25owned by the manufacturer or some other person, or whether the
26sale or lease is made apart from or as an incident to the

 

 

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1seller's engaging in the service occupation of producing
2machines, tools, dies, jigs, patterns, gauges, or other similar
3items of no commercial value on special order for a particular
4purchaser. The exemption provided by this paragraph (14) does
5not include machinery and equipment used in (i) the generation
6of electricity for wholesale or retail sale; (ii) the
7generation or treatment of natural or artificial gas for
8wholesale or retail sale that is delivered to customers through
9pipes, pipelines, or mains; or (iii) the treatment of water for
10wholesale or retail sale that is delivered to customers through
11pipes, pipelines, or mains. The provisions of Public Act 98-583
12are declaratory of existing law as to the meaning and scope of
13this exemption. Beginning on August 31, 2014, the exemption
14provided by this paragraph (14) includes, but is not limited
15to, graphic arts machinery and equipment, as defined in
16paragraph (4) of this Section. Beginning on August 31, 2014 and
17until December 31, 2019, the exemption provided by this
18paragraph (14) includes, but is not limited to, production
19related tangible personal property, as defined in Section 2-45
20of this Act. The exemption provided by this paragraph (14),
21except with respect to production related tangible personal
22property, is exempt from the provisions of Section 2-70.
23    (15) Proceeds of mandatory service charges separately
24stated on customers' bills for purchase and consumption of food
25and beverages, to the extent that the proceeds of the service
26charge are in fact turned over as tips or as a substitute for

 

 

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1tips to the employees who participate directly in preparing,
2serving, hosting or cleaning up the food or beverage function
3with respect to which the service charge is imposed.
4    (16) Petroleum products sold to a purchaser if the seller
5is prohibited by federal law from charging tax to the
6purchaser.
7    (17) Tangible personal property sold to a common carrier by
8rail or motor that receives the physical possession of the
9property in Illinois and that transports the property, or
10shares with another common carrier in the transportation of the
11property, out of Illinois on a standard uniform bill of lading
12showing the seller of the property as the shipper or consignor
13of the property to a destination outside Illinois, for use
14outside Illinois.
15    (18) Legal tender, currency, medallions, or gold or silver
16coinage issued by the State of Illinois, the government of the
17United States of America, or the government of any foreign
18country, and bullion.
19    (19) Until July 1 2003, oil field exploration, drilling,
20and production equipment, including (i) rigs and parts of rigs,
21rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
22tubular goods, including casing and drill strings, (iii) pumps
23and pump-jack units, (iv) storage tanks and flow lines, (v) any
24individual replacement part for oil field exploration,
25drilling, and production equipment, and (vi) machinery and
26equipment purchased for lease; but excluding motor vehicles

 

 

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1required to be registered under the Illinois Vehicle Code.
2    (20) Photoprocessing machinery and equipment, including
3repair and replacement parts, both new and used, including that
4manufactured on special order, certified by the purchaser to be
5used primarily for photoprocessing, and including
6photoprocessing machinery and equipment purchased for lease.
7    (21) Coal and aggregate exploration, mining, off-highway
8hauling, processing, maintenance, and reclamation equipment,
9including replacement parts and equipment, and including
10equipment purchased for lease, but excluding motor vehicles
11required to be registered under the Illinois Vehicle Code. The
12changes made to this Section by Public Act 97-767 apply on and
13after July 1, 2003, but no claim for credit or refund is
14allowed on or after August 16, 2013 (the effective date of
15Public Act 98-456) for such taxes paid during the period
16beginning July 1, 2003 and ending on August 16, 2013 (the
17effective date of Public Act 98-456).
18    (22) Until June 30, 2013, fuel and petroleum products sold
19to or used by an air carrier, certified by the carrier to be
20used for consumption, shipment, or storage in the conduct of
21its business as an air common carrier, for a flight destined
22for or returning from a location or locations outside the
23United States without regard to previous or subsequent domestic
24stopovers.
25    Beginning July 1, 2013, fuel and petroleum products sold to
26or used by an air carrier, certified by the carrier to be used

 

 

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1for consumption, shipment, or storage in the conduct of its
2business as an air common carrier, for a flight that (i) is
3engaged in foreign trade or is engaged in trade between the
4United States and any of its possessions and (ii) transports at
5least one individual or package for hire from the city of
6origination to the city of final destination on the same
7aircraft, without regard to a change in the flight number of
8that aircraft.
9    (23) A transaction in which the purchase order is received
10by a florist who is located outside Illinois, but who has a
11florist located in Illinois deliver the property to the
12purchaser or the purchaser's donee in Illinois.
13    (24) Fuel consumed or used in the operation of ships,
14barges, or vessels that are used primarily in or for the
15transportation of property or the conveyance of persons for
16hire on rivers bordering on this State if the fuel is delivered
17by the seller to the purchaser's barge, ship, or vessel while
18it is afloat upon that bordering river.
19    (25) Except as provided in item (25-5) of this Section, a
20motor vehicle sold in this State to a nonresident even though
21the motor vehicle is delivered to the nonresident in this
22State, if the motor vehicle is not to be titled in this State,
23and if a drive-away permit is issued to the motor vehicle as
24provided in Section 3-603 of the Illinois Vehicle Code or if
25the nonresident purchaser has vehicle registration plates to
26transfer to the motor vehicle upon returning to his or her home

 

 

09900SB0088sam001- 87 -LRB099 06105 HLH 32366 a

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

 

 

09900SB0088sam001- 88 -LRB099 06105 HLH 32366 a

1vehicle in the purchaser's state of residence if the purchaser
2titles the vehicle in his or her state of residence within 30
3days after the date of sale. The tax collected under this Act
4in accordance with this item (25-5) shall be proportionately
5distributed as if the tax were collected at the 6.25% general
6rate imposed under this Act.
7    (25-7) Beginning on July 1, 2007, no tax is imposed under
8this Act on the sale of an aircraft, as defined in Section 3 of
9the Illinois Aeronautics Act, if all of the following
10conditions are met:
11        (1) the aircraft leaves this State within 15 days after
12    the later of either the issuance of the final billing for
13    the sale of the aircraft, or the authorized approval for
14    return to service, completion of the maintenance record
15    entry, and completion of the test flight and ground test
16    for inspection, as required by 14 C.F.R. 91.407;
17        (2) the aircraft is not based or registered in this
18    State after the sale of the aircraft; and
19        (3) the seller retains in his or her books and records
20    and provides to the Department a signed and dated
21    certification from the purchaser, on a form prescribed by
22    the Department, certifying that the requirements of this
23    item (25-7) are met. The certificate must also include the
24    name and address of the purchaser, the address of the
25    location where the aircraft is to be titled or registered,
26    the address of the primary physical location of the

 

 

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1    aircraft, and other information that the Department may
2    reasonably require.
3    For purposes of this item (25-7):
4    "Based in this State" means hangared, stored, or otherwise
5used, excluding post-sale customizations as defined in this
6Section, for 10 or more days in each 12-month period
7immediately following the date of the sale of the aircraft.
8    "Registered in this State" means an aircraft registered
9with the Department of Transportation, Aeronautics Division,
10or titled or registered with the Federal Aviation
11Administration to an address located in this State.
12    This paragraph (25-7) is exempt from the provisions of
13Section 2-70.
14    (26) Semen used for artificial insemination of livestock
15for direct agricultural production.
16    (27) Horses, or interests in horses, registered with and
17meeting the requirements of any of the Arabian Horse Club
18Registry of America, Appaloosa Horse Club, American Quarter
19Horse Association, United States Trotting Association, or
20Jockey Club, as appropriate, used for purposes of breeding or
21racing for prizes. This item (27) is exempt from the provisions
22of Section 2-70, and the exemption provided for under this item
23(27) applies for all periods beginning May 30, 1995, but no
24claim for credit or refund is allowed on or after January 1,
252008 (the effective date of Public Act 95-88) for such taxes
26paid during the period beginning May 30, 2000 and ending on

 

 

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1January 1, 2008 (the effective date of Public Act 95-88).
2    (28) Computers and communications equipment utilized for
3any hospital purpose and equipment used in the diagnosis,
4analysis, or treatment of hospital patients sold to a lessor
5who leases the equipment, under a lease of one year or longer
6executed or in effect at the time of the purchase, to a
7hospital that has been issued an active tax exemption
8identification number by the Department under Section 1g of
9this Act.
10    (29) Personal property sold to a lessor who leases the
11property, under a lease of one year or longer executed or in
12effect at the time of the purchase, to a governmental body that
13has been issued an active tax exemption identification number
14by the Department under Section 1g of this Act.
15    (30) Beginning with taxable years ending on or after
16December 31, 1995 and ending with taxable years ending on or
17before December 31, 2004, personal property that is donated for
18disaster relief to be used in a State or federally declared
19disaster area in Illinois or bordering Illinois by a
20manufacturer or retailer that is registered in this State to a
21corporation, society, association, foundation, or institution
22that has been issued a sales tax exemption identification
23number by the Department that assists victims of the disaster
24who reside within the declared disaster area.
25    (31) Beginning with taxable years ending on or after
26December 31, 1995 and ending with taxable years ending on or

 

 

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1before December 31, 2004, personal property that is used in the
2performance of infrastructure repairs in this State, including
3but not limited to municipal roads and streets, access roads,
4bridges, sidewalks, waste disposal systems, water and sewer
5line extensions, water distribution and purification
6facilities, storm water drainage and retention facilities, and
7sewage treatment facilities, resulting from a State or
8federally declared disaster in Illinois or bordering Illinois
9when such repairs are initiated on facilities located in the
10declared disaster area within 6 months after the disaster.
11    (32) Beginning July 1, 1999, game or game birds sold at a
12"game breeding and hunting preserve area" as that term is used
13in the Wildlife Code. This paragraph is exempt from the
14provisions of Section 2-70.
15    (33) A motor vehicle, as that term is defined in Section
161-146 of the Illinois Vehicle Code, that is donated to a
17corporation, limited liability company, society, association,
18foundation, or institution that is determined by the Department
19to be organized and operated exclusively for educational
20purposes. For purposes of this exemption, "a corporation,
21limited liability company, society, association, foundation,
22or institution organized and operated exclusively for
23educational purposes" means all tax-supported public schools,
24private schools that offer systematic instruction in useful
25branches of learning by methods common to public schools and
26that compare favorably in their scope and intensity with the

 

 

09900SB0088sam001- 92 -LRB099 06105 HLH 32366 a

1course of study presented in tax-supported schools, and
2vocational or technical schools or institutes organized and
3operated exclusively to provide a course of study of not less
4than 6 weeks duration and designed to prepare individuals to
5follow a trade or to pursue a manual, technical, mechanical,
6industrial, business, or commercial occupation.
7    (34) Beginning January 1, 2000, personal property,
8including food, purchased through fundraising events for the
9benefit of a public or private elementary or secondary school,
10a group of those schools, or one or more school districts if
11the events are sponsored by an entity recognized by the school
12district that consists primarily of volunteers and includes
13parents and teachers of the school children. This paragraph
14does not apply to fundraising events (i) for the benefit of
15private home instruction or (ii) for which the fundraising
16entity purchases the personal property sold at the events from
17another individual or entity that sold the property for the
18purpose of resale by the fundraising entity and that profits
19from the sale to the fundraising entity. This paragraph is
20exempt from the provisions of Section 2-70.
21    (35) Beginning January 1, 2000 and through December 31,
222001, new or used automatic vending machines that prepare and
23serve hot food and beverages, including coffee, soup, and other
24items, and replacement parts for these machines. Beginning
25January 1, 2002 and through June 30, 2003, machines and parts
26for machines used in commercial, coin-operated amusement and

 

 

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

 

 

09900SB0088sam001- 94 -LRB099 06105 HLH 32366 a

1    (37) Beginning August 2, 2001, personal property sold to a
2lessor who leases the property, under a lease of one year or
3longer executed or in effect at the time of the purchase, to a
4governmental body that has been issued an active tax exemption
5identification number by the Department under Section 1g of
6this Act. This paragraph is exempt from the provisions of
7Section 2-70.
8    (38) Beginning on January 1, 2002 and through June 30,
92016, tangible personal property purchased from an Illinois
10retailer by a taxpayer engaged in centralized purchasing
11activities in Illinois who will, upon receipt of the property
12in Illinois, temporarily store the property in Illinois (i) for
13the purpose of subsequently transporting it outside this State
14for use or consumption thereafter solely outside this State or
15(ii) for the purpose of being processed, fabricated, or
16manufactured into, attached to, or incorporated into other
17tangible personal property to be transported outside this State
18and thereafter used or consumed solely outside this State. The
19Director of Revenue shall, pursuant to rules adopted in
20accordance with the Illinois Administrative Procedure Act,
21issue a permit to any taxpayer in good standing with the
22Department who is eligible for the exemption under this
23paragraph (38). The permit issued under this paragraph (38)
24shall authorize the holder, to the extent and in the manner
25specified in the rules adopted under this Act, to purchase
26tangible personal property from a retailer exempt from the

 

 

09900SB0088sam001- 95 -LRB099 06105 HLH 32366 a

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

 

 

09900SB0088sam001- 96 -LRB099 06105 HLH 32366 a

1tangible personal property to persons who modify, refurbish,
2complete, replace, or maintain an aircraft and who (i) hold an
3Air Agency Certificate and are empowered to operate an approved
4repair station by the Federal Aviation Administration, (ii)
5have a Class IV Rating, and (iii) conduct operations in
6accordance with Part 145 of the Federal Aviation Regulations.
7The exemption does not include aircraft operated by a
8commercial air carrier providing scheduled passenger air
9service pursuant to authority issued under Part 121 or Part 129
10of the Federal Aviation Regulations. The changes made to this
11paragraph (40) by Public Act 98-534 are declarative of existing
12law.
13    (41) Tangible personal property sold to a
14public-facilities corporation, as described in Section
1511-65-10 of the Illinois Municipal Code, for purposes of
16constructing or furnishing a municipal convention hall, but
17only if the legal title to the municipal convention hall is
18transferred to the municipality without any further
19consideration by or on behalf of the municipality at the time
20of the completion of the municipal convention hall or upon the
21retirement or redemption of any bonds or other debt instruments
22issued by the public-facilities corporation in connection with
23the development of the municipal convention hall. This
24exemption includes existing public-facilities corporations as
25provided in Section 11-65-25 of the Illinois Municipal Code.
26This paragraph is exempt from the provisions of Section 2-70.

 

 

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1(Source: P.A. 97-38, eff. 6-28-11; 97-73, eff. 6-30-11; 97-227,
2eff. 1-1-12; 97-431, eff. 8-16-11; 97-636, eff. 6-1-12; 97-767,
3eff. 7-9-12; 98-104, eff. 7-22-13; 98-422, eff. 8-16-13;
498-456, eff. 8-16-13; 98-534, eff. 8-23-13; 98-574, eff.
51-1-14; 98-583, eff. 1-1-14; 98-756, eff. 7-16-14.)
 
6    (35 ILCS 120/2-45)  (from Ch. 120, par. 441-45)
7    Sec. 2-45. Manufacturing and assembly exemption. The
8manufacturing and assembly machinery and equipment exemption
9includes machinery and equipment that replaces machinery and
10equipment in an existing manufacturing facility as well as
11machinery and equipment that are for use in an expanded or new
12manufacturing facility.
13    The machinery and equipment exemption also includes
14machinery and equipment used in the general maintenance or
15repair of exempt machinery and equipment or for in-house
16manufacture of exempt machinery and equipment. Beginning on
17August 31, 2014, the manufacturing and assembling machinery and
18equipment exemption also includes graphic arts machinery and
19equipment, as defined in paragraph (4) of Section 2-5.
20Beginning on August 31, 2014 and until December 31, 2019, the
21manufacturing and assembling machinery and equipment exemption
22also includes production related tangible personal property,
23as defined in this Section. The machinery and equipment
24exemption does not include machinery and equipment used in (i)
25the generation of electricity for wholesale or retail sale;

 

 

09900SB0088sam001- 98 -LRB099 06105 HLH 32366 a

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
6this amendatory Act of the 98th General Assembly are
7declaratory of existing law as to the meaning and scope of this
8exemption. For the purposes of this exemption, terms have the
9following meanings:
10        (1) "Manufacturing process" means the production of an
11    article of tangible personal property, whether the article
12    is a finished product or an article for use in the process
13    of manufacturing or assembling a different article of
14    tangible personal property, by a procedure commonly
15    regarded as manufacturing, processing, fabricating, or
16    refining that changes some existing material or materials
17    into a material with a different form, use, or name. In
18    relation to a recognized integrated business composed of a
19    series of operations that collectively constitute
20    manufacturing, or individually constitute manufacturing
21    operations, the manufacturing process commences with the
22    first operation or stage of production in the series and
23    does not end until the completion of the final product in
24    the last operation or stage of production in the series.
25    For purposes of this exemption, photoprocessing is a
26    manufacturing process of tangible personal property for

 

 

09900SB0088sam001- 99 -LRB099 06105 HLH 32366 a

1    wholesale or retail sale.
2        (2) "Assembling process" means the production of an
3    article of tangible personal property, whether the article
4    is a finished product or an article for use in the process
5    of manufacturing or assembling a different article of
6    tangible personal property, by the combination of existing
7    materials in a manner commonly regarded as assembling that
8    results in a material of a different form, use, or name.
9        (3) "Machinery" means major mechanical machines or
10    major components of those machines contributing to a
11    manufacturing or assembling process.
12        (4) "Equipment" includes an independent device or tool
13    separate from machinery but essential to an integrated
14    manufacturing or assembly process; including computers
15    used primarily in a manufacturer's computer assisted
16    design, computer assisted manufacturing (CAD/CAM) system;
17    any subunit or assembly comprising a component of any
18    machinery or auxiliary, adjunct, or attachment parts of
19    machinery, such as tools, dies, jigs, fixtures, patterns,
20    and molds; and any parts that require periodic replacement
21    in the course of normal operation; but does not include
22    hand tools. Equipment includes chemicals or chemicals
23    acting as catalysts but only if the chemicals or chemicals
24    acting as catalysts effect a direct and immediate change
25    upon a product being manufactured or assembled for
26    wholesale or retail sale or lease.

 

 

09900SB0088sam001- 100 -LRB099 06105 HLH 32366 a

1        (5) "Production related tangible personal property"
2    means all tangible personal property that is used or
3    consumed by the purchaser in a manufacturing facility in
4    which a manufacturing process takes place and includes,
5    without limitation, tangible personal property that is
6    purchased for incorporation into real estate within a
7    manufacturing facility and tangible personal property that
8    is used or consumed in activities such as research and
9    development, preproduction material handling, receiving,
10    quality control, inventory control, storage, staging, and
11    packaging for shipping and transportation purposes.
12    "Production related tangible personal property" does not
13    include (i) tangible personal property that is used, within
14    or without a manufacturing facility, in sales, purchasing,
15    accounting, fiscal management, marketing, personnel
16    recruitment or selection, or landscaping or (ii) tangible
17    personal property that is required to be titled or
18    registered with a department, agency, or unit of federal,
19    State, or local government.
20    The manufacturing and assembling machinery and equipment
21exemption includes production related tangible personal
22property that is purchased (i) on or after July 1, 2007 and on
23or before June 30, 2008 or (ii) on and after August 31, 2014
24and on or before December 31, 2019. The exemption for
25production related tangible personal property purchased on or
26after July 1, 2007 and on or before June 30, 2008 is subject to

 

 

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1both of the following limitations:
2        (1) The maximum amount of the exemption for any one
3    taxpayer may not exceed 5% of the purchase price of
4    production related tangible personal property that is
5    purchased on or after July 1, 2007 and on or before June
6    30, 2008. A credit under Section 3-85 of this Act may not
7    be earned by the purchase of production related tangible
8    personal property for which an exemption is received under
9    this Section.
10        (2) The maximum aggregate amount of the exemptions for
11    production related tangible personal property awarded
12    under this Act and the Use Tax Act to all taxpayers may not
13    exceed $10,000,000. If the claims for the exemption exceed
14    $10,000,000, then the Department shall reduce the amount of
15    the exemption to each taxpayer on a pro rata basis.
16The Department may adopt rules to implement and administer the
17exemption for production related tangible personal property.
18    The manufacturing and assembling machinery and equipment
19exemption includes the sale of materials to a purchaser who
20produces exempted types of machinery, equipment, or tools and
21who rents or leases that machinery, equipment, or tools to a
22manufacturer of tangible personal property. This exemption
23also includes the sale of materials to a purchaser who
24manufactures those materials into an exempted type of
25machinery, equipment, or tools that the purchaser uses himself
26or herself in the manufacturing of tangible personal property.

 

 

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1The purchaser of the machinery and equipment who has an active
2resale registration number shall furnish that number to the
3seller at the time of purchase. A purchaser of the machinery,
4equipment, and tools without an active resale registration
5number shall furnish to the seller a certificate of exemption
6for each transaction stating facts establishing the exemption
7for that transaction, and that certificate shall be available
8to the Department for inspection or audit. Informal rulings,
9opinions, or letters issued by the Department in response to an
10inquiry or request for an opinion from any person regarding the
11coverage and applicability of this exemption to specific
12devices shall be published, maintained as a public record, and
13made available for public inspection and copying. If the
14informal ruling, opinion, or letter contains trade secrets or
15other confidential information, where possible, the Department
16shall delete that information before publication. Whenever
17informal rulings, opinions, or letters contain a policy of
18general applicability, the Department shall formulate and
19adopt that policy as a rule in accordance with the Illinois
20Administrative Procedure Act.
21    The manufacturing and assembling machinery and equipment
22exemption, except with respect to production related tangible
23personal property, is exempt from the provisions of Section
242-70.
25(Source: P.A. 98-583, eff. 1-1-14.)
 

 

 

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1    Section 99. Effective date. This Act takes effect upon
2becoming law.".