HB5103 95TH GENERAL ASSEMBLY

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95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008
HB5103

Introduced , by Rep. Jack D. Franks

SYNOPSIS AS INTRODUCED:

35 ILCS 5/218 new

Amends the Illinois Income Tax Act. Creates an income tax credit for individual taxpayers who purchase qualified merchandise during the period from 12:01 a.m. on the first Friday in August through midnight of the Sunday that follows 9 days later. Sets the amount of the credit at an amount equal to 6.25% of the purchase. Defines "qualified merchandise" as any article of clothing or footwear or computer that is sold at or below certain selling prices. Sets forth criteria for transactions to qualify for the credit. Provides that the credit may not be carried forward or back and may not reduce the taxpayer's liability to less than zero. Effective immediately.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning revenue.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Illinois Income Tax Act is amended by adding Section 218 as follows:

(35 ILCS 5/218 new)

Sec. 218. Back-to-school purchase credit.

(a) For taxable years ending on or after December 31, 2008 and on or before December 30, 2013, each individual taxpayer who purchases qualified merchandise during the back-to-school period is entitled to a credit against the tax imposed under subsections (a) and (b) of Section 201 in an amount equal to 6.25% of the purchase.

(b) For the purpose of this Section:

"Back-to-school period" means the period from 12:01 a.m. on the first Friday in August through midnight of the Sunday that follows 9 days later.

"Qualified merchandise" means:

(1) an article of clothing or footwear that is purchased for a selling price of $200 or less; and

(2) a computer that is purchased for a selling price of $1,500 or less.

"Clothing or footwear" means an article of apparel designed to be worn about the human body. The term does not include accessories such as jewelry, handbags, purses, briefcases, luggage, wallets, watches, and similar items that are carried on or about the human body, without regard to whether the item is worn on the body in a manner that is characteristic of clothing.

"Computer" means a central processing unit for personal use plus any peripheral sold with it and any computer software installed in it at the time of purchase. The term "computer" includes desktop computers, laptop computers, hand-held computers, and personal digital assistants. The term "computer" does not include any device designed primarily for video game applications. The term "peripheral" includes any monitor, keyboard, printer, scanner, web/PC camera, microphone, external drive, network card, internal drive, and additional storage.

(c) For purpose of this Section, a "purchase" occurs during the back-to-school period if the buyer places an order and pays the purchase price by cash or credit during the tax back-to-school period regardless of whether the delivery of the item occurs after the tax back-to-school period.

An item of qualified merchandise that is placed in a layaway or similar deferred plan during the back-to-school period is not eligible for the credit unless the item is delivered to the purchaser during the period. An item that was placed in a layaway or similar deferred plan before the back-to-school period and is then delivered to the purchaser during the back-to-school period is eligible for the credit.

(d) Any discount, coupon, or other credit offered either by the retailer or by a vendor of the retailer to reduce the final price to the customer must be taken into account in determining the selling price of the item for the purposes of this credit. If the price of an item is free or reduced with the purchase of another item, then the total price of the items may not be averaged in order for both items to qualify for the credit.

The amount of any rebate may not be considered when determining the selling price of the item for the purposes of this credit.

(e) Articles that are normally sold as a unit must continue to be sold in that manner; they may not be priced separately and sold as individual items in order to be subject to the credit. For example, if a pair of shoes sells for $220, the pair cannot be split in order to sell each shoe for $110 to qualify for the credit. If a uniform is normally priced at $250 on a single price tag, the uniform cannot be split into separate articles so that any of the components may be sold for less than $200 in order to qualify for the credit. Components that are normally priced as separate articles, however, may continue to be sold as separate articles.

(f) Qualified merchandise that customers purchase during the back-to-school period with the use of a rain check qualifies for the credit regardless of when the rain check was issued. The issuance of a rain check, however, during the back-to-school period does not qualify merchandise for the credit if the merchandise is actually purchased after the back-to-school period.

(g) If a customer purchases an item of qualified merchandise during the back-to-school period but later exchanges the item for a substantially similar item of a different size, different color, or other feature, then the item qualifies for the credit even if the exchange is made after the back-to-school period.

If a customer purchases an item of qualified merchandise during the back-to-school period, but after the back-to-school period has ended, the customer returns the item and receives credit on the purchase of a different item, then the newly purchased item does not qualify for the credit.

If a customer purchases an item of qualified merchandise before the back-to-school period, but during the back-to-school period, the customer returns the item and receives credit on the purchase of a different item of qualified merchandise, then the newly purchased qualifies for the credit.

(h) The credit under this Section may not be carried forward or back and may not reduce the taxpayer's liability to less than zero.

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