Full Text of SB2205 93rd General Assembly
SB2205ham001 93RD GENERAL ASSEMBLY
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Revenue Committee
Adopted in House Comm. on May 13, 2004
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| AMENDMENT TO SENATE BILL 2205
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| AMENDMENT NO. ______. Amend Senate Bill 2205 by replacing | 3 |
| everything after the enacting clause with the following:
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| "Section 5. The Use Tax Act is amended by changing Sections | 5 |
| 2, 3, and 3-25 as follows:
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| (35 ILCS 105/2) (from Ch. 120, par. 439.2)
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| Sec. 2. "Use" means the exercise by any person of any right | 8 |
| or power over
tangible personal property incident to the | 9 |
| ownership of that property,
except that it does not include the | 10 |
| sale of such property in any form as
tangible personal property | 11 |
| in the regular course of business to the extent
that such | 12 |
| property is not first subjected to a use for which it was
| 13 |
| purchased, and does not include the use of such property by its | 14 |
| owner for
demonstration purposes: Provided that the property | 15 |
| purchased is deemed to
be purchased for the purpose of resale, | 16 |
| despite first being used, to the
extent to which it is resold | 17 |
| as an ingredient of an intentionally produced
product or | 18 |
| by-product of manufacturing. "Use" does not mean the | 19 |
| demonstration
use or interim use of tangible personal property | 20 |
| by a retailer before he sells
that tangible personal property. | 21 |
| For watercraft or aircraft, if the period of
demonstration use | 22 |
| or interim use by the retailer exceeds 18 months,
the retailer
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| shall pay on the retailers' original cost price the tax imposed | 24 |
| by this Act,
and no credit for that tax is permitted if the |
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| watercraft or aircraft is
subsequently sold by the retailer. | 2 |
| "Use" does not mean the physical
incorporation of tangible | 3 |
| personal property, to the extent not first subjected
to a use | 4 |
| for which it was purchased, as an ingredient or constituent, | 5 |
| into
other tangible personal property (a) which is sold in the | 6 |
| regular course of
business or (b) which the person | 7 |
| incorporating such ingredient or constituent
therein has | 8 |
| undertaken at the time of such purchase to cause to be | 9 |
| transported
in interstate commerce to destinations outside the | 10 |
| State of Illinois: Provided
that the property purchased is | 11 |
| deemed to be purchased for the purpose of
resale, despite first | 12 |
| being used, to the extent to which it is resold as an
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| ingredient of an intentionally produced product or by-product | 14 |
| of manufacturing.
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| "Watercraft" means a Class 2, Class 3, or Class 4 | 16 |
| watercraft as defined in
Section 3-2 of the Boat Registration | 17 |
| and Safety Act, a personal watercraft, or
any boat equipped | 18 |
| with an inboard motor.
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| "Purchase at retail" means the acquisition of the ownership | 20 |
| of or title
to tangible personal property through a sale at | 21 |
| retail.
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| "Purchaser" means anyone who, through a sale at retail, | 23 |
| acquires the
ownership of tangible personal property for a | 24 |
| valuable consideration.
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| "Sale at retail" means any transfer of the ownership of or | 26 |
| title to
tangible personal property to a purchaser, for the | 27 |
| purpose of use, and not
for the purpose of resale in any form | 28 |
| as tangible personal property to the
extent not first subjected | 29 |
| to a use for which it was purchased, for a
valuable | 30 |
| consideration: Provided that the property purchased is deemed | 31 |
| to
be purchased for the purpose of resale, despite first being | 32 |
| used, to the
extent to which it is resold as an ingredient of | 33 |
| an intentionally produced
product or by-product of | 34 |
| manufacturing. For this purpose, slag produced as
an incident |
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| to manufacturing pig iron or steel and sold is considered to be
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| an intentionally produced by-product of manufacturing. "Sale | 3 |
| at retail"
includes any such transfer made for resale unless | 4 |
| made in compliance with
Section 2c of the Retailers' Occupation | 5 |
| Tax Act, as incorporated by
reference into Section 12 of this | 6 |
| Act. Transactions whereby the possession
of the property is | 7 |
| transferred but the seller retains the title as security
for | 8 |
| payment of the selling price are sales.
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| "Sale at retail" shall also be construed to include any | 10 |
| Illinois
florist's sales transaction in which the purchase | 11 |
| order is received in
Illinois by a florist and the sale is for | 12 |
| use or consumption, but the
Illinois florist has a florist in | 13 |
| another state deliver the property to the
purchaser or the | 14 |
| purchaser's donee in such other state.
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| Nonreusable tangible personal property that is used by | 16 |
| persons engaged in
the business of operating a restaurant, | 17 |
| cafeteria, or drive-in is a sale for
resale when it is | 18 |
| transferred to customers in the ordinary course of business
as | 19 |
| part of the sale of food or beverages and is used to deliver, | 20 |
| package, or
consume food or beverages, regardless of where | 21 |
| consumption of the food or
beverages occurs. Examples of those | 22 |
| items include, but are not limited to
nonreusable, paper and | 23 |
| plastic cups, plates, baskets, boxes, sleeves, buckets
or other | 24 |
| containers, utensils, straws, placemats, napkins, doggie bags, | 25 |
| and
wrapping or packaging
materials that are transferred to | 26 |
| customers as part of the sale of food or
beverages in the | 27 |
| ordinary course of business.
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| The purchase, employment and transfer of such tangible | 29 |
| personal property
as newsprint and ink for the primary purpose | 30 |
| of conveying news (with or
without other information) is not a | 31 |
| purchase, use or sale of tangible
personal property.
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| Beginning July 1, 2004, "sale at retail" shall be construed | 33 |
| to include the licensing of computer software.
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| "Selling price" means the consideration for a sale valued |
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| in money
whether received in money or otherwise, including | 2 |
| cash, credits, property
other than as hereinafter provided, and | 3 |
| services, but not including the
value of or credit given for | 4 |
| traded-in tangible personal property where the
item that is | 5 |
| traded-in is of like kind and character as that which is being
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| sold, and shall be determined without any deduction on account | 7 |
| of the cost
of the property sold, the cost of materials used, | 8 |
| labor or service cost or
any other expense whatsoever, but does | 9 |
| not include interest or finance
charges which appear as | 10 |
| separate items on the bill of sale or sales
contract nor | 11 |
| charges that are added to prices by sellers on account of the
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| seller's tax liability under the "Retailers' Occupation Tax | 13 |
| Act", or on
account of the seller's duty to collect, from the | 14 |
| purchaser, the tax that
is imposed by this Act, or on account | 15 |
| of the seller's tax liability under
Section 8-11-1 of the | 16 |
| Illinois Municipal Code, as heretofore and hereafter
amended, | 17 |
| or on account of the seller's tax liability under the "County
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| Retailers' Occupation Tax Act". Effective December 1, 1985, | 19 |
| "selling price"
shall include charges that are added to prices | 20 |
| by sellers on account of the
seller's tax liability under the | 21 |
| Cigarette Tax Act, on account of the seller's
duty to collect, | 22 |
| from the purchaser, the tax imposed under the Cigarette Use
Tax | 23 |
| Act, and on account of the seller's duty to collect, from the | 24 |
| purchaser,
any cigarette tax imposed by a home rule unit.
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| The phrase "like kind and character" shall be liberally | 26 |
| construed
(including but not limited to any form of motor | 27 |
| vehicle for any form of
motor vehicle, or any kind of farm or | 28 |
| agricultural implement for any other
kind of farm or | 29 |
| agricultural implement), while not including a kind of item
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| which, if sold at retail by that retailer, would be exempt from | 31 |
| retailers'
occupation tax and use tax as an isolated or | 32 |
| occasional sale.
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| "Department" means the Department of Revenue.
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| "Person" means any natural individual, firm, partnership, |
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| association,
joint stock company, joint adventure, public or | 2 |
| private corporation, limited
liability company, or a
receiver, | 3 |
| executor, trustee, guardian or other representative appointed
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| by order of any court.
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| "Retailer" means and includes every person engaged in the | 6 |
| business of
making sales at retail as defined in this Section.
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| A person who holds himself or herself out as being engaged | 8 |
| (or who habitually
engages) in selling tangible personal | 9 |
| property at retail is a retailer
hereunder with respect to such | 10 |
| sales (and not primarily in a service
occupation) | 11 |
| notwithstanding the fact that such person designs and produces
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| such tangible personal property on special order for the | 13 |
| purchaser and in
such a way as to render the property of value | 14 |
| only to such purchaser, if
such tangible personal property so | 15 |
| produced on special order serves
substantially the same | 16 |
| function as stock or standard items of tangible
personal | 17 |
| property that are sold at retail.
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| A person whose activities are organized and conducted | 19 |
| primarily as a
not-for-profit service enterprise, and who | 20 |
| engages in selling tangible
personal property at retail | 21 |
| (whether to the public or merely to members and
their guests) | 22 |
| is a retailer with respect to such transactions, excepting
only | 23 |
| a person organized and operated exclusively for charitable, | 24 |
| religious
or educational purposes either (1), to the extent of | 25 |
| sales by such person
to its members, students, patients or | 26 |
| inmates of tangible personal property
to be used primarily for | 27 |
| the purposes of such person, or (2), to the extent
of sales by | 28 |
| such person of tangible personal property which is not sold or
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| offered for sale by persons organized for profit. The selling | 30 |
| of school
books and school supplies by schools at retail to | 31 |
| students is not
"primarily for the purposes of" the school | 32 |
| which does such selling. This
paragraph does not apply to nor | 33 |
| subject to taxation occasional dinners,
social or similar | 34 |
| activities of a person organized and operated exclusively
for |
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| charitable, religious or educational purposes, whether or not | 2 |
| such
activities are open to the public.
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| A person who is the recipient of a grant or contract under | 4 |
| Title VII of
the Older Americans Act of 1965 (P.L. 92-258) and | 5 |
| serves meals to
participants in the federal Nutrition Program | 6 |
| for the Elderly in return for
contributions established in | 7 |
| amount by the individual participant pursuant
to a schedule of | 8 |
| suggested fees as provided for in the federal Act is not a
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| retailer under this Act with respect to such transactions.
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| Persons who engage in the business of transferring tangible | 11 |
| personal
property upon the redemption of trading stamps are | 12 |
| retailers hereunder when
engaged in such business.
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| The isolated or occasional sale of tangible personal | 14 |
| property at retail
by a person who does not hold himself out as | 15 |
| being engaged (or who does not
habitually engage) in selling | 16 |
| such tangible personal property at retail or
a sale through a | 17 |
| bulk vending machine does not make such person a retailer
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| hereunder. However, any person who is engaged in a business | 19 |
| which is not
subject to the tax imposed by the "Retailers' | 20 |
| Occupation Tax Act" because
of involving the sale of or a | 21 |
| contract to sell real estate or a
construction contract to | 22 |
| improve real estate, but who, in the course of
conducting such | 23 |
| business, transfers tangible personal property to users or
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| consumers in the finished form in which it was purchased, and | 25 |
| which does
not become real estate, under any provision of a | 26 |
| construction contract or
real estate sale or real estate sales | 27 |
| agreement entered into with some
other person arising out of or | 28 |
| because of such nontaxable business, is a
retailer to the | 29 |
| extent of the value of the tangible personal property so
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| transferred. If, in such transaction, a separate charge is made | 31 |
| for the
tangible personal property so transferred, the value of | 32 |
| such property, for
the purposes of this Act, is the amount so | 33 |
| separately charged, but not less
than the cost of such property | 34 |
| to the transferor; if no separate charge is
made, the value of |
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| such property, for the purposes of this Act, is the cost
to the | 2 |
| transferor of such tangible personal property.
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| "Retailer maintaining a place of business in this State", | 4 |
| or any like
term, means and includes any of the following | 5 |
| retailers:
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| 1. A retailer having or maintaining within this State, | 7 |
| directly or by
a subsidiary, an office, distribution house, | 8 |
| sales house, warehouse or other
place of business, or any | 9 |
| agent or other representative operating within this
State | 10 |
| under the authority of the retailer or its subsidiary, | 11 |
| irrespective of
whether such place of business or agent or | 12 |
| other representative is located here
permanently or | 13 |
| temporarily, or whether such retailer or subsidiary is | 14 |
| licensed
to do business in this State. However, the | 15 |
| ownership of property that is
located at the premises of a | 16 |
| printer with which the retailer has contracted for
printing | 17 |
| and that consists of the final printed product, property | 18 |
| that becomes
a part of the final printed product, or copy | 19 |
| from which the printed product is
produced shall not result | 20 |
| in the retailer being deemed to have or maintain an
office, | 21 |
| distribution house, sales house, warehouse, or other place | 22 |
| of business
within this State.
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| 2. A retailer soliciting orders for tangible personal | 24 |
| property by
means of a telecommunication or television | 25 |
| shopping system (which utilizes toll
free numbers) which is | 26 |
| intended by the retailer to be broadcast by cable
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| television or other means of broadcasting, to consumers | 28 |
| located in this State.
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| 3. A retailer, pursuant to a contract with a | 30 |
| broadcaster or publisher
located in this State, soliciting | 31 |
| orders for tangible personal property by
means of | 32 |
| advertising which is disseminated primarily to consumers | 33 |
| located in
this State and only secondarily to bordering | 34 |
| jurisdictions.
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| 4. A retailer soliciting orders for tangible personal | 2 |
| property by mail
if the solicitations are substantial and | 3 |
| recurring and if the retailer benefits
from any banking, | 4 |
| financing, debt collection, telecommunication, or | 5 |
| marketing
activities occurring in this State or benefits | 6 |
| from the location in this State
of authorized installation, | 7 |
| servicing, or repair facilities.
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| 5. A retailer that is owned or controlled by the same | 9 |
| interests that own
or control any retailer engaging in | 10 |
| business in the same or similar line of
business in this | 11 |
| State.
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| 6. A retailer having a franchisee or licensee operating | 13 |
| under its trade
name if the franchisee or licensee is | 14 |
| required to collect the tax under this
Section.
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| 7. A retailer, pursuant to a contract with a cable | 16 |
| television operator
located in this State, soliciting | 17 |
| orders for tangible personal property by
means of | 18 |
| advertising which is transmitted or distributed over a | 19 |
| cable
television system in this State.
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| 8. A retailer engaging in activities in Illinois, which | 21 |
| activities in
the state in which the retail business | 22 |
| engaging in such activities is located
would constitute | 23 |
| maintaining a place of business in that state.
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| "Bulk vending machine" means a vending machine,
containing | 25 |
| unsorted confections, nuts, toys, or other items designed
| 26 |
| primarily to be used or played with by children
which, when a | 27 |
| coin or coins of a denomination not larger than $0.50 are | 28 |
| inserted, are dispensed in equal portions, at random and
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| without selection by the customer.
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| (Source: P.A. 92-213, eff. 1-1-02.)
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| (35 ILCS 105/3) (from Ch. 120, par. 439.3)
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| Sec. 3. Tax imposed. A tax is imposed upon the privilege of | 33 |
| using in
this State tangible personal property purchased at |
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| retail from a
retailer, including computer software, and
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| including photographs, negatives, and positives that are the | 3 |
| product of
photoprocessing, but not including products of | 4 |
| photoprocessing produced for
use in motion pictures for | 5 |
| commercial exhibition.
Beginning January 1, 2001, prepaid | 6 |
| telephone calling arrangements shall be
considered tangible | 7 |
| personal property subject to the tax imposed under this Act
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| regardless of the form in which those arrangements may be | 9 |
| embodied,
transmitted, or fixed by any method now known or | 10 |
| hereafter developed. Beginning July 1, 2004, computer software | 11 |
| subject to tax under this Act includes licenses of computer | 12 |
| software.
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| (Source: P.A. 91-51, eff. 6-30-99; 91-870, eff. 6-22-00.)
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| (35 ILCS 105/3-25) (from Ch. 120, par. 439.3-25)
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| Sec. 3-25. Computer software ; prewritten computer | 16 |
| software .
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| (a) For the purposes of this Act, "computer
software" means | 18 |
| a set of statements, data,
or instructions to be used directly | 19 |
| or indirectly in a computer in order to
bring about a certain | 20 |
| result in any form in which those statements, data, or
| 21 |
| instructions may be embodied, transmitted, or fixed, by any | 22 |
| method now known
or hereafter developed, regardless of whether | 23 |
| the statements, data, or
instructions are capable of being | 24 |
| perceived by or communicated to humans,
and includes prewritten | 25 |
| or canned software that is held for repeated sale
or lease, and | 26 |
| all associated documentation and materials, if any, whether
| 27 |
| contained on magnetic tapes, discs, cards, or other devices or | 28 |
| media, but
does not include (i) until July 1, 2004, software | 29 |
| that is adapted to specific individualized
requirements of a | 30 |
| purchaser, custom-made and modified software designed for
a | 31 |
| particular or limited use by a purchaser, or (ii) software used | 32 |
| to operate
exempt machinery and equipment used in the process | 33 |
| of manufacturing or
assembling tangible personal property for |
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| wholesale or retail sale or
lease.
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| (b) Beginning on July 1, 2004, "prewritten computer | 3 |
| software" means computer software, including upgrades, that is | 4 |
| not designed and developed by the author or other creator to | 5 |
| the specifications of a specific purchaser. The combining of 2 | 6 |
| or more "prewritten computer software" programs or prewritten | 7 |
| portions thereof does not cause the combination to be other | 8 |
| than "prewritten computer software". "Prewritten computer | 9 |
| software" includes software designed and developed by the | 10 |
| author or other creator to the specifications of a specific | 11 |
| purchaser when it is sold to a person other than the specific | 12 |
| purchaser. When a person modifies or enhances computer software | 13 |
| of which the person is not the author or creator, the person | 14 |
| shall be deemed to be the author or creator only of that | 15 |
| person's modifications or enhancements. "Prewritten computer | 16 |
| software" or a prewritten portion thereof that is modified or | 17 |
| enhanced to any degree, when the modification or enhancement | 18 |
| according to Department rules is designed and developed to the | 19 |
| specifications of a specific purchaser, remains "prewritten | 20 |
| computer software", except that when there is a reasonable | 21 |
| separately stated charge or an invoice or other statement of | 22 |
| the price given to the purchaser for the modification or | 23 |
| enhancement, the modification or enhancement does not | 24 |
| constitute "prewritten computer software".
| 25 |
| For the purposes of this Act, computer software shall be | 26 |
| considered to be
tangible personal property.
| 27 |
| (Source: P.A. 91-51, eff. 6-30-99.)
| 28 |
| Section 10. The Service Use Tax Act is amended by changing | 29 |
| Sections 2 and 3-25 as follows:
| 30 |
| (35 ILCS 110/2) (from Ch. 120, par. 439.32)
| 31 |
| Sec. 2. "Use" means the exercise by any person of any right | 32 |
| or power
over tangible personal property incident to the |
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| ownership of that
property, but does not include the sale or | 2 |
| use for demonstration by him
of that property in any form as | 3 |
| tangible personal property in the
regular course of business.
| 4 |
| "Use" does not mean the interim
use of
tangible personal | 5 |
| property nor the physical incorporation of tangible
personal | 6 |
| property, as an ingredient or constituent, into other tangible
| 7 |
| personal property, (a) which is sold in the regular course of | 8 |
| business
or (b) which the person incorporating such ingredient | 9 |
| or constituent
therein has undertaken at the time of such | 10 |
| purchase to cause to be
transported in interstate commerce to | 11 |
| destinations outside the State of
Illinois. Beginning July 1, | 12 |
| 2004, the use of licenses of computer software is considered a | 13 |
| use of tangible personal property under this Act.
| 14 |
| "Purchased from a serviceman" means the acquisition of the | 15 |
| ownership
of, or title to, tangible personal property through a | 16 |
| sale of service.
| 17 |
| "Purchaser" means any person who, through a sale of | 18 |
| service, acquires
the ownership of, or title to, any tangible | 19 |
| personal property.
| 20 |
| "Cost price" means the consideration paid by the serviceman | 21 |
| for a
purchase valued in money, whether paid in money or | 22 |
| otherwise, including
cash, credits and services, and shall be | 23 |
| determined without any
deduction on account of the supplier's | 24 |
| cost of the property sold or on
account of any other expense | 25 |
| incurred by the supplier. When a serviceman
contracts out part | 26 |
| or all of the services required in his sale of service,
it | 27 |
| shall be presumed that the cost price to the serviceman of the | 28 |
| property
transferred to him or her by his or her subcontractor | 29 |
| is equal to 50% of
the subcontractor's charges to the | 30 |
| serviceman in the absence of proof of
the consideration paid by | 31 |
| the subcontractor for the purchase of such property.
| 32 |
| "Selling price" means the consideration for a sale valued | 33 |
| in money
whether received in money or otherwise, including | 34 |
| cash, credits and
service, and shall be determined without any |
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| deduction on account of the
serviceman's cost of the property | 2 |
| sold, the cost of materials used,
labor or service cost or any | 3 |
| other expense whatsoever, but does not
include interest or | 4 |
| finance charges which appear as separate items on
the bill of | 5 |
| sale or sales contract nor charges that are added to prices
by | 6 |
| sellers on account of the seller's duty to collect, from the
| 7 |
| purchaser, the tax that is imposed by this Act.
| 8 |
| "Department" means the Department of Revenue.
| 9 |
| "Person" means any natural individual, firm, partnership,
| 10 |
| association, joint stock company, joint venture, public or | 11 |
| private
corporation, limited liability company, and any | 12 |
| receiver, executor, trustee,
guardian or other representative | 13 |
| appointed by order of any court.
| 14 |
| "Sale of service" means any transaction except:
| 15 |
| (1) a retail sale of tangible personal property taxable | 16 |
| under the
Retailers' Occupation Tax Act or under the Use | 17 |
| Tax Act.
| 18 |
| (2) a sale of tangible personal property for the | 19 |
| purpose of resale
made in compliance with Section 2c of the | 20 |
| Retailers' Occupation Tax Act.
| 21 |
| (3) except as hereinafter provided, a sale or transfer | 22 |
| of tangible
personal property as an incident to the | 23 |
| rendering of service for or by
any governmental body, or | 24 |
| for or by any corporation, society,
association, | 25 |
| foundation or institution organized and operated
| 26 |
| exclusively for charitable, religious or educational | 27 |
| purposes or any
not-for-profit corporation, society, | 28 |
| association, foundation,
institution or organization which | 29 |
| has no compensated officers or
employees and which is | 30 |
| organized and operated primarily for the
recreation of | 31 |
| persons 55 years of age or older. A limited liability | 32 |
| company
may qualify for the exemption under this paragraph | 33 |
| only if the limited
liability company is organized and | 34 |
| operated exclusively for educational
purposes.
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| (4) a sale or transfer of tangible personal
property as | 2 |
| an incident to the
rendering of service for interstate | 3 |
| carriers for hire for use as rolling stock
moving in | 4 |
| interstate commerce or by lessors under a lease of one year | 5 |
| or
longer, executed or in effect at the time of purchase of | 6 |
| personal property, to
interstate carriers for hire for use | 7 |
| as rolling stock moving in interstate
commerce so long as | 8 |
| so used by such interstate carriers for hire, and equipment
| 9 |
| operated by a telecommunications provider, licensed as a | 10 |
| common carrier by the
Federal Communications Commission, | 11 |
| which is permanently installed in or affixed
to aircraft | 12 |
| moving in interstate commerce.
| 13 |
| (4a) a sale or transfer of tangible personal
property | 14 |
| as an incident
to the rendering of service for owners, | 15 |
| lessors, or shippers of tangible
personal property which is | 16 |
| utilized by interstate carriers for hire for
use as rolling | 17 |
| stock moving in interstate commerce so long as so used by
| 18 |
| interstate carriers for hire, and equipment operated by a
| 19 |
| telecommunications provider, licensed as a common carrier | 20 |
| by the Federal
Communications Commission, which is | 21 |
| permanently installed in or affixed to
aircraft moving in | 22 |
| interstate commerce.
| 23 |
| (4a-5) on and after July 1, 2003, a sale or transfer of | 24 |
| a motor vehicle
of
the
second division with a gross vehicle | 25 |
| weight in excess of 8,000 pounds as an
incident to the | 26 |
| rendering of service if that motor
vehicle is subject
to | 27 |
| the commercial distribution fee imposed under Section | 28 |
| 3-815.1 of the
Illinois Vehicle
Code. This exemption | 29 |
| applies to repair and replacement parts added after the
| 30 |
| initial
purchase of such a motor vehicle if that motor | 31 |
| vehicle is used in a manner that
would
qualify for the | 32 |
| rolling stock exemption otherwise provided for in this Act.
| 33 |
| (5) a sale or transfer of machinery and equipment used | 34 |
| primarily in the
process of the manufacturing or |
|
|
|
09300SB2205ham001 |
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LRB093 15833 BDD 50832 a |
|
| 1 |
| assembling, either in an existing, an expanded
or a new | 2 |
| manufacturing facility, of tangible personal property for | 3 |
| wholesale or
retail sale or lease, whether such sale or | 4 |
| lease is made directly by the
manufacturer or by some other | 5 |
| person, whether the materials used in the process
are owned | 6 |
| by the manufacturer or some other person, or whether such | 7 |
| sale or
lease is made apart from or as an incident to the | 8 |
| seller's engaging in a
service occupation and the | 9 |
| applicable tax is a Service Use Tax or Service
Occupation | 10 |
| Tax, rather than Use Tax or Retailers' Occupation Tax.
| 11 |
| (5a) the repairing, reconditioning or remodeling, for | 12 |
| a
common carrier by rail, of tangible personal property | 13 |
| which belongs to such
carrier for hire, and as to which | 14 |
| such carrier receives the physical possession
of the | 15 |
| repaired, reconditioned or remodeled item of tangible | 16 |
| personal property
in Illinois, and which such carrier | 17 |
| transports, or shares with another common
carrier in the | 18 |
| transportation of such property, out of Illinois on a | 19 |
| standard
uniform bill of lading showing the person who | 20 |
| repaired, reconditioned or
remodeled the property to a | 21 |
| destination outside Illinois, for use outside
Illinois.
| 22 |
| (5b) a sale or transfer of tangible personal property | 23 |
| which is produced by
the seller thereof on special order in | 24 |
| such a way as to have made the
applicable tax the Service | 25 |
| Occupation Tax or the Service Use Tax, rather than
the | 26 |
| Retailers' Occupation Tax or the Use Tax, for an interstate | 27 |
| carrier by rail
which receives the physical possession of | 28 |
| such property in Illinois, and which
transports such | 29 |
| property, or shares with another common carrier in the
| 30 |
| transportation of such property, out of Illinois on a | 31 |
| standard uniform bill of
lading showing the seller of the | 32 |
| property as the shipper or consignor of such
property to a | 33 |
| destination outside Illinois, for use outside Illinois.
| 34 |
| (6) until July 1, 2003, a sale or transfer of |
|
|
|
09300SB2205ham001 |
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LRB093 15833 BDD 50832 a |
|
| 1 |
| distillation machinery
and equipment, sold
as a unit or kit | 2 |
| and assembled or installed by the retailer, which
machinery | 3 |
| and equipment is certified by the user to be used only for | 4 |
| the
production of ethyl alcohol that will be used for | 5 |
| consumption as motor fuel
or as a component of motor fuel | 6 |
| for the personal use of such user and not
subject to sale | 7 |
| or resale.
| 8 |
| (7) at the election of any serviceman not required to | 9 |
| be
otherwise registered as a retailer under Section 2a of | 10 |
| the Retailers'
Occupation Tax Act, made for each fiscal | 11 |
| year sales
of service in which the aggregate annual cost | 12 |
| price of tangible
personal property transferred as an | 13 |
| incident to the sales of service is
less than 35%, or 75% | 14 |
| in the case of servicemen transferring prescription
drugs | 15 |
| or servicemen engaged in graphic arts production, of the | 16 |
| aggregate
annual total gross receipts from all sales of | 17 |
| service. The purchase of
such tangible personal property by | 18 |
| the serviceman shall be subject to tax
under the Retailers' | 19 |
| Occupation Tax Act and the Use Tax Act.
However, if a
| 20 |
| primary serviceman who has made the election described in | 21 |
| this paragraph
subcontracts service work to a secondary | 22 |
| serviceman who has also made the
election described in this | 23 |
| paragraph, the primary serviceman does not
incur a Use Tax | 24 |
| liability if the secondary serviceman (i) has paid or will | 25 |
| pay
Use
Tax on his or her cost price of any tangible | 26 |
| personal property transferred
to the primary serviceman | 27 |
| and (ii) certifies that fact in writing to the
primary
| 28 |
| serviceman.
| 29 |
| Tangible personal property transferred incident to the | 30 |
| completion of a
maintenance agreement is exempt from the tax | 31 |
| imposed pursuant to this Act.
| 32 |
| Beginning July 1, 2004, prewritten computer software that | 33 |
| is modified or enhanced, when that enhancement or modification | 34 |
| according to Department rules is designed and developed to the |
|
|
|
09300SB2205ham001 |
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LRB093 15833 BDD 50832 a |
|
| 1 |
| specifications of a specific purchaser, is exempt from the tax | 2 |
| imposed under this Act and the transfer of that modified or | 3 |
| enhanced computer software is subject to tax under the | 4 |
| Retailers' Occupation Tax Act and the Use Tax Act.
| 5 |
| Exemption (5) also includes machinery and equipment used in | 6 |
| the general
maintenance or repair of such exempt machinery and | 7 |
| equipment or for in-house
manufacture of exempt machinery and | 8 |
| equipment. For the purposes of exemption
(5), each of these | 9 |
| terms shall have the following meanings: (1) "manufacturing
| 10 |
| process" shall mean the production of any article of tangible | 11 |
| personal
property, whether such article is a finished product | 12 |
| or an article for use in
the process of manufacturing or | 13 |
| assembling a different article of tangible
personal property, | 14 |
| by procedures commonly regarded as manufacturing,
processing, | 15 |
| fabricating, or refining which changes some existing
material | 16 |
| or materials into a material with a different form, use or
| 17 |
| name. In relation to a recognized integrated business composed | 18 |
| of a
series of operations which collectively constitute | 19 |
| manufacturing, or
individually constitute manufacturing | 20 |
| operations, the manufacturing
process shall be deemed to | 21 |
| commence with the first operation or stage of
production in the | 22 |
| series, and shall not be deemed to end until the
completion of | 23 |
| the final product in the last operation or stage of
production | 24 |
| in the series; and further, for purposes of exemption (5),
| 25 |
| photoprocessing is deemed to be a manufacturing process of | 26 |
| tangible
personal property for wholesale or retail sale; (2) | 27 |
| "assembling process" shall
mean the production of any article | 28 |
| of tangible personal property, whether such
article is a | 29 |
| finished product or an article for use in the process of
| 30 |
| manufacturing or assembling a different article of tangible | 31 |
| personal
property, by the combination of existing materials in | 32 |
| a manner commonly
regarded as assembling which results in a | 33 |
| material of a different form,
use or name; (3) "machinery" | 34 |
| shall mean major mechanical machines or
major components of |
|
|
|
09300SB2205ham001 |
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LRB093 15833 BDD 50832 a |
|
| 1 |
| such machines contributing to a manufacturing or
assembling | 2 |
| process; and (4) "equipment" shall include any independent
| 3 |
| device or tool separate from any machinery but essential to an
| 4 |
| integrated manufacturing or assembly process; including | 5 |
| computers
used primarily in a manufacturer's computer
assisted | 6 |
| design, computer assisted manufacturing (CAD/CAM) system;
or | 7 |
| any subunit or assembly comprising a component of any machinery | 8 |
| or
auxiliary, adjunct or attachment parts of machinery, such as | 9 |
| tools, dies,
jigs, fixtures, patterns and molds; or any parts | 10 |
| which require periodic
replacement in the course of normal | 11 |
| operation; but shall not include hand
tools.
Equipment includes | 12 |
| chemicals or chemicals acting as catalysts but only if the
| 13 |
| chemicals or chemicals acting as catalysts effect a direct and | 14 |
| immediate change
upon a
product being manufactured or assembled | 15 |
| for wholesale or retail sale or
lease.
The purchaser of such | 16 |
| machinery and equipment who has an active
resale registration | 17 |
| number shall furnish such number to the seller at the
time of | 18 |
| purchase. The user of such machinery and equipment and tools
| 19 |
| without an active resale registration number shall prepare a | 20 |
| certificate of
exemption for each transaction stating facts | 21 |
| establishing the exemption for
that transaction, which | 22 |
| certificate shall be available to the Department
for inspection | 23 |
| or audit. The Department shall prescribe the form of the
| 24 |
| certificate.
| 25 |
| Any informal rulings, opinions or letters issued by the | 26 |
| Department in
response to an inquiry or request for any opinion | 27 |
| from any person
regarding the coverage and applicability of | 28 |
| exemption (5) to specific
devices shall be published, | 29 |
| maintained as a public record, and made
available for public | 30 |
| inspection and copying. If the informal ruling,
opinion or | 31 |
| letter contains trade secrets or other confidential
| 32 |
| information, where possible the Department shall delete such | 33 |
| information
prior to publication. Whenever such informal | 34 |
| rulings, opinions, or
letters contain any policy of general |
|
|
|
09300SB2205ham001 |
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LRB093 15833 BDD 50832 a |
|
| 1 |
| applicability, the Department
shall formulate and adopt such | 2 |
| policy as a rule in accordance with the
provisions of the | 3 |
| Illinois Administrative Procedure Act.
| 4 |
| On and after July 1, 1987, no entity otherwise eligible | 5 |
| under exemption
(3) of this Section shall make tax free | 6 |
| purchases unless it has an active
exemption identification | 7 |
| number issued by the Department.
| 8 |
| The purchase, employment and transfer of such tangible | 9 |
| personal
property as newsprint and ink for the primary purpose | 10 |
| of conveying news
(with or without other information) is not a | 11 |
| purchase, use or sale of
service or of tangible personal | 12 |
| property within the meaning of this Act.
| 13 |
| "Serviceman" means any person who is engaged in the | 14 |
| occupation of
making sales of service.
| 15 |
| "Sale at retail" means "sale at retail" as defined in the | 16 |
| Retailers'
Occupation Tax Act.
| 17 |
| "Supplier" means any person who makes sales of tangible | 18 |
| personal
property to servicemen for the purpose of resale as an | 19 |
| incident to a
sale of service.
| 20 |
| "Serviceman maintaining a place of business in this State", | 21 |
| or any
like term, means and includes any serviceman:
| 22 |
| 1. having or maintaining within this State, directly or | 23 |
| by a
subsidiary, an office, distribution house, sales | 24 |
| house, warehouse or
other place of business, or any agent | 25 |
| or other representative operating
within this State under | 26 |
| the authority of the serviceman or its
subsidiary, | 27 |
| irrespective of whether such place of business or agent or
| 28 |
| other representative is located here permanently or | 29 |
| temporarily, or
whether such serviceman or subsidiary is | 30 |
| licensed to do business in this
State;
| 31 |
| 2. soliciting orders for tangible personal property by | 32 |
| means of a
telecommunication or television shopping system | 33 |
| (which utilizes toll free
numbers) which is intended by the | 34 |
| retailer to be broadcast by cable
television or other means |
|
|
|
09300SB2205ham001 |
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LRB093 15833 BDD 50832 a |
|
| 1 |
| of broadcasting, to consumers located in this State;
| 2 |
| 3. pursuant to a contract with a broadcaster or | 3 |
| publisher located in this
State, soliciting orders for | 4 |
| tangible personal property by means of advertising
which is | 5 |
| disseminated primarily to consumers located in this State | 6 |
| and only
secondarily to bordering jurisdictions;
| 7 |
| 4. soliciting orders for tangible personal property by | 8 |
| mail if the
solicitations are substantial and recurring and | 9 |
| if the retailer benefits
from any banking, financing, debt | 10 |
| collection, telecommunication, or
marketing activities | 11 |
| occurring in this State or benefits from the location
in | 12 |
| this State of authorized installation, servicing, or | 13 |
| repair facilities;
| 14 |
| 5. being owned or controlled by the same interests | 15 |
| which own or
control any retailer engaging in business in | 16 |
| the same or similar line of
business in this State;
| 17 |
| 6. having a franchisee or licensee operating under its | 18 |
| trade name if
the franchisee or licensee is required to | 19 |
| collect the tax under this Section;
| 20 |
| 7. pursuant to a contract with a cable television | 21 |
| operator located in
this State, soliciting orders for | 22 |
| tangible personal property by means of
advertising which is | 23 |
| transmitted or distributed over a cable television
system | 24 |
| in this State; or
| 25 |
| 8. engaging in activities in Illinois, which | 26 |
| activities in the
state in which the supply business | 27 |
| engaging in such activities is located
would constitute | 28 |
| maintaining a place of business in that state.
| 29 |
| (Source: P.A. 92-484, eff. 8-23-01; 93-23, eff. 6-20-03; 93-24, | 30 |
| eff.
6-20-03; revised 8-21-03.)
| 31 |
| (35 ILCS 110/3-25) (from Ch. 120, par. 439.33-25)
| 32 |
| Sec. 3-25. Computer software.
| 33 |
| (a) On and before June 30, 2004, for
For the purposes of |
|
|
|
09300SB2205ham001 |
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LRB093 15833 BDD 50832 a |
|
| 1 |
| this Act, "computer
software" means a set of statements, data,
| 2 |
| or instructions to be used directly or indirectly in a computer | 3 |
| in order to
bring about a certain result in any form in which | 4 |
| those statements, data, or
instructions may be embodied, | 5 |
| transmitted, or fixed, by any method now known
or hereafter | 6 |
| developed, regardless of whether the statements, data, or
| 7 |
| instructions are capable of being perceived by or communicated | 8 |
| to humans,
and includes prewritten or canned software that is | 9 |
| held for repeated sale
or lease, and all associated | 10 |
| documentation and materials, if any, whether
contained on | 11 |
| magnetic tapes, discs, cards, or other devices or media, but
| 12 |
| does not include software that is adapted to specific | 13 |
| individualized
requirements of a purchaser, custom-made and | 14 |
| modified software designed for
a particular or limited use by a | 15 |
| purchaser, or software used to operate
exempt machinery and | 16 |
| equipment used in the process of manufacturing or
assembling | 17 |
| tangible personal property for wholesale or retail sale or
| 18 |
| lease.
| 19 |
| (b) On and after July 1, 2004, for the purposes of this | 20 |
| Act, "computer software" has the same meaning as that term is | 21 |
| defined in Section 3-25 of the Use Tax Act.
| 22 |
| (c) For the purposes of this Act, computer software shall | 23 |
| be considered to be
tangible personal property.
| 24 |
| (Source: P.A. 91-51, eff. 6-30-99.)
| 25 |
| Section 15. The Service Occupation Tax Act is amended by | 26 |
| changing Sections 2 and 3-25 as follows:
| 27 |
| (35 ILCS 115/2) (from Ch. 120, par. 439.102)
| 28 |
| Sec. 2. "Transfer" means any transfer of the title to | 29 |
| property or of
the ownership of property whether or not the | 30 |
| transferor retains title as
security for the payment of amounts | 31 |
| due him from the transferee. Beginning July 1, 2004, the | 32 |
| transfer of licenses of computer software is considered the |
|
|
|
09300SB2205ham001 |
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LRB093 15833 BDD 50832 a |
|
| 1 |
| transfer of tangible personal property under this Act.
| 2 |
| "Cost Price" means the consideration paid by the serviceman | 3 |
| for a
purchase valued in money, whether paid in money or | 4 |
| otherwise, including
cash, credits and services, and shall be | 5 |
| determined without any deduction
on account of the supplier's | 6 |
| cost of the property sold or on account of any
other expense | 7 |
| incurred by the supplier. When a serviceman contracts out
part | 8 |
| or all of the services required in his sale of service, it | 9 |
| shall be
presumed that the cost price to the serviceman of the | 10 |
| property
transferred to him by his or her subcontractor is | 11 |
| equal to 50% of the
subcontractor's charges to the serviceman | 12 |
| in the absence of proof of the
consideration paid by the | 13 |
| subcontractor for the purchase of such
property.
| 14 |
| "Department" means the Department of Revenue.
| 15 |
| "Person" means any natural individual, firm, partnership, | 16 |
| association, joint
stock company, joint venture, public or | 17 |
| private corporation, limited liability
company, and any | 18 |
| receiver, executor, trustee, guardian or other representative
| 19 |
| appointed by order of any court.
| 20 |
| "Sale of Service" means any transaction except:
| 21 |
| (a) A retail sale of tangible personal property taxable | 22 |
| under the Retailers'
Occupation Tax Act or under the Use Tax | 23 |
| Act.
| 24 |
| (b) A sale of tangible personal property for the purpose of | 25 |
| resale made in
compliance with Section 2c of the Retailers' | 26 |
| Occupation Tax Act.
| 27 |
| (c) Except as hereinafter provided, a sale or transfer of | 28 |
| tangible personal
property as an incident to the rendering of | 29 |
| service for or by any governmental
body or for or by any | 30 |
| corporation, society, association, foundation or
institution | 31 |
| organized and operated exclusively for charitable, religious | 32 |
| or
educational purposes or any not-for-profit corporation, | 33 |
| society, association,
foundation, institution or organization | 34 |
| which has no compensated officers or
employees and which is |
|
|
|
09300SB2205ham001 |
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LRB093 15833 BDD 50832 a |
|
| 1 |
| organized and operated primarily for the recreation of
persons | 2 |
| 55 years of age or older. A limited liability company may | 3 |
| qualify for
the exemption under this paragraph only if the | 4 |
| limited liability company is
organized and operated | 5 |
| exclusively for educational purposes.
| 6 |
| (d) A sale or transfer of tangible personal
property
as an | 7 |
| incident to the
rendering of service for interstate carriers | 8 |
| for hire for use as rolling stock
moving in interstate commerce | 9 |
| or lessors under leases of one year or longer,
executed or in | 10 |
| effect at the time of purchase, to interstate carriers for hire
| 11 |
| for use as rolling stock moving in interstate commerce, and | 12 |
| equipment operated
by a telecommunications provider, licensed | 13 |
| as a common
carrier by the Federal Communications Commission, | 14 |
| which is permanently
installed in or affixed to aircraft moving | 15 |
| in interstate commerce.
| 16 |
| (d-1) A sale or transfer of tangible personal
property as | 17 |
| an incident to
the rendering of service for owners, lessors or | 18 |
| shippers of tangible personal
property which is utilized by | 19 |
| interstate carriers for hire for use as rolling
stock moving in | 20 |
| interstate commerce, and equipment operated
by a | 21 |
| telecommunications provider, licensed as a common carrier by | 22 |
| the
Federal Communications Commission, which is permanently | 23 |
| installed in or
affixed to aircraft moving in interstate | 24 |
| commerce.
| 25 |
| (d-1.1) On and after July 1, 2003, a sale or transfer of a | 26 |
| motor vehicle
of the
second division with a gross vehicle | 27 |
| weight in excess of 8,000 pounds as an
incident to the | 28 |
| rendering of service if that motor
vehicle is subject
to the | 29 |
| commercial distribution fee imposed under Section 3-815.1 of | 30 |
| the
Illinois Vehicle
Code. This exemption applies to repair and | 31 |
| replacement parts added after the
initial
purchase of such a | 32 |
| motor vehicle if that motor vehicle is used in a manner that
| 33 |
| would
qualify for the rolling stock exemption otherwise | 34 |
| provided for in this Act.
|
|
|
|
09300SB2205ham001 |
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LRB093 15833 BDD 50832 a |
|
| 1 |
| (d-2) The repairing, reconditioning or remodeling, for a | 2 |
| common carrier by
rail, of tangible personal property which | 3 |
| belongs to such carrier for hire, and
as to which such carrier | 4 |
| receives the physical possession of the repaired,
| 5 |
| reconditioned or remodeled item of tangible personal property | 6 |
| in Illinois, and
which such carrier transports, or shares with | 7 |
| another common carrier in the
transportation of such property, | 8 |
| out of Illinois on a standard uniform bill of
lading showing | 9 |
| the person who repaired, reconditioned or remodeled the | 10 |
| property
as the shipper or consignor of such property to a | 11 |
| destination outside Illinois,
for use outside Illinois.
| 12 |
| (d-3) A sale or transfer of tangible personal property | 13 |
| which
is produced by the seller thereof on special order in | 14 |
| such a way as to have
made the applicable tax the Service | 15 |
| Occupation Tax or the Service Use Tax,
rather than the | 16 |
| Retailers' Occupation Tax or the Use Tax, for an interstate
| 17 |
| carrier by rail which receives the physical possession of such | 18 |
| property in
Illinois, and which transports such property, or | 19 |
| shares with another common
carrier in the transportation of | 20 |
| such property, out of Illinois on a standard
uniform bill of | 21 |
| lading showing the seller of the property as the shipper or
| 22 |
| consignor of such property to a destination outside Illinois, | 23 |
| for use outside
Illinois.
| 24 |
| (d-4) Until January 1, 1997, a sale, by a registered | 25 |
| serviceman paying tax
under this Act to the Department, of | 26 |
| special order printed materials delivered
outside Illinois and | 27 |
| which are not returned to this State, if delivery is made
by | 28 |
| the seller or agent of the seller, including an agent who | 29 |
| causes the product
to be delivered outside Illinois by a common | 30 |
| carrier or the U.S.
postal service.
| 31 |
| (e) A sale or transfer of machinery and equipment used | 32 |
| primarily in
the process of the manufacturing or assembling, | 33 |
| either in an existing, an
expanded or a new manufacturing | 34 |
| facility, of tangible personal property for
wholesale or retail |
|
|
|
09300SB2205ham001 |
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LRB093 15833 BDD 50832 a |
|
| 1 |
| sale or lease, whether such sale or lease is made directly
by | 2 |
| the manufacturer or by some other person, whether the materials | 3 |
| used in the
process are owned by the manufacturer or some other | 4 |
| person, or whether such
sale or lease is made apart from or as | 5 |
| an incident to the seller's engaging in
a service occupation | 6 |
| and the applicable tax is a Service Occupation Tax or
Service | 7 |
| Use Tax, rather than Retailers' Occupation Tax or Use Tax.
| 8 |
| (f) Until July 1, 2003, the sale or transfer of | 9 |
| distillation
machinery
and equipment, sold as a
unit or kit and | 10 |
| assembled or installed by the retailer, which machinery
and | 11 |
| equipment is certified by the user to be used only for the | 12 |
| production
of ethyl alcohol that will be used for consumption | 13 |
| as motor fuel or as a
component of motor fuel for the personal | 14 |
| use of such user and not subject
to sale or resale.
| 15 |
| (g) At the election of any serviceman not required to be | 16 |
| otherwise
registered as a retailer under Section 2a of the | 17 |
| Retailers' Occupation Tax Act,
made for each fiscal year sales | 18 |
| of service in which the aggregate annual cost
price of tangible | 19 |
| personal property transferred as an incident to the sales of
| 20 |
| service is less than 35% (75% in the case of servicemen | 21 |
| transferring
prescription drugs or servicemen engaged in | 22 |
| graphic arts production) of the
aggregate annual total gross | 23 |
| receipts from all sales of service. The purchase
of such | 24 |
| tangible personal property by the serviceman shall be subject | 25 |
| to tax
under the Retailers' Occupation Tax Act and the Use Tax | 26 |
| Act.
However, if a
primary serviceman who has made the election | 27 |
| described in this paragraph
subcontracts service work to a | 28 |
| secondary serviceman who has also made the
election described | 29 |
| in this paragraph, the primary serviceman does not
incur a Use | 30 |
| Tax liability if the secondary serviceman (i) has paid or will | 31 |
| pay
Use
Tax on his or her cost price of any tangible personal | 32 |
| property transferred
to the primary serviceman and (ii) | 33 |
| certifies that fact in writing to the
primary serviceman.
| 34 |
| Tangible personal property transferred incident to the |
|
|
|
09300SB2205ham001 |
- 25 - |
LRB093 15833 BDD 50832 a |
|
| 1 |
| completion of a
maintenance agreement is exempt from the tax | 2 |
| imposed pursuant to this Act.
| 3 |
| Beginning July 1, 2004, prewritten computer software that | 4 |
| is modified or enhanced, when the enhancement or modification | 5 |
| according to Department rules is designed and developed to the | 6 |
| specifications of a specific purchaser, is exempt from the tax | 7 |
| imposed under this Act and the transfer of that modified or | 8 |
| enhanced computer software is subject to tax under the | 9 |
| Retailers' Occupation Tax Act and the Use Tax Act.
| 10 |
| Exemption (e) also includes machinery and equipment used in | 11 |
| the
general maintenance or repair of such exempt machinery and | 12 |
| equipment or for
in-house manufacture of exempt machinery and | 13 |
| equipment.
For the purposes of exemption (e), each of these | 14 |
| terms shall have the following
meanings: (1) "manufacturing | 15 |
| process" shall mean the production of any
article of tangible | 16 |
| personal property, whether such article is a
finished product | 17 |
| or an article for use in the process of manufacturing
or | 18 |
| assembling a different article of tangible personal property, | 19 |
| by
procedures commonly regarded as manufacturing, processing, | 20 |
| fabricating,
or refining which changes some existing material | 21 |
| or materials into a
material with a different form, use or | 22 |
| name. In relation to a
recognized integrated business composed | 23 |
| of a series of operations which
collectively constitute | 24 |
| manufacturing, or individually constitute
manufacturing | 25 |
| operations, the manufacturing process shall be deemed to
| 26 |
| commence with the first operation or stage of production in the | 27 |
| series,
and shall not be deemed to end until the completion of | 28 |
| the final product
in the last operation or stage of production | 29 |
| in the series; and further for
purposes of exemption (e), | 30 |
| photoprocessing is deemed to be a manufacturing
process of | 31 |
| tangible personal property for wholesale or retail sale;
(2) | 32 |
| "assembling process" shall mean the production of any article | 33 |
| of
tangible personal property, whether such article is a | 34 |
| finished product
or an article for use in the process of |
|
|
|
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| manufacturing or assembling a
different article of tangible | 2 |
| personal property, by the combination of
existing materials in | 3 |
| a manner commonly regarded as assembling which
results in a | 4 |
| material of a different form, use or name; (3) "machinery"
| 5 |
| shall mean major mechanical machines or major components of | 6 |
| such machines
contributing to a manufacturing or assembling | 7 |
| process; and (4) "equipment"
shall include any independent | 8 |
| device or tool separate from any machinery but
essential to an | 9 |
| integrated manufacturing or assembly process; including
| 10 |
| computers used primarily in a manufacturer's computer
assisted | 11 |
| design, computer assisted manufacturing (CAD/CAM) system; or | 12 |
| any
subunit or assembly comprising a component of any machinery | 13 |
| or auxiliary,
adjunct or attachment parts of machinery, such as | 14 |
| tools, dies, jigs, fixtures,
patterns and molds; or any parts | 15 |
| which require periodic replacement in the
course of normal | 16 |
| operation; but shall not include hand tools. Equipment
includes | 17 |
| chemicals or chemicals acting as catalysts but only if the | 18 |
| chemicals
or chemicals acting as catalysts effect a direct and | 19 |
| immediate change upon a
product being manufactured or assembled | 20 |
| for wholesale or retail sale or lease.
The purchaser of such | 21 |
| machinery and equipment
who has an active resale registration | 22 |
| number shall furnish such number to
the seller at the time of | 23 |
| purchase. The purchaser of such machinery and
equipment and | 24 |
| tools without an active resale registration number shall | 25 |
| furnish
to the seller a certificate of exemption for each | 26 |
| transaction stating facts
establishing the exemption for that | 27 |
| transaction, which certificate shall
be available to the | 28 |
| Department for inspection or audit.
| 29 |
| Except as provided in Section 2d of this Act, the rolling | 30 |
| stock exemption
applies to rolling
stock
used by an interstate
| 31 |
| carrier for hire, even just between points in Illinois, if such | 32 |
| rolling
stock transports, for hire, persons whose journeys or | 33 |
| property whose
shipments originate or terminate outside | 34 |
| Illinois.
|
|
|
|
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| 1 |
| Any informal rulings, opinions or letters issued by the | 2 |
| Department in
response to an inquiry or request for any opinion | 3 |
| from any person
regarding the coverage and applicability of | 4 |
| exemption (e) to specific
devices shall be published, | 5 |
| maintained as a public record, and made
available for public | 6 |
| inspection and copying. If the informal ruling,
opinion or | 7 |
| letter contains trade secrets or other confidential
| 8 |
| information, where possible the Department shall delete such | 9 |
| information
prior to publication. Whenever such informal | 10 |
| rulings, opinions, or
letters contain any policy of general | 11 |
| applicability, the Department
shall formulate and adopt such | 12 |
| policy as a rule in accordance with the
provisions of the | 13 |
| Illinois Administrative Procedure Act.
| 14 |
| On and after July 1, 1987, no entity otherwise eligible | 15 |
| under exemption
(c) of this Section shall make tax free | 16 |
| purchases unless it has an active
exemption identification | 17 |
| number issued by the Department.
| 18 |
| "Serviceman" means any person who is engaged in the | 19 |
| occupation of
making sales of service.
| 20 |
| "Sale at Retail" means "sale at retail" as defined in the | 21 |
| Retailers'
Occupation Tax Act.
| 22 |
| "Supplier" means any person who makes sales of tangible | 23 |
| personal
property to servicemen for the purpose of resale as an | 24 |
| incident to a
sale of service.
| 25 |
| (Source: P.A. 92-484, eff. 8-23-01;
93-23, eff. 6-20-03; 93-24, | 26 |
| eff. 6-20-03; revised 8-21-03.)
| 27 |
| (35 ILCS 115/3-25) (from Ch. 120, par. 439.103-25)
| 28 |
| Sec. 3-25. Computer software. | 29 |
| (a) On and before June 30, 2004, for
For the purposes of this | 30 |
| Act, "computer
software" means a set of statements, data,
or | 31 |
| instructions to be used directly or indirectly in a computer in | 32 |
| order to
bring about a certain result in any form in which | 33 |
| those statements, data, or
instructions may be embodied, |
|
|
|
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| transmitted, or fixed, by any method now known
or hereafter | 2 |
| developed, regardless of whether the statements, data, or
| 3 |
| instructions are capable of being perceived by or communicated | 4 |
| to humans,
and includes prewritten or canned software that is | 5 |
| held for repeated sale
or lease, and all associated | 6 |
| documentation and materials, if any, whether
contained on | 7 |
| magnetic tapes, discs, cards, or other devices or media, but
| 8 |
| does not include software that is adapted to specific | 9 |
| individualized
requirements of a purchaser, custom-made and | 10 |
| modified software designed for
a particular or limited use by a | 11 |
| purchaser, or software used to operate
exempt machinery and | 12 |
| equipment used in the process of manufacturing or
assembling | 13 |
| tangible personal property for wholesale or retail sale or
| 14 |
| lease.
| 15 |
| (b) On and after July 1, 2004, for the purposes of this | 16 |
| Act, "computer software" has the same meaning as that term is | 17 |
| defined in Section 2-25 of the Retailers' Occupation Tax Act.
| 18 |
| (c) For the purposes of this Act, computer software shall | 19 |
| be considered to be
tangible personal property.
| 20 |
| (Source: P.A. 91-51, eff. 6-30-99.)
| 21 |
| Section 20. The Retailers' Occupation Tax Act is amended by | 22 |
| changing Sections 1, 2, and 2-25 as follows:
| 23 |
| (35 ILCS 120/1) (from Ch. 120, par. 440)
| 24 |
| Sec. 1. Definitions. "Sale at retail" means any transfer of | 25 |
| the
ownership of or title to
tangible personal property to a | 26 |
| purchaser, for the purpose of use or
consumption, and not for | 27 |
| the purpose of resale in any form as tangible
personal property | 28 |
| to the extent not first subjected to a use for which it
was | 29 |
| purchased, for a valuable consideration: Provided that the | 30 |
| property
purchased is deemed to be purchased for the purpose of | 31 |
| resale, despite
first being used, to the extent to which it is | 32 |
| resold as an ingredient of
an intentionally produced product or |
|
|
|
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| byproduct of manufacturing. For this
purpose, slag produced as | 2 |
| an incident to manufacturing pig iron or steel
and sold is | 3 |
| considered to be an intentionally produced byproduct of
| 4 |
| manufacturing. Transactions whereby the possession of the | 5 |
| property is
transferred but the seller retains the title as | 6 |
| security for payment of the
selling price shall be deemed to be | 7 |
| sales.
| 8 |
| Beginning July 1, 2004, "sale at retail" includes the | 9 |
| licensing of computer software.
| 10 |
| "Sale at retail" shall be construed to include any transfer | 11 |
| of the
ownership of or title to tangible personal property to a | 12 |
| purchaser, for use
or consumption by any other person to whom | 13 |
| such purchaser may transfer the
tangible personal property | 14 |
| without a valuable consideration, and to include
any transfer, | 15 |
| whether made for or without a valuable consideration, for
| 16 |
| resale in any form as tangible personal property unless made in | 17 |
| compliance
with Section 2c of this Act.
| 18 |
| Sales of tangible personal property, which property, to the | 19 |
| extent not
first subjected to a use for which it was purchased, | 20 |
| as an ingredient or
constituent, goes into and forms a part of | 21 |
| tangible personal property
subsequently the subject of a "Sale | 22 |
| at retail", are not sales at retail as
defined in this Act: | 23 |
| Provided that the property purchased is deemed to be
purchased | 24 |
| for the purpose of resale, despite first being used, to the
| 25 |
| extent to which it is resold as an ingredient of an | 26 |
| intentionally produced
product or byproduct of manufacturing.
| 27 |
| "Sale at retail" shall be construed to include any Illinois | 28 |
| florist's
sales transaction in which the purchase order is | 29 |
| received in Illinois by a
florist and the sale is for use or | 30 |
| consumption, but the Illinois florist
has a florist in another | 31 |
| state deliver the property to the purchaser or the
purchaser's | 32 |
| donee in such other state.
| 33 |
| Nonreusable tangible personal property that is used by | 34 |
| persons engaged in
the business of operating a restaurant, |
|
|
|
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| cafeteria, or drive-in is a sale for
resale when it is | 2 |
| transferred to customers in the ordinary course of business
as | 3 |
| part of the sale of food or beverages and is used to deliver, | 4 |
| package, or
consume food or beverages, regardless of where | 5 |
| consumption of the food or
beverages occurs. Examples of those | 6 |
| items include, but are not limited to
nonreusable, paper and | 7 |
| plastic cups, plates, baskets, boxes, sleeves, buckets
or other | 8 |
| containers, utensils, straws, placemats, napkins, doggie bags, | 9 |
| and
wrapping or packaging
materials that are transferred to | 10 |
| customers as part of the sale of food or
beverages in the | 11 |
| ordinary course of business.
| 12 |
| The purchase, employment and transfer of such tangible | 13 |
| personal property
as newsprint and ink for the primary purpose | 14 |
| of conveying news (with or
without other information) is not a | 15 |
| purchase, use or sale of tangible
personal property.
| 16 |
| A person whose activities are organized and conducted | 17 |
| primarily as a
not-for-profit service enterprise, and who | 18 |
| engages in selling tangible
personal property at retail | 19 |
| (whether to the public or merely to members and
their guests) | 20 |
| is engaged in the business of selling tangible personal
| 21 |
| property at retail with respect to such transactions, excepting | 22 |
| only a
person organized and operated exclusively for | 23 |
| charitable, religious or
educational purposes either (1), to | 24 |
| the extent of sales by such person to
its members, students, | 25 |
| patients or inmates of tangible personal property to
be used | 26 |
| primarily for the purposes of such person, or (2), to the | 27 |
| extent of
sales by such person of tangible personal property | 28 |
| which is not sold or
offered for sale by persons organized for | 29 |
| profit. The selling of school
books and school supplies by | 30 |
| schools at retail to students is not
"primarily for the | 31 |
| purposes of" the school which does such selling. The
provisions | 32 |
| of this paragraph shall not apply to nor subject to taxation
| 33 |
| occasional dinners, socials or similar activities of a person | 34 |
| organized and
operated exclusively for charitable, religious |
|
|
|
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| or educational purposes,
whether or not such activities are | 2 |
| open to the public.
| 3 |
| A person who is the recipient of a grant or contract under | 4 |
| Title VII of
the Older Americans Act of 1965 (P.L. 92-258) and | 5 |
| serves meals to
participants in the federal Nutrition Program | 6 |
| for the Elderly in return for
contributions established in | 7 |
| amount by the individual participant pursuant
to a schedule of | 8 |
| suggested fees as provided for in the federal Act is not
| 9 |
| engaged in the business of selling tangible personal property | 10 |
| at retail
with respect to such transactions.
| 11 |
| "Purchaser" means anyone who, through a sale at retail, | 12 |
| acquires the
ownership of or title to tangible personal | 13 |
| property for a valuable
consideration.
| 14 |
| "Reseller of motor fuel" means any person engaged in the | 15 |
| business of selling
or delivering or transferring title of | 16 |
| motor fuel to another person
other than for use or consumption.
| 17 |
| No person shall act as a reseller of motor fuel within this | 18 |
| State without
first being registered as a reseller pursuant to | 19 |
| Section 2c or a retailer
pursuant to Section 2a.
| 20 |
| "Selling price" or the "amount of sale" means the | 21 |
| consideration for a
sale valued in money whether received in | 22 |
| money or otherwise, including
cash, credits, property, other | 23 |
| than as hereinafter provided, and services,
but not including | 24 |
| the value of or credit given for traded-in tangible
personal | 25 |
| property where the item that is traded-in is of like kind and
| 26 |
| character as that which is being sold, and shall be determined | 27 |
| without any
deduction on account of the cost of the property | 28 |
| sold, the cost of
materials used, labor or service cost or any | 29 |
| other expense whatsoever, but
does not include charges that are | 30 |
| added to prices by sellers on account of
the seller's tax | 31 |
| liability under this Act, or on account of the seller's
duty to | 32 |
| collect, from the purchaser, the tax that is imposed by the Use | 33 |
| Tax
Act, or on account of the seller's tax liability under | 34 |
| Section 8-11-1 of
the Illinois Municipal Code, as heretofore |
|
|
|
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|
| 1 |
| and hereafter amended, or on
account of the seller's tax | 2 |
| liability under the County Retailers'
Occupation Tax Act, or on | 3 |
| account of the seller's tax liability under the
Home Rule | 4 |
| Municipal Soft Drink Retailers' Occupation Tax,
or on account | 5 |
| of the seller's tax liability under any tax imposed under the
| 6 |
| "Regional Transportation Authority Act", approved December 12, | 7 |
| 1973.
Effective December 1, 1985, "selling price" shall include | 8 |
| charges that
are added to prices by sellers on account of the | 9 |
| seller's
tax liability under the Cigarette Tax Act, on account | 10 |
| of the sellers'
duty to collect, from the purchaser, the tax | 11 |
| imposed under the Cigarette
Use Tax Act, and on account of the | 12 |
| seller's duty to collect, from the
purchaser, any cigarette tax | 13 |
| imposed by a home rule unit.
| 14 |
| The phrase "like kind and character" shall be liberally | 15 |
| construed
(including but not limited to any form of motor | 16 |
| vehicle for any form of
motor vehicle, or any kind of farm or | 17 |
| agricultural implement for any other
kind of farm or | 18 |
| agricultural implement), while not including a kind of item
| 19 |
| which, if sold at retail by that retailer, would be exempt from | 20 |
| retailers'
occupation tax and use tax as an isolated or | 21 |
| occasional sale.
| 22 |
| "Gross receipts" from the sales of tangible personal | 23 |
| property at retail
means the total selling price or the amount | 24 |
| of such sales, as hereinbefore
defined. In the case of charge | 25 |
| and time sales, the amount thereof shall be
included only as | 26 |
| and when payments are received by the seller.
Receipts or other | 27 |
| consideration derived by a seller from
the sale, transfer or | 28 |
| assignment of accounts receivable to a wholly owned
subsidiary | 29 |
| will not be deemed payments prior to the time the purchaser
| 30 |
| makes payment on such accounts.
| 31 |
| "Department" means the Department of Revenue.
| 32 |
| "Person" means any natural individual, firm, partnership, | 33 |
| association,
joint stock company, joint adventure, public or | 34 |
| private corporation, limited
liability company, or a receiver, |
|
|
|
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| executor, trustee, guardian or other
representative appointed | 2 |
| by order of any court.
| 3 |
| The isolated or occasional sale of tangible personal | 4 |
| property at retail
by a person who does not hold himself out as | 5 |
| being engaged (or who does not
habitually engage) in selling | 6 |
| such tangible personal property at retail, or
a sale through a | 7 |
| bulk vending machine, does not constitute engaging in a
| 8 |
| business of selling such tangible personal property at retail | 9 |
| within the
meaning of this Act; provided that any person who is | 10 |
| engaged in a business
which is not subject to the tax imposed | 11 |
| by this Act because of involving
the sale of or a contract to | 12 |
| sell real estate or a construction contract to
improve real | 13 |
| estate or a construction contract to engineer, install, and
| 14 |
| maintain an integrated system of products, but who, in the | 15 |
| course of
conducting such business,
transfers tangible | 16 |
| personal property to users or consumers in the finished
form in | 17 |
| which it was purchased, and which does not become real estate | 18 |
| or was
not engineered and installed, under any provision of a | 19 |
| construction contract or
real estate sale or real estate sales | 20 |
| agreement entered into with some other
person arising out of or | 21 |
| because of such nontaxable business, is engaged in the
business | 22 |
| of selling tangible personal property at retail to the extent | 23 |
| of the
value of the tangible personal property so transferred. | 24 |
| If, in such a
transaction, a separate charge is made for the | 25 |
| tangible personal property so
transferred, the value of such | 26 |
| property, for the purpose of this Act, shall be
the amount so | 27 |
| separately charged, but not less than the cost of such property
| 28 |
| to the transferor; if no separate charge is made, the value of | 29 |
| such property,
for the purposes of this Act, is the cost to the | 30 |
| transferor of such tangible
personal property. Construction | 31 |
| contracts for the improvement of real estate
consisting of | 32 |
| engineering, installation, and maintenance of voice, data, | 33 |
| video,
security, and all telecommunication systems do not | 34 |
| constitute engaging in a
business of selling tangible personal |
|
|
|
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| 1 |
| property at retail within the meaning of
this Act if they are | 2 |
| sold at one specified contract price.
| 3 |
| A person who holds himself or herself out as being engaged | 4 |
| (or who habitually
engages) in selling tangible personal | 5 |
| property at retail is a person
engaged in the business of | 6 |
| selling tangible personal property at retail
hereunder with | 7 |
| respect to such sales (and not primarily in a service
| 8 |
| occupation) notwithstanding the fact that such person designs | 9 |
| and produces
such tangible personal property on special order | 10 |
| for the purchaser and in
such a way as to render the property | 11 |
| of value only to such purchaser, if
such tangible personal | 12 |
| property so produced on special order serves
substantially the | 13 |
| same function as stock or standard items of tangible
personal | 14 |
| property that are sold at retail.
| 15 |
| Persons who engage in the business of transferring tangible | 16 |
| personal
property upon the redemption of trading stamps are | 17 |
| engaged in the business
of selling such property at retail and | 18 |
| shall be liable for and shall pay
the tax imposed by this Act | 19 |
| on the basis of the retail value of the
property transferred | 20 |
| upon redemption of such stamps.
| 21 |
| "Bulk vending machine" means a vending machine,
containing | 22 |
| unsorted confections, nuts, toys, or other items designed
| 23 |
| primarily to be used or played with by children
which, when a | 24 |
| coin or coins of a denomination not larger than $0.50 are
| 25 |
| inserted, are dispensed in equal portions, at random and
| 26 |
| without selection by the customer.
| 27 |
| (Source: P.A. 92-213, eff. 1-1-02.)
| 28 |
| (35 ILCS 120/2) (from Ch. 120, par. 441)
| 29 |
| Sec. 2. Tax imposed. A tax is imposed upon persons engaged | 30 |
| in the
business of selling at retail tangible personal | 31 |
| property, including
computer software, and including | 32 |
| photographs, negatives, and positives that
are the product of | 33 |
| photoprocessing, but not including products of
photoprocessing |
|
|
|
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|
| 1 |
| produced for use in motion pictures for public commercial
| 2 |
| exhibition.
Beginning January 1, 2001, prepaid telephone | 3 |
| calling arrangements shall be
considered tangible personal | 4 |
| property subject to the tax imposed under this Act
regardless | 5 |
| of the form in which those arrangements may be embodied,
| 6 |
| transmitted, or fixed by any method now known or hereafter | 7 |
| developed. Beginning July 1, 2004, computer software subject to | 8 |
| tax under this Act includes licenses of computer software.
| 9 |
| (Source: P.A. 91-51, eff. 6-30-99; 91-870, eff. 6-22-00.)
| 10 |
| (35 ILCS 120/2-25) (from Ch. 120, par. 441-25)
| 11 |
| Sec. 2-25. Computer software. For the purposes of this Act, | 12 |
| "computer
software" means a set of statements, data,
or | 13 |
| instructions to be used directly or indirectly in a computer in | 14 |
| order to
bring about a certain result in any form in which | 15 |
| those statements, data, or
instructions may be embodied, | 16 |
| transmitted, or fixed, by any method now known
or hereafter | 17 |
| developed, regardless of whether the statements, data, or
| 18 |
| instructions are capable of being perceived by or communicated | 19 |
| to humans,
and includes prewritten or canned software that is | 20 |
| held for repeated sale
or lease, and all associated | 21 |
| documentation and materials, if any, whether
contained on | 22 |
| magnetic tapes, discs, cards, or other devices or media, but
| 23 |
| does not include (i) on and before June 30, 2004, software that | 24 |
| is adapted to specific individualized
requirements of a | 25 |
| purchaser, custom-made and modified software designed for
a | 26 |
| particular or limited use by a purchaser, or (ii) software used | 27 |
| to operate
exempt machinery and equipment used in the process | 28 |
| of manufacturing or
assembling tangible personal property for | 29 |
| wholesale or retail sale or
lease.
| 30 |
| Beginning on July 1, 2004, "prewritten computer software" | 31 |
| means computer software, including upgrades, that is not | 32 |
| designed and developed by the author or other creator to the | 33 |
| specifications of a specific purchaser. The combining of 2 or |
|
|
|
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|
| 1 |
| more "prewritten computer software" programs or prewritten | 2 |
| portions thereof does not cause the combination to be other | 3 |
| than "prewritten computer software". "Prewritten computer | 4 |
| software" includes software designed and developed by the | 5 |
| author or other creator to the specifications of a specific | 6 |
| purchaser when it is sold to a person other than the specific | 7 |
| purchaser. If a person modifies or enhances computer software | 8 |
| of which the person is not the author or creator, the person | 9 |
| shall be deemed to be the author or creator only of that | 10 |
| person's modifications or enhancements. "Prewritten computer | 11 |
| software" or a prewritten portion thereof that is modified or | 12 |
| enhanced to any degree, when the modification or enhancement | 13 |
| according to Department rules is designed and developed to the | 14 |
| specifications of a specific purchaser, remains "prewritten | 15 |
| computer software", except that when there is a reasonable | 16 |
| separately stated charge or an invoice or other statement of | 17 |
| the price given to the purchaser for the modification or | 18 |
| enhancement, the modification or enhancement does not | 19 |
| constitute "prewritten computer software".
| 20 |
| For the purposes of this Act, computer software shall be | 21 |
| considered to be
tangible personal property.
| 22 |
| (Source: P.A. 91-51, eff. 6-30-99.)
| 23 |
| Section 99. Effective date. This Act takes effect upon | 24 |
| becoming law.".
|
|