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Public Act 92-0484
HB3289 Enrolled LRB9205821SMdv
AN ACT concerning taxes.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Use Tax Act is amended by changing
Sections 3-5, 3-45 and 3-50 and adding Section 3-10.5 as
follows:
(35 ILCS 105/3-5) (from Ch. 120, par. 439.3-5)
Sec. 3-5. Exemptions. Use of the following tangible
personal property is exempt from the tax imposed by this Act:
(1) Personal property purchased from a corporation,
society, association, foundation, institution, or
organization, other than a limited liability company, that is
organized and operated as a not-for-profit service enterprise
for the benefit of persons 65 years of age or older if the
personal property was not purchased by the enterprise for the
purpose of resale by the enterprise.
(2) Personal property purchased by a not-for-profit
Illinois county fair association for use in conducting,
operating, or promoting the county fair.
(3) Personal property purchased by a not-for-profit arts
or cultural organization that establishes, by proof required
by the Department by rule, that it has received an exemption
under Section 501(c)(3) of the Internal Revenue Code and that
is organized and operated for the presentation or support of
arts or cultural programming, activities, or services. These
organizations include, but are not limited to, music and
dramatic arts organizations such as symphony orchestras and
theatrical groups, arts and cultural service organizations,
local arts councils, visual arts organizations, and media
arts organizations.
(4) Personal property purchased by a governmental body,
by a corporation, society, association, foundation, or
institution organized and operated exclusively for
charitable, religious, or educational purposes, or by a
not-for-profit corporation, society, association, foundation,
institution, or organization that has no compensated officers
or employees and that is organized and operated primarily for
the recreation of persons 55 years of age or older. A limited
liability company may qualify for the exemption under this
paragraph only if the limited liability company is organized
and operated exclusively for educational purposes. On and
after July 1, 1987, however, no entity otherwise eligible for
this exemption shall make tax-free purchases unless it has an
active exemption identification number issued by the
Department.
(5) A passenger car that is a replacement vehicle to the
extent that the purchase price of the car is subject to the
Replacement Vehicle Tax.
(6) Graphic arts machinery and equipment, including
repair and replacement parts, both new and used, and
including that manufactured on special order, certified by
the purchaser to be used primarily for graphic arts
production, and including machinery and equipment purchased
for lease. Equipment includes chemicals or chemicals acting
as catalysts but only if the chemicals or chemicals acting as
catalysts effect a direct and immediate change upon a graphic
arts product.
(7) Farm chemicals.
(8) Legal tender, currency, medallions, or gold or
silver coinage issued by the State of Illinois, the
government of the United States of America, or the government
of any foreign country, and bullion.
(9) Personal property purchased from a teacher-sponsored
student organization affiliated with an elementary or
secondary school located in Illinois.
(10) A motor vehicle of the first division, a motor
vehicle of the second division that is a self-contained motor
vehicle designed or permanently converted to provide living
quarters for recreational, camping, or travel use, with
direct walk through to the living quarters from the driver's
seat, or a motor vehicle of the second division that is of
the van configuration designed for the transportation of not
less than 7 nor more than 16 passengers, as defined in
Section 1-146 of the Illinois Vehicle Code, that is used for
automobile renting, as defined in the Automobile Renting
Occupation and Use Tax Act.
(11) Farm machinery and equipment, both new and used,
including that manufactured on special order, certified by
the purchaser to be used primarily for production agriculture
or State or federal agricultural programs, including
individual replacement parts for the machinery and equipment,
including machinery and equipment purchased for lease, and
including implements of husbandry defined in Section 1-130 of
the Illinois Vehicle Code, farm machinery and agricultural
chemical and fertilizer spreaders, and nurse wagons required
to be registered under Section 3-809 of the Illinois Vehicle
Code, but excluding other motor vehicles required to be
registered under the Illinois Vehicle Code. Horticultural
polyhouses or hoop houses used for propagating, growing, or
overwintering plants shall be considered farm machinery and
equipment under this item (11). Agricultural chemical tender
tanks and dry boxes shall include units sold separately from
a motor vehicle required to be licensed and units sold
mounted on a motor vehicle required to be licensed if the
selling price of the tender is separately stated.
Farm machinery and equipment shall include precision
farming equipment that is installed or purchased to be
installed on farm machinery and equipment including, but not
limited to, tractors, harvesters, sprayers, planters,
seeders, or spreaders. Precision farming equipment includes,
but is not limited to, soil testing sensors, computers,
monitors, software, global positioning and mapping systems,
and other such equipment.
Farm machinery and equipment also includes computers,
sensors, software, and related equipment used primarily in
the computer-assisted operation of production agriculture
facilities, equipment, and activities such as, but not
limited to, the collection, monitoring, and correlation of
animal and crop data for the purpose of formulating animal
diets and agricultural chemicals. This item (11) is exempt
from the provisions of Section 3-90.
(12) Fuel and petroleum products sold to or used by an
air common carrier, certified by the carrier to be used for
consumption, shipment, or storage in the conduct of its
business as an air common carrier, for a flight destined for
or returning from a location or locations outside the United
States without regard to previous or subsequent domestic
stopovers.
(13) Proceeds of mandatory service charges separately
stated on customers' bills for the purchase and consumption
of food and beverages purchased at retail from a retailer, to
the extent that the proceeds of the service charge are in
fact turned over as tips or as a substitute for tips to the
employees who participate directly in preparing, serving,
hosting or cleaning up the food or beverage function with
respect to which the service charge is imposed.
(14) Oil field exploration, drilling, and production
equipment, including (i) rigs and parts of rigs, rotary rigs,
cable tool rigs, and workover rigs, (ii) pipe and tubular
goods, including casing and drill strings, (iii) pumps and
pump-jack units, (iv) storage tanks and flow lines, (v) any
individual replacement part for oil field exploration,
drilling, and production equipment, and (vi) machinery and
equipment purchased for lease; but excluding motor vehicles
required to be registered under the Illinois Vehicle Code.
(15) Photoprocessing machinery and equipment, including
repair and replacement parts, both new and used, including
that manufactured on special order, certified by the
purchaser to be used primarily for photoprocessing, and
including photoprocessing machinery and equipment purchased
for lease.
(16) Coal exploration, mining, offhighway hauling,
processing, maintenance, and reclamation equipment, including
replacement parts and equipment, and including equipment
purchased for lease, but excluding motor vehicles required to
be registered under the Illinois Vehicle Code.
(17) Distillation machinery and equipment, sold as a
unit or kit, assembled or installed by the retailer,
certified by the user to be used only for the production of
ethyl alcohol that will be used for consumption as motor fuel
or as a component of motor fuel for the personal use of the
user, and not subject to sale or resale.
(18) Manufacturing and assembling machinery and
equipment used primarily in the process of manufacturing or
assembling tangible personal property for wholesale or retail
sale or lease, whether that sale or lease is made directly by
the manufacturer or by some other person, whether the
materials used in the process are owned by the manufacturer
or some other person, or whether that sale or lease is made
apart from or as an incident to the seller's engaging in the
service occupation of producing machines, tools, dies, jigs,
patterns, gauges, or other similar items of no commercial
value on special order for a particular purchaser.
(19) Personal property delivered to a purchaser or
purchaser's donee inside Illinois when the purchase order for
that personal property was received by a florist located
outside Illinois who has a florist located inside Illinois
deliver the personal property.
(20) Semen used for artificial insemination of livestock
for direct agricultural production.
(21) Horses, or interests in horses, registered with and
meeting the requirements of any of the Arabian Horse Club
Registry of America, Appaloosa Horse Club, American Quarter
Horse Association, United States Trotting Association, or
Jockey Club, as appropriate, used for purposes of breeding or
racing for prizes.
(22) Computers and communications equipment utilized for
any hospital purpose and equipment used in the diagnosis,
analysis, or treatment of hospital patients purchased by a
lessor who leases the equipment, under a lease of one year or
longer executed or in effect at the time the lessor would
otherwise be subject to the tax imposed by this Act, to a
hospital that has been issued an active tax exemption
identification number by the Department under Section 1g of
the Retailers' Occupation Tax Act. If the equipment is
leased in a manner that does not qualify for this exemption
or is used in any other non-exempt manner, the lessor shall
be liable for the tax imposed under this Act or the Service
Use Tax Act, as the case may be, based on the fair market
value of the property at the time the non-qualifying use
occurs. No lessor shall collect or attempt to collect an
amount (however designated) that purports to reimburse that
lessor for the tax imposed by this Act or the Service Use Tax
Act, as the case may be, if the tax has not been paid by the
lessor. If a lessor improperly collects any such amount from
the lessee, the lessee shall have a legal right to claim a
refund of that amount from the lessor. If, however, that
amount is not refunded to the lessee for any reason, the
lessor is liable to pay that amount to the Department.
(23) Personal property purchased by a lessor who leases
the property, under a lease of one year or longer executed
or in effect at the time the lessor would otherwise be
subject to the tax imposed by this Act, to a governmental
body that has been issued an active sales tax exemption
identification number by the Department under Section 1g of
the Retailers' Occupation Tax Act. If the property is leased
in a manner that does not qualify for this exemption or used
in any other non-exempt manner, the lessor shall be liable
for the tax imposed under this Act or the Service Use Tax
Act, as the case may be, based on the fair market value of
the property at the time the non-qualifying use occurs. No
lessor shall collect or attempt to collect an amount (however
designated) that purports to reimburse that lessor for the
tax imposed by this Act or the Service Use Tax Act, as the
case may be, if the tax has not been paid by the lessor. If
a lessor improperly collects any such amount from the lessee,
the lessee shall have a legal right to claim a refund of that
amount from the lessor. If, however, that amount is not
refunded to the lessee for any reason, the lessor is liable
to pay that amount to the Department.
(24) Beginning with taxable years ending on or after
December 31, 1995 and ending with taxable years ending on or
before December 31, 2004, personal property that is donated
for disaster relief to be used in a State or federally
declared disaster area in Illinois or bordering Illinois by a
manufacturer or retailer that is registered in this State to
a corporation, society, association, foundation, or
institution that has been issued a sales tax exemption
identification number by the Department that assists victims
of the disaster who reside within the declared disaster area.
(25) Beginning with taxable years ending on or after
December 31, 1995 and ending with taxable years ending on or
before December 31, 2004, personal property that is used in
the performance of infrastructure repairs in this State,
including but not limited to municipal roads and streets,
access roads, bridges, sidewalks, waste disposal systems,
water and sewer line extensions, water distribution and
purification facilities, storm water drainage and retention
facilities, and sewage treatment facilities, resulting from a
State or federally declared disaster in Illinois or bordering
Illinois when such repairs are initiated on facilities
located in the declared disaster area within 6 months after
the disaster.
(26) Beginning July 1, 1999, game or game birds
purchased at a "game breeding and hunting preserve area" or
an "exotic game hunting area" as those terms are used in the
Wildlife Code or at a hunting enclosure approved through
rules adopted by the Department of Natural Resources. This
paragraph is exempt from the provisions of Section 3-90.
(27) A motor vehicle, as that term is defined in Section
1-146 of the Illinois Vehicle Code, that is donated to a
corporation, limited liability company, society, association,
foundation, or institution that is determined by the
Department to be organized and operated exclusively for
educational purposes. For purposes of this exemption, "a
corporation, limited liability company, society, association,
foundation, or institution organized and operated exclusively
for educational purposes" means all tax-supported public
schools, private schools that offer systematic instruction in
useful branches of learning by methods common to public
schools and that compare favorably in their scope and
intensity with the course of study presented in tax-supported
schools, and vocational or technical schools or institutes
organized and operated exclusively to provide a course of
study of not less than 6 weeks duration and designed to
prepare individuals to follow a trade or to pursue a manual,
technical, mechanical, industrial, business, or commercial
occupation.
(28) Beginning January 1, 2000, personal property,
including food, purchased through fundraising events for the
benefit of a public or private elementary or secondary
school, a group of those schools, or one or more school
districts if the events are sponsored by an entity recognized
by the school district that consists primarily of volunteers
and includes parents and teachers of the school children.
This paragraph does not apply to fundraising events (i) for
the benefit of private home instruction or (ii) for which the
fundraising entity purchases the personal property sold at
the events from another individual or entity that sold the
property for the purpose of resale by the fundraising entity
and that profits from the sale to the fundraising entity.
This paragraph is exempt from the provisions of Section 3-90.
(29) Beginning January 1, 2000, new or used automatic
vending machines that prepare and serve hot food and
beverages, including coffee, soup, and other items, and
replacement parts for these machines. This paragraph is
exempt from the provisions of Section 3-90.
(30) Food for human consumption that is to be consumed
off the premises where it is sold (other than alcoholic
beverages, soft drinks, and food that has been prepared for
immediate consumption) and prescription and nonprescription
medicines, drugs, medical appliances, and insulin, urine
testing materials, syringes, and needles used by diabetics,
for human use, when purchased for use by a person receiving
medical assistance under Article 5 of the Illinois Public Aid
Code who resides in a licensed long-term care facility, as
defined in the Nursing Home Care Act.
(Source: P.A. 90-14, eff. 7-1-97; 90-552, eff. 12-12-97;
90-605, eff. 6-30-98; 91-51, eff. 6-30-99; 91-200, eff.
7-20-99; 91-439, eff. 8-6-99; 91-637, eff. 8-20-99; 91-644,
eff. 8-20-99; 91-901, eff. 1-1-01.)
(35 ILCS 105/3-10.5 new)
Sec. 3-10.5. Direct payment of retailers' occupation tax
and applicable local retailers' occupation tax by purchaser;
purchaser relieved of paying use tax and local retailers'
occupation tax reimbursement liabilities to retailer.
(a) A retailer who makes a retail sale of tangible
personal property to a purchaser who provides the retailer
with a copy of the purchaser's valid Direct Pay Permit issued
under Section 2-10.5 of the Retailers' Occupation Tax Act is
not required under Section 3-45 of this Act to collect the
tax imposed by this Act on that sale.
(b) A purchaser who makes a purchase from a retailer who
would otherwise incur retailers' occupation tax liability on
the transaction and who provides the retailer with a copy of
a valid Direct Pay Permit issued under Section 2-10.5 of the
Retailers' Occupation Tax Act does not incur the tax imposed
by this Act on the purchase. The purchaser assumes the
retailer's obligation to pay the retailers' occupation tax
directly to the Department, including all local retailers'
occupation tax liabilities applicable to that retail sale.
(c) A purchaser who makes a purchase from a retailer who
would not incur retailers' occupation tax liability on the
transaction and who provides the retailer with a copy of a
valid Direct Pay Permit issued under Section 2-10.5 of the
Retailers' Occupation Tax Act incurs the tax imposed by this
Act on the purchase. If, on any transaction, the retailer is
entitled under this Act to a discount for collecting and
remitting the tax imposed under this Act to the Department,
the right to the discount provided in Section 9 of this Act
shall be transferred to the Permit holder. If the retailer
would not be entitled to a discount as provided in Section 9
of this Act, then the Permit holder is not entitled to a
discount.
(35 ILCS 105/3-45) (from Ch. 120, par. 439.3-45)
Sec. 3-45. Collection. The tax imposed by this Act
shall be collected from the purchaser by a retailer
maintaining a place of business in this State or a retailer
authorized by the Department under Section 6 of this Act, and
shall be remitted to the Department as provided in Section 9
of this Act, except as provided in Section 3-10.5 of this
Act.
The tax imposed by this Act that is not paid to a
retailer under this Section shall be paid to the Department
directly by any person using the property within this State
as provided in Section 10 of this Act.
Retailers shall collect the tax from users by adding the
tax to the selling price of tangible personal property, when
sold for use, in the manner prescribed by the Department.
The Department may adopt and promulgate reasonable rules and
regulations for the adding of the tax by retailers to selling
prices by prescribing bracket systems for the purpose of
enabling the retailers to add and collect, as far as
practicable, the amount of the tax.
If a seller collects use tax measured by receipts that
are not subject to use tax, or if a seller, in collecting use
tax measured by receipts that are subject to tax under this
Act, collects more from the purchaser than the required
amount of the use tax on the transaction, the purchaser shall
have a legal right to claim a refund of that amount from the
seller. If, however, that amount is not refunded to the
purchaser for any reason, the seller is liable to pay that
amount to the Department. This paragraph does not apply to
an amount collected by the seller as use tax on receipts that
are subject to tax under this Act as long as the collection
is made in compliance with the tax collection brackets
prescribed by the Department in its rules and regulations.
(Source: P.A. 91-51, eff. 6-30-99.)
(35 ILCS 105/3-50) (from Ch. 120, par. 439.3-50)
Sec. 3-50. Manufacturing and assembly exemption. The
manufacturing and assembling machinery and equipment
exemption includes machinery and equipment that replaces
machinery and equipment in an existing manufacturing facility
as well as machinery and equipment that are for use in an
expanded or new manufacturing facility. The machinery and
equipment exemption also includes machinery and equipment
used in the general maintenance or repair of exempt machinery
and equipment or for in-house manufacture of exempt machinery
and equipment. For the purposes of this exemption, terms have
the following meanings:
(1) "Manufacturing process" means the production of
an article of tangible personal property, whether the
article is a finished product or an article for use in
the process of manufacturing or assembling a different
article of tangible personal property, by a procedure
commonly regarded as manufacturing, processing,
fabricating, or refining that changes some existing
material into a material with a different form, use, or
name. In relation to a recognized integrated business
composed of a series of operations that collectively
constitute manufacturing, or individually constitute
manufacturing operations, the manufacturing process
commences with the first operation or stage of production
in the series and does not end until the completion of
the final product in the last operation or stage of
production in the series. For purposes of this
exemption, photoprocessing is a manufacturing process of
tangible personal property for wholesale or retail sale.
(2) "Assembling process" means the production of an
article of tangible personal property, whether the
article is a finished product or an article for use in
the process of manufacturing or assembling a different
article of tangible personal property, by the combination
of existing materials in a manner commonly regarded as
assembling that results in an article or material of a
different form, use, or name.
(3) "Machinery" means major mechanical machines or
major components of those machines contributing to a
manufacturing or assembling process.
(4) "Equipment" includes an independent device or
tool separate from machinery but essential to an
integrated manufacturing or assembly process; including
computers used primarily in a manufacturer's operating
exempt machinery and equipment in a computer assisted
design, computer assisted manufacturing (CAD/CAM) system;
any subunit or assembly comprising a component of any
machinery or auxiliary, adjunct, or attachment parts of
machinery, such as tools, dies, jigs, fixtures, patterns,
and molds; and any parts that require periodic
replacement in the course of normal operation; but does
not include hand tools. Equipment includes chemicals or
chemicals acting as catalysts but only if the chemicals
or chemicals acting as catalysts effect a direct and
immediate change upon a product being manufactured or
assembled for wholesale or retail sale or lease.
The manufacturing and assembling machinery and equipment
exemption includes the sale of materials to a purchaser who
produces exempted types of machinery, equipment, or tools and
who rents or leases that machinery, equipment, or tools to a
manufacturer of tangible personal property. This exemption
also includes the sale of materials to a purchaser who
manufactures those materials into an exempted type of
machinery, equipment, or tools that the purchaser uses
himself or herself in the manufacturing of tangible personal
property. This exemption includes the sale of exempted types
of machinery or equipment to a purchaser who is not the
manufacturer, but who rents or leases the use of the property
to a manufacturer. The purchaser of the machinery and
equipment who has an active resale registration number shall
furnish that number to the seller at the time of purchase. A
user of the machinery, equipment, or tools without an active
resale registration number shall prepare a certificate of
exemption for each transaction stating facts establishing the
exemption for that transaction, and that certificate shall be
available to the Department for inspection or audit. The
Department shall prescribe the form of the certificate.
Informal rulings, opinions, or letters issued by the
Department in response to an inquiry or request for an
opinion from any person regarding the coverage and
applicability of this exemption to specific devices shall be
published, maintained as a public record, and made available
for public inspection and copying. If the informal ruling,
opinion, or letter contains trade secrets or other
confidential information, where possible, the Department
shall delete that information before publication. Whenever
informal rulings, opinions, or letters contain a policy of
general applicability, the Department shall formulate and
adopt that policy as a rule in accordance with the Illinois
Administrative Procedure Act.
(Source: P.A. 91-51, eff. 6-30-99.)
Section 10. The Service Use Tax Act is amended by
changing Sections 2 and 3-5 as follows:
(35 ILCS 110/2) (from Ch. 120, par. 439.32)
Sec. 2. "Use" means the exercise by any person of any
right or power over tangible personal property incident to
the ownership of that property, but does not include the sale
or use for demonstration by him of that property in any form
as tangible personal property in the regular course of
business. "Use" does not mean the interim use of tangible
personal property nor the physical incorporation of tangible
personal property, as an ingredient or constituent, into
other tangible personal property, (a) which is sold in the
regular course of business or (b) which the person
incorporating such ingredient or constituent therein has
undertaken at the time of such purchase to cause to be
transported in interstate commerce to destinations outside
the State of Illinois.
"Purchased from a serviceman" means the acquisition of
the ownership of, or title to, tangible personal property
through a sale of service.
"Purchaser" means any person who, through a sale of
service, acquires the ownership of, or title to, any tangible
personal property.
"Cost price" means the consideration paid by the
serviceman for a purchase valued in money, whether paid in
money or otherwise, including cash, credits and services, and
shall be determined without any deduction on account of the
supplier's cost of the property sold or on account of any
other expense incurred by the supplier. When a serviceman
contracts out part or all of the services required in his
sale of service, it shall be presumed that the cost price to
the serviceman of the property transferred to him or her by
his or her subcontractor is equal to 50% of the
subcontractor's charges to the serviceman in the absence of
proof of the consideration paid by the subcontractor for the
purchase of such property.
"Selling price" means the consideration for a sale valued
in money whether received in money or otherwise, including
cash, credits and service, and shall be determined without
any deduction on account of the serviceman's cost of the
property sold, the cost of materials used, labor or service
cost or any other expense whatsoever, but does not include
interest or finance charges which appear as separate items on
the bill of sale or sales contract nor charges that are added
to prices by sellers on account of the seller's duty to
collect, from the purchaser, the tax that is imposed by this
Act.
"Department" means the Department of Revenue.
"Person" means any natural individual, firm, partnership,
association, joint stock company, joint venture, public or
private corporation, limited liability company, and any
receiver, executor, trustee, guardian or other representative
appointed by order of any court.
"Sale of service" means any transaction except:
(1) a retail sale of tangible personal property
taxable under the Retailers' Occupation Tax Act or under
the Use Tax Act.
(2) a sale of tangible personal property for the
purpose of resale made in compliance with Section 2c of
the Retailers' Occupation Tax Act.
(3) except as hereinafter provided, a sale or
transfer of tangible personal property as an incident to
the rendering of service for or by any governmental body,
or for or by any corporation, society, association,
foundation or institution organized and operated
exclusively for charitable, religious or educational
purposes or any not-for-profit corporation, society,
association, foundation, institution or organization
which has no compensated officers or employees and which
is organized and operated primarily for the recreation of
persons 55 years of age or older. A limited liability
company may qualify for the exemption under this
paragraph only if the limited liability company is
organized and operated exclusively for educational
purposes.
(4) a sale or transfer of tangible personal
property as an incident to the rendering of service for
interstate carriers for hire for use as rolling stock
moving in interstate commerce or by lessors under a lease
of one year or longer, executed or in effect at the time
of purchase of personal property, to interstate carriers
for hire for use as rolling stock moving in interstate
commerce so long as so used by such interstate carriers
for hire, and equipment operated by a telecommunications
provider, licensed as a common carrier by the Federal
Communications Commission, which is permanently installed
in or affixed to aircraft moving in interstate commerce.
(4a) a sale or transfer of tangible personal
property as an incident to the rendering of service for
owners, lessors, or shippers of tangible personal
property which is utilized by interstate carriers for
hire for use as rolling stock moving in interstate
commerce so long as so used by interstate carriers for
hire, and equipment operated by a telecommunications
provider, licensed as a common carrier by the Federal
Communications Commission, which is permanently installed
in or affixed to aircraft moving in interstate commerce.
(5) a sale or transfer of machinery and equipment
used primarily in the process of the manufacturing or
assembling, either in an existing, an expanded or a new
manufacturing facility, of tangible personal property for
wholesale or retail sale or lease, whether such sale or
lease is made directly by the manufacturer or by some
other person, whether the materials used in the process
are owned by the manufacturer or some other person, or
whether such sale or lease is made apart from or as an
incident to the seller's engaging in a service occupation
and the applicable tax is a Service Use Tax or Service
Occupation Tax, rather than Use Tax or Retailers'
Occupation Tax.
(5a) the repairing, reconditioning or remodeling,
for a common carrier by rail, of tangible personal
property which belongs to such carrier for hire, and as
to which such carrier receives the physical possession of
the repaired, reconditioned or remodeled item of tangible
personal property in Illinois, and which such carrier
transports, or shares with another common carrier in the
transportation of such property, out of Illinois on a
standard uniform bill of lading showing the person who
repaired, reconditioned or remodeled the property to a
destination outside Illinois, for use outside Illinois.
(5b) a sale or transfer of tangible personal
property which is produced by the seller thereof on
special order in such a way as to have made the
applicable tax the Service Occupation Tax or the Service
Use Tax, rather than the Retailers' Occupation Tax or the
Use Tax, for an interstate carrier by rail which receives
the physical possession of such property in Illinois, and
which transports such property, or shares with another
common carrier in the transportation of such property,
out of Illinois on a standard uniform bill of lading
showing the seller of the property as the shipper or
consignor of such property to a destination outside
Illinois, for use outside Illinois.
(6) a sale or transfer of distillation machinery
and equipment, sold as a unit or kit and assembled or
installed by the retailer, which machinery and equipment
is certified by the user to be used only for the
production of ethyl alcohol that will be used for
consumption as motor fuel or as a component of motor fuel
for the personal use of such user and not subject to sale
or resale.
(7) at the election of any serviceman not required
to be otherwise registered as a retailer under Section 2a
of the Retailers' Occupation Tax Act, made for each
fiscal year sales of service in which the aggregate
annual cost price of tangible personal property
transferred as an incident to the sales of service is
less than 35%, or 75% in the case of servicemen
transferring prescription drugs or servicemen engaged in
graphic arts production, of the aggregate annual total
gross receipts from all sales of service. The purchase of
such tangible personal property by the serviceman shall
be subject to tax under the Retailers' Occupation Tax Act
and the Use Tax Act. However, if a primary serviceman
who has made the election described in this paragraph
subcontracts service work to a secondary serviceman who
has also made the election described in this paragraph,
the primary serviceman does not incur a Use Tax liability
if the secondary serviceman (i) has paid or will pay Use
Tax on his or her cost price of any tangible personal
property transferred to the primary serviceman and (ii)
certifies that fact in writing to the primary serviceman.
Tangible personal property transferred incident to the
completion of a maintenance agreement is exempt from the tax
imposed pursuant to this Act.
Exemption (5) also includes machinery and equipment used
in the general maintenance or repair of such exempt machinery
and equipment or for in-house manufacture of exempt machinery
and equipment. For the purposes of exemption (5), each of
these terms shall have the following meanings: (1)
"manufacturing process" shall mean the production of any
article of tangible personal property, whether such article
is a finished product or an article for use in the process of
manufacturing or assembling a different article of tangible
personal property, by procedures commonly regarded as
manufacturing, processing, fabricating, or refining which
changes some existing material or materials into a material
with a different form, use or name. In relation to a
recognized integrated business composed of a series of
operations which collectively constitute manufacturing, or
individually constitute manufacturing operations, the
manufacturing process shall be deemed to commence with the
first operation or stage of production in the series, and
shall not be deemed to end until the completion of the final
product in the last operation or stage of production in the
series; and further, for purposes of exemption (5),
photoprocessing is deemed to be a manufacturing process of
tangible personal property for wholesale or retail sale; (2)
"assembling process" shall mean the production of any article
of tangible personal property, whether such article is a
finished product or an article for use in the process of
manufacturing or assembling a different article of tangible
personal property, by the combination of existing materials
in a manner commonly regarded as assembling which results in
a material of a different form, use or name; (3) "machinery"
shall mean major mechanical machines or major components of
such machines contributing to a manufacturing or assembling
process; and (4) "equipment" shall include any independent
device or tool separate from any machinery but essential to
an integrated manufacturing or assembly process; including
computers used primarily in a manufacturer's operating exempt
machinery and equipment in a computer assisted design,
computer assisted manufacturing (CAD/CAM) system; or any
subunit or assembly comprising a component of any machinery
or auxiliary, adjunct or attachment parts of machinery, such
as tools, dies, jigs, fixtures, patterns and molds; or any
parts which require periodic replacement in the course of
normal operation; but shall not include hand tools. Equipment
includes chemicals or chemicals acting as catalysts but only
if the chemicals or chemicals acting as catalysts effect a
direct and immediate change upon a product being manufactured
or assembled for wholesale or retail sale or lease. The
purchaser of such machinery and equipment who has an active
resale registration number shall furnish such number to the
seller at the time of purchase. The user of such machinery
and equipment and tools without an active resale registration
number shall prepare a certificate of exemption for each
transaction stating facts establishing the exemption for that
transaction, which certificate shall be available to the
Department for inspection or audit. The Department shall
prescribe the form of the certificate.
Any informal rulings, opinions or letters issued by the
Department in response to an inquiry or request for any
opinion from any person regarding the coverage and
applicability of exemption (5) to specific devices shall be
published, maintained as a public record, and made available
for public inspection and copying. If the informal ruling,
opinion or letter contains trade secrets or other
confidential information, where possible the Department shall
delete such information prior to publication. Whenever such
informal rulings, opinions, or letters contain any policy of
general applicability, the Department shall formulate and
adopt such policy as a rule in accordance with the provisions
of the Illinois Administrative Procedure Act.
On and after July 1, 1987, no entity otherwise eligible
under exemption (3) of this Section shall make tax free
purchases unless it has an active exemption identification
number issued by the Department.
The purchase, employment and transfer of such tangible
personal property as newsprint and ink for the primary
purpose of conveying news (with or without other information)
is not a purchase, use or sale of service or of tangible
personal property within the meaning of this Act.
"Serviceman" means any person who is engaged in the
occupation of making sales of service.
"Sale at retail" means "sale at retail" as defined in the
Retailers' Occupation Tax Act.
"Supplier" means any person who makes sales of tangible
personal property to servicemen for the purpose of resale as
an incident to a sale of service.
"Serviceman maintaining a place of business in this
State", or any like term, means and includes any serviceman:
1. having or maintaining within this State,
directly or by a subsidiary, an office, distribution
house, sales house, warehouse or other place of business,
or any agent or other representative operating within
this State under the authority of the serviceman or its
subsidiary, irrespective of whether such place of
business or agent or other representative is located here
permanently or temporarily, or whether such serviceman or
subsidiary is licensed to do business in this State;
2. soliciting orders for tangible personal property
by means of a telecommunication or television shopping
system (which utilizes toll free numbers) which is
intended by the retailer to be broadcast by cable
television or other means of broadcasting, to consumers
located in this State;
3. pursuant to a contract with a broadcaster or
publisher located in this State, soliciting orders for
tangible personal property by means of advertising which
is disseminated primarily to consumers located in this
State and only secondarily to bordering jurisdictions;
4. soliciting orders for tangible personal property
by mail if the solicitations are substantial and
recurring and if the retailer benefits from any banking,
financing, debt collection, telecommunication, or
marketing activities occurring in this State or benefits
from the location in this State of authorized
installation, servicing, or repair facilities;
5. being owned or controlled by the same interests
which own or control any retailer engaging in business in
the same or similar line of business in this State;
6. having a franchisee or licensee operating under
its trade name if the franchisee or licensee is required
to collect the tax under this Section;
7. pursuant to a contract with a cable television
operator located in this State, soliciting orders for
tangible personal property by means of advertising which
is transmitted or distributed over a cable television
system in this State; or
8. engaging in activities in Illinois, which
activities in the state in which the supply business
engaging in such activities is located would constitute
maintaining a place of business in that state.
(Source: P.A. 91-51, eff. 6-30-99.)
(35 ILCS 110/3-5) (from Ch. 120, par. 439.33-5)
Sec. 3-5. Exemptions. Use of the following tangible
personal property is exempt from the tax imposed by this Act:
(1) Personal property purchased from a corporation,
society, association, foundation, institution, or
organization, other than a limited liability company, that is
organized and operated as a not-for-profit service enterprise
for the benefit of persons 65 years of age or older if the
personal property was not purchased by the enterprise for the
purpose of resale by the enterprise.
(2) Personal property purchased by a non-profit Illinois
county fair association for use in conducting, operating, or
promoting the county fair.
(3) Personal property purchased by a not-for-profit arts
or cultural organization that establishes, by proof required
by the Department by rule, that it has received an exemption
under Section 501(c)(3) of the Internal Revenue Code and that
is organized and operated for the presentation or support of
arts or cultural programming, activities, or services. These
organizations include, but are not limited to, music and
dramatic arts organizations such as symphony orchestras and
theatrical groups, arts and cultural service organizations,
local arts councils, visual arts organizations, and media
arts organizations.
(4) Legal tender, currency, medallions, or gold or
silver coinage issued by the State of Illinois, the
government of the United States of America, or the government
of any foreign country, and bullion.
(5) Graphic arts machinery and equipment, including
repair and replacement parts, both new and used, and
including that manufactured on special order or purchased for
lease, certified by the purchaser to be used primarily for
graphic arts production. Equipment includes chemicals or
chemicals acting as catalysts but only if the chemicals or
chemicals acting as catalysts effect a direct and immediate
change upon a graphic arts product.
(6) Personal property purchased from a teacher-sponsored
student organization affiliated with an elementary or
secondary school located in Illinois.
(7) Farm machinery and equipment, both new and used,
including that manufactured on special order, certified by
the purchaser to be used primarily for production agriculture
or State or federal agricultural programs, including
individual replacement parts for the machinery and equipment,
including machinery and equipment purchased for lease, and
including implements of husbandry defined in Section 1-130 of
the Illinois Vehicle Code, farm machinery and agricultural
chemical and fertilizer spreaders, and nurse wagons required
to be registered under Section 3-809 of the Illinois Vehicle
Code, but excluding other motor vehicles required to be
registered under the Illinois Vehicle Code. Horticultural
polyhouses or hoop houses used for propagating, growing, or
overwintering plants shall be considered farm machinery and
equipment under this item (7). Agricultural chemical tender
tanks and dry boxes shall include units sold separately from
a motor vehicle required to be licensed and units sold
mounted on a motor vehicle required to be licensed if the
selling price of the tender is separately stated.
Farm machinery and equipment shall include precision
farming equipment that is installed or purchased to be
installed on farm machinery and equipment including, but not
limited to, tractors, harvesters, sprayers, planters,
seeders, or spreaders. Precision farming equipment includes,
but is not limited to, soil testing sensors, computers,
monitors, software, global positioning and mapping systems,
and other such equipment.
Farm machinery and equipment also includes computers,
sensors, software, and related equipment used primarily in
the computer-assisted operation of production agriculture
facilities, equipment, and activities such as, but not
limited to, the collection, monitoring, and correlation of
animal and crop data for the purpose of formulating animal
diets and agricultural chemicals. This item (7) is exempt
from the provisions of Section 3-75.
(8) Fuel and petroleum products sold to or used by an
air common carrier, certified by the carrier to be used for
consumption, shipment, or storage in the conduct of its
business as an air common carrier, for a flight destined for
or returning from a location or locations outside the United
States without regard to previous or subsequent domestic
stopovers.
(9) Proceeds of mandatory service charges separately
stated on customers' bills for the purchase and consumption
of food and beverages acquired as an incident to the purchase
of a service from a serviceman, to the extent that the
proceeds of the service charge are in fact turned over as
tips or as a substitute for tips to the employees who
participate directly in preparing, serving, hosting or
cleaning up the food or beverage function with respect to
which the service charge is imposed.
(10) Oil field exploration, drilling, and production
equipment, including (i) rigs and parts of rigs, rotary rigs,
cable tool rigs, and workover rigs, (ii) pipe and tubular
goods, including casing and drill strings, (iii) pumps and
pump-jack units, (iv) storage tanks and flow lines, (v) any
individual replacement part for oil field exploration,
drilling, and production equipment, and (vi) machinery and
equipment purchased for lease; but excluding motor vehicles
required to be registered under the Illinois Vehicle Code.
(11) Proceeds from the sale of photoprocessing machinery
and equipment, including repair and replacement parts, both
new and used, including that manufactured on special order,
certified by the purchaser to be used primarily for
photoprocessing, and including photoprocessing machinery and
equipment purchased for lease.
(12) Coal exploration, mining, offhighway hauling,
processing, maintenance, and reclamation equipment, including
replacement parts and equipment, and including equipment
purchased for lease, but excluding motor vehicles required to
be registered under the Illinois Vehicle Code.
(13) Semen used for artificial insemination of livestock
for direct agricultural production.
(14) Horses, or interests in horses, registered with and
meeting the requirements of any of the Arabian Horse Club
Registry of America, Appaloosa Horse Club, American Quarter
Horse Association, United States Trotting Association, or
Jockey Club, as appropriate, used for purposes of breeding or
racing for prizes.
(15) Computers and communications equipment utilized for
any hospital purpose and equipment used in the diagnosis,
analysis, or treatment of hospital patients purchased by a
lessor who leases the equipment, under a lease of one year or
longer executed or in effect at the time the lessor would
otherwise be subject to the tax imposed by this Act, to a
hospital that has been issued an active tax exemption
identification number by the Department under Section 1g of
the Retailers' Occupation Tax Act. If the equipment is leased
in a manner that does not qualify for this exemption or is
used in any other non-exempt manner, the lessor shall be
liable for the tax imposed under this Act or the Use Tax Act,
as the case may be, based on the fair market value of the
property at the time the non-qualifying use occurs. No
lessor shall collect or attempt to collect an amount (however
designated) that purports to reimburse that lessor for the
tax imposed by this Act or the Use Tax Act, as the case may
be, if the tax has not been paid by the lessor. If a lessor
improperly collects any such amount from the lessee, the
lessee shall have a legal right to claim a refund of that
amount from the lessor. If, however, that amount is not
refunded to the lessee for any reason, the lessor is liable
to pay that amount to the Department.
(16) Personal property purchased by a lessor who leases
the property, under a lease of one year or longer executed or
in effect at the time the lessor would otherwise be subject
to the tax imposed by this Act, to a governmental body that
has been issued an active tax exemption identification number
by the Department under Section 1g of the Retailers'
Occupation Tax Act. If the property is leased in a manner
that does not qualify for this exemption or is used in any
other non-exempt manner, the lessor shall be liable for the
tax imposed under this Act or the Use Tax Act, as the case
may be, based on the fair market value of the property at the
time the non-qualifying use occurs. No lessor shall collect
or attempt to collect an amount (however designated) that
purports to reimburse that lessor for the tax imposed by this
Act or the Use Tax Act, as the case may be, if the tax has
not been paid by the lessor. If a lessor improperly collects
any such amount from the lessee, the lessee shall have a
legal right to claim a refund of that amount from the lessor.
If, however, that amount is not refunded to the lessee for
any reason, the lessor is liable to pay that amount to the
Department.
(17) Beginning with taxable years ending on or after
December 31, 1995 and ending with taxable years ending on or
before December 31, 2004, personal property that is donated
for disaster relief to be used in a State or federally
declared disaster area in Illinois or bordering Illinois by a
manufacturer or retailer that is registered in this State to
a corporation, society, association, foundation, or
institution that has been issued a sales tax exemption
identification number by the Department that assists victims
of the disaster who reside within the declared disaster area.
(18) Beginning with taxable years ending on or after
December 31, 1995 and ending with taxable years ending on or
before December 31, 2004, personal property that is used in
the performance of infrastructure repairs in this State,
including but not limited to municipal roads and streets,
access roads, bridges, sidewalks, waste disposal systems,
water and sewer line extensions, water distribution and
purification facilities, storm water drainage and retention
facilities, and sewage treatment facilities, resulting from a
State or federally declared disaster in Illinois or bordering
Illinois when such repairs are initiated on facilities
located in the declared disaster area within 6 months after
the disaster.
(19) Beginning July 1, 1999, game or game birds
purchased at a "game breeding and hunting preserve area" or
an "exotic game hunting area" as those terms are used in the
Wildlife Code or at a hunting enclosure approved through
rules adopted by the Department of Natural Resources. This
paragraph is exempt from the provisions of Section 3-75.
(20) (19) A motor vehicle, as that term is defined in
Section 1-146 of the Illinois Vehicle Code, that is donated
to a corporation, limited liability company, society,
association, foundation, or institution that is determined by
the Department to be organized and operated exclusively for
educational purposes. For purposes of this exemption, "a
corporation, limited liability company, society, association,
foundation, or institution organized and operated exclusively
for educational purposes" means all tax-supported public
schools, private schools that offer systematic instruction in
useful branches of learning by methods common to public
schools and that compare favorably in their scope and
intensity with the course of study presented in tax-supported
schools, and vocational or technical schools or institutes
organized and operated exclusively to provide a course of
study of not less than 6 weeks duration and designed to
prepare individuals to follow a trade or to pursue a manual,
technical, mechanical, industrial, business, or commercial
occupation.
(21) (20) Beginning January 1, 2000, personal property,
including food, purchased through fundraising events for the
benefit of a public or private elementary or secondary
school, a group of those schools, or one or more school
districts if the events are sponsored by an entity recognized
by the school district that consists primarily of volunteers
and includes parents and teachers of the school children.
This paragraph does not apply to fundraising events (i) for
the benefit of private home instruction or (ii) for which the
fundraising entity purchases the personal property sold at
the events from another individual or entity that sold the
property for the purpose of resale by the fundraising entity
and that profits from the sale to the fundraising entity.
This paragraph is exempt from the provisions of Section 3-75.
(22) (19) Beginning January 1, 2000, new or used
automatic vending machines that prepare and serve hot food
and beverages, including coffee, soup, and other items, and
replacement parts for these machines. This paragraph is
exempt from the provisions of Section 3-75.
(23) Food for human consumption that is to be consumed
off the premises where it is sold (other than alcoholic
beverages, soft drinks, and food that has been prepared for
immediate consumption) and prescription and nonprescription
medicines, drugs, medical appliances, and insulin, urine
testing materials, syringes, and needles used by diabetics,
for human use, when purchased for use by a person receiving
medical assistance under Article 5 of the Illinois Public Aid
Code who resides in a licensed long-term care facility, as
defined in the Nursing Home Care Act.
(Source: P.A. 90-14, eff. 7-1-97; 90-552, eff. 12-12-97;
90-605, eff. 6-30-98; 91-51, eff. 6-30-99; 91-200, eff.
7-20-99; 91-439, eff. 8-6-99; 91-637, eff. 8-20-99; 91-644,
eff. 8-20-99; revised 9-29-99.)
Section 12. The Service Occupation Tax Act is amended by
changing Sections 2 and 3-5 as follows:
(35 ILCS 115/2) (from Ch. 120, par. 439.102)
Sec. 2. "Transfer" means any transfer of the title to
property or of the ownership of property whether or not the
transferor retains title as security for the payment of
amounts due him from the transferee.
"Cost Price" means the consideration paid by the
serviceman for a purchase valued in money, whether paid in
money or otherwise, including cash, credits and services, and
shall be determined without any deduction on account of the
supplier's cost of the property sold or on account of any
other expense incurred by the supplier. When a serviceman
contracts out part or all of the services required in his
sale of service, it shall be presumed that the cost price to
the serviceman of the property transferred to him by his or
her subcontractor is equal to 50% of the subcontractor's
charges to the serviceman in the absence of proof of the
consideration paid by the subcontractor for the purchase of
such property.
"Department" means the Department of Revenue.
"Person" means any natural individual, firm, partnership,
association, joint stock company, joint venture, public or
private corporation, limited liability company, and any
receiver, executor, trustee, guardian or other representative
appointed by order of any court.
"Sale of Service" means any transaction except:
(a) A retail sale of tangible personal property taxable
under the Retailers' Occupation Tax Act or under the Use Tax
Act.
(b) A sale of tangible personal property for the purpose
of resale made in compliance with Section 2c of the
Retailers' Occupation Tax Act.
(c) Except as hereinafter provided, a sale or transfer
of tangible personal property as an incident to the rendering
of service for or by any governmental body or for or by any
corporation, society, association, foundation or institution
organized and operated exclusively for charitable, religious
or educational purposes or any not-for-profit corporation,
society, association, foundation, institution or organization
which has no compensated officers or employees and which is
organized and operated primarily for the recreation of
persons 55 years of age or older. A limited liability company
may qualify for the exemption under this paragraph only if
the limited liability company is organized and operated
exclusively for educational purposes.
(d) A sale or transfer of tangible personal property as
an incident to the rendering of service for interstate
carriers for hire for use as rolling stock moving in
interstate commerce or lessors under leases of one year or
longer, executed or in effect at the time of purchase, to
interstate carriers for hire for use as rolling stock moving
in interstate commerce, and equipment operated by a
telecommunications provider, licensed as a common carrier by
the Federal Communications Commission, which is permanently
installed in or affixed to aircraft moving in interstate
commerce.
(d-1) A sale or transfer of tangible personal property
as an incident to the rendering of service for owners,
lessors or shippers of tangible personal property which is
utilized by interstate carriers for hire for use as rolling
stock moving in interstate commerce, and equipment operated
by a telecommunications provider, licensed as a common
carrier by the Federal Communications Commission, which is
permanently installed in or affixed to aircraft moving in
interstate commerce.
(d-2) The repairing, reconditioning or remodeling, for a
common carrier by rail, of tangible personal property which
belongs to such carrier for hire, and as to which such
carrier receives the physical possession of the repaired,
reconditioned or remodeled item of tangible personal property
in Illinois, and which such carrier transports, or shares
with another common carrier in the transportation of such
property, out of Illinois on a standard uniform bill of
lading showing the person who repaired, reconditioned or
remodeled the property as the shipper or consignor of such
property to a destination outside Illinois, for use outside
Illinois.
(d-3) A sale or transfer of tangible personal property
which is produced by the seller thereof on special order in
such a way as to have made the applicable tax the Service
Occupation Tax or the Service Use Tax, rather than the
Retailers' Occupation Tax or the Use Tax, for an interstate
carrier by rail which receives the physical possession of
such property in Illinois, and which transports such
property, or shares with another common carrier in the
transportation of such property, out of Illinois on a
standard uniform bill of lading showing the seller of the
property as the shipper or consignor of such property to a
destination outside Illinois, for use outside Illinois.
(d-4) Until January 1, 1997, a sale, by a registered
serviceman paying tax under this Act to the Department, of
special order printed materials delivered outside Illinois
and which are not returned to this State, if delivery is made
by the seller or agent of the seller, including an agent who
causes the product to be delivered outside Illinois by a
common carrier or the U.S. postal service.
(e) A sale or transfer of machinery and equipment used
primarily in the process of the manufacturing or assembling,
either in an existing, an expanded or a new manufacturing
facility, of tangible personal property for wholesale or
retail sale or lease, whether such sale or lease is made
directly by the manufacturer or by some other person, whether
the materials used in the process are owned by the
manufacturer or some other person, or whether such sale or
lease is made apart from or as an incident to the seller's
engaging in a service occupation and the applicable tax is a
Service Occupation Tax or Service Use Tax, rather than
Retailers' Occupation Tax or Use Tax.
(f) The sale or transfer of distillation machinery and
equipment, sold as a unit or kit and assembled or installed
by the retailer, which machinery and equipment is certified
by the user to be used only for the production of ethyl
alcohol that will be used for consumption as motor fuel or as
a component of motor fuel for the personal use of such user
and not subject to sale or resale.
(g) At the election of any serviceman not required to be
otherwise registered as a retailer under Section 2a of the
Retailers' Occupation Tax Act, made for each fiscal year
sales of service in which the aggregate annual cost price of
tangible personal property transferred as an incident to the
sales of service is less than 35% (75% in the case of
servicemen transferring prescription drugs or servicemen
engaged in graphic arts production) of the aggregate annual
total gross receipts from all sales of service. The purchase
of such tangible personal property by the serviceman shall be
subject to tax under the Retailers' Occupation Tax Act and
the Use Tax Act. However, if a primary serviceman who has
made the election described in this paragraph subcontracts
service work to a secondary serviceman who has also made the
election described in this paragraph, the primary serviceman
does not incur a Use Tax liability if the secondary
serviceman (i) has paid or will pay Use Tax on his or her
cost price of any tangible personal property transferred to
the primary serviceman and (ii) certifies that fact in
writing to the primary serviceman.
Tangible personal property transferred incident to the
completion of a maintenance agreement is exempt from the tax
imposed pursuant to this Act.
Exemption (e) also includes machinery and equipment used
in the general maintenance or repair of such exempt machinery
and equipment or for in-house manufacture of exempt machinery
and equipment. For the purposes of exemption (e), each of
these terms shall have the following meanings: (1)
"manufacturing process" shall mean the production of any
article of tangible personal property, whether such article
is a finished product or an article for use in the process of
manufacturing or assembling a different article of tangible
personal property, by procedures commonly regarded as
manufacturing, processing, fabricating, or refining which
changes some existing material or materials into a material
with a different form, use or name. In relation to a
recognized integrated business composed of a series of
operations which collectively constitute manufacturing, or
individually constitute manufacturing operations, the
manufacturing process shall be deemed to commence with the
first operation or stage of production in the series, and
shall not be deemed to end until the completion of the final
product in the last operation or stage of production in the
series; and further for purposes of exemption (e),
photoprocessing is deemed to be a manufacturing process of
tangible personal property for wholesale or retail sale; (2)
"assembling process" shall mean the production of any article
of tangible personal property, whether such article is a
finished product or an article for use in the process of
manufacturing or assembling a different article of tangible
personal property, by the combination of existing materials
in a manner commonly regarded as assembling which results in
a material of a different form, use or name; (3) "machinery"
shall mean major mechanical machines or major components of
such machines contributing to a manufacturing or assembling
process; and (4) "equipment" shall include any independent
device or tool separate from any machinery but essential to
an integrated manufacturing or assembly process; including
computers used primarily in a manufacuturer's operating
exempt machinery and equipment in a computer assisted design,
computer assisted manufacturing (CAD/CAM) system; or any
subunit or assembly comprising a component of any machinery
or auxiliary, adjunct or attachment parts of machinery, such
as tools, dies, jigs, fixtures, patterns and molds; or any
parts which require periodic replacement in the course of
normal operation; but shall not include hand tools. Equipment
includes chemicals or chemicals acting as catalysts but only
if the chemicals or chemicals acting as catalysts effect a
direct and immediate change upon a product being manufactured
or assembled for wholesale or retail sale or lease. The
purchaser of such machinery and equipment who has an active
resale registration number shall furnish such number to the
seller at the time of purchase. The purchaser of such
machinery and equipment and tools without an active resale
registration number shall furnish to the seller a certificate
of exemption for each transaction stating facts establishing
the exemption for that transaction, which certificate shall
be available to the Department for inspection or audit.
The rolling stock exemption applies to rolling stock used
by an interstate carrier for hire, even just between points
in Illinois, if such rolling stock transports, for hire,
persons whose journeys or property whose shipments originate
or terminate outside Illinois.
Any informal rulings, opinions or letters issued by the
Department in response to an inquiry or request for any
opinion from any person regarding the coverage and
applicability of exemption (e) to specific devices shall be
published, maintained as a public record, and made available
for public inspection and copying. If the informal ruling,
opinion or letter contains trade secrets or other
confidential information, where possible the Department shall
delete such information prior to publication. Whenever such
informal rulings, opinions, or letters contain any policy of
general applicability, the Department shall formulate and
adopt such policy as a rule in accordance with the provisions
of the Illinois Administrative Procedure Act.
On and after July 1, 1987, no entity otherwise eligible
under exemption (c) of this Section shall make tax free
purchases unless it has an active exemption identification
number issued by the Department.
"Serviceman" means any person who is engaged in the
occupation of making sales of service.
"Sale at Retail" means "sale at retail" as defined in the
Retailers' Occupation Tax Act.
"Supplier" means any person who makes sales of tangible
personal property to servicemen for the purpose of resale as
an incident to a sale of service.
(Source: P.A. 91-51, eff. 6-30-99.)
(35 ILCS 115/3-5) (from Ch. 120, par. 439.103-5)
Sec. 3-5. Exemptions. The following tangible personal
property is exempt from the tax imposed by this Act:
(1) Personal property sold by a corporation, society,
association, foundation, institution, or organization, other
than a limited liability company, that is organized and
operated as a not-for-profit service enterprise for the
benefit of persons 65 years of age or older if the personal
property was not purchased by the enterprise for the purpose
of resale by the enterprise.
(2) Personal property purchased by a not-for-profit
Illinois county fair association for use in conducting,
operating, or promoting the county fair.
(3) Personal property purchased by any not-for-profit
arts or cultural organization that establishes, by proof
required by the Department by rule, that it has received an
exemption under Section 501(c)(3) of the Internal Revenue
Code and that is organized and operated for the presentation
or support of arts or cultural programming, activities, or
services. These organizations include, but are not limited
to, music and dramatic arts organizations such as symphony
orchestras and theatrical groups, arts and cultural service
organizations, local arts councils, visual arts
organizations, and media arts organizations.
(4) Legal tender, currency, medallions, or gold or
silver coinage issued by the State of Illinois, the
government of the United States of America, or the government
of any foreign country, and bullion.
(5) Graphic arts machinery and equipment, including
repair and replacement parts, both new and used, and
including that manufactured on special order or purchased for
lease, certified by the purchaser to be used primarily for
graphic arts production. Equipment includes chemicals or
chemicals acting as catalysts but only if the chemicals or
chemicals acting as catalysts effect a direct and immediate
change upon a graphic arts product.
(6) Personal property sold by a teacher-sponsored
student organization affiliated with an elementary or
secondary school located in Illinois.
(7) Farm machinery and equipment, both new and used,
including that manufactured on special order, certified by
the purchaser to be used primarily for production agriculture
or State or federal agricultural programs, including
individual replacement parts for the machinery and equipment,
including machinery and equipment purchased for lease, and
including implements of husbandry defined in Section 1-130 of
the Illinois Vehicle Code, farm machinery and agricultural
chemical and fertilizer spreaders, and nurse wagons required
to be registered under Section 3-809 of the Illinois Vehicle
Code, but excluding other motor vehicles required to be
registered under the Illinois Vehicle Code. Horticultural
polyhouses or hoop houses used for propagating, growing, or
overwintering plants shall be considered farm machinery and
equipment under this item (7). Agricultural chemical tender
tanks and dry boxes shall include units sold separately from
a motor vehicle required to be licensed and units sold
mounted on a motor vehicle required to be licensed if the
selling price of the tender is separately stated.
Farm machinery and equipment shall include precision
farming equipment that is installed or purchased to be
installed on farm machinery and equipment including, but not
limited to, tractors, harvesters, sprayers, planters,
seeders, or spreaders. Precision farming equipment includes,
but is not limited to, soil testing sensors, computers,
monitors, software, global positioning and mapping systems,
and other such equipment.
Farm machinery and equipment also includes computers,
sensors, software, and related equipment used primarily in
the computer-assisted operation of production agriculture
facilities, equipment, and activities such as, but not
limited to, the collection, monitoring, and correlation of
animal and crop data for the purpose of formulating animal
diets and agricultural chemicals. This item (7) is exempt
from the provisions of Section 3-55.
(8) Fuel and petroleum products sold to or used by an
air common carrier, certified by the carrier to be used for
consumption, shipment, or storage in the conduct of its
business as an air common carrier, for a flight destined for
or returning from a location or locations outside the United
States without regard to previous or subsequent domestic
stopovers.
(9) Proceeds of mandatory service charges separately
stated on customers' bills for the purchase and consumption
of food and beverages, to the extent that the proceeds of the
service charge are in fact turned over as tips or as a
substitute for tips to the employees who participate directly
in preparing, serving, hosting or cleaning up the food or
beverage function with respect to which the service charge is
imposed.
(10) Oil field exploration, drilling, and production
equipment, including (i) rigs and parts of rigs, rotary rigs,
cable tool rigs, and workover rigs, (ii) pipe and tubular
goods, including casing and drill strings, (iii) pumps and
pump-jack units, (iv) storage tanks and flow lines, (v) any
individual replacement part for oil field exploration,
drilling, and production equipment, and (vi) machinery and
equipment purchased for lease; but excluding motor vehicles
required to be registered under the Illinois Vehicle Code.
(11) Photoprocessing machinery and equipment, including
repair and replacement parts, both new and used, including
that manufactured on special order, certified by the
purchaser to be used primarily for photoprocessing, and
including photoprocessing machinery and equipment purchased
for lease.
(12) Coal exploration, mining, offhighway hauling,
processing, maintenance, and reclamation equipment, including
replacement parts and equipment, and including equipment
purchased for lease, but excluding motor vehicles required to
be registered under the Illinois Vehicle Code.
(13) Food for human consumption that is to be consumed
off the premises where it is sold (other than alcoholic
beverages, soft drinks and food that has been prepared for
immediate consumption) and prescription and non-prescription
medicines, drugs, medical appliances, and insulin, urine
testing materials, syringes, and needles used by diabetics,
for human use, when purchased for use by a person receiving
medical assistance under Article 5 of the Illinois Public Aid
Code who resides in a licensed long-term care facility, as
defined in the Nursing Home Care Act.
(14) Semen used for artificial insemination of livestock
for direct agricultural production.
(15) Horses, or interests in horses, registered with and
meeting the requirements of any of the Arabian Horse Club
Registry of America, Appaloosa Horse Club, American Quarter
Horse Association, United States Trotting Association, or
Jockey Club, as appropriate, used for purposes of breeding or
racing for prizes.
(16) Computers and communications equipment utilized for
any hospital purpose and equipment used in the diagnosis,
analysis, or treatment of hospital patients sold to a lessor
who leases the equipment, under a lease of one year or longer
executed or in effect at the time of the purchase, to a
hospital that has been issued an active tax exemption
identification number by the Department under Section 1g of
the Retailers' Occupation Tax Act.
(17) Personal property sold to a lessor who leases the
property, under a lease of one year or longer executed or in
effect at the time of the purchase, to a governmental body
that has been issued an active tax exemption identification
number by the Department under Section 1g of the Retailers'
Occupation Tax Act.
(18) Beginning with taxable years ending on or after
December 31, 1995 and ending with taxable years ending on or
before December 31, 2004, personal property that is donated
for disaster relief to be used in a State or federally
declared disaster area in Illinois or bordering Illinois by a
manufacturer or retailer that is registered in this State to
a corporation, society, association, foundation, or
institution that has been issued a sales tax exemption
identification number by the Department that assists victims
of the disaster who reside within the declared disaster area.
(19) Beginning with taxable years ending on or after
December 31, 1995 and ending with taxable years ending on or
before December 31, 2004, personal property that is used in
the performance of infrastructure repairs in this State,
including but not limited to municipal roads and streets,
access roads, bridges, sidewalks, waste disposal systems,
water and sewer line extensions, water distribution and
purification facilities, storm water drainage and retention
facilities, and sewage treatment facilities, resulting from a
State or federally declared disaster in Illinois or bordering
Illinois when such repairs are initiated on facilities
located in the declared disaster area within 6 months after
the disaster.
(20) Beginning July 1, 1999, game or game birds sold at
a "game breeding and hunting preserve area" or an "exotic
game hunting area" as those terms are used in the Wildlife
Code or at a hunting enclosure approved through rules adopted
by the Department of Natural Resources. This paragraph is
exempt from the provisions of Section 3-55.
(21) (20) A motor vehicle, as that term is defined in
Section 1-146 of the Illinois Vehicle Code, that is donated
to a corporation, limited liability company, society,
association, foundation, or institution that is determined by
the Department to be organized and operated exclusively for
educational purposes. For purposes of this exemption, "a
corporation, limited liability company, society, association,
foundation, or institution organized and operated exclusively
for educational purposes" means all tax-supported public
schools, private schools that offer systematic instruction in
useful branches of learning by methods common to public
schools and that compare favorably in their scope and
intensity with the course of study presented in tax-supported
schools, and vocational or technical schools or institutes
organized and operated exclusively to provide a course of
study of not less than 6 weeks duration and designed to
prepare individuals to follow a trade or to pursue a manual,
technical, mechanical, industrial, business, or commercial
occupation.
(22) (21) Beginning January 1, 2000, personal property,
including food, purchased through fundraising events for the
benefit of a public or private elementary or secondary
school, a group of those schools, or one or more school
districts if the events are sponsored by an entity recognized
by the school district that consists primarily of volunteers
and includes parents and teachers of the school children.
This paragraph does not apply to fundraising events (i) for
the benefit of private home instruction or (ii) for which the
fundraising entity purchases the personal property sold at
the events from another individual or entity that sold the
property for the purpose of resale by the fundraising entity
and that profits from the sale to the fundraising entity.
This paragraph is exempt from the provisions of Section 3-55.
(23) (20) Beginning January 1, 2000, new or used
automatic vending machines that prepare and serve hot food
and beverages, including coffee, soup, and other items, and
replacement parts for these machines. This paragraph is
exempt from the provisions of Section 3-55.
(Source: P.A. 90-14, eff. 7-1-97; 90-552, eff. 12-12-97;
90-605, eff. 6-30-98; 91-51, eff. 6-30-99; 91-200, eff.
7-20-99; 91-439, eff. 8-6-99; 91-533, eff. 8-13-99; 91-637,
eff. 8-20-99; 91-644, eff. 8-20-99; revised 9-29-99.)
Section 15. The Retailers' Occupation Tax Act is amended
by changing Sections 2-5, 2-45, 3, and 5k and by adding
Section 2-10.5 as follows:
(35 ILCS 120/2-5) (from Ch. 120, par. 441-5)
Sec. 2-5. Exemptions. Gross receipts from proceeds from
the sale of the following tangible personal property are
exempt from the tax imposed by this Act:
(1) Farm chemicals.
(2) Farm machinery and equipment, both new and used,
including that manufactured on special order, certified by
the purchaser to be used primarily for production agriculture
or State or federal agricultural programs, including
individual replacement parts for the machinery and equipment,
including machinery and equipment purchased for lease, and
including implements of husbandry defined in Section 1-130 of
the Illinois Vehicle Code, farm machinery and agricultural
chemical and fertilizer spreaders, and nurse wagons required
to be registered under Section 3-809 of the Illinois Vehicle
Code, but excluding other motor vehicles required to be
registered under the Illinois Vehicle Code. Horticultural
polyhouses or hoop houses used for propagating, growing, or
overwintering plants shall be considered farm machinery and
equipment under this item (2). Agricultural chemical tender
tanks and dry boxes shall include units sold separately from
a motor vehicle required to be licensed and units sold
mounted on a motor vehicle required to be licensed, if the
selling price of the tender is separately stated.
Farm machinery and equipment shall include precision
farming equipment that is installed or purchased to be
installed on farm machinery and equipment including, but not
limited to, tractors, harvesters, sprayers, planters,
seeders, or spreaders. Precision farming equipment includes,
but is not limited to, soil testing sensors, computers,
monitors, software, global positioning and mapping systems,
and other such equipment.
Farm machinery and equipment also includes computers,
sensors, software, and related equipment used primarily in
the computer-assisted operation of production agriculture
facilities, equipment, and activities such as, but not
limited to, the collection, monitoring, and correlation of
animal and crop data for the purpose of formulating animal
diets and agricultural chemicals. This item (7) is exempt
from the provisions of Section 2-70.
(3) Distillation machinery and equipment, sold as a unit
or kit, assembled or installed by the retailer, certified by
the user to be used only for the production of ethyl alcohol
that will be used for consumption as motor fuel or as a
component of motor fuel for the personal use of the user, and
not subject to sale or resale.
(4) Graphic arts machinery and equipment, including
repair and replacement parts, both new and used, and
including that manufactured on special order or purchased for
lease, certified by the purchaser to be used primarily for
graphic arts production. Equipment includes chemicals or
chemicals acting as catalysts but only if the chemicals or
chemicals acting as catalysts effect a direct and immediate
change upon a graphic arts product.
(5) A motor vehicle of the first division, a motor
vehicle of the second division that is a self-contained motor
vehicle designed or permanently converted to provide living
quarters for recreational, camping, or travel use, with
direct walk through access to the living quarters from the
driver's seat, or a motor vehicle of the second division that
is of the van configuration designed for the transportation
of not less than 7 nor more than 16 passengers, as defined in
Section 1-146 of the Illinois Vehicle Code, that is used for
automobile renting, as defined in the Automobile Renting
Occupation and Use Tax Act.
(6) Personal property sold by a teacher-sponsored
student organization affiliated with an elementary or
secondary school located in Illinois.
(7) Proceeds of that portion of the selling price of a
passenger car the sale of which is subject to the Replacement
Vehicle Tax.
(8) Personal property sold to an Illinois county fair
association for use in conducting, operating, or promoting
the county fair.
(9) Personal property sold to a not-for-profit arts or
cultural organization that establishes, by proof required by
the Department by rule, that it has received an exemption
under Section 501(c)(3) of the Internal Revenue Code and that
is organized and operated for the presentation or support of
arts or cultural programming, activities, or services. These
organizations include, but are not limited to, music and
dramatic arts organizations such as symphony orchestras and
theatrical groups, arts and cultural service organizations,
local arts councils, visual arts organizations, and media
arts organizations.
(10) Personal property sold by a corporation, society,
association, foundation, institution, or organization, other
than a limited liability company, that is organized and
operated as a not-for-profit service enterprise for the
benefit of persons 65 years of age or older if the personal
property was not purchased by the enterprise for the purpose
of resale by the enterprise.
(11) Personal property sold to a governmental body, to a
corporation, society, association, foundation, or institution
organized and operated exclusively for charitable, religious,
or educational purposes, or to a not-for-profit corporation,
society, association, foundation, institution, or
organization that has no compensated officers or employees
and that is organized and operated primarily for the
recreation of persons 55 years of age or older. A limited
liability company may qualify for the exemption under this
paragraph only if the limited liability company is organized
and operated exclusively for educational purposes. On and
after July 1, 1987, however, no entity otherwise eligible for
this exemption shall make tax-free purchases unless it has an
active identification number issued by the Department.
(12) Personal property sold to interstate carriers for
hire for use as rolling stock moving in interstate commerce
or to lessors under leases of one year or longer executed or
in effect at the time of purchase by interstate carriers for
hire for use as rolling stock moving in interstate commerce
and equipment operated by a telecommunications provider,
licensed as a common carrier by the Federal Communications
Commission, which is permanently installed in or affixed to
aircraft moving in interstate commerce.
(13) Proceeds from sales to owners, lessors, or shippers
of tangible personal property that is utilized by interstate
carriers for hire for use as rolling stock moving in
interstate commerce and equipment operated by a
telecommunications provider, licensed as a common carrier by
the Federal Communications Commission, which is permanently
installed in or affixed to aircraft moving in interstate
commerce.
(14) Machinery and equipment that will be used by the
purchaser, or a lessee of the purchaser, primarily in the
process of manufacturing or assembling tangible personal
property for wholesale or retail sale or lease, whether the
sale or lease is made directly by the manufacturer or by some
other person, whether the materials used in the process are
owned by the manufacturer or some other person, or whether
the sale or lease is made apart from or as an incident to the
seller's engaging in the service occupation of producing
machines, tools, dies, jigs, patterns, gauges, or other
similar items of no commercial value on special order for a
particular purchaser.
(15) Proceeds of mandatory service charges separately
stated on customers' bills for purchase and consumption of
food and beverages, to the extent that the proceeds of the
service charge are in fact turned over as tips or as a
substitute for tips to the employees who participate directly
in preparing, serving, hosting or cleaning up the food or
beverage function with respect to which the service charge is
imposed.
(16) Petroleum products sold to a purchaser if the
seller is prohibited by federal law from charging tax to the
purchaser.
(17) Tangible personal property sold to a common carrier
by rail or motor that receives the physical possession of the
property in Illinois and that transports the property, or
shares with another common carrier in the transportation of
the property, out of Illinois on a standard uniform bill of
lading showing the seller of the property as the shipper or
consignor of the property to a destination outside Illinois,
for use outside Illinois.
(18) Legal tender, currency, medallions, or gold or
silver coinage issued by the State of Illinois, the
government of the United States of America, or the government
of any foreign country, and bullion.
(19) Oil field exploration, drilling, and production
equipment, including (i) rigs and parts of rigs, rotary rigs,
cable tool rigs, and workover rigs, (ii) pipe and tubular
goods, including casing and drill strings, (iii) pumps and
pump-jack units, (iv) storage tanks and flow lines, (v) any
individual replacement part for oil field exploration,
drilling, and production equipment, and (vi) machinery and
equipment purchased for lease; but excluding motor vehicles
required to be registered under the Illinois Vehicle Code.
(20) Photoprocessing machinery and equipment, including
repair and replacement parts, both new and used, including
that manufactured on special order, certified by the
purchaser to be used primarily for photoprocessing, and
including photoprocessing machinery and equipment purchased
for lease.
(21) Coal exploration, mining, offhighway hauling,
processing, maintenance, and reclamation equipment, including
replacement parts and equipment, and including equipment
purchased for lease, but excluding motor vehicles required to
be registered under the Illinois Vehicle Code.
(22) Fuel and petroleum products sold to or used by an
air carrier, certified by the carrier to be used for
consumption, shipment, or storage in the conduct of its
business as an air common carrier, for a flight destined for
or returning from a location or locations outside the United
States without regard to previous or subsequent domestic
stopovers.
(23) A transaction in which the purchase order is
received by a florist who is located outside Illinois, but
who has a florist located in Illinois deliver the property to
the purchaser or the purchaser's donee in Illinois.
(24) Fuel consumed or used in the operation of ships,
barges, or vessels that are used primarily in or for the
transportation of property or the conveyance of persons for
hire on rivers bordering on this State if the fuel is
delivered by the seller to the purchaser's barge, ship, or
vessel while it is afloat upon that bordering river.
(25) A motor vehicle sold in this State to a nonresident
even though the motor vehicle is delivered to the nonresident
in this State, if the motor vehicle is not to be titled in
this State, and if a driveaway decal permit is issued to the
motor vehicle as provided in Section 3-603 of the Illinois
Vehicle Code or if the nonresident purchaser has vehicle
registration plates to transfer to the motor vehicle upon
returning to his or her home state. The issuance of the
driveaway decal permit or having the out-of-state
registration plates to be transferred is prima facie evidence
that the motor vehicle will not be titled in this State.
(26) Semen used for artificial insemination of livestock
for direct agricultural production.
(27) Horses, or interests in horses, registered with and
meeting the requirements of any of the Arabian Horse Club
Registry of America, Appaloosa Horse Club, American Quarter
Horse Association, United States Trotting Association, or
Jockey Club, as appropriate, used for purposes of breeding or
racing for prizes.
(28) Computers and communications equipment utilized for
any hospital purpose and equipment used in the diagnosis,
analysis, or treatment of hospital patients sold to a lessor
who leases the equipment, under a lease of one year or longer
executed or in effect at the time of the purchase, to a
hospital that has been issued an active tax exemption
identification number by the Department under Section 1g of
this Act.
(29) Personal property sold to a lessor who leases the
property, under a lease of one year or longer executed or in
effect at the time of the purchase, to a governmental body
that has been issued an active tax exemption identification
number by the Department under Section 1g of this Act.
(30) Beginning with taxable years ending on or after
December 31, 1995 and ending with taxable years ending on or
before December 31, 2004, personal property that is donated
for disaster relief to be used in a State or federally
declared disaster area in Illinois or bordering Illinois by a
manufacturer or retailer that is registered in this State to
a corporation, society, association, foundation, or
institution that has been issued a sales tax exemption
identification number by the Department that assists victims
of the disaster who reside within the declared disaster area.
(31) Beginning with taxable years ending on or after
December 31, 1995 and ending with taxable years ending on or
before December 31, 2004, personal property that is used in
the performance of infrastructure repairs in this State,
including but not limited to municipal roads and streets,
access roads, bridges, sidewalks, waste disposal systems,
water and sewer line extensions, water distribution and
purification facilities, storm water drainage and retention
facilities, and sewage treatment facilities, resulting from a
State or federally declared disaster in Illinois or bordering
Illinois when such repairs are initiated on facilities
located in the declared disaster area within 6 months after
the disaster.
(32) Beginning July 1, 1999, game or game birds sold at
a "game breeding and hunting preserve area" or an "exotic
game hunting area" as those terms are used in the Wildlife
Code or at a hunting enclosure approved through rules adopted
by the Department of Natural Resources. This paragraph is
exempt from the provisions of Section 2-70.
(33) (32) A motor vehicle, as that term is defined in
Section 1-146 of the Illinois Vehicle Code, that is donated
to a corporation, limited liability company, society,
association, foundation, or institution that is determined by
the Department to be organized and operated exclusively for
educational purposes. For purposes of this exemption, "a
corporation, limited liability company, society, association,
foundation, or institution organized and operated exclusively
for educational purposes" means all tax-supported public
schools, private schools that offer systematic instruction in
useful branches of learning by methods common to public
schools and that compare favorably in their scope and
intensity with the course of study presented in tax-supported
schools, and vocational or technical schools or institutes
organized and operated exclusively to provide a course of
study of not less than 6 weeks duration and designed to
prepare individuals to follow a trade or to pursue a manual,
technical, mechanical, industrial, business, or commercial
occupation.
(34) (33) Beginning January 1, 2000, personal property,
including food, purchased through fundraising events for the
benefit of a public or private elementary or secondary
school, a group of those schools, or one or more school
districts if the events are sponsored by an entity recognized
by the school district that consists primarily of volunteers
and includes parents and teachers of the school children.
This paragraph does not apply to fundraising events (i) for
the benefit of private home instruction or (ii) for which the
fundraising entity purchases the personal property sold at
the events from another individual or entity that sold the
property for the purpose of resale by the fundraising entity
and that profits from the sale to the fundraising entity.
This paragraph is exempt from the provisions of Section 2-70.
(35) (32) Beginning January 1, 2000, new or used
automatic vending machines that prepare and serve hot food
and beverages, including coffee, soup, and other items, and
replacement parts for these machines. This paragraph is
exempt from the provisions of Section 2-70.
(36) Food for human consumption that is to be consumed
off the premises where it is sold (other than alcoholic
beverages, soft drinks, and food that has been prepared for
immediate consumption) and prescription and nonprescription
medicines, drugs, medical appliances, and insulin, urine
testing materials, syringes, and needles used by diabetics,
for human use, when purchased for use by a person receiving
medical assistance under Article 5 of the Illinois Public Aid
Code who resides in a licensed long-term care facility, as
defined in the Nursing Home Care Act.
(Source: P.A. 90-14, eff. 7-1-97; 90-519, eff. 6-1-98;
90-552, eff. 12-12-97; 90-605, eff. 6-30-98; 91-51, eff.
6-30-99; 91-200, eff. 7-20-99; 91-439, eff. 8-6-99; 91-533,
eff. 8-13-99; 91-637, eff. 8-20-99; 91-644, eff. 8-20-99;
revised 9-28-99.)
(35 ILCS 120/2-10.5 new)
Sec. 2-10.5. Direct payment program; purchaser's
providing of permit to retailer; retailer relieved of
collecting use tax and local retailers' occupation tax
reimbursements from purchaser; direct payment of retailers'
occupation tax and local retailers' occupation tax by
purchaser.
(a) Beginning on July 1, 2001 there is established in
this State a Direct Payment Program to be administered by the
Department. The Department shall issue a Direct Pay Permit
to applicants who have been approved to participate in the
Direct Payment Program. Each person applying to participate
in the Direct Payment Program must demonstrate (1) the
applicant's ability to comply with the retailers' occupation
tax laws and the use tax laws in effect in this State and
that the applicant's accounting system will reflect the
proper amount of tax due, (2) that the applicant has a valid
business purpose for participating in the Direct Payment
Program, and (3) how the applicant's participation in the
Direct Payment Program will benefit tax compliance.
Application shall be made on forms provided by the Department
and shall contain information as the Department may
reasonably require. The Department shall approve or deny an
applicant within 90 days after the Department's receipt of
the application, unless the Department makes a written
request for additional information from the applicant.
(b) A person who has been approved for the Direct
Payment Program and who has been issued a Direct Pay Permit
by the Department is relieved of paying tax to a retailer
when purchasing tangible personal property for use or
consumption, except as provided in subsection (d), by
providing that retailer a copy of that Direct Pay Permit. A
retailer who accepts a copy of a customer's Direct Pay Permit
is relieved of the obligation to remit the tax imposed by
this Act on the transaction. References in this Section to
"the tax imposed by this Act" include any local occupation
taxes administered by the Department that would be incurred
on the retail sale.
(c) Once the holder of a Direct Pay Permit uses that
Permit to relieve the Permit holder from paying tax to a
particular retailer, the holder must use its Permit for all
purchases, except as provided in subsection (d), from that
retailer for so long as the Permit is valid.
(d) Direct Pay Permits are not valid and shall not be
used for sales or purchases of:
(1) food or beverage;
(2) tangible personal property required to be
titled or registered with an agency of government; or
(3) any transactions subject to the Service
Occupation Tax Act or Service Use Tax Act.
(e) Direct Pay Permits are not assignable and are not
transferable. As an illustration, a construction contractor
shall not make purchases using a customer's Direct Pay
Permit.
(f) A Direct Pay Permit is valid until it is revoked by
the Department or until the holder notifies the Department in
writing that the holder is withdrawing from the Direct
Payment Program. A Direct Pay Permit can be revoked by the
Department, after notice and hearing, if the holder violates
any provision of this Act, any provision of the Illinois Use
Tax Act, or any provision of any Act imposing a local
retailers' occupation tax administered by the Department.
(g) The holder of a Direct Pay Permit who has been
relieved of paying tax to a retailer on a purchase for use or
consumption by representing to that retailer that it would
pay all applicable taxes directly to the Department shall pay
those taxes to the Department not later than the 20th day of
the month following the month in which the purchase was made.
Permit holders making such purchases are subject to all
provisions of this Act, and the tax must be reported and paid
as retailers' occupation tax in the same manner that the
retailer from whom the purchases were made would have
reported and paid it, including any local retailers'
occupation taxes applicable to that retail sale.
Notwithstanding any other provision of this Act, Permit
holders shall make all payments to the Department through the
use of electronic funds transfer.
(35 ILCS 120/2-45) (from Ch. 120, par. 441-45)
Sec. 2-45. Manufacturing and assembly exemption. The
manufacturing and assembly machinery and equipment exemption
includes machinery and equipment that replaces machinery and
equipment in an existing manufacturing facility as well as
machinery and equipment that are for use in an expanded or
new manufacturing facility.
The machinery and equipment exemption also includes
machinery and equipment used in the general maintenance or
repair of exempt machinery and equipment or for in-house
manufacture of exempt machinery and equipment. For the
purposes of this exemption, terms have the following
meanings:
(1) "Manufacturing process" means the production of
an article of tangible personal property, whether the
article is a finished product or an article for use in
the process of manufacturing or assembling a different
article of tangible personal property, by a procedure
commonly regarded as manufacturing, processing,
fabricating, or refining that changes some existing
material or materials into a material with a different
form, use, or name. In relation to a recognized
integrated business composed of a series of operations
that collectively constitute manufacturing, or
individually constitute manufacturing operations, the
manufacturing process commences with the first operation
or stage of production in the series and does not end
until the completion of the final product in the last
operation or stage of production in the series. For
purposes of this exemption, photoprocessing is a
manufacturing process of tangible personal property for
wholesale or retail sale.
(2) "Assembling process" means the production of an
article of tangible personal property, whether the
article is a finished product or an article for use in
the process of manufacturing or assembling a different
article of tangible personal property, by the combination
of existing materials in a manner commonly regarded as
assembling that results in a material of a different
form, use, or name.
(3) "Machinery" means major mechanical machines or
major components of those machines contributing to a
manufacturing or assembling process.
(4) "Equipment" includes an independent device or
tool separate from machinery but essential to an
integrated manufacturing or assembly process; including
computers used primarily in a manufacturer's operating
exempt machinery and equipment in a computer assisted
design, computer assisted manufacturing (CAD/CAM) system;
any subunit or assembly comprising a component of any
machinery or auxiliary, adjunct, or attachment parts of
machinery, such as tools, dies, jigs, fixtures, patterns,
and molds; and any parts that require periodic
replacement in the course of normal operation; but does
not include hand tools. Equipment includes chemicals or
chemicals acting as catalysts but only if the chemicals
or chemicals acting as catalysts effect a direct and
immediate change upon a product being manufactured or
assembled for wholesale or retail sale or lease.
The manufacturing and assembling machinery and equipment
exemption includes the sale of materials to a purchaser who
produces exempted types of machinery, equipment, or tools and
who rents or leases that machinery, equipment, or tools to a
manufacturer of tangible personal property. This exemption
also includes the sale of materials to a purchaser who
manufactures those materials into an exempted type of
machinery, equipment, or tools that the purchaser uses
himself or herself in the manufacturing of tangible personal
property. The purchaser of the machinery and equipment who
has an active resale registration number shall furnish that
number to the seller at the time of purchase. A purchaser of
the machinery, equipment, and tools without an active resale
registration number shall furnish to the seller a certificate
of exemption for each transaction stating facts establishing
the exemption for that transaction, and that certificate
shall be available to the Department for inspection or audit.
Informal rulings, opinions, or letters issued by the
Department in response to an inquiry or request for an
opinion from any person regarding the coverage and
applicability of this exemption to specific devices shall be
published, maintained as a public record, and made available
for public inspection and copying. If the informal ruling,
opinion, or letter contains trade secrets or other
confidential information, where possible, the Department
shall delete that information before publication. Whenever
informal rulings, opinions, or letters contain a policy of
general applicability, the Department shall formulate and
adopt that policy as a rule in accordance with the Illinois
Administrative Procedure Act.
(Source: P.A. 91-51, eff. 6-30-99.)
(35 ILCS 120/3) (from Ch. 120, par. 442)
Sec. 3. Except as provided in this Section, on or before
the twentieth day of each calendar month, every person
engaged in the business of selling tangible personal property
at retail in this State during the preceding calendar month
shall file a return with the Department, stating:
1. The name of the seller;
2. His residence address and the address of his
principal place of business and the address of the
principal place of business (if that is a different
address) from which he engages in the business of selling
tangible personal property at retail in this State;
3. Total amount of receipts received by him during
the preceding calendar month or quarter, as the case may
be, from sales of tangible personal property, and from
services furnished, by him during such preceding calendar
month or quarter;
4. Total amount received by him during the
preceding calendar month or quarter on charge and time
sales of tangible personal property, and from services
furnished, by him prior to the month or quarter for which
the return is filed;
5. Deductions allowed by law;
6. Gross receipts which were received by him during
the preceding calendar month or quarter and upon the
basis of which the tax is imposed;
7. The amount of credit provided in Section 2d of
this Act;
8. The amount of tax due;
9. The signature of the taxpayer; and
10. Such other reasonable information as the
Department may require.
If a taxpayer fails to sign a return within 30 days after
the proper notice and demand for signature by the Department,
the return shall be considered valid and any amount shown to
be due on the return shall be deemed assessed.
Each return shall be accompanied by the statement of
prepaid tax issued pursuant to Section 2e for which credit is
claimed.
A retailer may accept a Manufacturer's Purchase Credit
certification from a purchaser in satisfaction of Use Tax as
provided in Section 3-85 of the Use Tax Act if the purchaser
provides the appropriate documentation as required by Section
3-85 of the Use Tax Act. A Manufacturer's Purchase Credit
certification, accepted by a retailer as provided in Section
3-85 of the Use Tax Act, may be used by that retailer to
satisfy Retailers' Occupation Tax liability in the amount
claimed in the certification, not to exceed 6.25% of the
receipts subject to tax from a qualifying purchase.
The Department may require returns to be filed on a
quarterly basis. If so required, a return for each calendar
quarter shall be filed on or before the twentieth day of the
calendar month following the end of such calendar quarter.
The taxpayer shall also file a return with the Department for
each of the first two months of each calendar quarter, on or
before the twentieth day of the following calendar month,
stating:
1. The name of the seller;
2. The address of the principal place of business
from which he engages in the business of selling tangible
personal property at retail in this State;
3. The total amount of taxable receipts received by
him during the preceding calendar month from sales of
tangible personal property by him during such preceding
calendar month, including receipts from charge and time
sales, but less all deductions allowed by law;
4. The amount of credit provided in Section 2d of
this Act;
5. The amount of tax due; and
6. Such other reasonable information as the
Department may require.
If a total amount of less than $1 is payable, refundable
or creditable, such amount shall be disregarded if it is less
than 50 cents and shall be increased to $1 if it is 50 cents
or more.
Beginning October 1, 1993, a taxpayer who has an average
monthly tax liability of $150,000 or more shall make all
payments required by rules of the Department by electronic
funds transfer. Beginning October 1, 1994, a taxpayer who
has an average monthly tax liability of $100,000 or more
shall make all payments required by rules of the Department
by electronic funds transfer. Beginning October 1, 1995, a
taxpayer who has an average monthly tax liability of $50,000
or more shall make all payments required by rules of the
Department by electronic funds transfer. Beginning October
1, 2000, a taxpayer who has an annual tax liability of
$200,000 or more shall make all payments required by rules of
the Department by electronic funds transfer. The term
"annual tax liability" shall be the sum of the taxpayer's
liabilities under this Act, and under all other State and
local occupation and use tax laws administered by the
Department, for the immediately preceding calendar year. The
term "average monthly tax liability" shall be the sum of the
taxpayer's liabilities under this Act, and under all other
State and local occupation and use tax laws administered by
the Department, for the immediately preceding calendar year
divided by 12.
Before August 1 of each year beginning in 1993, the
Department shall notify all taxpayers required to make
payments by electronic funds transfer. All taxpayers
required to make payments by electronic funds transfer shall
make those payments for a minimum of one year beginning on
October 1.
Any taxpayer not required to make payments by electronic
funds transfer may make payments by electronic funds transfer
with the permission of the Department.
All taxpayers required to make payment by electronic
funds transfer and any taxpayers authorized to voluntarily
make payments by electronic funds transfer shall make those
payments in the manner authorized by the Department.
The Department shall adopt such rules as are necessary to
effectuate a program of electronic funds transfer and the
requirements of this Section.
Any amount which is required to be shown or reported on
any return or other document under this Act shall, if such
amount is not a whole-dollar amount, be increased to the
nearest whole-dollar amount in any case where the fractional
part of a dollar is 50 cents or more, and decreased to the
nearest whole-dollar amount where the fractional part of a
dollar is less than 50 cents.
If the retailer is otherwise required to file a monthly
return and if the retailer's average monthly tax liability to
the Department does not exceed $200, the Department may
authorize his returns to be filed on a quarter annual basis,
with the return for January, February and March of a given
year being due by April 20 of such year; with the return for
April, May and June of a given year being due by July 20 of
such year; with the return for July, August and September of
a given year being due by October 20 of such year, and with
the return for October, November and December of a given year
being due by January 20 of the following year.
If the retailer is otherwise required to file a monthly
or quarterly return and if the retailer's average monthly tax
liability with the Department does not exceed $50, the
Department may authorize his returns to be filed on an annual
basis, with the return for a given year being due by January
20 of the following year.
Such quarter annual and annual returns, as to form and
substance, shall be subject to the same requirements as
monthly returns.
Notwithstanding any other provision in this Act
concerning the time within which a retailer may file his
return, in the case of any retailer who ceases to engage in a
kind of business which makes him responsible for filing
returns under this Act, such retailer shall file a final
return under this Act with the Department not more than one
month after discontinuing such business.
Where the same person has more than one business
registered with the Department under separate registrations
under this Act, such person may not file each return that is
due as a single return covering all such registered
businesses, but shall file separate returns for each such
registered business.
In addition, with respect to motor vehicles, watercraft,
aircraft, and trailers that are required to be registered
with an agency of this State, every retailer selling this
kind of tangible personal property shall file, with the
Department, upon a form to be prescribed and supplied by the
Department, a separate return for each such item of tangible
personal property which the retailer sells, except that if,
in the same transaction, (i) a retailer of aircraft,
watercraft, motor vehicles or trailers transfers more than
one aircraft, watercraft, motor vehicle or trailer to another
aircraft, watercraft, motor vehicle retailer or trailer
retailer for the purpose of resale or (ii) a retailer of
aircraft, watercraft, motor vehicles, or trailers transfers
more than one aircraft, watercraft, motor vehicle, or trailer
to a purchaser for use as a qualifying rolling stock as
provided in Section 2-5 of this Act, then that seller may
report the transfer of all aircraft, watercraft, motor
vehicles or trailers involved in that transaction to the
Department on the same uniform invoice-transaction reporting
return form. For purposes of this Section, "watercraft"
means a Class 2, Class 3, or Class 4 watercraft as defined in
Section 3-2 of the Boat Registration and Safety Act, a
personal watercraft, or any boat equipped with an inboard
motor.
Any retailer who sells only motor vehicles, watercraft,
aircraft, or trailers that are required to be registered with
an agency of this State, so that all retailers' occupation
tax liability is required to be reported, and is reported, on
such transaction reporting returns and who is not otherwise
required to file monthly or quarterly returns, need not file
monthly or quarterly returns. However, those retailers shall
be required to file returns on an annual basis.
The transaction reporting return, in the case of motor
vehicles or trailers that are required to be registered with
an agency of this State, shall be the same document as the
Uniform Invoice referred to in Section 5-402 of The Illinois
Vehicle Code and must show the name and address of the
seller; the name and address of the purchaser; the amount of
the selling price including the amount allowed by the
retailer for traded-in property, if any; the amount allowed
by the retailer for the traded-in tangible personal property,
if any, to the extent to which Section 1 of this Act allows
an exemption for the value of traded-in property; the balance
payable after deducting such trade-in allowance from the
total selling price; the amount of tax due from the retailer
with respect to such transaction; the amount of tax collected
from the purchaser by the retailer on such transaction (or
satisfactory evidence that such tax is not due in that
particular instance, if that is claimed to be the fact); the
place and date of the sale; a sufficient identification of
the property sold; such other information as is required in
Section 5-402 of The Illinois Vehicle Code, and such other
information as the Department may reasonably require.
The transaction reporting return in the case of
watercraft or aircraft must show the name and address of the
seller; the name and address of the purchaser; the amount of
the selling price including the amount allowed by the
retailer for traded-in property, if any; the amount allowed
by the retailer for the traded-in tangible personal property,
if any, to the extent to which Section 1 of this Act allows
an exemption for the value of traded-in property; the balance
payable after deducting such trade-in allowance from the
total selling price; the amount of tax due from the retailer
with respect to such transaction; the amount of tax collected
from the purchaser by the retailer on such transaction (or
satisfactory evidence that such tax is not due in that
particular instance, if that is claimed to be the fact); the
place and date of the sale, a sufficient identification of
the property sold, and such other information as the
Department may reasonably require.
Such transaction reporting return shall be filed not
later than 20 days after the day of delivery of the item that
is being sold, but may be filed by the retailer at any time
sooner than that if he chooses to do so. The transaction
reporting return and tax remittance or proof of exemption
from the Illinois use tax may be transmitted to the
Department by way of the State agency with which, or State
officer with whom the tangible personal property must be
titled or registered (if titling or registration is required)
if the Department and such agency or State officer determine
that this procedure will expedite the processing of
applications for title or registration.
With each such transaction reporting return, the retailer
shall remit the proper amount of tax due (or shall submit
satisfactory evidence that the sale is not taxable if that is
the case), to the Department or its agents, whereupon the
Department shall issue, in the purchaser's name, a use tax
receipt (or a certificate of exemption if the Department is
satisfied that the particular sale is tax exempt) which such
purchaser may submit to the agency with which, or State
officer with whom, he must title or register the tangible
personal property that is involved (if titling or
registration is required) in support of such purchaser's
application for an Illinois certificate or other evidence of
title or registration to such tangible personal property.
No retailer's failure or refusal to remit tax under this
Act precludes a user, who has paid the proper tax to the
retailer, from obtaining his certificate of title or other
evidence of title or registration (if titling or registration
is required) upon satisfying the Department that such user
has paid the proper tax (if tax is due) to the retailer. The
Department shall adopt appropriate rules to carry out the
mandate of this paragraph.
If the user who would otherwise pay tax to the retailer
wants the transaction reporting return filed and the payment
of the tax or proof of exemption made to the Department
before the retailer is willing to take these actions and such
user has not paid the tax to the retailer, such user may
certify to the fact of such delay by the retailer and may
(upon the Department being satisfied of the truth of such
certification) transmit the information required by the
transaction reporting return and the remittance for tax or
proof of exemption directly to the Department and obtain his
tax receipt or exemption determination, in which event the
transaction reporting return and tax remittance (if a tax
payment was required) shall be credited by the Department to
the proper retailer's account with the Department, but
without the 2.1% or 1.75% discount provided for in this
Section being allowed. When the user pays the tax directly
to the Department, he shall pay the tax in the same amount
and in the same form in which it would be remitted if the tax
had been remitted to the Department by the retailer.
Refunds made by the seller during the preceding return
period to purchasers, on account of tangible personal
property returned to the seller, shall be allowed as a
deduction under subdivision 5 of his monthly or quarterly
return, as the case may be, in case the seller had
theretofore included the receipts from the sale of such
tangible personal property in a return filed by him and had
paid the tax imposed by this Act with respect to such
receipts.
Where the seller is a corporation, the return filed on
behalf of such corporation shall be signed by the president,
vice-president, secretary or treasurer or by the properly
accredited agent of such corporation.
Where the seller is a limited liability company, the
return filed on behalf of the limited liability company shall
be signed by a manager, member, or properly accredited agent
of the limited liability company.
Except as provided in this Section, the retailer filing
the return under this Section shall, at the time of filing
such return, pay to the Department the amount of tax imposed
by this Act less a discount of 2.1% prior to January 1, 1990
and 1.75% on and after January 1, 1990, or $5 per calendar
year, whichever is greater, which is allowed to reimburse the
retailer for the expenses incurred in keeping records,
preparing and filing returns, remitting the tax and supplying
data to the Department on request. Any prepayment made
pursuant to Section 2d of this Act shall be included in the
amount on which such 2.1% or 1.75% discount is computed. In
the case of retailers who report and pay the tax on a
transaction by transaction basis, as provided in this
Section, such discount shall be taken with each such tax
remittance instead of when such retailer files his periodic
return.
Before October 1, 2000, if the taxpayer's average monthly
tax liability to the Department under this Act, the Use Tax
Act, the Service Occupation Tax Act, and the Service Use Tax
Act, excluding any liability for prepaid sales tax to be
remitted in accordance with Section 2d of this Act, was
$10,000 or more during the preceding 4 complete calendar
quarters, he shall file a return with the Department each
month by the 20th day of the month next following the month
during which such tax liability is incurred and shall make
payments to the Department on or before the 7th, 15th, 22nd
and last day of the month during which such liability is
incurred. On and after October 1, 2000, if the taxpayer's
average monthly tax liability to the Department under this
Act, the Use Tax Act, the Service Occupation Tax Act, and the
Service Use Tax Act, excluding any liability for prepaid
sales tax to be remitted in accordance with Section 2d of
this Act, was $20,000 or more during the preceding 4 complete
calendar quarters, he shall file a return with the Department
each month by the 20th day of the month next following the
month during which such tax liability is incurred and shall
make payment to the Department on or before the 7th, 15th,
22nd and last day of the month during which such liability is
incurred. If the month during which such tax liability is
incurred began prior to January 1, 1985, each payment shall
be in an amount equal to 1/4 of the taxpayer's actual
liability for the month or an amount set by the Department
not to exceed 1/4 of the average monthly liability of the
taxpayer to the Department for the preceding 4 complete
calendar quarters (excluding the month of highest liability
and the month of lowest liability in such 4 quarter period).
If the month during which such tax liability is incurred
begins on or after January 1, 1985 and prior to January 1,
1987, each payment shall be in an amount equal to 22.5% of
the taxpayer's actual liability for the month or 27.5% of the
taxpayer's liability for the same calendar month of the
preceding year. If the month during which such tax liability
is incurred begins on or after January 1, 1987 and prior to
January 1, 1988, each payment shall be in an amount equal to
22.5% of the taxpayer's actual liability for the month or
26.25% of the taxpayer's liability for the same calendar
month of the preceding year. If the month during which such
tax liability is incurred begins on or after January 1, 1988,
and prior to January 1, 1989, or begins on or after January
1, 1996, each payment shall be in an amount equal to 22.5% of
the taxpayer's actual liability for the month or 25% of the
taxpayer's liability for the same calendar month of the
preceding year. If the month during which such tax liability
is incurred begins on or after January 1, 1989, and prior to
January 1, 1996, each payment shall be in an amount equal to
22.5% of the taxpayer's actual liability for the month or 25%
of the taxpayer's liability for the same calendar month of
the preceding year or 100% of the taxpayer's actual liability
for the quarter monthly reporting period. The amount of such
quarter monthly payments shall be credited against the final
tax liability of the taxpayer's return for that month.
Before October 1, 2000, once applicable, the requirement of
the making of quarter monthly payments to the Department by
taxpayers having an average monthly tax liability of $10,000
or more as determined in the manner provided above shall
continue until such taxpayer's average monthly liability to
the Department during the preceding 4 complete calendar
quarters (excluding the month of highest liability and the
month of lowest liability) is less than $9,000, or until such
taxpayer's average monthly liability to the Department as
computed for each calendar quarter of the 4 preceding
complete calendar quarter period is less than $10,000.
However, if a taxpayer can show the Department that a
substantial change in the taxpayer's business has occurred
which causes the taxpayer to anticipate that his average
monthly tax liability for the reasonably foreseeable future
will fall below the $10,000 threshold stated above, then such
taxpayer may petition the Department for a change in such
taxpayer's reporting status. On and after October 1, 2000,
once applicable, the requirement of the making of quarter
monthly payments to the Department by taxpayers having an
average monthly tax liability of $20,000 or more as
determined in the manner provided above shall continue until
such taxpayer's average monthly liability to the Department
during the preceding 4 complete calendar quarters (excluding
the month of highest liability and the month of lowest
liability) is less than $19,000 or until such taxpayer's
average monthly liability to the Department as computed for
each calendar quarter of the 4 preceding complete calendar
quarter period is less than $20,000. However, if a taxpayer
can show the Department that a substantial change in the
taxpayer's business has occurred which causes the taxpayer to
anticipate that his average monthly tax liability for the
reasonably foreseeable future will fall below the $20,000
threshold stated above, then such taxpayer may petition the
Department for a change in such taxpayer's reporting status.
The Department shall change such taxpayer's reporting status
unless it finds that such change is seasonal in nature and
not likely to be long term. If any such quarter monthly
payment is not paid at the time or in the amount required by
this Section, then the taxpayer shall be liable for penalties
and interest on the difference between the minimum amount due
as a payment and the amount of such quarter monthly payment
actually and timely paid, except insofar as the taxpayer has
previously made payments for that month to the Department in
excess of the minimum payments previously due as provided in
this Section. The Department shall make reasonable rules and
regulations to govern the quarter monthly payment amount and
quarter monthly payment dates for taxpayers who file on other
than a calendar monthly basis.
The provisions of this paragraph apply before October 1,
2001. Without regard to whether a taxpayer is required to
make quarter monthly payments as specified above, any
taxpayer who is required by Section 2d of this Act to collect
and remit prepaid taxes and has collected prepaid taxes which
average in excess of $25,000 per month during the preceding 2
complete calendar quarters, shall file a return with the
Department as required by Section 2f and shall make payments
to the Department on or before the 7th, 15th, 22nd and last
day of the month during which such liability is incurred. If
the month during which such tax liability is incurred began
prior to the effective date of this amendatory Act of 1985,
each payment shall be in an amount not less than 22.5% of the
taxpayer's actual liability under Section 2d. If the month
during which such tax liability is incurred begins on or
after January 1, 1986, each payment shall be in an amount
equal to 22.5% of the taxpayer's actual liability for the
month or 27.5% of the taxpayer's liability for the same
calendar month of the preceding calendar year. If the month
during which such tax liability is incurred begins on or
after January 1, 1987, each payment shall be in an amount
equal to 22.5% of the taxpayer's actual liability for the
month or 26.25% of the taxpayer's liability for the same
calendar month of the preceding year. The amount of such
quarter monthly payments shall be credited against the final
tax liability of the taxpayer's return for that month filed
under this Section or Section 2f, as the case may be. Once
applicable, the requirement of the making of quarter monthly
payments to the Department pursuant to this paragraph shall
continue until such taxpayer's average monthly prepaid tax
collections during the preceding 2 complete calendar quarters
is $25,000 or less. If any such quarter monthly payment is
not paid at the time or in the amount required, the taxpayer
shall be liable for penalties and interest on such
difference, except insofar as the taxpayer has previously
made payments for that month in excess of the minimum
payments previously due.
The provisions of this paragraph apply on and after
October 1, 2001. Without regard to whether a taxpayer is
required to make quarter monthly payments as specified above,
any taxpayer who is required by Section 2d of this Act to
collect and remit prepaid taxes and has collected prepaid
taxes that average in excess of $20,000 per month during the
preceding 4 complete calendar quarters shall file a return
with the Department as required by Section 2f and shall make
payments to the Department on or before the 7th, 15th, 22nd
and last day of the month during which the liability is
incurred. Each payment shall be in an amount equal to 22.5%
of the taxpayer's actual liability for the month or 25% of
the taxpayer's liability for the same calendar month of the
preceding year. The amount of the quarter monthly payments
shall be credited against the final tax liability of the
taxpayer's return for that month filed under this Section or
Section 2f, as the case may be. Once applicable, the
requirement of the making of quarter monthly payments to the
Department pursuant to this paragraph shall continue until
the taxpayer's average monthly prepaid tax collections during
the preceding 4 complete calendar quarters (excluding the
month of highest liability and the month of lowest liability)
is less than $19,000 or until such taxpayer's average monthly
liability to the Department as computed for each calendar
quarter of the 4 preceding complete calendar quarters is less
than $20,000. If any such quarter monthly payment is not
paid at the time or in the amount required, the taxpayer
shall be liable for penalties and interest on such
difference, except insofar as the taxpayer has previously
made payments for that month in excess of the minimum
payments previously due.
If any payment provided for in this Section exceeds the
taxpayer's liabilities under this Act, the Use Tax Act, the
Service Occupation Tax Act and the Service Use Tax Act, as
shown on an original monthly return, the Department shall, if
requested by the taxpayer, issue to the taxpayer a credit
memorandum no later than 30 days after the date of payment.
The credit evidenced by such credit memorandum may be
assigned by the taxpayer to a similar taxpayer under this
Act, the Use Tax Act, the Service Occupation Tax Act or the
Service Use Tax Act, in accordance with reasonable rules and
regulations to be prescribed by the Department. If no such
request is made, the taxpayer may credit such excess payment
against tax liability subsequently to be remitted to the
Department under this Act, the Use Tax Act, the Service
Occupation Tax Act or the Service Use Tax Act, in accordance
with reasonable rules and regulations prescribed by the
Department. If the Department subsequently determined that
all or any part of the credit taken was not actually due to
the taxpayer, the taxpayer's 2.1% and 1.75% vendor's discount
shall be reduced by 2.1% or 1.75% of the difference between
the credit taken and that actually due, and that taxpayer
shall be liable for penalties and interest on such
difference.
If a retailer of motor fuel is entitled to a credit under
Section 2d of this Act which exceeds the taxpayer's liability
to the Department under this Act for the month which the
taxpayer is filing a return, the Department shall issue the
taxpayer a credit memorandum for the excess.
Beginning January 1, 1990, each month the Department
shall pay into the Local Government Tax Fund, a special fund
in the State treasury which is hereby created, the net
revenue realized for the preceding month from the 1% tax on
sales of food for human consumption which is to be consumed
off the premises where it is sold (other than alcoholic
beverages, soft drinks and food which has been prepared for
immediate consumption) and prescription and nonprescription
medicines, drugs, medical appliances and insulin, urine
testing materials, syringes and needles used by diabetics.
Beginning January 1, 1990, each month the Department
shall pay into the County and Mass Transit District Fund, a
special fund in the State treasury which is hereby created,
4% of the net revenue realized for the preceding month from
the 6.25% general rate.
Beginning August 1, 2000, each month the Department shall
pay into the County and Mass Transit District Fund 20% of the
net revenue realized for the preceding month from the 1.25%
rate on the selling price of motor fuel and gasohol.
Beginning January 1, 1990, each month the Department
shall pay into the Local Government Tax Fund 16% of the net
revenue realized for the preceding month from the 6.25%
general rate on the selling price of tangible personal
property.
Beginning August 1, 2000, each month the Department shall
pay into the Local Government Tax Fund 80% of the net revenue
realized for the preceding month from the 1.25% rate on the
selling price of motor fuel and gasohol.
Of the remainder of the moneys received by the Department
pursuant to this Act, (a) 1.75% thereof shall be paid into
the Build Illinois Fund and (b) prior to July 1, 1989, 2.2%
and on and after July 1, 1989, 3.8% thereof shall be paid
into the Build Illinois Fund; provided, however, that if in
any fiscal year the sum of (1) the aggregate of 2.2% or 3.8%,
as the case may be, of the moneys received by the Department
and required to be paid into the Build Illinois Fund pursuant
to this Act, Section 9 of the Use Tax Act, Section 9 of the
Service Use Tax Act, and Section 9 of the Service Occupation
Tax Act, such Acts being hereinafter called the "Tax Acts"
and such aggregate of 2.2% or 3.8%, as the case may be, of
moneys being hereinafter called the "Tax Act Amount", and (2)
the amount transferred to the Build Illinois Fund from the
State and Local Sales Tax Reform Fund shall be less than the
Annual Specified Amount (as hereinafter defined), an amount
equal to the difference shall be immediately paid into the
Build Illinois Fund from other moneys received by the
Department pursuant to the Tax Acts; the "Annual Specified
Amount" means the amounts specified below for fiscal years
1986 through 1993:
Fiscal Year Annual Specified Amount
1986 $54,800,000
1987 $76,650,000
1988 $80,480,000
1989 $88,510,000
1990 $115,330,000
1991 $145,470,000
1992 $182,730,000
1993 $206,520,000;
and means the Certified Annual Debt Service Requirement (as
defined in Section 13 of the Build Illinois Bond Act) or the
Tax Act Amount, whichever is greater, for fiscal year 1994
and each fiscal year thereafter; and further provided, that
if on the last business day of any month the sum of (1) the
Tax Act Amount required to be deposited into the Build
Illinois Bond Account in the Build Illinois Fund during such
month and (2) the amount transferred to the Build Illinois
Fund from the State and Local Sales Tax Reform Fund shall
have been less than 1/12 of the Annual Specified Amount, an
amount equal to the difference shall be immediately paid into
the Build Illinois Fund from other moneys received by the
Department pursuant to the Tax Acts; and, further provided,
that in no event shall the payments required under the
preceding proviso result in aggregate payments into the Build
Illinois Fund pursuant to this clause (b) for any fiscal year
in excess of the greater of (i) the Tax Act Amount or (ii)
the Annual Specified Amount for such fiscal year. The
amounts payable into the Build Illinois Fund under clause (b)
of the first sentence in this paragraph shall be payable only
until such time as the aggregate amount on deposit under each
trust indenture securing Bonds issued and outstanding
pursuant to the Build Illinois Bond Act is sufficient, taking
into account any future investment income, to fully provide,
in accordance with such indenture, for the defeasance of or
the payment of the principal of, premium, if any, and
interest on the Bonds secured by such indenture and on any
Bonds expected to be issued thereafter and all fees and costs
payable with respect thereto, all as certified by the
Director of the Bureau of the Budget. If on the last
business day of any month in which Bonds are outstanding
pursuant to the Build Illinois Bond Act, the aggregate of
moneys deposited in the Build Illinois Bond Account in the
Build Illinois Fund in such month shall be less than the
amount required to be transferred in such month from the
Build Illinois Bond Account to the Build Illinois Bond
Retirement and Interest Fund pursuant to Section 13 of the
Build Illinois Bond Act, an amount equal to such deficiency
shall be immediately paid from other moneys received by the
Department pursuant to the Tax Acts to the Build Illinois
Fund; provided, however, that any amounts paid to the Build
Illinois Fund in any fiscal year pursuant to this sentence
shall be deemed to constitute payments pursuant to clause (b)
of the first sentence of this paragraph and shall reduce the
amount otherwise payable for such fiscal year pursuant to
that clause (b). The moneys received by the Department
pursuant to this Act and required to be deposited into the
Build Illinois Fund are subject to the pledge, claim and
charge set forth in Section 12 of the Build Illinois Bond
Act.
Subject to payment of amounts into the Build Illinois
Fund as provided in the preceding paragraph or in any
amendment thereto hereafter enacted, the following specified
monthly installment of the amount requested in the
certificate of the Chairman of the Metropolitan Pier and
Exposition Authority provided under Section 8.25f of the
State Finance Act, but not in excess of sums designated as
"Total Deposit", shall be deposited in the aggregate from
collections under Section 9 of the Use Tax Act, Section 9 of
the Service Use Tax Act, Section 9 of the Service Occupation
Tax Act, and Section 3 of the Retailers' Occupation Tax Act
into the McCormick Place Expansion Project Fund in the
specified fiscal years.
Fiscal Year Total Deposit
1993 $0
1994 53,000,000
1995 58,000,000
1996 61,000,000
1997 64,000,000
1998 68,000,000
1999 71,000,000
2000 75,000,000
2001 80,000,000
2002 84,000,000
2003 89,000,000
2004 93,000,000
2005 97,000,000
2006 102,000,000
2007 108,000,000
2008 115,000,000
2009 120,000,000
2010 126,000,000
2011 132,000,000
2012 138,000,000
2013 and 145,000,000
each fiscal year
thereafter that bonds
are outstanding under
Section 13.2 of the
Metropolitan Pier and
Exposition Authority
Act, but not after fiscal year 2029.
Beginning July 20, 1993 and in each month of each fiscal
year thereafter, one-eighth of the amount requested in the
certificate of the Chairman of the Metropolitan Pier and
Exposition Authority for that fiscal year, less the amount
deposited into the McCormick Place Expansion Project Fund by
the State Treasurer in the respective month under subsection
(g) of Section 13 of the Metropolitan Pier and Exposition
Authority Act, plus cumulative deficiencies in the deposits
required under this Section for previous months and years,
shall be deposited into the McCormick Place Expansion Project
Fund, until the full amount requested for the fiscal year,
but not in excess of the amount specified above as "Total
Deposit", has been deposited.
Subject to payment of amounts into the Build Illinois
Fund and the McCormick Place Expansion Project Fund pursuant
to the preceding paragraphs or in any amendment thereto
hereafter enacted, each month the Department shall pay into
the Local Government Distributive Fund 0.4% of the net
revenue realized for the preceding month from the 5% general
rate or 0.4% of 80% of the net revenue realized for the
preceding month from the 6.25% general rate, as the case may
be, on the selling price of tangible personal property which
amount shall, subject to appropriation, be distributed as
provided in Section 2 of the State Revenue Sharing Act. No
payments or distributions pursuant to this paragraph shall be
made if the tax imposed by this Act on photoprocessing
products is declared unconstitutional, or if the proceeds
from such tax are unavailable for distribution because of
litigation.
Subject to payment of amounts into the Build Illinois
Fund, the McCormick Place Expansion Project Fund, and the
Local Government Distributive Fund pursuant to the preceding
paragraphs or in any amendments thereto hereafter enacted,
beginning July 1, 1993, the Department shall each month pay
into the Illinois Tax Increment Fund 0.27% of 80% of the net
revenue realized for the preceding month from the 6.25%
general rate on the selling price of tangible personal
property.
Of the remainder of the moneys received by the Department
pursuant to this Act, 75% thereof shall be paid into the
State Treasury and 25% shall be reserved in a special account
and used only for the transfer to the Common School Fund as
part of the monthly transfer from the General Revenue Fund in
accordance with Section 8a of the State Finance Act.
The Department may, upon separate written notice to a
taxpayer, require the taxpayer to prepare and file with the
Department on a form prescribed by the Department within not
less than 60 days after receipt of the notice an annual
information return for the tax year specified in the notice.
Such annual return to the Department shall include a
statement of gross receipts as shown by the retailer's last
Federal income tax return. If the total receipts of the
business as reported in the Federal income tax return do not
agree with the gross receipts reported to the Department of
Revenue for the same period, the retailer shall attach to his
annual return a schedule showing a reconciliation of the 2
amounts and the reasons for the difference. The retailer's
annual return to the Department shall also disclose the cost
of goods sold by the retailer during the year covered by such
return, opening and closing inventories of such goods for
such year, costs of goods used from stock or taken from stock
and given away by the retailer during such year, payroll
information of the retailer's business during such year and
any additional reasonable information which the Department
deems would be helpful in determining the accuracy of the
monthly, quarterly or annual returns filed by such retailer
as provided for in this Section.
If the annual information return required by this Section
is not filed when and as required, the taxpayer shall be
liable as follows:
(i) Until January 1, 1994, the taxpayer shall be
liable for a penalty equal to 1/6 of 1% of the tax due
from such taxpayer under this Act during the period to be
covered by the annual return for each month or fraction
of a month until such return is filed as required, the
penalty to be assessed and collected in the same manner
as any other penalty provided for in this Act.
(ii) On and after January 1, 1994, the taxpayer
shall be liable for a penalty as described in Section 3-4
of the Uniform Penalty and Interest Act.
The chief executive officer, proprietor, owner or highest
ranking manager shall sign the annual return to certify the
accuracy of the information contained therein. Any person
who willfully signs the annual return containing false or
inaccurate information shall be guilty of perjury and
punished accordingly. The annual return form prescribed by
the Department shall include a warning that the person
signing the return may be liable for perjury.
The provisions of this Section concerning the filing of
an annual information return do not apply to a retailer who
is not required to file an income tax return with the United
States Government.
As soon as possible after the first day of each month,
upon certification of the Department of Revenue, the
Comptroller shall order transferred and the Treasurer shall
transfer from the General Revenue Fund to the Motor Fuel Tax
Fund an amount equal to 1.7% of 80% of the net revenue
realized under this Act for the second preceding month.
Beginning April 1, 2000, this transfer is no longer required
and shall not be made.
Net revenue realized for a month shall be the revenue
collected by the State pursuant to this Act, less the amount
paid out during that month as refunds to taxpayers for
overpayment of liability.
For greater simplicity of administration, manufacturers,
importers and wholesalers whose products are sold at retail
in Illinois by numerous retailers, and who wish to do so, may
assume the responsibility for accounting and paying to the
Department all tax accruing under this Act with respect to
such sales, if the retailers who are affected do not make
written objection to the Department to this arrangement.
Any person who promotes, organizes, provides retail
selling space for concessionaires or other types of sellers
at the Illinois State Fair, DuQuoin State Fair, county fairs,
local fairs, art shows, flea markets and similar exhibitions
or events, including any transient merchant as defined by
Section 2 of the Transient Merchant Act of 1987, is required
to file a report with the Department providing the name of
the merchant's business, the name of the person or persons
engaged in merchant's business, the permanent address and
Illinois Retailers Occupation Tax Registration Number of the
merchant, the dates and location of the event and other
reasonable information that the Department may require. The
report must be filed not later than the 20th day of the month
next following the month during which the event with retail
sales was held. Any person who fails to file a report
required by this Section commits a business offense and is
subject to a fine not to exceed $250.
Any person engaged in the business of selling tangible
personal property at retail as a concessionaire or other type
of seller at the Illinois State Fair, county fairs, art
shows, flea markets and similar exhibitions or events, or any
transient merchants, as defined by Section 2 of the Transient
Merchant Act of 1987, may be required to make a daily report
of the amount of such sales to the Department and to make a
daily payment of the full amount of tax due. The Department
shall impose this requirement when it finds that there is a
significant risk of loss of revenue to the State at such an
exhibition or event. Such a finding shall be based on
evidence that a substantial number of concessionaires or
other sellers who are not residents of Illinois will be
engaging in the business of selling tangible personal
property at retail at the exhibition or event, or other
evidence of a significant risk of loss of revenue to the
State. The Department shall notify concessionaires and other
sellers affected by the imposition of this requirement. In
the absence of notification by the Department, the
concessionaires and other sellers shall file their returns as
otherwise required in this Section.
(Source: P.A. 90-491, eff. 1-1-99; 90-612, eff. 7-8-98;
91-37, eff. 7-1-99; 91-51, eff. 6-30-99; 91-101, eff.
7-12-99; 91-541, eff. 8-13-99; 91-872, eff. 7-1-00; 91-901,
eff. 1-1-01; revised 1-15-01.)
(35 ILCS 120/5k) (from Ch. 120, par. 444k)
(Text of Section before amendment by P.A. 91-954)
Sec. 5k. Each retailer whose place a business is within
a county or municipality which has established an Enterprise
Zone pursuant to the "Illinois Enterprise Zone Act" and who
makes a sale of building materials to be incorporated into
real estate in such enterprise zone by remodeling,
rehabilitation or new construction, may deduct receipts from
such sales when calculating the tax imposed by this Act. The
deduction allowed by this Section for the sale of building
materials may be limited, to the extent authorized by
ordinance, adopted after the effective date of this
amendatory Act of 1992, by the municipality or county that
created the enterprise zone. The corporate authorities of
any municipality or county that adopts an ordinance or
resolution imposing or changing any limitation on the
enterprise zone exemption for building materials shall
transmit to the Department of Revenue on or not later than 5
days after publication, as provided by law, a certified copy
of the ordinance or resolution imposing or changing those
limitations, whereupon the Department of Revenue shall
proceed to administer and enforce those limitations effective
the first day of the second calendar month next following
date of receipt by the Department of the certified ordinance
or resolution.
(Source: P.A. 91-51, eff. 6-30-99.)
(Text of Section after amendment by P.A. 91-954)
Sec. 5k. Each retailer in Illinois who makes a sale of
building materials to be incorporated into real estate in an
enterprise zone established by a county or municipality under
the Illinois Enterprise Zone Act by remodeling,
rehabilitation or new construction, may deduct receipts from
such sales when calculating the tax imposed by this Act. The
deduction allowed by this Section for the sale of building
materials may be limited, to the extent authorized by
ordinance, adopted after the effective date of this
amendatory Act of 1992, by the municipality or county that
created the enterprise zone in which the retailer's place of
business is located. The corporate authorities of any
municipality or county that adopts an ordinance or resolution
imposing or changing any limitation on the enterprise zone
exemption for building materials shall transmit to the
Department of Revenue on or not later than 5 days after
publication, as provided by law, a certified copy of the
ordinance or resolution imposing or changing those
limitations, whereupon the Department of Revenue shall
proceed to administer and enforce those limitations effective
the first day of the second calendar month next following
date of receipt by the Department of the certified ordinance
or resolution. The provisions of this Section are exempt
from Section 2-70.
(Source: P.A. 91-51, eff. 6-30-99; 91-954, eff. 1-1-02.)
Section 95. No acceleration or delay. Where this Act
makes changes in a statute that is represented in this Act by
text that is not yet or no longer in effect (for example, a
Section represented by multiple versions), the use of that
text does not accelerate or delay the taking effect of (i)
the changes made by this Act or (ii) provisions derived from
any other Public Act.
Section 99. Effective date. This Act takes effect upon
becoming law.
Passed in the General Assembly May 30, 2001.
Approved August 23, 2001.
Effective August 23, 2001.
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