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90_HB2201ham001
LRB9000111KDksam
1 AMENDMENT TO HOUSE BILL 2201
2 AMENDMENT NO. . Amend House Bill 2201 by replacing
3 the title with the following:
4 "AN ACT to amend the Service Use Tax Act by changing
5 Section 3-70."; and
6 by replacing everything after the enacting clause with the
7 following:
8 "Section 5. The Service Use Tax Act is amended by
9 changing Section 3-70 as follows:
10 (35 ILCS 110/3-70)
11 Sec. 3-70. Manufacturer's Purchase Credit. For purchases
12 of machinery and equipment made on and after January 1, 1995,
13 a purchaser of manufacturing machinery and equipment that
14 qualifies for the exemption provided by Section 2 of this Act
15 earns a credit in an amount equal to a fixed percentage of
16 the tax which would have been incurred under this Act on
17 those purchases. For purchases of graphic arts machinery and
18 equipment made on or after July 1, 1996, a purchase of
19 graphic arts machinery and equipment that qualifies for the
20 exemption provided by paragraph (5) of Section 3-5 of this
21 Act earns a credit in an amount equal to a fixed percentage
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1 of the tax that would have been incurred under this Act on
2 those purchases. The credit earned for the purchase of
3 manufacturing machinery and equipment and graphic arts
4 machinery and equipment shall be referred to as the
5 Manufacturer's Purchase Credit. A graphic arts producer is a
6 person engaged in graphic arts production as defined in
7 Section 3-30 of the Service Occupation Tax Act. Beginning
8 July 1, 1996, all references in this Section to manufacturers
9 or manufacturing shall also refer to graphic arts producers
10 or graphic arts production.
11 The amount of credit shall be a percentage of the tax
12 that would have been incurred on the purchase of the
13 manufacturing machinery and equipment or graphic arts
14 machinery and equipment if the exemptions provided by Section
15 2 or paragraph (5) of Section 3-5 of this Act had not been
16 applicable.
17 All purchases of manufacturing machinery and equipment
18 and graphic arts machinery and equipment that qualify for the
19 exemptions provided by paragraph (5) of Section 2 or
20 paragraph (5) of Section 3-5 of this Act qualify for the
21 credit without regard to whether the serviceman elected, or
22 could have elected, under paragraph (7) of Section 2 of this
23 Act to exclude the transaction from this Act. If the
24 serviceman's billing to the service customer separately
25 states a selling price for the exempt manufacturing machinery
26 or equipment or the exempt graphic arts machinery and
27 equipment, the credit shall be calculated, as otherwise
28 provided herein, based on that selling price. If the
29 serviceman's billing does not separately state a selling
30 price for the exempt manufacturing machinery and equipment or
31 the exempt graphic arts machinery and equipment, the credit
32 shall be calculated, as otherwise provided herein, based on
33 50% of the entire billing. If the serviceman contracts to
34 design, develop, and produce special order manufacturing
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1 machinery and equipment or special order graphic arts
2 machinery and equipment, and the billing does not separately
3 state a selling price for such special order machinery and
4 equipment, the credit shall be calculated, as otherwise
5 provided herein, based on 50% of the entire billing. The
6 provisions of this paragraph are effective for purchases made
7 on or after January 1, 1995.
8 The percentage shall be as follows:
9 (1) 15% for purchases made on or before June 30,
10 1995.
11 (2) 25% for purchases made after June 30, 1995, and
12 on or before June 30, 1996.
13 (3) 40% for purchases made after June 30, 1996, and
14 on or before June 30, 1997.
15 (4) 50% for purchases made on or after July 1,
16 1997.
17 A purchaser of production related tangible personal
18 property desiring to use the Manufacturer's Purchase Credit
19 shall certify to the seller that the purchaser is satisfying
20 all or part of the liability under the Use Tax Act or the
21 Service Use Tax Act that is due on the purchase of the
22 production related tangible personal property by use of a
23 Manufacturer's Purchase Credit. The Manufacturer's Purchase
24 Credit certification must be dated and shall include the name
25 and address of the purchaser, the purchaser's registration
26 number, if registered, the credit being applied, and a
27 statement that the State Use Tax or Service Use Tax liability
28 is being satisfied with the manufacturer's or graphic arts
29 producer's accumulated purchase credit. Certification may be
30 incorporated into the manufacturer's or graphic arts
31 producer's purchase order. Manufacturer's Purchase Credit
32 certification by the manufacturer or graphic arts producer
33 may be used to satisfy the retailer's or serviceman's
34 liability under the Retailers' Occupation Tax Act or Service
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1 Occupation Tax Act for the credit claimed, not to exceed
2 6.25% of the receipts subject to tax from a qualifying
3 purchase, but only if the retailer or serviceman reports the
4 Manufacturer's Purchase Credit claimed as required by the
5 Department. The Manufacturer's Purchase Credit earned by
6 purchase of exempt manufacturing machinery and equipment or
7 graphic arts machinery and equipment is a non-transferable
8 credit. A manufacturer or graphic arts producer that enters
9 into a contract involving the installation of tangible
10 personal property into real estate within a manufacturing or
11 graphic arts production facility may authorize a construction
12 contractor to utilize credit accumulated by the manufacturer
13 or graphic arts producer to purchase the tangible personal
14 property. A manufacturer or graphic arts producer intending
15 to use accumulated credit to purchase such tangible personal
16 property shall execute a written contract authorizing the
17 contractor to utilize a specified dollar amount of credit.
18 The contractor shall furnish the supplier with the
19 manufacturer's or graphic arts producer's name, registration
20 or resale number, and a statement that a specific amount of
21 the Use Tax or Service Use Tax liability, not to exceed 6.25%
22 of the selling price, is being satisfied with the credit. The
23 manufacturer or graphic arts producer shall remain liable to
24 timely report all information required by the annual Report
25 of Manufacturer's Purchase Credit Used for credit utilized by
26 a construction contractor.
27 The Manufacturer's Purchase Credit may be used to satisfy
28 liability under the Use Tax Act or the Service Use Tax Act
29 due on the purchase of production related tangible personal
30 property (including purchases by a manufacturer, by a graphic
31 arts producer, or a lessor who rents or leases the use of the
32 property to a manufacturer or graphic arts producer) that
33 does not otherwise qualify for the manufacturing machinery
34 and equipment exemption or the graphic arts machinery and
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1 equipment exemption. "Production related tangible personal
2 property" means (i) all tangible personal property used or
3 consumed by the purchaser in a manufacturing facility in
4 which a manufacturing process described in Section 2-45 of
5 the Retailers' Occupation Tax Act takes place, including
6 tangible personal property purchased for incorporation into
7 real estate within a manufacturing facility and including,
8 but not limited to, tangible personal property used or
9 consumed in activities such as pre-production material
10 handling, receiving, quality control, inventory control,
11 storage, staging, and packaging for shipping and
12 transportation purposes; (ii) all tangible personal property
13 used or consumed by the purchaser in a graphic arts facility
14 in which graphic arts production as described in Section 2-30
15 of the Retailers' Occupation Tax Act takes place, including
16 tangible personal property purchased for incorporation into
17 real estate within a graphic arts facility and including, but
18 not limited to, all tangible personal property used or
19 consumed in activities such as graphic arts preliminary or
20 pre-press production, pre-production material handling,
21 receiving, quality control, inventory control, storage,
22 staging, sorting, labeling, mailing, tying, wrapping, and
23 packaging; and (iii) all tangible personal property used or
24 consumed by the purchaser for research and development.
25 "Production related tangible personal property" does not
26 include (i) tangible personal property used, within or
27 without a manufacturing or graphic arts facility, in sales,
28 purchasing, accounting, fiscal management, marketing,
29 personnel recruitment or selection, or landscaping or (ii)
30 tangible personal property required to be titled or
31 registered with a department, agency, or unit of federal,
32 state, or local government. The Manufacturer's Purchase
33 Credit may be used to satisfy the tax arising either from the
34 purchase of machinery and equipment on or after January 1,
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1 1995 for which the manufacturing machinery and equipment
2 exemption provided by Section 2 of this Act was erroneously
3 claimed, or the purchase of machinery and equipment on or
4 after July 1, 1996 for which the exemption provided by
5 paragraph (5) of Section 3-5 of this Act was erroneously
6 claimed, but not in satisfaction of penalty, if any, and
7 interest for failure to pay the tax when due. A purchaser of
8 production related tangible personal property who is required
9 to pay Illinois Use Tax or Service Use Tax on the purchase
10 directly to the Department may utilize the Manufacturer's
11 Purchase Credit in satisfaction of the tax arising from that
12 purchase, but not in satisfaction of penalty and interest. A
13 purchaser who uses the Manufacturer's Purchase Credit to
14 purchase property which is later determined not to be
15 production related tangible personal property may be liable
16 for tax, penalty, and interest on the purchase of that
17 property as of the date of purchase but shall be entitled to
18 use the disallowed Manufacturer's Purchase Credit, so long as
19 it has not expired, on qualifying purchases of production
20 related tangible personal property not previously subject to
21 credit usage. The Manufacturer's Purchase Credit earned by a
22 manufacturer or graphic arts producer expires the last day of
23 the second calendar year following the calendar year in which
24 the credit arose.
25 A purchaser earning Manufacturer's Purchase Credit shall
26 sign and file an annual Report of Manufacturer's Purchase
27 Credit Earned for each calendar year no later than the last
28 day of the sixth month following the calendar year in which a
29 Manufacturer's Purchase Credit is earned. A Report of
30 Manufacturer's Purchase Credit Earned shall be filed on forms
31 as prescribed or approved by the Department and shall state,
32 for each month of the calendar year: (i) the total purchase
33 price of all purchases of exempt manufacturing or graphic
34 arts machinery on which the credit was earned; (ii) the total
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1 State Use Tax or Service Use Tax which would have been due on
2 those items; (iii) the percentage used to calculate the
3 amount of credit earned; (iv) the amount of credit earned;
4 and (v) such other information as the Department may
5 reasonably require. A purchaser earning Manufacturer's
6 Purchase Credit shall maintain records which identify, as to
7 each purchase of manufacturing or graphic arts machinery and
8 equipment on which the purchaser earned Manufacturer's
9 Purchase Credit, the vendor (including, if applicable, either
10 the vendor's registration number or Federal Employer
11 Identification Number), the purchase price, and the amount of
12 Manufacturer's Purchase Credit earned on each purchase.
13 A purchaser using Manufacturer's Purchase Credit shall
14 sign and file an annual Report of Manufacturer's Purchase
15 Credit Used for each calendar year no later than the last day
16 of the sixth month following the calendar year in which a
17 Manufacturer's Purchase Credit is used. A Report of
18 Manufacturer's Purchase Credit Used shall be filed on forms
19 as prescribed or approved by the Department and shall state,
20 for each month of the calendar year: (i) the total purchase
21 price of production related tangible personal property
22 purchased from Illinois suppliers; (ii) the total purchase
23 price of production related tangible personal property
24 purchased from out-of-state suppliers; (iii) the total amount
25 of credit used during such month; and (iv) such other
26 information as the Department may reasonably require. A
27 purchaser using Manufacturer's Purchase Credit shall maintain
28 records that identify, as to each purchase of production
29 related tangible personal property on which the purchaser
30 used Manufacturer's Purchase Credit, the vendor (including,
31 if applicable, either the vendor's registration number or
32 Federal Employer Identification Number), the purchase price,
33 and the amount of Manufacturer's Purchase Credit used on each
34 purchase.
-8- LRB9000111KDksam
1 No annual report shall be filed before May 1, 1996. A
2 purchaser that fails to file an annual Report of
3 Manufacturer's Purchase Credit Earned or an annual Report of
4 Manufacturer's Purchase Credit Used by the last day of the
5 sixth month following the end of the calendar year shall
6 forfeit all Manufacturer's Purchase Credit for that calendar
7 year unless it establishes that its failure to file was due
8 to reasonable cause. Manufacturer's Purchase Credit reports
9 may be amended to report and claim credit on qualifying
10 purchases not previously reported at any time before the
11 credit would have expired, unless both the Department and the
12 purchaser have agreed to an extension of the statute of
13 limitations for the issuance of a notice of tax liability as
14 provided in Section 4 of the Retailers' Occupation Tax Act.
15 If the time for assessment or refund has been extended, then
16 amended reports for a calendar year may be filed at any time
17 prior to the date to which the statute of limitations for the
18 calendar year or portion thereof has been extended. No
19 Manufacturer's Purchase Credit report filed with the
20 Department for periods prior to January 1, 1995 shall be
21 approved. Manufacturer's Purchase Credit claimed on an
22 amended report may be used to satisfy tax liability under the
23 Use Tax Act or the Service Use Tax Act (i) on qualifying
24 purchases of production related tangible personal property
25 made after the date the amended report is filed or (ii)
26 assessed by the Department on qualifying purchases of
27 production related tangible personal property made in the
28 case of manufacturers on or after January 1, 1995, or in the
29 case of graphic arts producers on or after July 1, 1996.
30 If the purchaser is not the manufacturer or a graphic
31 arts producer, but rents or leases the use of the property to
32 a manufacturer or a graphic arts producer, the purchaser may
33 earn, report, and use Manufacturer's Purchase Credit in the
34 same manner as a manufacturer or graphic arts producer.
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1 A purchaser shall not be entitled to any Manufacturer's
2 Purchase Credit for a purchase that is required to be
3 reported and is not timely reported as provided in this
4 Section. A purchaser remains liable for (i) any tax that was
5 satisfied by use of a Manufacturer's Purchase Credit, as of
6 the date of purchase, if that use is not timely reported as
7 required in this Section and (ii) for any applicable
8 penalties and interest for failing to pay the tax when due.
9 (Source: P.A. 88-547, eff. 6-30-94; 89-89, eff. 6-30-95;
10 89-235, eff. 8-4-95; 89-531, eff. 7-19-96.)
11 Section 99. Effective date. This Act takes effect upon
12 becoming law.".