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90_HB2950enr
35 ILCS 125/2 from Ch. 5, par. 1752
Amends the Gasohol Fuels Tax Abatement Act. Makes a
technical change in the definition Section.
LRB9008806KDcd
HB2950 Enrolled LRB9008806KDcd
1 AN ACT in relation to taxes.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 3. The Illinois Income Tax Act is amended by
5 changing Section 201 as follows:
6 (35 ILCS 5/201) (from Ch. 120, par. 2-201)
7 Sec. 201. Tax Imposed.
8 (a) In general. A tax measured by net income is hereby
9 imposed on every individual, corporation, trust and estate
10 for each taxable year ending after July 31, 1969 on the
11 privilege of earning or receiving income in or as a resident
12 of this State. Such tax shall be in addition to all other
13 occupation or privilege taxes imposed by this State or by any
14 municipal corporation or political subdivision thereof.
15 (b) Rates. The tax imposed by subsection (a) of this
16 Section shall be determined as follows:
17 (1) In the case of an individual, trust or estate,
18 for taxable years ending prior to July 1, 1989, an amount
19 equal to 2 1/2% of the taxpayer's net income for the
20 taxable year.
21 (2) In the case of an individual, trust or estate,
22 for taxable years beginning prior to July 1, 1989 and
23 ending after June 30, 1989, an amount equal to the sum of
24 (i) 2 1/2% of the taxpayer's net income for the period
25 prior to July 1, 1989, as calculated under Section 202.3,
26 and (ii) 3% of the taxpayer's net income for the period
27 after June 30, 1989, as calculated under Section 202.3.
28 (3) In the case of an individual, trust or estate,
29 for taxable years beginning after June 30, 1989, an
30 amount equal to 3% of the taxpayer's net income for the
31 taxable year.
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1 (4) (Blank).
2 (5) (Blank).
3 (6) In the case of a corporation, for taxable years
4 ending prior to July 1, 1989, an amount equal to 4% of
5 the taxpayer's net income for the taxable year.
6 (7) In the case of a corporation, for taxable years
7 beginning prior to July 1, 1989 and ending after June 30,
8 1989, an amount equal to the sum of (i) 4% of the
9 taxpayer's net income for the period prior to July 1,
10 1989, as calculated under Section 202.3, and (ii) 4.8% of
11 the taxpayer's net income for the period after June 30,
12 1989, as calculated under Section 202.3.
13 (8) In the case of a corporation, for taxable years
14 beginning after June 30, 1989, an amount equal to 4.8% of
15 the taxpayer's net income for the taxable year.
16 (c) Beginning on July 1, 1979 and thereafter, in
17 addition to such income tax, there is also hereby imposed the
18 Personal Property Tax Replacement Income Tax measured by net
19 income on every corporation (including Subchapter S
20 corporations), partnership and trust, for each taxable year
21 ending after June 30, 1979. Such taxes are imposed on the
22 privilege of earning or receiving income in or as a resident
23 of this State. The Personal Property Tax Replacement Income
24 Tax shall be in addition to the income tax imposed by
25 subsections (a) and (b) of this Section and in addition to
26 all other occupation or privilege taxes imposed by this State
27 or by any municipal corporation or political subdivision
28 thereof.
29 (d) Additional Personal Property Tax Replacement Income
30 Tax Rates. The personal property tax replacement income tax
31 imposed by this subsection and subsection (c) of this Section
32 in the case of a corporation, other than a Subchapter S
33 corporation, shall be an additional amount equal to 2.85% of
34 such taxpayer's net income for the taxable year, except that
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1 beginning on January 1, 1981, and thereafter, the rate of
2 2.85% specified in this subsection shall be reduced to 2.5%,
3 and in the case of a partnership, trust or a Subchapter S
4 corporation shall be an additional amount equal to 1.5% of
5 such taxpayer's net income for the taxable year.
6 (e) Investment credit. A taxpayer shall be allowed a
7 credit against the Personal Property Tax Replacement Income
8 Tax for investment in qualified property.
9 (1) A taxpayer shall be allowed a credit equal to
10 .5% of the basis of qualified property placed in service
11 during the taxable year, provided such property is placed
12 in service on or after July 1, 1984. There shall be
13 allowed an additional credit equal to .5% of the basis of
14 qualified property placed in service during the taxable
15 year, provided such property is placed in service on or
16 after July 1, 1986, and the taxpayer's base employment
17 within Illinois has increased by 1% or more over the
18 preceding year as determined by the taxpayer's employment
19 records filed with the Illinois Department of Employment
20 Security. Taxpayers who are new to Illinois shall be
21 deemed to have met the 1% growth in base employment for
22 the first year in which they file employment records with
23 the Illinois Department of Employment Security. The
24 provisions added to this Section by Public Act 85-1200
25 (and restored by Public Act 87-895) shall be construed as
26 declaratory of existing law and not as a new enactment.
27 If, in any year, the increase in base employment within
28 Illinois over the preceding year is less than 1%, the
29 additional credit shall be limited to that percentage
30 times a fraction, the numerator of which is .5% and the
31 denominator of which is 1%, but shall not exceed .5%.
32 The investment credit shall not be allowed to the extent
33 that it would reduce a taxpayer's liability in any tax
34 year below zero, nor may any credit for qualified
HB2950 Enrolled -4- LRB9008806KDcd
1 property be allowed for any year other than the year in
2 which the property was placed in service in Illinois. For
3 tax years ending on or after December 31, 1987, and on or
4 before December 31, 1988, the credit shall be allowed for
5 the tax year in which the property is placed in service,
6 or, if the amount of the credit exceeds the tax liability
7 for that year, whether it exceeds the original liability
8 or the liability as later amended, such excess may be
9 carried forward and applied to the tax liability of the 5
10 taxable years following the excess credit years if the
11 taxpayer (i) makes investments which cause the creation
12 of a minimum of 2,000 full-time equivalent jobs in
13 Illinois, (ii) is located in an enterprise zone
14 established pursuant to the Illinois Enterprise Zone Act
15 and (iii) is certified by the Department of Commerce and
16 Community Affairs as complying with the requirements
17 specified in clause (i) and (ii) by July 1, 1986. The
18 Department of Commerce and Community Affairs shall notify
19 the Department of Revenue of all such certifications
20 immediately. For tax years ending after December 31,
21 1988, the credit shall be allowed for the tax year in
22 which the property is placed in service, or, if the
23 amount of the credit exceeds the tax liability for that
24 year, whether it exceeds the original liability or the
25 liability as later amended, such excess may be carried
26 forward and applied to the tax liability of the 5 taxable
27 years following the excess credit years. The credit shall
28 be applied to the earliest year for which there is a
29 liability. If there is credit from more than one tax year
30 that is available to offset a liability, earlier credit
31 shall be applied first.
32 (2) The term "qualified property" means property
33 which:
34 (A) is tangible, whether new or used,
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1 including buildings and structural components of
2 buildings and signs that are real property, but not
3 including land or improvements to real property that
4 are not a structural component of a building such as
5 landscaping, sewer lines, local access roads,
6 fencing, parking lots, and other appurtenances;
7 (B) is depreciable pursuant to Section 167 of
8 the Internal Revenue Code, except that "3-year
9 property" as defined in Section 168(c)(2)(A) of that
10 Code is not eligible for the credit provided by this
11 subsection (e);
12 (C) is acquired by purchase as defined in
13 Section 179(d) of the Internal Revenue Code;
14 (D) is used in Illinois by a taxpayer who is
15 primarily engaged in manufacturing, or in mining
16 coal or fluorite, or in retailing; and
17 (E) has not previously been used in Illinois
18 in such a manner and by such a person as would
19 qualify for the credit provided by this subsection
20 (e) or subsection (f).
21 (3) For purposes of this subsection (e),
22 "manufacturing" means the material staging and production
23 of tangible personal property by procedures commonly
24 regarded as manufacturing, processing, fabrication, or
25 assembling which changes some existing material into new
26 shapes, new qualities, or new combinations. For purposes
27 of this subsection (e) the term "mining" shall have the
28 same meaning as the term "mining" in Section 613(c) of
29 the Internal Revenue Code. For purposes of this
30 subsection (e), the term "retailing" means the sale of
31 tangible personal property or services rendered in
32 conjunction with the sale of tangible consumer goods or
33 commodities.
34 (4) The basis of qualified property shall be the
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1 basis used to compute the depreciation deduction for
2 federal income tax purposes.
3 (5) If the basis of the property for federal income
4 tax depreciation purposes is increased after it has been
5 placed in service in Illinois by the taxpayer, the amount
6 of such increase shall be deemed property placed in
7 service on the date of such increase in basis.
8 (6) The term "placed in service" shall have the
9 same meaning as under Section 46 of the Internal Revenue
10 Code.
11 (7) If during any taxable year, any property ceases
12 to be qualified property in the hands of the taxpayer
13 within 48 months after being placed in service, or the
14 situs of any qualified property is moved outside Illinois
15 within 48 months after being placed in service, the
16 Personal Property Tax Replacement Income Tax for such
17 taxable year shall be increased. Such increase shall be
18 determined by (i) recomputing the investment credit which
19 would have been allowed for the year in which credit for
20 such property was originally allowed by eliminating such
21 property from such computation and, (ii) subtracting such
22 recomputed credit from the amount of credit previously
23 allowed. For the purposes of this paragraph (7), a
24 reduction of the basis of qualified property resulting
25 from a redetermination of the purchase price shall be
26 deemed a disposition of qualified property to the extent
27 of such reduction.
28 (8) Unless the investment credit is extended by
29 law, the basis of qualified property shall not include
30 costs incurred after December 31, 2003, except for costs
31 incurred pursuant to a binding contract entered into on
32 or before December 31, 2003.
33 (9) Each taxable year, a partnership may elect to
34 pass through to its partners the credits to which the
HB2950 Enrolled -7- LRB9008806KDcd
1 partnership is entitled under this subsection (e) for the
2 taxable year. A partner may use the credit allocated to
3 him or her under this paragraph only against the tax
4 imposed in subsections (c) and (d) of this Section. If
5 the partnership makes that election, those credits shall
6 be allocated among the partners in the partnership in
7 accordance with the rules set forth in Section 704(b) of
8 the Internal Revenue Code, and the rules promulgated
9 under that Section, and the allocated amount of the
10 credits shall be allowed to the partners for that taxable
11 year. The partnership shall make this election on its
12 Personal Property Tax Replacement Income Tax return for
13 that taxable year. The election to pass through the
14 credits shall be irrevocable.
15 (f) Investment credit; Enterprise Zone.
16 (1) A taxpayer shall be allowed a credit against
17 the tax imposed by subsections (a) and (b) of this
18 Section for investment in qualified property which is
19 placed in service in an Enterprise Zone created pursuant
20 to the Illinois Enterprise Zone Act. For partners and for
21 shareholders of Subchapter S corporations, there shall be
22 allowed a credit under this subsection (f) to be
23 determined in accordance with the determination of income
24 and distributive share of income under Sections 702 and
25 704 and Subchapter S of the Internal Revenue Code. The
26 credit shall be .5% of the basis for such property. The
27 credit shall be available only in the taxable year in
28 which the property is placed in service in the Enterprise
29 Zone and shall not be allowed to the extent that it would
30 reduce a taxpayer's liability for the tax imposed by
31 subsections (a) and (b) of this Section to below zero.
32 For tax years ending on or after December 31, 1985, the
33 credit shall be allowed for the tax year in which the
34 property is placed in service, or, if the amount of the
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1 credit exceeds the tax liability for that year, whether
2 it exceeds the original liability or the liability as
3 later amended, such excess may be carried forward and
4 applied to the tax liability of the 5 taxable years
5 following the excess credit year. The credit shall be
6 applied to the earliest year for which there is a
7 liability. If there is credit from more than one tax year
8 that is available to offset a liability, the credit
9 accruing first in time shall be applied first.
10 (2) The term qualified property means property
11 which:
12 (A) is tangible, whether new or used,
13 including buildings and structural components of
14 buildings;
15 (B) is depreciable pursuant to Section 167 of
16 the Internal Revenue Code, except that "3-year
17 property" as defined in Section 168(c)(2)(A) of that
18 Code is not eligible for the credit provided by this
19 subsection (f);
20 (C) is acquired by purchase as defined in
21 Section 179(d) of the Internal Revenue Code;
22 (D) is used in the Enterprise Zone by the
23 taxpayer; and
24 (E) has not been previously used in Illinois
25 in such a manner and by such a person as would
26 qualify for the credit provided by this subsection
27 (f) or subsection (e).
28 (3) The basis of qualified property shall be the
29 basis used to compute the depreciation deduction for
30 federal income tax purposes.
31 (4) If the basis of the property for federal income
32 tax depreciation purposes is increased after it has been
33 placed in service in the Enterprise Zone by the taxpayer,
34 the amount of such increase shall be deemed property
HB2950 Enrolled -9- LRB9008806KDcd
1 placed in service on the date of such increase in basis.
2 (5) The term "placed in service" shall have the
3 same meaning as under Section 46 of the Internal Revenue
4 Code.
5 (6) If during any taxable year, any property ceases
6 to be qualified property in the hands of the taxpayer
7 within 48 months after being placed in service, or the
8 situs of any qualified property is moved outside the
9 Enterprise Zone within 48 months after being placed in
10 service, the tax imposed under subsections (a) and (b) of
11 this Section for such taxable year shall be increased.
12 Such increase shall be determined by (i) recomputing the
13 investment credit which would have been allowed for the
14 year in which credit for such property was originally
15 allowed by eliminating such property from such
16 computation, and (ii) subtracting such recomputed credit
17 from the amount of credit previously allowed. For the
18 purposes of this paragraph (6), a reduction of the basis
19 of qualified property resulting from a redetermination of
20 the purchase price shall be deemed a disposition of
21 qualified property to the extent of such reduction.
22 (g) Jobs Tax Credit; Enterprise Zone and Foreign
23 Trade Zone or Sub-Zone.
24 (1) A taxpayer conducting a trade or business in an
25 enterprise zone or a High Impact Business designated by
26 the Department of Commerce and Community Affairs
27 conducting a trade or business in a federally designated
28 Foreign Trade Zone or Sub-Zone shall be allowed a credit
29 against the tax imposed by subsections (a) and (b) of
30 this Section in the amount of $500 per eligible employee
31 hired to work in the zone during the taxable year.
32 (2) To qualify for the credit:
33 (A) the taxpayer must hire 5 or more eligible
34 employees to work in an enterprise zone or federally
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1 designated Foreign Trade Zone or Sub-Zone during the
2 taxable year;
3 (B) the taxpayer's total employment within the
4 enterprise zone or federally designated Foreign
5 Trade Zone or Sub-Zone must increase by 5 or more
6 full-time employees beyond the total employed in
7 that zone at the end of the previous tax year for
8 which a jobs tax credit under this Section was
9 taken, or beyond the total employed by the taxpayer
10 as of December 31, 1985, whichever is later; and
11 (C) the eligible employees must be employed
12 180 consecutive days in order to be deemed hired for
13 purposes of this subsection.
14 (3) An "eligible employee" means an employee who
15 is:
16 (A) Certified by the Department of Commerce
17 and Community Affairs as "eligible for services"
18 pursuant to regulations promulgated in accordance
19 with Title II of the Job Training Partnership Act,
20 Training Services for the Disadvantaged or Title III
21 of the Job Training Partnership Act, Employment and
22 Training Assistance for Dislocated Workers Program.
23 (B) Hired after the enterprise zone or
24 federally designated Foreign Trade Zone or Sub-Zone
25 was designated or the trade or business was located
26 in that zone, whichever is later.
27 (C) Employed in the enterprise zone or Foreign
28 Trade Zone or Sub-Zone. An employee is employed in
29 an enterprise zone or federally designated Foreign
30 Trade Zone or Sub-Zone if his services are rendered
31 there or it is the base of operations for the
32 services performed.
33 (D) A full-time employee working 30 or more
34 hours per week.
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1 (4) For tax years ending on or after December 31,
2 1985 and prior to December 31, 1988, the credit shall be
3 allowed for the tax year in which the eligible employees
4 are hired. For tax years ending on or after December 31,
5 1988, the credit shall be allowed for the tax year
6 immediately following the tax year in which the eligible
7 employees are hired. If the amount of the credit exceeds
8 the tax liability for that year, whether it exceeds the
9 original liability or the liability as later amended,
10 such excess may be carried forward and applied to the tax
11 liability of the 5 taxable years following the excess
12 credit year. The credit shall be applied to the earliest
13 year for which there is a liability. If there is credit
14 from more than one tax year that is available to offset a
15 liability, earlier credit shall be applied first.
16 (5) The Department of Revenue shall promulgate such
17 rules and regulations as may be deemed necessary to carry
18 out the purposes of this subsection (g).
19 (6) The credit shall be available for eligible
20 employees hired on or after January 1, 1986.
21 (h) Investment credit; High Impact Business.
22 (1) Subject to subsection (b) of Section 5.5 of the
23 Illinois Enterprise Zone Act, a taxpayer shall be allowed
24 a credit against the tax imposed by subsections (a) and
25 (b) of this Section for investment in qualified property
26 which is placed in service by a Department of Commerce
27 and Community Affairs designated High Impact Business.
28 The credit shall be .5% of the basis for such property.
29 The credit shall not be available until the minimum
30 investments in qualified property set forth in Section
31 5.5 of the Illinois Enterprise Zone Act have been
32 satisfied and shall not be allowed to the extent that it
33 would reduce a taxpayer's liability for the tax imposed
34 by subsections (a) and (b) of this Section to below zero.
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1 The credit applicable to such minimum investments shall
2 be taken in the taxable year in which such minimum
3 investments have been completed. The credit for
4 additional investments beyond the minimum investment by a
5 designated high impact business shall be available only
6 in the taxable year in which the property is placed in
7 service and shall not be allowed to the extent that it
8 would reduce a taxpayer's liability for the tax imposed
9 by subsections (a) and (b) of this Section to below zero.
10 For tax years ending on or after December 31, 1987, the
11 credit shall be allowed for the tax year in which the
12 property is placed in service, or, if the amount of the
13 credit exceeds the tax liability for that year, whether
14 it exceeds the original liability or the liability as
15 later amended, such excess may be carried forward and
16 applied to the tax liability of the 5 taxable years
17 following the excess credit year. The credit shall be
18 applied to the earliest year for which there is a
19 liability. If there is credit from more than one tax
20 year that is available to offset a liability, the credit
21 accruing first in time shall be applied first.
22 Changes made in this subdivision (h)(1) by Public
23 Act 88-670 restore changes made by Public Act 85-1182 and
24 reflect existing law.
25 (2) The term qualified property means property
26 which:
27 (A) is tangible, whether new or used,
28 including buildings and structural components of
29 buildings;
30 (B) is depreciable pursuant to Section 167 of
31 the Internal Revenue Code, except that "3-year
32 property" as defined in Section 168(c)(2)(A) of that
33 Code is not eligible for the credit provided by this
34 subsection (h);
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1 (C) is acquired by purchase as defined in
2 Section 179(d) of the Internal Revenue Code; and
3 (D) is not eligible for the Enterprise Zone
4 Investment Credit provided by subsection (f) of this
5 Section.
6 (3) The basis of qualified property shall be the
7 basis used to compute the depreciation deduction for
8 federal income tax purposes.
9 (4) If the basis of the property for federal income
10 tax depreciation purposes is increased after it has been
11 placed in service in a federally designated Foreign Trade
12 Zone or Sub-Zone located in Illinois by the taxpayer, the
13 amount of such increase shall be deemed property placed
14 in service on the date of such increase in basis.
15 (5) The term "placed in service" shall have the
16 same meaning as under Section 46 of the Internal Revenue
17 Code.
18 (6) If during any taxable year ending on or before
19 December 31, 1996, any property ceases to be qualified
20 property in the hands of the taxpayer within 48 months
21 after being placed in service, or the situs of any
22 qualified property is moved outside Illinois within 48
23 months after being placed in service, the tax imposed
24 under subsections (a) and (b) of this Section for such
25 taxable year shall be increased. Such increase shall be
26 determined by (i) recomputing the investment credit which
27 would have been allowed for the year in which credit for
28 such property was originally allowed by eliminating such
29 property from such computation, and (ii) subtracting such
30 recomputed credit from the amount of credit previously
31 allowed. For the purposes of this paragraph (6), a
32 reduction of the basis of qualified property resulting
33 from a redetermination of the purchase price shall be
34 deemed a disposition of qualified property to the extent
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1 of such reduction.
2 (7) Beginning with tax years ending after December
3 31, 1996, if a taxpayer qualifies for the credit under
4 this subsection (h) and thereby is granted a tax
5 abatement and the taxpayer relocates its entire facility
6 in violation of the explicit terms and length of the
7 contract under Section 18-183 of the Property Tax Code,
8 the tax imposed under subsections (a) and (b) of this
9 Section shall be increased for the taxable year in which
10 the taxpayer relocated its facility by an amount equal to
11 the amount of credit received by the taxpayer under this
12 subsection (h).
13 (i) A credit shall be allowed against the tax imposed by
14 subsections (a) and (b) of this Section for the tax imposed
15 by subsections (c) and (d) of this Section. This credit
16 shall be computed by multiplying the tax imposed by
17 subsections (c) and (d) of this Section by a fraction, the
18 numerator of which is base income allocable to Illinois and
19 the denominator of which is Illinois base income, and further
20 multiplying the product by the tax rate imposed by
21 subsections (a) and (b) of this Section.
22 Any credit earned on or after December 31, 1986 under
23 this subsection which is unused in the year the credit is
24 computed because it exceeds the tax liability imposed by
25 subsections (a) and (b) for that year (whether it exceeds the
26 original liability or the liability as later amended) may be
27 carried forward and applied to the tax liability imposed by
28 subsections (a) and (b) of the 5 taxable years following the
29 excess credit year. This credit shall be applied first to
30 the earliest year for which there is a liability. If there
31 is a credit under this subsection from more than one tax year
32 that is available to offset a liability the earliest credit
33 arising under this subsection shall be applied first.
34 If, during any taxable year ending on or after December
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1 31, 1986, the tax imposed by subsections (c) and (d) of this
2 Section for which a taxpayer has claimed a credit under this
3 subsection (i) is reduced, the amount of credit for such tax
4 shall also be reduced. Such reduction shall be determined by
5 recomputing the credit to take into account the reduced tax
6 imposed by subsection (c) and (d). If any portion of the
7 reduced amount of credit has been carried to a different
8 taxable year, an amended return shall be filed for such
9 taxable year to reduce the amount of credit claimed.
10 (j) Training expense credit. Beginning with tax years
11 ending on or after December 31, 1986, a taxpayer shall be
12 allowed a credit against the tax imposed by subsection (a)
13 and (b) under this Section for all amounts paid or accrued,
14 on behalf of all persons employed by the taxpayer in Illinois
15 or Illinois residents employed outside of Illinois by a
16 taxpayer, for educational or vocational training in
17 semi-technical or technical fields or semi-skilled or skilled
18 fields, which were deducted from gross income in the
19 computation of taxable income. The credit against the tax
20 imposed by subsections (a) and (b) shall be 1.6% of such
21 training expenses. For partners and for shareholders of
22 subchapter S corporations, there shall be allowed a credit
23 under this subsection (j) to be determined in accordance with
24 the determination of income and distributive share of income
25 under Sections 702 and 704 and subchapter S of the Internal
26 Revenue Code.
27 Any credit allowed under this subsection which is unused
28 in the year the credit is earned may be carried forward to
29 each of the 5 taxable years following the year for which the
30 credit is first computed until it is used. This credit shall
31 be applied first to the earliest year for which there is a
32 liability. If there is a credit under this subsection from
33 more than one tax year that is available to offset a
34 liability the earliest credit arising under this subsection
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1 shall be applied first.
2 (k) Research and development credit.
3 Beginning with tax years ending after July 1, 1990, a
4 taxpayer shall be allowed a credit against the tax imposed by
5 subsections (a) and (b) of this Section for increasing
6 research activities in this State. The credit allowed
7 against the tax imposed by subsections (a) and (b) shall be
8 equal to 6 1/2% of the qualifying expenditures for increasing
9 research activities in this State.
10 For purposes of this subsection, "qualifying
11 expenditures" means the qualifying expenditures as defined
12 for the federal credit for increasing research activities
13 which would be allowable under Section 41 of the Internal
14 Revenue Code and which are conducted in this State,
15 "qualifying expenditures for increasing research activities
16 in this State" means the excess of qualifying expenditures
17 for the taxable year in which incurred over qualifying
18 expenditures for the base period, "qualifying expenditures
19 for the base period" means the average of the qualifying
20 expenditures for each year in the base period, and "base
21 period" means the 3 taxable years immediately preceding the
22 taxable year for which the determination is being made.
23 Any credit in excess of the tax liability for the taxable
24 year may be carried forward. A taxpayer may elect to have the
25 unused credit shown on its final completed return carried
26 over as a credit against the tax liability for the following
27 5 taxable years or until it has been fully used, whichever
28 occurs first.
29 If an unused credit is carried forward to a given year
30 from 2 or more earlier years, that credit arising in the
31 earliest year will be applied first against the tax liability
32 for the given year. If a tax liability for the given year
33 still remains, the credit from the next earliest year will
34 then be applied, and so on, until all credits have been used
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1 or no tax liability for the given year remains. Any
2 remaining unused credit or credits then will be carried
3 forward to the next following year in which a tax liability
4 is incurred, except that no credit can be carried forward to
5 a year which is more than 5 years after the year in which the
6 expense for which the credit is given was incurred.
7 Unless extended by law, the credit shall not include
8 costs incurred after December 31, 2004 1999, except for costs
9 incurred pursuant to a binding contract entered into on or
10 before December 31, 2004 1999.
11 (l) Environmental Remediation Tax Credit.
12 (i) For tax years ending after December 31, 1997
13 and on or before December 31, 2001, a taxpayer shall be
14 allowed a credit against the tax imposed by subsections
15 (a) and (b) of this Section for certain amounts paid for
16 unreimbursed eligible remediation costs, as specified in
17 this subsection. For purposes of this Section,
18 "unreimbursed eligible remediation costs" means costs
19 approved by the Illinois Environmental Protection Agency
20 ("Agency") under Section 58.14 of the Environmental
21 Protection Act that were paid in performing environmental
22 remediation at a site for which a No Further Remediation
23 Letter was issued by the Agency and recorded under
24 Section 58.10 of the Environmental Protection Act, and
25 does not mean approved eligible remediation costs that
26 are at any time deducted under the provisions of the
27 Internal Revenue Code. The credit must be claimed for
28 the taxable year in which Agency approval of the eligible
29 remediation costs is granted. In no event shall
30 unreimbursed eligible remediation costs include any costs
31 taken into account in calculating an environmental
32 remediation credit granted against a tax imposed under
33 the provisions of the Internal Revenue Code. The credit
34 is not available to any taxpayer if the taxpayer or any
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1 related party caused or contributed to, in any material
2 respect, a release of regulated substances on, in, or
3 under the site that was identified and addressed by the
4 remedial action pursuant to the Site Remediation Program
5 of the Environmental Protection Act. After the Pollution
6 Control Board rules are adopted pursuant to the Illinois
7 Administrative Procedure Act for the administration and
8 enforcement of Section 58.9 of the Environmental
9 Protection Act, determinations as to credit availability
10 for purposes of this Section shall be made consistent
11 with those rules. For purposes of this Section,
12 "taxpayer" includes a person whose tax attributes the
13 taxpayer has succeeded to under Section 381 of the
14 Internal Revenue Code and "related party" includes the
15 persons disallowed a deduction for losses by paragraphs
16 (b), (c), and (f)(1) of Section 267 of the Internal
17 Revenue Code by virtue of being a related taxpayer, as
18 well as any of its partners. The credit allowed against
19 the tax imposed by subsections (a) and (b) shall be equal
20 to 25% of the unreimbursed eligible remediation costs in
21 excess of $100,000 per site, except that the $100,000
22 threshold shall not apply to any site contained in an
23 enterprise zone and located in a census tract that is
24 located in a minor civil division and place or county
25 that has been determined by the Department of Commerce
26 and Community Affairs to contain a majority of households
27 consisting of low and moderate income persons. The total
28 credit allowed shall not exceed $40,000 per year with a
29 maximum total of $150,000 per site. For partners and
30 shareholders of subchapter S corporations, there shall be
31 allowed a credit under this subsection to be determined
32 in accordance with the determination of income and
33 distributive share of income under Sections 702 and 704
34 of subchapter S of the Internal Revenue Code.
HB2950 Enrolled -19- LRB9008806KDcd
1 (ii) A credit allowed under this subsection that is
2 unused in the year the credit is earned may be carried
3 forward to each of the 5 taxable years following the year
4 for which the credit is first earned until it is used.
5 The term "unused credit" does not include any amounts of
6 unreimbursed eligible remediation costs in excess of the
7 maximum credit per site authorized under paragraph (i).
8 This credit shall be applied first to the earliest year
9 for which there is a liability. If there is a credit
10 under this subsection from more than one tax year that is
11 available to offset a liability, the earliest credit
12 arising under this subsection shall be applied first. A
13 credit allowed under this subsection may be sold to a
14 buyer as part of a sale of all or part of the remediation
15 site for which the credit was granted. The purchaser of
16 a remediation site and the tax credit shall succeed to
17 the unused credit and remaining carry-forward period of
18 the seller. To perfect the transfer, the assignor shall
19 record the transfer in the chain of title for the site
20 and provide written notice to the Director of the
21 Illinois Department of Revenue of the assignor's intent
22 to sell the remediation site and the amount of the tax
23 credit to be transferred as a portion of the sale. In no
24 event may a credit be transferred to any taxpayer if the
25 taxpayer or a related party would not be eligible under
26 the provisions of subsection (i).
27 (iii) For purposes of this Section, the term "site"
28 shall have the same meaning as under Section 58.2 of the
29 Environmental Protection Act.
30 (Source: P.A. 89-235, eff. 8-4-95; 89-519, eff. 7-18-96;
31 89-591, eff. 8-1-96; 90-123, eff. 7-21-97; 90-458, eff.
32 8-17-97; revised 10-16-97.)
33 Section 5. The Use Tax Act is amended by changing
HB2950 Enrolled -20- LRB9008806KDcd
1 Sections 3-5 and 3-10 as follows:
2 (35 ILCS 105/3-5) (from Ch. 120, par. 439.3-5)
3 Sec. 3-5. Exemptions. Use of the following tangible
4 personal property is exempt from the tax imposed by this Act:
5 (1) Personal property purchased from a corporation,
6 society, association, foundation, institution, or
7 organization, other than a limited liability company, that is
8 organized and operated as a not-for-profit service enterprise
9 for the benefit of persons 65 years of age or older if the
10 personal property was not purchased by the enterprise for the
11 purpose of resale by the enterprise.
12 (2) Personal property purchased by a not-for-profit
13 Illinois county fair association for use in conducting,
14 operating, or promoting the county fair.
15 (3) Personal property purchased by a not-for-profit
16 music or dramatic arts organization that establishes, by
17 proof required by the Department by rule, that it has
18 received an exemption under Section 501(c)(3) of the Internal
19 Revenue Code and that is organized and operated for the
20 presentation of live public performances of musical or
21 theatrical works on a regular basis.
22 (4) Personal property purchased by a governmental body,
23 by a corporation, society, association, foundation, or
24 institution organized and operated exclusively for
25 charitable, religious, or educational purposes, or by a
26 not-for-profit corporation, society, association, foundation,
27 institution, or organization that has no compensated officers
28 or employees and that is organized and operated primarily for
29 the recreation of persons 55 years of age or older. A limited
30 liability company may qualify for the exemption under this
31 paragraph only if the limited liability company is organized
32 and operated exclusively for educational purposes. On and
33 after July 1, 1987, however, no entity otherwise eligible for
HB2950 Enrolled -21- LRB9008806KDcd
1 this exemption shall make tax-free purchases unless it has an
2 active exemption identification number issued by the
3 Department.
4 (5) A passenger car that is a replacement vehicle to the
5 extent that the purchase price of the car is subject to the
6 Replacement Vehicle Tax.
7 (6) Graphic arts machinery and equipment, including
8 repair and replacement parts, both new and used, and
9 including that manufactured on special order, certified by
10 the purchaser to be used primarily for graphic arts
11 production, and including machinery and equipment purchased
12 for lease.
13 (7) Farm chemicals.
14 (8) Legal tender, currency, medallions, or gold or
15 silver coinage issued by the State of Illinois, the
16 government of the United States of America, or the government
17 of any foreign country, and bullion.
18 (9) Personal property purchased from a teacher-sponsored
19 student organization affiliated with an elementary or
20 secondary school located in Illinois.
21 (10) A motor vehicle of the first division, a motor
22 vehicle of the second division that is a self-contained motor
23 vehicle designed or permanently converted to provide living
24 quarters for recreational, camping, or travel use, with
25 direct walk through to the living quarters from the driver's
26 seat, or a motor vehicle of the second division that is of
27 the van configuration designed for the transportation of not
28 less than 7 nor more than 16 passengers, as defined in
29 Section 1-146 of the Illinois Vehicle Code, that is used for
30 automobile renting, as defined in the Automobile Renting
31 Occupation and Use Tax Act.
32 (11) Farm machinery and equipment, both new and used,
33 including that manufactured on special order, certified by
34 the purchaser to be used primarily for production agriculture
HB2950 Enrolled -22- LRB9008806KDcd
1 or State or federal agricultural programs, including
2 individual replacement parts for the machinery and equipment,
3 and including machinery and equipment purchased for lease,
4 and including implements of husbandry defined in Section
5 1-130 of the Illinois Vehicle Code, farm machinery and
6 agricultural chemical and fertilizer spreaders, and nurse
7 wagons required to be registered under Section 3-809 of the
8 Illinois Vehicle Code, but excluding other motor vehicles
9 required to be registered under the Illinois Vehicle Code.
10 Horticultural polyhouses or hoop houses used for propagating,
11 growing, or overwintering plants shall be considered farm
12 machinery and equipment under this item (11) paragraph.
13 Agricultural chemical tender tanks and dry boxes shall
14 include units sold separately from a motor vehicle required
15 to be licensed and units sold mounted on a motor vehicle
16 required to be licensed if the selling price of the tender is
17 separately stated.
18 Farm machinery and equipment shall include precision
19 farming equipment that is installed or purchased to be
20 installed on farm machinery and equipment including, but not
21 limited to, tractors, harvesters, sprayers, planters,
22 seeders, or spreaders. Precision farming equipment includes,
23 but is not limited to, soil testing sensors, computers,
24 monitors, software, global positioning and mapping systems,
25 and other such equipment.
26 Farm machinery and equipment also includes computers,
27 sensors, software, and related equipment used primarily in
28 the computer-assisted operation of production agriculture
29 facilities, equipment, and activities such as, but not
30 limited to, the collection, monitoring, and correlation of
31 animal and crop data for the purpose of formulating animal
32 diets and agricultural chemicals. This item (11) is exempt
33 from the provisions of Section 3-90.
34 (12) Fuel and petroleum products sold to or used by an
HB2950 Enrolled -23- LRB9008806KDcd
1 air common carrier, certified by the carrier to be used for
2 consumption, shipment, or storage in the conduct of its
3 business as an air common carrier, for a flight destined for
4 or returning from a location or locations outside the United
5 States without regard to previous or subsequent domestic
6 stopovers.
7 (13) Proceeds of mandatory service charges separately
8 stated on customers' bills for the purchase and consumption
9 of food and beverages purchased at retail from a retailer, to
10 the extent that the proceeds of the service charge are in
11 fact turned over as tips or as a substitute for tips to the
12 employees who participate directly in preparing, serving,
13 hosting or cleaning up the food or beverage function with
14 respect to which the service charge is imposed.
15 (14) Oil field exploration, drilling, and production
16 equipment, including (i) rigs and parts of rigs, rotary rigs,
17 cable tool rigs, and workover rigs, (ii) pipe and tubular
18 goods, including casing and drill strings, (iii) pumps and
19 pump-jack units, (iv) storage tanks and flow lines, (v) any
20 individual replacement part for oil field exploration,
21 drilling, and production equipment, and (vi) machinery and
22 equipment purchased for lease; but excluding motor vehicles
23 required to be registered under the Illinois Vehicle Code.
24 (15) Photoprocessing machinery and equipment, including
25 repair and replacement parts, both new and used, including
26 that manufactured on special order, certified by the
27 purchaser to be used primarily for photoprocessing, and
28 including photoprocessing machinery and equipment purchased
29 for lease.
30 (16) Coal exploration, mining, offhighway hauling,
31 processing, maintenance, and reclamation equipment, including
32 replacement parts and equipment, and including equipment
33 purchased for lease, but excluding motor vehicles required to
34 be registered under the Illinois Vehicle Code.
HB2950 Enrolled -24- LRB9008806KDcd
1 (17) Distillation machinery and equipment, sold as a
2 unit or kit, assembled or installed by the retailer,
3 certified by the user to be used only for the production of
4 ethyl alcohol that will be used for consumption as motor fuel
5 or as a component of motor fuel for the personal use of the
6 user, and not subject to sale or resale.
7 (18) Manufacturing and assembling machinery and
8 equipment used primarily in the process of manufacturing or
9 assembling tangible personal property for wholesale or retail
10 sale or lease, whether that sale or lease is made directly by
11 the manufacturer or by some other person, whether the
12 materials used in the process are owned by the manufacturer
13 or some other person, or whether that sale or lease is made
14 apart from or as an incident to the seller's engaging in the
15 service occupation of producing machines, tools, dies, jigs,
16 patterns, gauges, or other similar items of no commercial
17 value on special order for a particular purchaser.
18 (19) Personal property delivered to a purchaser or
19 purchaser's donee inside Illinois when the purchase order for
20 that personal property was received by a florist located
21 outside Illinois who has a florist located inside Illinois
22 deliver the personal property.
23 (20) Semen used for artificial insemination of livestock
24 for direct agricultural production.
25 (21) Horses, or interests in horses, registered with and
26 meeting the requirements of any of the Arabian Horse Club
27 Registry of America, Appaloosa Horse Club, American Quarter
28 Horse Association, United States Trotting Association, or
29 Jockey Club, as appropriate, used for purposes of breeding or
30 racing for prizes.
31 (22) Computers and communications equipment utilized for
32 any hospital purpose and equipment used in the diagnosis,
33 analysis, or treatment of hospital patients purchased by a
34 lessor who leases the equipment, under a lease of one year or
HB2950 Enrolled -25- LRB9008806KDcd
1 longer executed or in effect at the time the lessor would
2 otherwise be subject to the tax imposed by this Act, to a
3 hospital that has been issued an active tax exemption
4 identification number by the Department under Section 1g of
5 the Retailers' Occupation Tax Act. If the equipment is
6 leased in a manner that does not qualify for this exemption
7 or is used in any other non-exempt manner, the lessor shall
8 be liable for the tax imposed under this Act or the Service
9 Use Tax Act, as the case may be, based on the fair market
10 value of the property at the time the non-qualifying use
11 occurs. No lessor shall collect or attempt to collect an
12 amount (however designated) that purports to reimburse that
13 lessor for the tax imposed by this Act or the Service Use Tax
14 Act, as the case may be, if the tax has not been paid by the
15 lessor. If a lessor improperly collects any such amount from
16 the lessee, the lessee shall have a legal right to claim a
17 refund of that amount from the lessor. If, however, that
18 amount is not refunded to the lessee for any reason, the
19 lessor is liable to pay that amount to the Department.
20 (23) Personal property purchased by a lessor who leases
21 the property, under a lease of one year or longer executed
22 or in effect at the time the lessor would otherwise be
23 subject to the tax imposed by this Act, to a governmental
24 body that has been issued an active sales tax exemption
25 identification number by the Department under Section 1g of
26 the Retailers' Occupation Tax Act. If the property is leased
27 in a manner that does not qualify for this exemption or used
28 in any other non-exempt manner, the lessor shall be liable
29 for the tax imposed under this Act or the Service Use Tax
30 Act, as the case may be, based on the fair market value of
31 the property at the time the non-qualifying use occurs. No
32 lessor shall collect or attempt to collect an amount (however
33 designated) that purports to reimburse that lessor for the
34 tax imposed by this Act or the Service Use Tax Act, as the
HB2950 Enrolled -26- LRB9008806KDcd
1 case may be, if the tax has not been paid by the lessor. If
2 a lessor improperly collects any such amount from the lessee,
3 the lessee shall have a legal right to claim a refund of that
4 amount from the lessor. If, however, that amount is not
5 refunded to the lessee for any reason, the lessor is liable
6 to pay that amount to the Department.
7 (24) Beginning with taxable years ending on or after
8 December 31, 1995 and ending with taxable years ending on or
9 before December 31, 2004, personal property that is donated
10 for disaster relief to be used in a State or federally
11 declared disaster area in Illinois or bordering Illinois by a
12 manufacturer or retailer that is registered in this State to
13 a corporation, society, association, foundation, or
14 institution that has been issued a sales tax exemption
15 identification number by the Department that assists victims
16 of the disaster who reside within the declared disaster area.
17 (25) Beginning with taxable years ending on or after
18 December 31, 1995 and ending with taxable years ending on or
19 before December 31, 2004, personal property that is used in
20 the performance of infrastructure repairs in this State,
21 including but not limited to municipal roads and streets,
22 access roads, bridges, sidewalks, waste disposal systems,
23 water and sewer line extensions, water distribution and
24 purification facilities, storm water drainage and retention
25 facilities, and sewage treatment facilities, resulting from a
26 State or federally declared disaster in Illinois or bordering
27 Illinois when such repairs are initiated on facilities
28 located in the declared disaster area within 6 months after
29 the disaster.
30 (Source: P.A. 89-16, eff. 5-30-95; 89-115, eff. 1-1-96;
31 89-349, eff. 8-17-95; 89-495, eff. 6-24-96; 89-496, eff.
32 6-25-96; 89-626, eff. 8-9-96; 90-14, eff. 7-1-97; 90-552,
33 eff. 12-12-97.)
HB2950 Enrolled -27- LRB9008806KDcd
1 (35 ILCS 105/3-10) (from Ch. 120, par. 439.3-10)
2 Sec. 3-10. Rate of tax. Unless otherwise provided in
3 this Section, the tax imposed by this Act is at the rate of
4 6.25% of either the selling price or the fair market value,
5 if any, of the tangible personal property. In all cases
6 where property functionally used or consumed is the same as
7 the property that was purchased at retail, then the tax is
8 imposed on the selling price of the property. In all cases
9 where property functionally used or consumed is a by-product
10 or waste product that has been refined, manufactured, or
11 produced from property purchased at retail, then the tax is
12 imposed on the lower of the fair market value, if any, of the
13 specific property so used in this State or on the selling
14 price of the property purchased at retail. For purposes of
15 this Section "fair market value" means the price at which
16 property would change hands between a willing buyer and a
17 willing seller, neither being under any compulsion to buy or
18 sell and both having reasonable knowledge of the relevant
19 facts. The fair market value shall be established by Illinois
20 sales by the taxpayer of the same property as that
21 functionally used or consumed, or if there are no such sales
22 by the taxpayer, then comparable sales or purchases of
23 property of like kind and character in Illinois.
24 With respect to gasohol, the tax imposed by this Act
25 applies to 70% of the proceeds of sales made on or after
26 January 1, 1990, and before July 1, 2003 1999, and to 100% of
27 the proceeds of sales made thereafter, except that from July
28 1, 1997 to July 1, 1999, the rate shall be 85% for gasohol
29 sold in this State during the 12 months beginning July 1
30 following any calendar year for which the Department has
31 determined that the percentages in Section 10 of the Gasohol
32 Fuels Tax Abatement Act have not been met.
33 With respect to food for human consumption that is to be
34 consumed off the premises where it is sold (other than
HB2950 Enrolled -28- LRB9008806KDcd
1 alcoholic beverages, soft drinks, and food that has been
2 prepared for immediate consumption) and prescription and
3 nonprescription medicines, drugs, medical appliances,
4 modifications to a motor vehicle for the purpose of rendering
5 it usable by a disabled person, and insulin, urine testing
6 materials, syringes, and needles used by diabetics, for human
7 use, the tax is imposed at the rate of 1%. For the purposes
8 of this Section, the term "soft drinks" means any complete,
9 finished, ready-to-use, non-alcoholic drink, whether
10 carbonated or not, including but not limited to soda water,
11 cola, fruit juice, vegetable juice, carbonated water, and all
12 other preparations commonly known as soft drinks of whatever
13 kind or description that are contained in any closed or
14 sealed bottle, can, carton, or container, regardless of size.
15 "Soft drinks" does not include coffee, tea, non-carbonated
16 water, infant formula, milk or milk products as defined in
17 the Grade A Pasteurized Milk and Milk Products Act, or drinks
18 containing 50% or more natural fruit or vegetable juice.
19 Notwithstanding any other provisions of this Act, "food
20 for human consumption that is to be consumed off the premises
21 where it is sold" includes all food sold through a vending
22 machine, except soft drinks and food products that are
23 dispensed hot from a vending machine, regardless of the
24 location of the vending machine.
25 If the property that is purchased at retail from a
26 retailer is acquired outside Illinois and used outside
27 Illinois before being brought to Illinois for use here and is
28 taxable under this Act, the "selling price" on which the tax
29 is computed shall be reduced by an amount that represents a
30 reasonable allowance for depreciation for the period of prior
31 out-of-state use.
32 (Source: P.A. 88-45; 89-359, eff. 8-17-95; 89-420, eff.
33 6-1-96; 89-463, eff. 5-31-96; 89-626, eff. 8-9-96.)
HB2950 Enrolled -29- LRB9008806KDcd
1 Section 10. The Service Use Tax Act is amended by
2 changing Sections 3-5 and 3-10 as follows:
3 (35 ILCS 110/3-5) (from Ch. 120, par. 439.33-5)
4 Sec. 3-5. Exemptions. Use of the following tangible
5 personal property is exempt from the tax imposed by this Act:
6 (1) Personal property purchased from a corporation,
7 society, association, foundation, institution, or
8 organization, other than a limited liability company, that is
9 organized and operated as a not-for-profit service enterprise
10 for the benefit of persons 65 years of age or older if the
11 personal property was not purchased by the enterprise for the
12 purpose of resale by the enterprise.
13 (2) Personal property purchased by a non-profit Illinois
14 county fair association for use in conducting, operating, or
15 promoting the county fair.
16 (3) Personal property purchased by a not-for-profit
17 music or dramatic arts organization that establishes, by
18 proof required by the Department by rule, that it has
19 received an exemption under Section 501(c)(3) of the Internal
20 Revenue Code and that is organized and operated for the
21 presentation of live public performances of musical or
22 theatrical works on a regular basis.
23 (4) Legal tender, currency, medallions, or gold or
24 silver coinage issued by the State of Illinois, the
25 government of the United States of America, or the government
26 of any foreign country, and bullion.
27 (5) Graphic arts machinery and equipment, including
28 repair and replacement parts, both new and used, and
29 including that manufactured on special order or purchased for
30 lease, certified by the purchaser to be used primarily for
31 graphic arts production.
32 (6) Personal property purchased from a teacher-sponsored
33 student organization affiliated with an elementary or
HB2950 Enrolled -30- LRB9008806KDcd
1 secondary school located in Illinois.
2 (7) Farm machinery and equipment, both new and used,
3 including that manufactured on special order, certified by
4 the purchaser to be used primarily for production agriculture
5 or State or federal agricultural programs, including
6 individual replacement parts for the machinery and equipment,
7 and including machinery and equipment purchased for lease,
8 and including implements of husbandry defined in Section
9 1-130 of the Illinois Vehicle Code, farm machinery and
10 agricultural chemical and fertilizer spreaders, and nurse
11 wagons required to be registered under Section 3-809 of the
12 Illinois Vehicle Code, but excluding other motor vehicles
13 required to be registered under the Illinois Vehicle Code.
14 Horticultural polyhouses or hoop houses used for propagating,
15 growing, or overwintering plants shall be considered farm
16 machinery and equipment under this item (7) paragraph.
17 Agricultural chemical tender tanks and dry boxes shall
18 include units sold separately from a motor vehicle required
19 to be licensed and units sold mounted on a motor vehicle
20 required to be licensed if the selling price of the tender is
21 separately stated.
22 Farm machinery and equipment shall include precision
23 farming equipment that is installed or purchased to be
24 installed on farm machinery and equipment including, but not
25 limited to, tractors, harvesters, sprayers, planters,
26 seeders, or spreaders. Precision farming equipment includes,
27 but is not limited to, soil testing sensors, computers,
28 monitors, software, global positioning and mapping systems,
29 and other such equipment.
30 Farm machinery and equipment also includes computers,
31 sensors, software, and related equipment used primarily in
32 the computer-assisted operation of production agriculture
33 facilities, equipment, and activities such as, but not
34 limited to, the collection, monitoring, and correlation of
HB2950 Enrolled -31- LRB9008806KDcd
1 animal and crop data for the purpose of formulating animal
2 diets and agricultural chemicals. This item (7) is exempt
3 from the provisions of Section 3-75.
4 (8) Fuel and petroleum products sold to or used by an
5 air common carrier, certified by the carrier to be used for
6 consumption, shipment, or storage in the conduct of its
7 business as an air common carrier, for a flight destined for
8 or returning from a location or locations outside the United
9 States without regard to previous or subsequent domestic
10 stopovers.
11 (9) Proceeds of mandatory service charges separately
12 stated on customers' bills for the purchase and consumption
13 of food and beverages acquired as an incident to the purchase
14 of a service from a serviceman, to the extent that the
15 proceeds of the service charge are in fact turned over as
16 tips or as a substitute for tips to the employees who
17 participate directly in preparing, serving, hosting or
18 cleaning up the food or beverage function with respect to
19 which the service charge is imposed.
20 (10) Oil field exploration, drilling, and production
21 equipment, including (i) rigs and parts of rigs, rotary rigs,
22 cable tool rigs, and workover rigs, (ii) pipe and tubular
23 goods, including casing and drill strings, (iii) pumps and
24 pump-jack units, (iv) storage tanks and flow lines, (v) any
25 individual replacement part for oil field exploration,
26 drilling, and production equipment, and (vi) machinery and
27 equipment purchased for lease; but excluding motor vehicles
28 required to be registered under the Illinois Vehicle Code.
29 (11) Proceeds from the sale of photoprocessing machinery
30 and equipment, including repair and replacement parts, both
31 new and used, including that manufactured on special order,
32 certified by the purchaser to be used primarily for
33 photoprocessing, and including photoprocessing machinery and
34 equipment purchased for lease.
HB2950 Enrolled -32- LRB9008806KDcd
1 (12) Coal exploration, mining, offhighway hauling,
2 processing, maintenance, and reclamation equipment, including
3 replacement parts and equipment, and including equipment
4 purchased for lease, but excluding motor vehicles required to
5 be registered under the Illinois Vehicle Code.
6 (13) Semen used for artificial insemination of livestock
7 for direct agricultural production.
8 (14) Horses, or interests in horses, registered with and
9 meeting the requirements of any of the Arabian Horse Club
10 Registry of America, Appaloosa Horse Club, American Quarter
11 Horse Association, United States Trotting Association, or
12 Jockey Club, as appropriate, used for purposes of breeding or
13 racing for prizes.
14 (15) Computers and communications equipment utilized for
15 any hospital purpose and equipment used in the diagnosis,
16 analysis, or treatment of hospital patients purchased by a
17 lessor who leases the equipment, under a lease of one year or
18 longer executed or in effect at the time the lessor would
19 otherwise be subject to the tax imposed by this Act, to a
20 hospital that has been issued an active tax exemption
21 identification number by the Department under Section 1g of
22 the Retailers' Occupation Tax Act. If the equipment is leased
23 in a manner that does not qualify for this exemption or is
24 used in any other non-exempt manner, the lessor shall be
25 liable for the tax imposed under this Act or the Use Tax Act,
26 as the case may be, based on the fair market value of the
27 property at the time the non-qualifying use occurs. No
28 lessor shall collect or attempt to collect an amount (however
29 designated) that purports to reimburse that lessor for the
30 tax imposed by this Act or the Use Tax Act, as the case may
31 be, if the tax has not been paid by the lessor. If a lessor
32 improperly collects any such amount from the lessee, the
33 lessee shall have a legal right to claim a refund of that
34 amount from the lessor. If, however, that amount is not
HB2950 Enrolled -33- LRB9008806KDcd
1 refunded to the lessee for any reason, the lessor is liable
2 to pay that amount to the Department.
3 (16) Personal property purchased by a lessor who leases
4 the property, under a lease of one year or longer executed or
5 in effect at the time the lessor would otherwise be subject
6 to the tax imposed by this Act, to a governmental body that
7 has been issued an active tax exemption identification number
8 by the Department under Section 1g of the Retailers'
9 Occupation Tax Act. If the property is leased in a manner
10 that does not qualify for this exemption or is used in any
11 other non-exempt manner, the lessor shall be liable for the
12 tax imposed under this Act or the Use Tax Act, as the case
13 may be, based on the fair market value of the property at the
14 time the non-qualifying use occurs. No lessor shall collect
15 or attempt to collect an amount (however designated) that
16 purports to reimburse that lessor for the tax imposed by this
17 Act or the Use Tax Act, as the case may be, if the tax has
18 not been paid by the lessor. If a lessor improperly collects
19 any such amount from the lessee, the lessee shall have a
20 legal right to claim a refund of that amount from the lessor.
21 If, however, that amount is not refunded to the lessee for
22 any reason, the lessor is liable to pay that amount to the
23 Department.
24 (17) Beginning with taxable years ending on or after
25 December 31, 1995 and ending with taxable years ending on or
26 before December 31, 2004, personal property that is donated
27 for disaster relief to be used in a State or federally
28 declared disaster area in Illinois or bordering Illinois by a
29 manufacturer or retailer that is registered in this State to
30 a corporation, society, association, foundation, or
31 institution that has been issued a sales tax exemption
32 identification number by the Department that assists victims
33 of the disaster who reside within the declared disaster area.
34 (18) Beginning with taxable years ending on or after
HB2950 Enrolled -34- LRB9008806KDcd
1 December 31, 1995 and ending with taxable years ending on or
2 before December 31, 2004, personal property that is used in
3 the performance of infrastructure repairs in this State,
4 including but not limited to municipal roads and streets,
5 access roads, bridges, sidewalks, waste disposal systems,
6 water and sewer line extensions, water distribution and
7 purification facilities, storm water drainage and retention
8 facilities, and sewage treatment facilities, resulting from a
9 State or federally declared disaster in Illinois or bordering
10 Illinois when such repairs are initiated on facilities
11 located in the declared disaster area within 6 months after
12 the disaster.
13 (Source: P.A. 89-16, eff. 5-30-95; 89-115, eff. 1-1-96;
14 89-349, eff. 8-17-95; 89-495, eff. 6-24-96; 89-496, eff.
15 6-25-96; 89-626, eff. 8-9-96; 90-14, eff. 7-1-97; 90-552,
16 eff. 12-12-97.)
17 (35 ILCS 110/3-10) (from Ch. 120, par. 439.33-10)
18 Sec. 3-10. Rate of tax. Unless otherwise provided in
19 this Section, the tax imposed by this Act is at the rate of
20 6.25% of the selling price of tangible personal property
21 transferred as an incident to the sale of service, but, for
22 the purpose of computing this tax, in no event shall the
23 selling price be less than the cost price of the property to
24 the serviceman.
25 With respect to gasohol, as defined in the Use Tax Act,
26 the tax imposed by this Act applies to 70% of the selling
27 price of property transferred as an incident to the sale of
28 service on or after January 1, 1990, and before July 1, 2003
29 1999, and to 100% of the selling price thereafter, except
30 that from July 1, 1997 to July 1, 1999, the rate shall be 85%
31 for gasohol sold in this State during the 12 months beginning
32 July 1 following any calendar year for which the Department
33 has determined that the percentages in Section 10 of the
HB2950 Enrolled -35- LRB9008806KDcd
1 Gasohol Fuels Tax Abatement Act have not been met.
2 At the election of any registered serviceman made for
3 each fiscal year, sales of service in which the aggregate
4 annual cost price of tangible personal property transferred
5 as an incident to the sales of service is less than 35%, or
6 75% in the case of servicemen transferring prescription drugs
7 or servicemen engaged in graphic arts production, of the
8 aggregate annual total gross receipts from all sales of
9 service, the tax imposed by this Act shall be based on the
10 serviceman's cost price of the tangible personal property
11 transferred as an incident to the sale of those services.
12 The tax shall be imposed at the rate of 1% on food
13 prepared for immediate consumption and transferred incident
14 to a sale of service subject to this Act or the Service
15 Occupation Tax Act by an entity licensed under the Hospital
16 Licensing Act or the Nursing Home Care Act. The tax shall
17 also be imposed at the rate of 1% on food for human
18 consumption that is to be consumed off the premises where it
19 is sold (other than alcoholic beverages, soft drinks, and
20 food that has been prepared for immediate consumption and is
21 not otherwise included in this paragraph) and prescription
22 and nonprescription medicines, drugs, medical appliances,
23 modifications to a motor vehicle for the purpose of rendering
24 it usable by a disabled person, and insulin, urine testing
25 materials, syringes, and needles used by diabetics, for human
26 use. For the purposes of this Section, the term "soft drinks"
27 means any complete, finished, ready-to-use, non-alcoholic
28 drink, whether carbonated or not, including but not limited
29 to soda water, cola, fruit juice, vegetable juice, carbonated
30 water, and all other preparations commonly known as soft
31 drinks of whatever kind or description that are contained in
32 any closed or sealed bottle, can, carton, or container,
33 regardless of size. "Soft drinks" does not include coffee,
34 tea, non-carbonated water, infant formula, milk or milk
HB2950 Enrolled -36- LRB9008806KDcd
1 products as defined in the Grade A Pasteurized Milk and Milk
2 Products Act, or drinks containing 50% or more natural fruit
3 or vegetable juice.
4 Notwithstanding any other provisions of this Act, "food
5 for human consumption that is to be consumed off the premises
6 where it is sold" includes all food sold through a vending
7 machine, except soft drinks and food products that are
8 dispensed hot from a vending machine, regardless of the
9 location of the vending machine.
10 If the property that is acquired from a serviceman is
11 acquired outside Illinois and used outside Illinois before
12 being brought to Illinois for use here and is taxable under
13 this Act, the "selling price" on which the tax is computed
14 shall be reduced by an amount that represents a reasonable
15 allowance for depreciation for the period of prior
16 out-of-state use.
17 (Source: P.A. 88-45; 89-359, eff. 8-17-95; 89-420, eff.
18 6-1-96; 89-463, eff. 5-31-96; 89-626, eff. 8-9-96.)
19 Section 15. The Service Occupation Tax Act is amended by
20 changing Sections 3-5 and 3-10 as follows:
21 (35 ILCS 115/3-5) (from Ch. 120, par. 439.103-5)
22 Sec. 3-5. Exemptions. The following tangible personal
23 property is exempt from the tax imposed by this Act:
24 (1) Personal property sold by a corporation, society,
25 association, foundation, institution, or organization, other
26 than a limited liability company, that is organized and
27 operated as a not-for-profit service enterprise for the
28 benefit of persons 65 years of age or older if the personal
29 property was not purchased by the enterprise for the purpose
30 of resale by the enterprise.
31 (2) Personal property purchased by a not-for-profit
32 Illinois county fair association for use in conducting,
HB2950 Enrolled -37- LRB9008806KDcd
1 operating, or promoting the county fair.
2 (3) Personal property purchased by any not-for-profit
3 music or dramatic arts organization that establishes, by
4 proof required by the Department by rule, that it has
5 received an exemption under Section 501(c)(3) of the
6 Internal Revenue Code and that is organized and operated for
7 the presentation of live public performances of musical or
8 theatrical works on a regular basis.
9 (4) Legal tender, currency, medallions, or gold or
10 silver coinage issued by the State of Illinois, the
11 government of the United States of America, or the government
12 of any foreign country, and bullion.
13 (5) Graphic arts machinery and equipment, including
14 repair and replacement parts, both new and used, and
15 including that manufactured on special order or purchased for
16 lease, certified by the purchaser to be used primarily for
17 graphic arts production.
18 (6) Personal property sold by a teacher-sponsored
19 student organization affiliated with an elementary or
20 secondary school located in Illinois.
21 (7) Farm machinery and equipment, both new and used,
22 including that manufactured on special order, certified by
23 the purchaser to be used primarily for production agriculture
24 or State or federal agricultural programs, including
25 individual replacement parts for the machinery and equipment,
26 and including machinery and equipment purchased for lease,
27 and including implements of husbandry defined in Section
28 1-130 of the Illinois Vehicle Code, farm machinery and
29 agricultural chemical and fertilizer spreaders, and nurse
30 wagons required to be registered under Section 3-809 of the
31 Illinois Vehicle Code, but excluding other motor vehicles
32 required to be registered under the Illinois Vehicle Code.
33 Horticultural polyhouses or hoop houses used for propagating,
34 growing, or overwintering plants shall be considered farm
HB2950 Enrolled -38- LRB9008806KDcd
1 machinery and equipment under this item (7) paragraph.
2 Agricultural chemical tender tanks and dry boxes shall
3 include units sold separately from a motor vehicle required
4 to be licensed and units sold mounted on a motor vehicle
5 required to be licensed if the selling price of the tender is
6 separately stated.
7 Farm machinery and equipment shall include precision
8 farming equipment that is installed or purchased to be
9 installed on farm machinery and equipment including, but not
10 limited to, tractors, harvesters, sprayers, planters,
11 seeders, or spreaders. Precision farming equipment includes,
12 but is not limited to, soil testing sensors, computers,
13 monitors, software, global positioning and mapping systems,
14 and other such equipment.
15 Farm machinery and equipment also includes computers,
16 sensors, software, and related equipment used primarily in
17 the computer-assisted operation of production agriculture
18 facilities, equipment, and activities such as, but not
19 limited to, the collection, monitoring, and correlation of
20 animal and crop data for the purpose of formulating animal
21 diets and agricultural chemicals. This item (7) is exempt
22 from the provisions of Section 3-75.
23 (8) Fuel and petroleum products sold to or used by an
24 air common carrier, certified by the carrier to be used for
25 consumption, shipment, or storage in the conduct of its
26 business as an air common carrier, for a flight destined for
27 or returning from a location or locations outside the United
28 States without regard to previous or subsequent domestic
29 stopovers.
30 (9) Proceeds of mandatory service charges separately
31 stated on customers' bills for the purchase and consumption
32 of food and beverages, to the extent that the proceeds of the
33 service charge are in fact turned over as tips or as a
34 substitute for tips to the employees who participate directly
HB2950 Enrolled -39- LRB9008806KDcd
1 in preparing, serving, hosting or cleaning up the food or
2 beverage function with respect to which the service charge is
3 imposed.
4 (10) Oil field exploration, drilling, and production
5 equipment, including (i) rigs and parts of rigs, rotary rigs,
6 cable tool rigs, and workover rigs, (ii) pipe and tubular
7 goods, including casing and drill strings, (iii) pumps and
8 pump-jack units, (iv) storage tanks and flow lines, (v) any
9 individual replacement part for oil field exploration,
10 drilling, and production equipment, and (vi) machinery and
11 equipment purchased for lease; but excluding motor vehicles
12 required to be registered under the Illinois Vehicle Code.
13 (11) Photoprocessing machinery and equipment, including
14 repair and replacement parts, both new and used, including
15 that manufactured on special order, certified by the
16 purchaser to be used primarily for photoprocessing, and
17 including photoprocessing machinery and equipment purchased
18 for lease.
19 (12) Coal exploration, mining, offhighway hauling,
20 processing, maintenance, and reclamation equipment, including
21 replacement parts and equipment, and including equipment
22 purchased for lease, but excluding motor vehicles required to
23 be registered under the Illinois Vehicle Code.
24 (13) Food for human consumption that is to be consumed
25 off the premises where it is sold (other than alcoholic
26 beverages, soft drinks and food that has been prepared for
27 immediate consumption) and prescription and non-prescription
28 medicines, drugs, medical appliances, and insulin, urine
29 testing materials, syringes, and needles used by diabetics,
30 for human use, when purchased for use by a person receiving
31 medical assistance under Article 5 of the Illinois Public Aid
32 Code who resides in a licensed long-term care facility, as
33 defined in the Nursing Home Care Act.
34 (14) Semen used for artificial insemination of livestock
HB2950 Enrolled -40- LRB9008806KDcd
1 for direct agricultural production.
2 (15) Horses, or interests in horses, registered with and
3 meeting the requirements of any of the Arabian Horse Club
4 Registry of America, Appaloosa Horse Club, American Quarter
5 Horse Association, United States Trotting Association, or
6 Jockey Club, as appropriate, used for purposes of breeding or
7 racing for prizes.
8 (16) Computers and communications equipment utilized for
9 any hospital purpose and equipment used in the diagnosis,
10 analysis, or treatment of hospital patients sold to a lessor
11 who leases the equipment, under a lease of one year or longer
12 executed or in effect at the time of the purchase, to a
13 hospital that has been issued an active tax exemption
14 identification number by the Department under Section 1g of
15 the Retailers' Occupation Tax Act.
16 (17) Personal property sold to a lessor who leases the
17 property, under a lease of one year or longer executed or in
18 effect at the time of the purchase, to a governmental body
19 that has been issued an active tax exemption identification
20 number by the Department under Section 1g of the Retailers'
21 Occupation Tax Act.
22 (18) Beginning with taxable years ending on or after
23 December 31, 1995 and ending with taxable years ending on or
24 before December 31, 2004, personal property that is donated
25 for disaster relief to be used in a State or federally
26 declared disaster area in Illinois or bordering Illinois by a
27 manufacturer or retailer that is registered in this State to
28 a corporation, society, association, foundation, or
29 institution that has been issued a sales tax exemption
30 identification number by the Department that assists victims
31 of the disaster who reside within the declared disaster area.
32 (19) Beginning with taxable years ending on or after
33 December 31, 1995 and ending with taxable years ending on or
34 before December 31, 2004, personal property that is used in
HB2950 Enrolled -41- LRB9008806KDcd
1 the performance of infrastructure repairs in this State,
2 including but not limited to municipal roads and streets,
3 access roads, bridges, sidewalks, waste disposal systems,
4 water and sewer line extensions, water distribution and
5 purification facilities, storm water drainage and retention
6 facilities, and sewage treatment facilities, resulting from a
7 State or federally declared disaster in Illinois or bordering
8 Illinois when such repairs are initiated on facilities
9 located in the declared disaster area within 6 months after
10 the disaster.
11 (Source: P.A. 89-16, eff. 5-30-95; 89-115, eff. 1-1-96;
12 89-349, eff. 8-17-95; 89-495, eff. 6-24-96; 89-496, eff.
13 6-25-96; 89-626, eff. 8-9-96; 90-14, eff. 7-1-97; 90-552,
14 eff. 12-12-97.)
15 (35 ILCS 115/3-10) (from Ch. 120, par. 439.103-10)
16 Sec. 3-10. Rate of tax. Unless otherwise provided in
17 this Section, the tax imposed by this Act is at the rate of
18 6.25% of the "selling price", as defined in Section 2 of the
19 Service Use Tax Act, of the tangible personal property. For
20 the purpose of computing this tax, in no event shall the
21 "selling price" be less than the cost price to the serviceman
22 of the tangible personal property transferred. The selling
23 price of each item of tangible personal property transferred
24 as an incident of a sale of service may be shown as a
25 distinct and separate item on the serviceman's billing to the
26 service customer. If the selling price is not so shown, the
27 selling price of the tangible personal property is deemed to
28 be 50% of the serviceman's entire billing to the service
29 customer. When, however, a serviceman contracts to design,
30 develop, and produce special order machinery or equipment,
31 the tax imposed by this Act shall be based on the
32 serviceman's cost price of the tangible personal property
33 transferred incident to the completion of the contract.
HB2950 Enrolled -42- LRB9008806KDcd
1 With respect to gasohol, as defined in the Use Tax Act,
2 the tax imposed by this Act shall apply to 70% of the cost
3 price of property transferred as an incident to the sale of
4 service on or after January 1, 1990, and before July 1, 2003
5 1999, and to 100% of the cost price thereafter, except that
6 from July 1, 1997 to July 1, 1999, the rate shall be 85% for
7 gasohol sold in this State during the 12 months beginning
8 July 1 following any calendar year for which the Department
9 has determined that the percentages in Section 10 of the
10 Gasohol Fuels Tax Abatement Act have not been met.
11 At the election of any registered serviceman made for
12 each fiscal year, sales of service in which the aggregate
13 annual cost price of tangible personal property transferred
14 as an incident to the sales of service is less than 35%, or
15 75% in the case of servicemen transferring prescription drugs
16 or servicemen engaged in graphic arts production, of the
17 aggregate annual total gross receipts from all sales of
18 service, the tax imposed by this Act shall be based on the
19 serviceman's cost price of the tangible personal property
20 transferred incident to the sale of those services.
21 The tax shall be imposed at the rate of 1% on food
22 prepared for immediate consumption and transferred incident
23 to a sale of service subject to this Act or the Service
24 Occupation Tax Act by an entity licensed under the Hospital
25 Licensing Act or the Nursing Home Care Act. The tax shall
26 also be imposed at the rate of 1% on food for human
27 consumption that is to be consumed off the premises where it
28 is sold (other than alcoholic beverages, soft drinks, and
29 food that has been prepared for immediate consumption and is
30 not otherwise included in this paragraph) and prescription
31 and nonprescription medicines, drugs, medical appliances,
32 modifications to a motor vehicle for the purpose of rendering
33 it usable by a disabled person, and insulin, urine testing
34 materials, syringes, and needles used by diabetics, for human
HB2950 Enrolled -43- LRB9008806KDcd
1 use. For the purposes of this Section, the term "soft
2 drinks" means any complete, finished, ready-to-use,
3 non-alcoholic drink, whether carbonated or not, including but
4 not limited to soda water, cola, fruit juice, vegetable
5 juice, carbonated water, and all other preparations commonly
6 known as soft drinks of whatever kind or description that are
7 contained in any closed or sealed can, carton, or container,
8 regardless of size. "Soft drinks" does not include coffee,
9 tea, non-carbonated water, infant formula, milk or milk
10 products as defined in the Grade A Pasteurized Milk and Milk
11 Products Act, or drinks containing 50% or more natural fruit
12 or vegetable juice.
13 Notwithstanding any other provisions of this Act, "food
14 for human consumption that is to be consumed off the premises
15 where it is sold" includes all food sold through a vending
16 machine, except soft drinks and food products that are
17 dispensed hot from a vending machine, regardless of the
18 location of the vending machine.
19 (Source: P.A. 89-359, eff. 8-17-95; 89-420, eff. 6-1-96;
20 89-463, eff. 5-31-96; 89-626, eff. 8-9-96.)
21 Section 20. The Retailers' Occupation Tax Act is amended
22 by changing Sections 2-5 and 2-10 as follows:
23 (35 ILCS 120/2-5) (from Ch. 120, par. 441-5)
24 (Text of Section before amendment by P.A. 90-519)
25 Sec. 2-5. Exemptions. Gross receipts from proceeds from
26 the sale of the following tangible personal property are
27 exempt from the tax imposed by this Act:
28 (1) Farm chemicals.
29 (2) Farm machinery and equipment, both new and used,
30 including that manufactured on special order, certified by
31 the purchaser to be used primarily for production agriculture
32 or State or federal agricultural programs, including
HB2950 Enrolled -44- LRB9008806KDcd
1 individual replacement parts for the machinery and equipment,
2 and including machinery and equipment purchased for lease,
3 and including implements of husbandry defined in Section
4 1-130 of the Illinois Vehicle Code, farm machinery and
5 agricultural chemical and fertilizer spreaders, and nurse
6 wagons required to be registered under Section 3-809 of the
7 Illinois Vehicle Code, but excluding other motor vehicles
8 required to be registered under the Illinois Vehicle Code.
9 Horticultural polyhouses or hoop houses used for propagating,
10 growing, or overwintering plants shall be considered farm
11 machinery and equipment under this item (2) paragraph.
12 Agricultural chemical tender tanks and dry boxes shall
13 include units sold separately from a motor vehicle required
14 to be licensed and units sold mounted on a motor vehicle
15 required to be licensed if the selling price of the tender is
16 separately stated.
17 Farm machinery and equipment shall include precision
18 farming equipment that is installed or purchased to be
19 installed on farm machinery and equipment including, but not
20 limited to, tractors, harvesters, sprayers, planters,
21 seeders, or spreaders. Precision farming equipment includes,
22 but is not limited to, soil testing sensors, computers,
23 monitors, software, global positioning and mapping systems,
24 and other such equipment.
25 Farm machinery and equipment also includes computers,
26 sensors, software, and related equipment used primarily in
27 the computer-assisted operation of production agriculture
28 facilities, equipment, and activities such as, but not
29 limited to, the collection, monitoring, and correlation of
30 animal and crop data for the purpose of formulating animal
31 diets and agricultural chemicals. This item (7) is exempt
32 from the provisions of Section 3-75.
33 (3) Distillation machinery and equipment, sold as a unit
34 or kit, assembled or installed by the retailer, certified by
HB2950 Enrolled -45- LRB9008806KDcd
1 the user to be used only for the production of ethyl alcohol
2 that will be used for consumption as motor fuel or as a
3 component of motor fuel for the personal use of the user, and
4 not subject to sale or resale.
5 (4) Graphic arts machinery and equipment, including
6 repair and replacement parts, both new and used, and
7 including that manufactured on special order or purchased for
8 lease, certified by the purchaser to be used primarily for
9 graphic arts production.
10 (5) A motor vehicle of the first division, a motor
11 vehicle of the second division that is a self-contained motor
12 vehicle designed or permanently converted to provide living
13 quarters for recreational, camping, or travel use, with
14 direct walk through access to the living quarters from the
15 driver's seat, or a motor vehicle of the second division that
16 is of the van configuration designed for the transportation
17 of not less than 7 nor more than 16 passengers, as defined in
18 Section 1-146 of the Illinois Vehicle Code, that is used for
19 automobile renting, as defined in the Automobile Renting
20 Occupation and Use Tax Act.
21 (6) Personal property sold by a teacher-sponsored
22 student organization affiliated with an elementary or
23 secondary school located in Illinois.
24 (7) Proceeds of that portion of the selling price of a
25 passenger car the sale of which is subject to the Replacement
26 Vehicle Tax.
27 (8) Personal property sold to an Illinois county fair
28 association for use in conducting, operating, or promoting
29 the county fair.
30 (9) Personal property sold to a not-for-profit music or
31 dramatic arts organization that establishes, by proof
32 required by the Department by rule, that it has received an
33 exemption under Section 501(c) (3) of the Internal Revenue
34 Code and that is organized and operated for the presentation
HB2950 Enrolled -46- LRB9008806KDcd
1 of live public performances of musical or theatrical works on
2 a regular basis.
3 (10) Personal property sold by a corporation, society,
4 association, foundation, institution, or organization, other
5 than a limited liability company, that is organized and
6 operated as a not-for-profit service enterprise for the
7 benefit of persons 65 years of age or older if the personal
8 property was not purchased by the enterprise for the purpose
9 of resale by the enterprise.
10 (11) Personal property sold to a governmental body, to a
11 corporation, society, association, foundation, or institution
12 organized and operated exclusively for charitable, religious,
13 or educational purposes, or to a not-for-profit corporation,
14 society, association, foundation, institution, or
15 organization that has no compensated officers or employees
16 and that is organized and operated primarily for the
17 recreation of persons 55 years of age or older. A limited
18 liability company may qualify for the exemption under this
19 paragraph only if the limited liability company is organized
20 and operated exclusively for educational purposes. On and
21 after July 1, 1987, however, no entity otherwise eligible for
22 this exemption shall make tax-free purchases unless it has an
23 active identification number issued by the Department.
24 (12) Personal property sold to interstate carriers for
25 hire for use as rolling stock moving in interstate commerce
26 or to lessors under leases of one year or longer executed or
27 in effect at the time of purchase by interstate carriers for
28 hire for use as rolling stock moving in interstate commerce
29 and equipment operated by a telecommunications provider,
30 licensed as a common carrier by the Federal Communications
31 Commission, which is permanently installed in or affixed to
32 aircraft moving in interstate commerce.
33 (13) Proceeds from sales to owners, lessors, or shippers
34 of tangible personal property that is utilized by interstate
HB2950 Enrolled -47- LRB9008806KDcd
1 carriers for hire for use as rolling stock moving in
2 interstate commerce and equipment operated by a
3 telecommunications provider, licensed as a common carrier by
4 the Federal Communications Commission, which is permanently
5 installed in or affixed to aircraft moving in interstate
6 commerce.
7 (14) Machinery and equipment that will be used by the
8 purchaser, or a lessee of the purchaser, primarily in the
9 process of manufacturing or assembling tangible personal
10 property for wholesale or retail sale or lease, whether the
11 sale or lease is made directly by the manufacturer or by some
12 other person, whether the materials used in the process are
13 owned by the manufacturer or some other person, or whether
14 the sale or lease is made apart from or as an incident to the
15 seller's engaging in the service occupation of producing
16 machines, tools, dies, jigs, patterns, gauges, or other
17 similar items of no commercial value on special order for a
18 particular purchaser.
19 (15) Proceeds of mandatory service charges separately
20 stated on customers' bills for purchase and consumption of
21 food and beverages, to the extent that the proceeds of the
22 service charge are in fact turned over as tips or as a
23 substitute for tips to the employees who participate directly
24 in preparing, serving, hosting or cleaning up the food or
25 beverage function with respect to which the service charge is
26 imposed.
27 (16) Petroleum products sold to a purchaser if the
28 seller is prohibited by federal law from charging tax to the
29 purchaser.
30 (17) Tangible personal property sold to a common carrier
31 by rail or motor that receives the physical possession of the
32 property in Illinois and that transports the property, or
33 shares with another common carrier in the transportation of
34 the property, out of Illinois on a standard uniform bill of
HB2950 Enrolled -48- LRB9008806KDcd
1 lading showing the seller of the property as the shipper or
2 consignor of the property to a destination outside Illinois,
3 for use outside Illinois.
4 (18) Legal tender, currency, medallions, or gold or
5 silver coinage issued by the State of Illinois, the
6 government of the United States of America, or the government
7 of any foreign country, and bullion.
8 (19) Oil field exploration, drilling, and production
9 equipment, including (i) rigs and parts of rigs, rotary rigs,
10 cable tool rigs, and workover rigs, (ii) pipe and tubular
11 goods, including casing and drill strings, (iii) pumps and
12 pump-jack units, (iv) storage tanks and flow lines, (v) any
13 individual replacement part for oil field exploration,
14 drilling, and production equipment, and (vi) machinery and
15 equipment purchased for lease; but excluding motor vehicles
16 required to be registered under the Illinois Vehicle Code.
17 (20) Photoprocessing machinery and equipment, including
18 repair and replacement parts, both new and used, including
19 that manufactured on special order, certified by the
20 purchaser to be used primarily for photoprocessing, and
21 including photoprocessing machinery and equipment purchased
22 for lease.
23 (21) Coal exploration, mining, offhighway hauling,
24 processing, maintenance, and reclamation equipment, including
25 replacement parts and equipment, and including equipment
26 purchased for lease, but excluding motor vehicles required to
27 be registered under the Illinois Vehicle Code.
28 (22) Fuel and petroleum products sold to or used by an
29 air carrier, certified by the carrier to be used for
30 consumption, shipment, or storage in the conduct of its
31 business as an air common carrier, for a flight destined for
32 or returning from a location or locations outside the United
33 States without regard to previous or subsequent domestic
34 stopovers.
HB2950 Enrolled -49- LRB9008806KDcd
1 (23) A transaction in which the purchase order is
2 received by a florist who is located outside Illinois, but
3 who has a florist located in Illinois deliver the property to
4 the purchaser or the purchaser's donee in Illinois.
5 (24) Fuel consumed or used in the operation of ships,
6 barges, or vessels that are used primarily in or for the
7 transportation of property or the conveyance of persons for
8 hire on rivers bordering on this State if the fuel is
9 delivered by the seller to the purchaser's barge, ship, or
10 vessel while it is afloat upon that bordering river.
11 (25) A motor vehicle sold in this State to a nonresident
12 even though the motor vehicle is delivered to the nonresident
13 in this State, if the motor vehicle is not to be titled in
14 this State, and if a driveaway decal permit is issued to the
15 motor vehicle as provided in Section 3-603 of the Illinois
16 Vehicle Code or if the nonresident purchaser has vehicle
17 registration plates to transfer to the motor vehicle upon
18 returning to his or her home state. The issuance of the
19 driveaway decal permit or having the out-of-state
20 registration plates to be transferred is prima facie evidence
21 that the motor vehicle will not be titled in this State.
22 (26) Semen used for artificial insemination of livestock
23 for direct agricultural production.
24 (27) Horses, or interests in horses, registered with and
25 meeting the requirements of any of the Arabian Horse Club
26 Registry of America, Appaloosa Horse Club, American Quarter
27 Horse Association, United States Trotting Association, or
28 Jockey Club, as appropriate, used for purposes of breeding or
29 racing for prizes.
30 (28) Computers and communications equipment utilized
31 for any hospital purpose and equipment used in the diagnosis,
32 analysis, or treatment of hospital patients sold to a lessor
33 who leases the equipment, under a lease of one year or longer
34 executed or in effect at the time of the purchase, to a
HB2950 Enrolled -50- LRB9008806KDcd
1 hospital that has been issued an active tax exemption
2 identification number by the Department under Section 1g of
3 this Act.
4 (29) Personal property sold to a lessor who leases the
5 property, under a lease of one year or longer executed or in
6 effect at the time of the purchase, to a governmental body
7 that has been issued an active tax exemption identification
8 number by the Department under Section 1g of this Act.
9 (30) Beginning with taxable years ending on or after
10 December 31, 1995 and ending with taxable years ending on or
11 before December 31, 2004, personal property that is donated
12 for disaster relief to be used in a State or federally
13 declared disaster area in Illinois or bordering Illinois by a
14 manufacturer or retailer that is registered in this State to
15 a corporation, society, association, foundation, or
16 institution that has been issued a sales tax exemption
17 identification number by the Department that assists victims
18 of the disaster who reside within the declared disaster area.
19 (31) Beginning with taxable years ending on or after
20 December 31, 1995 and ending with taxable years ending on or
21 before December 31, 2004, personal property that is used in
22 the performance of infrastructure repairs in this State,
23 including but not limited to municipal roads and streets,
24 access roads, bridges, sidewalks, waste disposal systems,
25 water and sewer line extensions, water distribution and
26 purification facilities, storm water drainage and retention
27 facilities, and sewage treatment facilities, resulting from a
28 State or federally declared disaster in Illinois or bordering
29 Illinois when such repairs are initiated on facilities
30 located in the declared disaster area within 6 months after
31 the disaster.
32 (Source: P.A. 89-16, eff. 5-30-95; 89-115, eff. 1-1-96;
33 89-349, eff. 8-17-95; 89-495, eff. 6-24-96; 89-496, eff.
34 6-25-96; 89-626, eff. 8-9-96; 90-14, eff. 7-1-97; 90-552,
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1 eff. 12-12-97.)
2 (Text of Section after amendment by P.A. 90-519)
3 Sec. 2-5. Exemptions. Gross receipts from proceeds from
4 the sale of the following tangible personal property are
5 exempt from the tax imposed by this Act:
6 (1) Farm chemicals.
7 (2) Farm machinery and equipment, both new and used,
8 including that manufactured on special order, certified by
9 the purchaser to be used primarily for production agriculture
10 or State or federal agricultural programs, including
11 individual replacement parts for the machinery and equipment,
12 and including machinery and equipment purchased for lease,
13 and including implements of husbandry defined in Section
14 1-130 of the Illinois Vehicle Code, farm machinery and
15 agricultural chemical and fertilizer spreaders, and nurse
16 wagons required to be registered under Section 3-809 of the
17 Illinois Vehicle Code, but excluding other motor vehicles
18 required to be registered under the Illinois Vehicle Code.
19 Horticultural polyhouses or hoop houses used for propagating,
20 growing, or overwintering plants shall be considered farm
21 machinery and equipment under this item (2) paragraph.
22 Agricultural chemical tender tanks and dry boxes shall
23 include units sold separately from a motor vehicle required
24 to be licensed and units sold mounted on a motor vehicle
25 required to be licensed, if the selling price of the tender
26 is separately stated.
27 Farm machinery and equipment shall include precision
28 farming equipment that is installed or purchased to be
29 installed on farm machinery and equipment including, but not
30 limited to, tractors, harvesters, sprayers, planters,
31 seeders, or spreaders. Precision farming equipment includes,
32 but is not limited to, soil testing sensors, computers,
33 monitors, software, global positioning and mapping systems,
34 and other such equipment.
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1 Farm machinery and equipment also includes computers,
2 sensors, software, and related equipment used primarily in
3 the computer-assisted operation of production agriculture
4 facilities, equipment, and activities such as, but not
5 limited to, the collection, monitoring, and correlation of
6 animal and crop data for the purpose of formulating animal
7 diets and agricultural chemicals. This item (7) is exempt
8 from the provisions of Section 3-75.
9 (3) Distillation machinery and equipment, sold as a unit
10 or kit, assembled or installed by the retailer, certified by
11 the user to be used only for the production of ethyl alcohol
12 that will be used for consumption as motor fuel or as a
13 component of motor fuel for the personal use of the user, and
14 not subject to sale or resale.
15 (4) Graphic arts machinery and equipment, including
16 repair and replacement parts, both new and used, and
17 including that manufactured on special order or purchased for
18 lease, certified by the purchaser to be used primarily for
19 graphic arts production.
20 (5) A motor vehicle of the first division, a motor
21 vehicle of the second division that is a self-contained motor
22 vehicle designed or permanently converted to provide living
23 quarters for recreational, camping, or travel use, with
24 direct walk through access to the living quarters from the
25 driver's seat, or a motor vehicle of the second division that
26 is of the van configuration designed for the transportation
27 of not less than 7 nor more than 16 passengers, as defined in
28 Section 1-146 of the Illinois Vehicle Code, that is used for
29 automobile renting, as defined in the Automobile Renting
30 Occupation and Use Tax Act.
31 (6) Personal property sold by a teacher-sponsored
32 student organization affiliated with an elementary or
33 secondary school located in Illinois.
34 (7) Proceeds of that portion of the selling price of a
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1 passenger car the sale of which is subject to the Replacement
2 Vehicle Tax.
3 (8) Personal property sold to an Illinois county fair
4 association for use in conducting, operating, or promoting
5 the county fair.
6 (9) Personal property sold to a not-for-profit music or
7 dramatic arts organization that establishes, by proof
8 required by the Department by rule, that it has received an
9 exemption under Section 501(c) (3) of the Internal Revenue
10 Code and that is organized and operated for the presentation
11 of live public performances of musical or theatrical works on
12 a regular basis.
13 (10) Personal property sold by a corporation, society,
14 association, foundation, institution, or organization, other
15 than a limited liability company, that is organized and
16 operated as a not-for-profit service enterprise for the
17 benefit of persons 65 years of age or older if the personal
18 property was not purchased by the enterprise for the purpose
19 of resale by the enterprise.
20 (11) Personal property sold to a governmental body, to a
21 corporation, society, association, foundation, or institution
22 organized and operated exclusively for charitable, religious,
23 or educational purposes, or to a not-for-profit corporation,
24 society, association, foundation, institution, or
25 organization that has no compensated officers or employees
26 and that is organized and operated primarily for the
27 recreation of persons 55 years of age or older. A limited
28 liability company may qualify for the exemption under this
29 paragraph only if the limited liability company is organized
30 and operated exclusively for educational purposes. On and
31 after July 1, 1987, however, no entity otherwise eligible for
32 this exemption shall make tax-free purchases unless it has an
33 active identification number issued by the Department.
34 (12) Personal property sold to interstate carriers for
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1 hire for use as rolling stock moving in interstate commerce
2 or to lessors under leases of one year or longer executed or
3 in effect at the time of purchase by interstate carriers for
4 hire for use as rolling stock moving in interstate commerce
5 and equipment operated by a telecommunications provider,
6 licensed as a common carrier by the Federal Communications
7 Commission, which is permanently installed in or affixed to
8 aircraft moving in interstate commerce.
9 (13) Proceeds from sales to owners, lessors, or shippers
10 of tangible personal property that is utilized by interstate
11 carriers for hire for use as rolling stock moving in
12 interstate commerce and equipment operated by a
13 telecommunications provider, licensed as a common carrier by
14 the Federal Communications Commission, which is permanently
15 installed in or affixed to aircraft moving in interstate
16 commerce.
17 (14) Machinery and equipment that will be used by the
18 purchaser, or a lessee of the purchaser, primarily in the
19 process of manufacturing or assembling tangible personal
20 property for wholesale or retail sale or lease, whether the
21 sale or lease is made directly by the manufacturer or by some
22 other person, whether the materials used in the process are
23 owned by the manufacturer or some other person, or whether
24 the sale or lease is made apart from or as an incident to the
25 seller's engaging in the service occupation of producing
26 machines, tools, dies, jigs, patterns, gauges, or other
27 similar items of no commercial value on special order for a
28 particular purchaser.
29 (15) Proceeds of mandatory service charges separately
30 stated on customers' bills for purchase and consumption of
31 food and beverages, to the extent that the proceeds of the
32 service charge are in fact turned over as tips or as a
33 substitute for tips to the employees who participate directly
34 in preparing, serving, hosting or cleaning up the food or
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1 beverage function with respect to which the service charge is
2 imposed.
3 (16) Petroleum products sold to a purchaser if the
4 seller is prohibited by federal law from charging tax to the
5 purchaser.
6 (17) Tangible personal property sold to a common carrier
7 by rail or motor that receives the physical possession of the
8 property in Illinois and that transports the property, or
9 shares with another common carrier in the transportation of
10 the property, out of Illinois on a standard uniform bill of
11 lading showing the seller of the property as the shipper or
12 consignor of the property to a destination outside Illinois,
13 for use outside Illinois.
14 (18) Legal tender, currency, medallions, or gold or
15 silver coinage issued by the State of Illinois, the
16 government of the United States of America, or the government
17 of any foreign country, and bullion.
18 (19) Oil field exploration, drilling, and production
19 equipment, including (i) rigs and parts of rigs, rotary rigs,
20 cable tool rigs, and workover rigs, (ii) pipe and tubular
21 goods, including casing and drill strings, (iii) pumps and
22 pump-jack units, (iv) storage tanks and flow lines, (v) any
23 individual replacement part for oil field exploration,
24 drilling, and production equipment, and (vi) machinery and
25 equipment purchased for lease; but excluding motor vehicles
26 required to be registered under the Illinois Vehicle Code.
27 (20) Photoprocessing machinery and equipment, including
28 repair and replacement parts, both new and used, including
29 that manufactured on special order, certified by the
30 purchaser to be used primarily for photoprocessing, and
31 including photoprocessing machinery and equipment purchased
32 for lease.
33 (21) Coal exploration, mining, offhighway hauling,
34 processing, maintenance, and reclamation equipment, including
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1 replacement parts and equipment, and including equipment
2 purchased for lease, but excluding motor vehicles required to
3 be registered under the Illinois Vehicle Code.
4 (22) Fuel and petroleum products sold to or used by an
5 air carrier, certified by the carrier to be used for
6 consumption, shipment, or storage in the conduct of its
7 business as an air common carrier, for a flight destined for
8 or returning from a location or locations outside the United
9 States without regard to previous or subsequent domestic
10 stopovers.
11 (23) A transaction in which the purchase order is
12 received by a florist who is located outside Illinois, but
13 who has a florist located in Illinois deliver the property to
14 the purchaser or the purchaser's donee in Illinois.
15 (24) Fuel consumed or used in the operation of ships,
16 barges, or vessels that are used primarily in or for the
17 transportation of property or the conveyance of persons for
18 hire on rivers bordering on this State if the fuel is
19 delivered by the seller to the purchaser's barge, ship, or
20 vessel while it is afloat upon that bordering river.
21 (25) A motor vehicle sold in this State to a nonresident
22 even though the motor vehicle is delivered to the nonresident
23 in this State, if the motor vehicle is not to be titled in
24 this State, and if a driveaway decal permit is issued to the
25 motor vehicle as provided in Section 3-603 of the Illinois
26 Vehicle Code or if the nonresident purchaser has vehicle
27 registration plates to transfer to the motor vehicle upon
28 returning to his or her home state. The issuance of the
29 driveaway decal permit or having the out-of-state
30 registration plates to be transferred is prima facie evidence
31 that the motor vehicle will not be titled in this State.
32 (26) Semen used for artificial insemination of livestock
33 for direct agricultural production.
34 (27) Horses, or interests in horses, registered with and
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1 meeting the requirements of any of the Arabian Horse Club
2 Registry of America, Appaloosa Horse Club, American Quarter
3 Horse Association, United States Trotting Association, or
4 Jockey Club, as appropriate, used for purposes of breeding or
5 racing for prizes.
6 (28) Computers and communications equipment utilized
7 for any hospital purpose and equipment used in the diagnosis,
8 analysis, or treatment of hospital patients sold to a lessor
9 who leases the equipment, under a lease of one year or longer
10 executed or in effect at the time of the purchase, to a
11 hospital that has been issued an active tax exemption
12 identification number by the Department under Section 1g of
13 this Act.
14 (29) Personal property sold to a lessor who leases the
15 property, under a lease of one year or longer executed or in
16 effect at the time of the purchase, to a governmental body
17 that has been issued an active tax exemption identification
18 number by the Department under Section 1g of this Act.
19 (30) Beginning with taxable years ending on or after
20 December 31, 1995 and ending with taxable years ending on or
21 before December 31, 2004, personal property that is donated
22 for disaster relief to be used in a State or federally
23 declared disaster area in Illinois or bordering Illinois by a
24 manufacturer or retailer that is registered in this State to
25 a corporation, society, association, foundation, or
26 institution that has been issued a sales tax exemption
27 identification number by the Department that assists victims
28 of the disaster who reside within the declared disaster area.
29 (31) Beginning with taxable years ending on or after
30 December 31, 1995 and ending with taxable years ending on or
31 before December 31, 2004, personal property that is used in
32 the performance of infrastructure repairs in this State,
33 including but not limited to municipal roads and streets,
34 access roads, bridges, sidewalks, waste disposal systems,
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1 water and sewer line extensions, water distribution and
2 purification facilities, storm water drainage and retention
3 facilities, and sewage treatment facilities, resulting from a
4 State or federally declared disaster in Illinois or bordering
5 Illinois when such repairs are initiated on facilities
6 located in the declared disaster area within 6 months after
7 the disaster.
8 (Source: P.A. 89-16, eff. 5-30-95; 89-115, eff. 1-1-96;
9 89-349, eff. 8-17-95; 89-495, eff. 6-24-96; 89-496, eff.
10 6-25-96; 89-626, eff. 8-9-96; 90-14, eff. 7-1-97; 90-519,
11 eff. 6-1-98; 90-552, eff. 12-12-97.)
12 (35 ILCS 120/2-10) (from Ch. 120, par. 441-10)
13 Sec. 2-10. Rate of tax. Unless otherwise provided in
14 this Section, the tax imposed by this Act is at the rate of
15 6.25% of gross receipts from sales of tangible personal
16 property made in the course of business.
17 With respect to gasohol, as defined in the Use Tax Act,
18 the tax imposed by this Act applies to 70% of the proceeds of
19 sales made on or after January 1, 1990, and before July 1,
20 2003 1999, and to 100% of the proceeds of sales made
21 thereafter, except that from July 1, 1997 to July 1, 1999,
22 the rate shall be 85% for gasohol sold in this State during
23 the 12 months beginning July 1 following any calendar year
24 for which the Department has determined that the percentages
25 in Section 10 of the Gasohol Fuels Tax Abatement Act have not
26 been met.
27 With respect to food for human consumption that is to be
28 consumed off the premises where it is sold (other than
29 alcoholic beverages, soft drinks, and food that has been
30 prepared for immediate consumption) and prescription and
31 nonprescription medicines, drugs, medical appliances,
32 modifications to a motor vehicle for the purpose of rendering
33 it usable by a disabled person, and insulin, urine testing
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1 materials, syringes, and needles used by diabetics, for human
2 use, the tax is imposed at the rate of 1%. For the purposes
3 of this Section, the term "soft drinks" means any complete,
4 finished, ready-to-use, non-alcoholic drink, whether
5 carbonated or not, including but not limited to soda water,
6 cola, fruit juice, vegetable juice, carbonated water, and all
7 other preparations commonly known as soft drinks of whatever
8 kind or description that are contained in any closed or
9 sealed bottle, can, carton, or container, regardless of size.
10 "Soft drinks" does not include coffee, tea, non-carbonated
11 water, infant formula, milk or milk products as defined in
12 the Grade A Pasteurized Milk and Milk Products Act, or drinks
13 containing 50% or more natural fruit or vegetable juice.
14 Notwithstanding any other provisions of this Act, "food
15 for human consumption that is to be consumed off the premises
16 where it is sold" includes all food sold through a vending
17 machine, except soft drinks and food products that are
18 dispensed hot from a vending machine, regardless of the
19 location of the vending machine.
20 (Source: P.A. 89-359, eff. 8-17-95; 89-420, eff. 6-1-96;
21 89-463, eff. 5-31-96; 89-626, eff. 8-9-96.)
22 (35 ILCS 125/Act rep.)
23 Section 25. The Gasohol Fuels Tax Abatement Act is
24 repealed.
25 Section 95. No acceleration or delay. Where this Act
26 makes changes in a statute that is represented in this Act by
27 text that is not yet or no longer in effect (for example, a
28 Section represented by multiple versions), the use of that
29 text does not accelerate or delay the taking effect of (i)
30 the changes made by this Act or (ii) provisions derived from
31 any other Public Act.
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1 Section 99. Effective date. This Act takes effect upon
2 becoming law.