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| [ Engrossed ] | [ Senate Amendment 001 ] |
91_SB0417
LRB9102412PTcd
1 AN ACT concerning taxes.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 5. The Use Tax Act is amended by changing
5 Section 3-50 as follows:
6 (35 ILCS 105/3-50) (from Ch. 120, par. 439.3-50)
7 Sec. 3-50. Manufacturing and assembly exemption. The
8 manufacturing and assembling machinery and equipment
9 exemption includes machinery and equipment that replaces
10 machinery and equipment in an existing manufacturing facility
11 as well as machinery and equipment that are for use in an
12 expanded or new manufacturing facility. The machinery and
13 equipment exemption also includes machinery and equipment
14 used in the general maintenance or repair of exempt machinery
15 and equipment or for in-house manufacture of exempt machinery
16 and equipment. For the purposes of this exemption, terms have
17 the following meanings:
18 (1) "Manufacturing process" means the production of
19 an article of tangible personal property, whether the
20 article is a finished product or an article for use in
21 the process of manufacturing or assembling a different
22 article of tangible personal property, by a procedure
23 commonly regarded as manufacturing, processing,
24 fabricating, or refining that changes some existing
25 material into a material with a different form, use, or
26 name. In relation to a recognized integrated business
27 composed of a series of operations that collectively
28 constitute manufacturing, or individually constitute
29 manufacturing operations, the manufacturing process
30 commences with the first operation or stage of production
31 in the series and does not end until the completion of
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1 the final product in the last operation or stage of
2 production in the series. For purposes of this
3 exemption, photoprocessing is a manufacturing process of
4 tangible personal property for wholesale or retail sale.
5 (2) "Assembling process" means the production of an
6 article of tangible personal property, whether the
7 article is a finished product or an article for use in
8 the process of manufacturing or assembling a different
9 article of tangible personal property, by the combination
10 of existing materials in a manner commonly regarded as
11 assembling that results in an article or material of a
12 different form, use, or name.
13 (3) "Machinery" means major mechanical machines or
14 major components of those machines contributing to a
15 manufacturing or assembling process. "Machinery"
16 includes, without limitation, (i) automatic vending
17 machines that prepare and serve food and beverages, (ii)
18 automatic vending machines that preserve food, other than
19 beverages, by refrigeration, (iii) microwave ovens used
20 in conjunction with an automatic vending machine in item
21 (i) or (ii), and (iv) replacement parts for items (i)
22 through (iii). The provisions of this amendatory Act of
23 the 91st General Assembly are exempt from the provisions
24 of Section 3-90.
25 (4) "Equipment" includes an independent device or
26 tool separate from machinery but essential to an
27 integrated manufacturing or assembly process; including
28 computers used primarily in operating exempt machinery
29 and equipment in a computer assisted design, computer
30 assisted manufacturing (CAD/CAM) system; any subunit or
31 assembly comprising a component of any machinery or
32 auxiliary, adjunct, or attachment parts of machinery,
33 such as tools, dies, jigs, fixtures, patterns, and molds;
34 and any parts that require periodic replacement in the
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1 course of normal operation; but does not include hand
2 tools.
3 The manufacturing and assembling machinery and equipment
4 exemption includes the sale of materials to a purchaser who
5 produces exempted types of machinery, equipment, or tools and
6 who rents or leases that machinery, equipment, or tools to a
7 manufacturer of tangible personal property. This exemption
8 also includes the sale of materials to a purchaser who
9 manufactures those materials into an exempted type of
10 machinery, equipment, or tools that the purchaser uses
11 himself or herself in the manufacturing of tangible personal
12 property. This exemption includes the sale of exempted types
13 of machinery or equipment to a purchaser who is not the
14 manufacturer, but who rents or leases the use of the property
15 to a manufacturer. The purchaser of the machinery and
16 equipment who has an active resale registration number shall
17 furnish that number to the seller at the time of purchase. A
18 user of the machinery, equipment, or tools without an active
19 resale registration number shall prepare a certificate of
20 exemption for each transaction stating facts establishing the
21 exemption for that transaction, and that certificate shall be
22 available to the Department for inspection or audit. The
23 Department shall prescribe the form of the certificate.
24 Informal rulings, opinions, or letters issued by the
25 Department in response to an inquiry or request for an
26 opinion from any person regarding the coverage and
27 applicability of this exemption to specific devices shall be
28 published, maintained as a public record, and made available
29 for public inspection and copying. If the informal ruling,
30 opinion, or letter contains trade secrets or other
31 confidential information, where possible, the Department
32 shall delete that information before publication. Whenever
33 informal rulings, opinions, or letters contain a policy of
34 general applicability, the Department shall formulate and
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1 adopt that policy as a rule in accordance with the Illinois
2 Administrative Procedure Act.
3 (Source: P.A. 88-505; 88-547.)
4 Section 10. The Service Use Tax Act is amended by
5 changing Section 2 as follows:
6 (35 ILCS 110/2) (from Ch. 120, par. 439.32)
7 Sec. 2. "Use" means the exercise by any person of any
8 right or power over tangible personal property incident to
9 the ownership of that property, but does not include the sale
10 or use for demonstration by him of that property in any form
11 as tangible personal property in the regular course of
12 business. "Use" does not mean the interim use of tangible
13 personal property nor the physical incorporation of tangible
14 personal property, as an ingredient or constituent, into
15 other tangible personal property, (a) which is sold in the
16 regular course of business or (b) which the person
17 incorporating such ingredient or constituent therein has
18 undertaken at the time of such purchase to cause to be
19 transported in interstate commerce to destinations outside
20 the State of Illinois.
21 "Purchased from a serviceman" means the acquisition of
22 the ownership of, or title to, tangible personal property
23 through a sale of service.
24 "Purchaser" means any person who, through a sale of
25 service, acquires the ownership of, or title to, any tangible
26 personal property.
27 "Cost price" means the consideration paid by the
28 serviceman for a purchase valued in money, whether paid in
29 money or otherwise, including cash, credits and services, and
30 shall be determined without any deduction on account of the
31 supplier's cost of the property sold or on account of any
32 other expense incurred by the supplier. When a serviceman
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1 contracts out part or all of the services required in his
2 sale of service, it shall be presumed that the cost price to
3 the serviceman of the property transferred to him or her by
4 his or her subcontractor is equal to 50% of the
5 subcontractor's charges to the serviceman in the absence of
6 proof of the consideration paid by the subcontractor for the
7 purchase of such property.
8 "Selling price" means the consideration for a sale valued
9 in money whether received in money or otherwise, including
10 cash, credits and service, and shall be determined without
11 any deduction on account of the serviceman's cost of the
12 property sold, the cost of materials used, labor or service
13 cost or any other expense whatsoever, but does not include
14 interest or finance charges which appear as separate items on
15 the bill of sale or sales contract nor charges that are added
16 to prices by sellers on account of the seller's duty to
17 collect, from the purchaser, the tax that is imposed by this
18 Act.
19 "Department" means the Department of Revenue.
20 "Person" means any natural individual, firm, partnership,
21 association, joint stock company, joint venture, public or
22 private corporation, limited liability company, and any
23 receiver, executor, trustee, guardian or other representative
24 appointed by order of any court.
25 "Sale of service" means any transaction except:
26 (1) a retail sale of tangible personal property
27 taxable under the Retailers' Occupation Tax Act or under
28 the Use Tax Act.
29 (2) a sale of tangible personal property for the
30 purpose of resale made in compliance with Section 2c of
31 the Retailers' Occupation Tax Act.
32 (3) except as hereinafter provided, a sale or
33 transfer of tangible personal property as an incident to
34 the rendering of service for or by any governmental body,
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1 or for or by any corporation, society, association,
2 foundation or institution organized and operated
3 exclusively for charitable, religious or educational
4 purposes or any not-for-profit corporation, society,
5 association, foundation, institution or organization
6 which has no compensated officers or employees and which
7 is organized and operated primarily for the recreation of
8 persons 55 years of age or older. A limited liability
9 company may qualify for the exemption under this
10 paragraph only if the limited liability company is
11 organized and operated exclusively for educational
12 purposes.
13 (4) a sale or transfer of tangible personal
14 property as an incident to the rendering of service for
15 interstate carriers for hire for use as rolling stock
16 moving in interstate commerce or by lessors under a lease
17 of one year or longer, executed or in effect at the time
18 of purchase of personal property, to interstate carriers
19 for hire for use as rolling stock moving in interstate
20 commerce so long as so used by such interstate carriers
21 for hire, and equipment operated by a telecommunications
22 provider, licensed as a common carrier by the Federal
23 Communications Commission, which is permanently installed
24 in or affixed to aircraft moving in interstate commerce.
25 (4a) a sale or transfer of tangible personal
26 property as an incident to the rendering of service for
27 owners, lessors, or shippers of tangible personal
28 property which is utilized by interstate carriers for
29 hire for use as rolling stock moving in interstate
30 commerce so long as so used by interstate carriers for
31 hire, and equipment operated by a telecommunications
32 provider, licensed as a common carrier by the Federal
33 Communications Commission, which is permanently installed
34 in or affixed to aircraft moving in interstate commerce.
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1 (5) a sale or transfer of machinery and equipment
2 used primarily in the process of the manufacturing or
3 assembling, either in an existing, an expanded or a new
4 manufacturing facility, of tangible personal property for
5 wholesale or retail sale or lease, whether such sale or
6 lease is made directly by the manufacturer or by some
7 other person, whether the materials used in the process
8 are owned by the manufacturer or some other person, or
9 whether such sale or lease is made apart from or as an
10 incident to the seller's engaging in a service occupation
11 and the applicable tax is a Service Use Tax or Service
12 Occupation Tax, rather than Use Tax or Retailers'
13 Occupation Tax. "Machinery" includes, without limitation,
14 (i) automatic vending machines that prepare and serve
15 food and beverages, (ii) automatic vending machines that
16 preserve food, other than beverages, by refrigeration,
17 (iii) microwave ovens used in conjunction with an
18 automatic vending machine in item (i) or (ii), and (iv)
19 replacement parts for items (i) through (iii). The
20 provisions of this amendatory Act of the 91st General
21 Assembly are exempt from the provisions of Section 3-75.
22 (5a) the repairing, reconditioning or remodeling,
23 for a common carrier by rail, of tangible personal
24 property which belongs to such carrier for hire, and as
25 to which such carrier receives the physical possession of
26 the repaired, reconditioned or remodeled item of tangible
27 personal property in Illinois, and which such carrier
28 transports, or shares with another common carrier in the
29 transportation of such property, out of Illinois on a
30 standard uniform bill of lading showing the person who
31 repaired, reconditioned or remodeled the property to a
32 destination outside Illinois, for use outside Illinois.
33 (5b) a sale or transfer of tangible personal
34 property which is produced by the seller thereof on
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1 special order in such a way as to have made the
2 applicable tax the Service Occupation Tax or the Service
3 Use Tax, rather than the Retailers' Occupation Tax or the
4 Use Tax, for an interstate carrier by rail which receives
5 the physical possession of such property in Illinois, and
6 which transports such property, or shares with another
7 common carrier in the transportation of such property,
8 out of Illinois on a standard uniform bill of lading
9 showing the seller of the property as the shipper or
10 consignor of such property to a destination outside
11 Illinois, for use outside Illinois.
12 (6) a sale or transfer of distillation machinery
13 and equipment, sold as a unit or kit and assembled or
14 installed by the retailer, which machinery and equipment
15 is certified by the user to be used only for the
16 production of ethyl alcohol that will be used for
17 consumption as motor fuel or as a component of motor fuel
18 for the personal use of such user and not subject to sale
19 or resale.
20 (7) at the election of any serviceman not required
21 to be otherwise registered as a retailer under Section 2a
22 of the Retailers' Occupation Tax Act, made for each
23 fiscal year sales of service in which the aggregate
24 annual cost price of tangible personal property
25 transferred as an incident to the sales of service is
26 less than 35%, or 75% in the case of servicemen
27 transferring prescription drugs or servicemen engaged in
28 graphic arts production, of the aggregate annual total
29 gross receipts from all sales of service. The purchase of
30 such tangible personal property by the serviceman shall
31 be subject to tax under the Retailers' Occupation Tax Act
32 and the Use Tax Act. However, if a primary serviceman
33 who has made the election described in this paragraph
34 subcontracts service work to a secondary serviceman who
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1 has also made the election described in this paragraph,
2 the primary serviceman does not incur a Use Tax liability
3 if the secondary serviceman (i) has paid or will pay Use
4 Tax on his or her cost price of any tangible personal
5 property transferred to the primary serviceman and (ii)
6 certifies that fact in writing to the primary serviceman.
7 Tangible personal property transferred incident to the
8 completion of a maintenance agreement is exempt from the tax
9 imposed pursuant to this Act.
10 Exemption (5) also includes machinery and equipment used
11 in the general maintenance or repair of such exempt machinery
12 and equipment or for in-house manufacture of exempt machinery
13 and equipment. For the purposes of exemption (5), each of
14 these terms shall have the following meanings: (1)
15 "manufacturing process" shall mean the production of any
16 article of tangible personal property, whether such article
17 is a finished product or an article for use in the process of
18 manufacturing or assembling a different article of tangible
19 personal property, by procedures commonly regarded as
20 manufacturing, processing, fabricating, or refining which
21 changes some existing material or materials into a material
22 with a different form, use or name. In relation to a
23 recognized integrated business composed of a series of
24 operations which collectively constitute manufacturing, or
25 individually constitute manufacturing operations, the
26 manufacturing process shall be deemed to commence with the
27 first operation or stage of production in the series, and
28 shall not be deemed to end until the completion of the final
29 product in the last operation or stage of production in the
30 series; and further, for purposes of exemption (5),
31 photoprocessing is deemed to be a manufacturing process of
32 tangible personal property for wholesale or retail sale; (2)
33 "assembling process" shall mean the production of any article
34 of tangible personal property, whether such article is a
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1 finished product or an article for use in the process of
2 manufacturing or assembling a different article of tangible
3 personal property, by the combination of existing materials
4 in a manner commonly regarded as assembling which results in
5 a material of a different form, use or name; (3) "machinery"
6 shall mean major mechanical machines or major components of
7 such machines contributing to a manufacturing or assembling
8 process; and (4) "equipment" shall include any independent
9 device or tool separate from any machinery but essential to
10 an integrated manufacturing or assembly process; including
11 computers used primarily in operating exempt machinery and
12 equipment in a computer assisted design, computer assisted
13 manufacturing (CAD/CAM) system; or any subunit or assembly
14 comprising a component of any machinery or auxiliary, adjunct
15 or attachment parts of machinery, such as tools, dies, jigs,
16 fixtures, patterns and molds; or any parts which require
17 periodic replacement in the course of normal operation; but
18 shall not include hand tools. The purchaser of such machinery
19 and equipment who has an active resale registration number
20 shall furnish such number to the seller at the time of
21 purchase. The user of such machinery and equipment and tools
22 without an active resale registration number shall prepare a
23 certificate of exemption for each transaction stating facts
24 establishing the exemption for that transaction, which
25 certificate shall be available to the Department for
26 inspection or audit. The Department shall prescribe the form
27 of the certificate.
28 Any informal rulings, opinions or letters issued by the
29 Department in response to an inquiry or request for any
30 opinion from any person regarding the coverage and
31 applicability of exemption (5) to specific devices shall be
32 published, maintained as a public record, and made available
33 for public inspection and copying. If the informal ruling,
34 opinion or letter contains trade secrets or other
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1 confidential information, where possible the Department shall
2 delete such information prior to publication. Whenever such
3 informal rulings, opinions, or letters contain any policy of
4 general applicability, the Department shall formulate and
5 adopt such policy as a rule in accordance with the provisions
6 of the Illinois Administrative Procedure Act.
7 On and after July 1, 1987, no entity otherwise eligible
8 under exemption (3) of this Section shall make tax free
9 purchases unless it has an active exemption identification
10 number issued by the Department.
11 The purchase, employment and transfer of such tangible
12 personal property as newsprint and ink for the primary
13 purpose of conveying news (with or without other information)
14 is not a purchase, use or sale of service or of tangible
15 personal property within the meaning of this Act.
16 "Serviceman" means any person who is engaged in the
17 occupation of making sales of service.
18 "Sale at retail" means "sale at retail" as defined in the
19 Retailers' Occupation Tax Act.
20 "Supplier" means any person who makes sales of tangible
21 personal property to servicemen for the purpose of resale as
22 an incident to a sale of service.
23 "Serviceman maintaining a place of business in this
24 State", or any like term, means and includes any serviceman:
25 1. having or maintaining within this State,
26 directly or by a subsidiary, an office, distribution
27 house, sales house, warehouse or other place of business,
28 or any agent or other representative operating within
29 this State under the authority of the serviceman or its
30 subsidiary, irrespective of whether such place of
31 business or agent or other representative is located here
32 permanently or temporarily, or whether such serviceman or
33 subsidiary is licensed to do business in this State;
34 2. soliciting orders for tangible personal property
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1 by means of a telecommunication or television shopping
2 system (which utilizes toll free numbers) which is
3 intended by the retailer to be broadcast by cable
4 television or other means of broadcasting, to consumers
5 located in this State;
6 3. pursuant to a contract with a broadcaster or
7 publisher located in this State, soliciting orders for
8 tangible personal property by means of advertising which
9 is disseminated primarily to consumers located in this
10 State and only secondarily to bordering jurisdictions;
11 4. soliciting orders for tangible personal property
12 by mail if the solicitations are substantial and
13 recurring and if the retailer benefits from any banking,
14 financing, debt collection, telecommunication, or
15 marketing activities occurring in this State or benefits
16 from the location in this State of authorized
17 installation, servicing, or repair facilities;
18 5. being owned or controlled by the same interests
19 which own or control any retailer engaging in business in
20 the same or similar line of business in this State;
21 6. having a franchisee or licensee operating under
22 its trade name if the franchisee or licensee is required
23 to collect the tax under this Section;
24 7. pursuant to a contract with a cable television
25 operator located in this State, soliciting orders for
26 tangible personal property by means of advertising which
27 is transmitted or distributed over a cable television
28 system in this State; or
29 8. engaging in activities in Illinois, which
30 activities in the state in which the supply business
31 engaging in such activities is located would constitute
32 maintaining a place of business in that state.
33 (Source: P.A. 88-480; 88-505; 88-547; 88-670, eff. 12-2-94;
34 89-675, eff. 8-14-96.)
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1 Section 15. The Service Occupation Tax Act is amended by
2 changing Section 2 as follows:
3 (35 ILCS 115/2) (from Ch. 120, par. 439.102)
4 Sec. 2. "Transfer" means any transfer of the title to
5 property or of the ownership of property whether or not the
6 transferor retains title as security for the payment of
7 amounts due him from the transferee.
8 "Cost Price" means the consideration paid by the
9 serviceman for a purchase valued in money, whether paid in
10 money or otherwise, including cash, credits and services, and
11 shall be determined without any deduction on account of the
12 supplier's cost of the property sold or on account of any
13 other expense incurred by the supplier. When a serviceman
14 contracts out part or all of the services required in his
15 sale of service, it shall be presumed that the cost price to
16 the serviceman of the property transferred to him by his or
17 her subcontractor is equal to 50% of the subcontractor's
18 charges to the serviceman in the absence of proof of the
19 consideration paid by the subcontractor for the purchase of
20 such property.
21 "Department" means the Department of Revenue.
22 "Person" means any natural individual, firm, partnership,
23 association, joint stock company, joint venture, public or
24 private corporation, limited liability company, and any
25 receiver, executor, trustee, guardian or other representative
26 appointed by order of any court.
27 "Sale of Service" means any transaction except:
28 (a) A retail sale of tangible personal property taxable
29 under the Retailers' Occupation Tax Act or under the Use Tax
30 Act.
31 (b) A sale of tangible personal property for the purpose
32 of resale made in compliance with Section 2c of the
33 Retailers' Occupation Tax Act.
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1 (c) Except as hereinafter provided, a sale or transfer
2 of tangible personal property as an incident to the rendering
3 of service for or by any governmental body or for or by any
4 corporation, society, association, foundation or institution
5 organized and operated exclusively for charitable, religious
6 or educational purposes or any not-for-profit corporation,
7 society, association, foundation, institution or organization
8 which has no compensated officers or employees and which is
9 organized and operated primarily for the recreation of
10 persons 55 years of age or older. A limited liability company
11 may qualify for the exemption under this paragraph only if
12 the limited liability company is organized and operated
13 exclusively for educational purposes.
14 (d) A sale or transfer of tangible personal property as
15 an incident to the rendering of service for interstate
16 carriers for hire for use as rolling stock moving in
17 interstate commerce or lessors under leases of one year or
18 longer, executed or in effect at the time of purchase, to
19 interstate carriers for hire for use as rolling stock moving
20 in interstate commerce, and equipment operated by a
21 telecommunications provider, licensed as a common carrier by
22 the Federal Communications Commission, which is permanently
23 installed in or affixed to aircraft moving in interstate
24 commerce.
25 (d-1) A sale or transfer of tangible personal property
26 as an incident to the rendering of service for owners,
27 lessors or shippers of tangible personal property which is
28 utilized by interstate carriers for hire for use as rolling
29 stock moving in interstate commerce, and equipment operated
30 by a telecommunications provider, licensed as a common
31 carrier by the Federal Communications Commission, which is
32 permanently installed in or affixed to aircraft moving in
33 interstate commerce.
34 (d-2) The repairing, reconditioning or remodeling, for a
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1 common carrier by rail, of tangible personal property which
2 belongs to such carrier for hire, and as to which such
3 carrier receives the physical possession of the repaired,
4 reconditioned or remodeled item of tangible personal property
5 in Illinois, and which such carrier transports, or shares
6 with another common carrier in the transportation of such
7 property, out of Illinois on a standard uniform bill of
8 lading showing the person who repaired, reconditioned or
9 remodeled the property as the shipper or consignor of such
10 property to a destination outside Illinois, for use outside
11 Illinois.
12 (d-3) A sale or transfer of tangible personal property
13 which is produced by the seller thereof on special order in
14 such a way as to have made the applicable tax the Service
15 Occupation Tax or the Service Use Tax, rather than the
16 Retailers' Occupation Tax or the Use Tax, for an interstate
17 carrier by rail which receives the physical possession of
18 such property in Illinois, and which transports such
19 property, or shares with another common carrier in the
20 transportation of such property, out of Illinois on a
21 standard uniform bill of lading showing the seller of the
22 property as the shipper or consignor of such property to a
23 destination outside Illinois, for use outside Illinois.
24 (d-4) Until January 1, 1997, a sale, by a registered
25 serviceman paying tax under this Act to the Department, of
26 special order printed materials delivered outside Illinois
27 and which are not returned to this State, if delivery is made
28 by the seller or agent of the seller, including an agent who
29 causes the product to be delivered outside Illinois by a
30 common carrier or the U.S. postal service.
31 (e) A sale or transfer of machinery and equipment used
32 primarily in the process of the manufacturing or assembling,
33 either in an existing, an expanded or a new manufacturing
34 facility, of tangible personal property for wholesale or
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1 retail sale or lease, whether such sale or lease is made
2 directly by the manufacturer or by some other person, whether
3 the materials used in the process are owned by the
4 manufacturer or some other person, or whether such sale or
5 lease is made apart from or as an incident to the seller's
6 engaging in a service occupation and the applicable tax is a
7 Service Occupation Tax or Service Use Tax, rather than
8 Retailers' Occupation Tax or Use Tax. "Machinery" includes,
9 without limitation, (i) automatic vending machines that
10 prepare and serve food and beverages, (ii) automatic vending
11 machines that preserve food, other than beverages, by
12 refrigeration, (iii) microwave ovens used in conjunction with
13 an automatic vending machine in item (i) or (ii), and (iv)
14 replacement parts for items (i) through (iii). The provisions
15 of this amendatory Act of the 91st General Assembly are
16 exempt from the provisions of Section 3-55.
17 (f) The sale or transfer of distillation machinery and
18 equipment, sold as a unit or kit and assembled or installed
19 by the retailer, which machinery and equipment is certified
20 by the user to be used only for the production of ethyl
21 alcohol that will be used for consumption as motor fuel or as
22 a component of motor fuel for the personal use of such user
23 and not subject to sale or resale.
24 (g) At the election of any serviceman not required to be
25 otherwise registered as a retailer under Section 2a of the
26 Retailers' Occupation Tax Act, made for each fiscal year
27 sales of service in which the aggregate annual cost price of
28 tangible personal property transferred as an incident to the
29 sales of service is less than 35% (75% in the case of
30 servicemen transferring prescription drugs or servicemen
31 engaged in graphic arts production) of the aggregate annual
32 total gross receipts from all sales of service. The purchase
33 of such tangible personal property by the serviceman shall be
34 subject to tax under the Retailers' Occupation Tax Act and
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1 the Use Tax Act. However, if a primary serviceman who has
2 made the election described in this paragraph subcontracts
3 service work to a secondary serviceman who has also made the
4 election described in this paragraph, the primary serviceman
5 does not incur a Use Tax liability if the secondary
6 serviceman (i) has paid or will pay Use Tax on his or her
7 cost price of any tangible personal property transferred to
8 the primary serviceman and (ii) certifies that fact in
9 writing to the primary serviceman.
10 Tangible personal property transferred incident to the
11 completion of a maintenance agreement is exempt from the tax
12 imposed pursuant to this Act.
13 Exemption (e) also includes machinery and equipment used
14 in the general maintenance or repair of such exempt machinery
15 and equipment or for in-house manufacture of exempt machinery
16 and equipment. For the purposes of exemption (e), each of
17 these terms shall have the following meanings: (1)
18 "manufacturing process" shall mean the production of any
19 article of tangible personal property, whether such article
20 is a finished product or an article for use in the process of
21 manufacturing or assembling a different article of tangible
22 personal property, by procedures commonly regarded as
23 manufacturing, processing, fabricating, or refining which
24 changes some existing material or materials into a material
25 with a different form, use or name. In relation to a
26 recognized integrated business composed of a series of
27 operations which collectively constitute manufacturing, or
28 individually constitute manufacturing operations, the
29 manufacturing process shall be deemed to commence with the
30 first operation or stage of production in the series, and
31 shall not be deemed to end until the completion of the final
32 product in the last operation or stage of production in the
33 series; and further for purposes of exemption (e),
34 photoprocessing is deemed to be a manufacturing process of
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1 tangible personal property for wholesale or retail sale; (2)
2 "assembling process" shall mean the production of any article
3 of tangible personal property, whether such article is a
4 finished product or an article for use in the process of
5 manufacturing or assembling a different article of tangible
6 personal property, by the combination of existing materials
7 in a manner commonly regarded as assembling which results in
8 a material of a different form, use or name; (3) "machinery"
9 shall mean major mechanical machines or major components of
10 such machines contributing to a manufacturing or assembling
11 process; and (4) "equipment" shall include any independent
12 device or tool separate from any machinery but essential to
13 an integrated manufacturing or assembly process; including
14 computers used primarily in operating exempt machinery and
15 equipment in a computer assisted design, computer assisted
16 manufacturing (CAD/CAM) system; or any subunit or assembly
17 comprising a component of any machinery or auxiliary, adjunct
18 or attachment parts of machinery, such as tools, dies, jigs,
19 fixtures, patterns and molds; or any parts which require
20 periodic replacement in the course of normal operation; but
21 shall not include hand tools. The purchaser of such machinery
22 and equipment who has an active resale registration number
23 shall furnish such number to the seller at the time of
24 purchase. The purchaser of such machinery and equipment and
25 tools without an active resale registration number shall
26 furnish to the seller a certificate of exemption for each
27 transaction stating facts establishing the exemption for that
28 transaction, which certificate shall be available to the
29 Department for inspection or audit.
30 The rolling stock exemption applies to rolling stock used
31 by an interstate carrier for hire, even just between points
32 in Illinois, if such rolling stock transports, for hire,
33 persons whose journeys or property whose shipments originate
34 or terminate outside Illinois.
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1 Any informal rulings, opinions or letters issued by the
2 Department in response to an inquiry or request for any
3 opinion from any person regarding the coverage and
4 applicability of exemption (e) to specific devices shall be
5 published, maintained as a public record, and made available
6 for public inspection and copying. If the informal ruling,
7 opinion or letter contains trade secrets or other
8 confidential information, where possible the Department shall
9 delete such information prior to publication. Whenever such
10 informal rulings, opinions, or letters contain any policy of
11 general applicability, the Department shall formulate and
12 adopt such policy as a rule in accordance with the provisions
13 of the Illinois Administrative Procedure Act.
14 On and after July 1, 1987, no entity otherwise eligible
15 under exemption (c) of this Section shall make tax free
16 purchases unless it has an active exemption identification
17 number issued by the Department.
18 "Serviceman" means any person who is engaged in the
19 occupation of making sales of service.
20 "Sale at Retail" means "sale at retail" as defined in the
21 Retailers' Occupation Tax Act.
22 "Supplier" means any person who makes sales of tangible
23 personal property to servicemen for the purpose of resale as
24 an incident to a sale of service.
25 (Source: P.A. 88-480; 88-505; 88-526; 88-547; 88-670, eff.
26 12-2-94; 89-675, eff. 8-14-96.)
27 Section 20. The Retailers' Occupation Tax Act is amended
28 by changing Section 2-45 as follows:
29 (35 ILCS 120/2-45) (from Ch. 120, par. 441-45)
30 Sec. 2-45. Manufacturing and assembly exemption. The
31 manufacturing and assembly machinery and equipment exemption
32 includes machinery and equipment that replaces machinery and
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1 equipment in an existing manufacturing facility as well as
2 machinery and equipment that are for use in an expanded or
3 new manufacturing facility.
4 The machinery and equipment exemption also includes
5 machinery and equipment used in the general maintenance or
6 repair of exempt machinery and equipment or for in-house
7 manufacture of exempt machinery and equipment. For the
8 purposes of this exemption, terms have the following
9 meanings:
10 (1) "Manufacturing process" means the production of
11 an article of tangible personal property, whether the
12 article is a finished product or an article for use in
13 the process of manufacturing or assembling a different
14 article of tangible personal property, by a procedure
15 commonly regarded as manufacturing, processing,
16 fabricating, or refining that changes some existing
17 material or materials into a material with a different
18 form, use, or name. In relation to a recognized
19 integrated business composed of a series of operations
20 that collectively constitute manufacturing, or
21 individually constitute manufacturing operations, the
22 manufacturing process commences with the first operation
23 or stage of production in the series and does not end
24 until the completion of the final product in the last
25 operation or stage of production in the series. For
26 purposes of this exemption, photoprocessing is a
27 manufacturing process of tangible personal property for
28 wholesale or retail sale.
29 (2) "Assembling process" means the production of an
30 article of tangible personal property, whether the
31 article is a finished product or an article for use in
32 the process of manufacturing or assembling a different
33 article of tangible personal property, by the combination
34 of existing materials in a manner commonly regarded as
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1 assembling that results in a material of a different
2 form, use, or name.
3 (3) "Machinery" means major mechanical machines or
4 major components of those machines contributing to a
5 manufacturing or assembling process. "Machinery"
6 includes, without limitation, (i) automatic vending
7 machines that prepare and serve food and beverages, (ii)
8 automatic vending machines that preserve food, other than
9 beverages, by refrigeration, (iii) microwave ovens used
10 in conjunction with an automatic vending machine in item
11 (i) or (ii), and (iv) replacement parts for items (i)
12 through (iii). The provisions of this amendatory Act of
13 the 91st General Assembly are exempt from the provisions
14 of Section 2-70.
15 (4) "Equipment" includes an independent device or
16 tool separate from machinery but essential to an
17 integrated manufacturing or assembly process; including
18 computers used primarily in operating exempt machinery
19 and equipment in a computer assisted design, computer
20 assisted manufacturing (CAD/CAM) system; any subunit or
21 assembly comprising a component of any machinery or
22 auxiliary, adjunct, or attachment parts of machinery,
23 such as tools, dies, jigs, fixtures, patterns, and molds;
24 and any parts that require periodic replacement in the
25 course of normal operation; but does not include hand
26 tools.
27 The manufacturing and assembling machinery and equipment
28 exemption includes the sale of materials to a purchaser who
29 produces exempted types of machinery, equipment, or tools and
30 who rents or leases that machinery, equipment, or tools to a
31 manufacturer of tangible personal property. This exemption
32 also includes the sale of materials to a purchaser who
33 manufactures those materials into an exempted type of
34 machinery, equipment, or tools that the purchaser uses
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1 himself or herself in the manufacturing of tangible personal
2 property. The purchaser of the machinery and equipment who
3 has an active resale registration number shall furnish that
4 number to the seller at the time of purchase. A purchaser of
5 the machinery, equipment, and tools without an active resale
6 registration number shall furnish to the seller a certificate
7 of exemption for each transaction stating facts establishing
8 the exemption for that transaction, and that certificate
9 shall be available to the Department for inspection or audit.
10 Informal rulings, opinions, or letters issued by the
11 Department in response to an inquiry or request for an
12 opinion from any person regarding the coverage and
13 applicability of this exemption to specific devices shall be
14 published, maintained as a public record, and made available
15 for public inspection and copying. If the informal ruling,
16 opinion, or letter contains trade secrets or other
17 confidential information, where possible, the Department
18 shall delete that information before publication. Whenever
19 informal rulings, opinions, or letters contain a policy of
20 general applicability, the Department shall formulate and
21 adopt that policy as a rule in accordance with the Illinois
22 Administrative Procedure Act.
23 (Source: P.A. 88-505; 88-547.)
24 Section 90. The State Mandates Act is amended by adding
25 Section 8.23 as follows:
26 (30 ILCS 805/8.23 new)
27 Sec. 8.23. Exempt mandate. Notwithstanding Sections 6
28 and 8 of this Act, no reimbursement by the State is required
29 for the implementation of any mandate created by this
30 amendatory Act of the 91st General Assembly.
31 Section 99. Effective date. This Act takes effect
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1 January 1, 2000.