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92_HB0539eng HB0539 Engrossed LRB9203973SMdv 1 AN ACT concerning taxation. 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 3-5 as follows: 6 (35 ILCS 105/3-5) (from Ch. 120, par. 439.3-5) 7 Sec. 3-5. Exemptions from tax. Use of the following 8 tangible personal property is exempt from the tax imposed by 9 this Act: 10 (1) Personal property purchased from a corporation, 11 society, association, foundation, institution, or 12 organization, other than a limited liability company, that is 13 organized and operated as a not-for-profit service enterprise 14 for the benefit of persons 65 years of age or older if the 15 personal property was not purchased by the enterprise for the 16 purpose of resale by the enterprise. 17 (2) Personal property purchased by a not-for-profit 18 Illinois county fair association for use in conducting, 19 operating, or promoting the county fair. 20 (3) Personal property purchased by a not-for-profit arts 21 or cultural organization that establishes, by proof required 22 by the Department by rule, that it has received an exemption 23 under Section 501(c)(3) of the Internal Revenue Code and that 24 is organized and operated for the presentation or support of 25 arts or cultural programming, activities, or services. These 26 organizations include, but are not limited to, music and 27 dramatic arts organizations such as symphony orchestras and 28 theatrical groups, arts and cultural service organizations, 29 local arts councils, visual arts organizations, and media 30 arts organizations. 31 (4) Personal property purchased by a governmental body, HB0539 Engrossed -2- LRB9203973SMdv 1 by a corporation, society, association, foundation, or 2 institution organized and operated exclusively for 3 charitable, religious, or educational purposes, or by a 4 not-for-profit corporation, society, association, foundation, 5 institution, or organization that has no compensated officers 6 or employees and that is organized and operated primarily for 7 the recreation of persons 55 years of age or older. A limited 8 liability company may qualify for the exemption under this 9 paragraph only if the limited liability company is organized 10 and operated exclusively for educational purposes. On and 11 after July 1, 1987, however, no entity otherwise eligible for 12 this exemption shall make tax-free purchases unless it has an 13 active exemption identification number issued by the 14 Department. 15 (5) A passenger car that is a replacement vehicle to the 16 extent that the purchase price of the car is subject to the 17 Replacement Vehicle Tax. 18 (6) Graphic arts machinery and equipment, including 19 repair and replacement parts, both new and used, and 20 including that manufactured on special order, certified by 21 the purchaser to be used primarily for graphic arts 22 production, and including machinery and equipment purchased 23 for lease. 24 (7) Farm chemicals. 25 (8) Legal tender, currency, medallions, or gold or 26 silver coinage issued by the State of Illinois, the 27 government of the United States of America, or the government 28 of any foreign country, and bullion. 29 (9) Personal property purchased from a teacher-sponsored 30 student organization affiliated with an elementary or 31 secondary school located in Illinois. 32 (10) A motor vehicle of the first division, a motor 33 vehicle of the second division that is a self-contained motor 34 vehicle designed or permanently converted to provide living HB0539 Engrossed -3- LRB9203973SMdv 1 quarters for recreational, camping, or travel use, with 2 direct walk through to the living quarters from the driver's 3 seat, or a motor vehicle of the second division that is of 4 the van configuration designed for the transportation of not 5 less than 7 nor more than 16 passengers, as defined in 6 Section 1-146 of the Illinois Vehicle Code, that is used for 7 automobile renting, as defined in the Automobile Renting 8 Occupation and Use Tax Act. 9 (11) Farm machinery and equipment, both new and used, 10 including that manufactured on special order, certified by 11 the purchaser to be used primarily for production agriculture 12 or State or federal agricultural programs, including 13 individual replacement parts for the machinery and equipment, 14 including machinery and equipment purchased for lease, and 15 including implements of husbandry defined in Section 1-130 of 16 the Illinois Vehicle Code, farm machinery and agricultural 17 chemical and fertilizer spreaders, and nurse wagons required 18 to be registered under Section 3-809 of the Illinois Vehicle 19 Code, but excluding other motor vehicles required to be 20 registered under the Illinois Vehicle Code. Horticultural 21 polyhouses or hoop houses used for propagating, growing, or 22 overwintering plants shall be considered farm machinery and 23 equipment under this item (11). Agricultural chemical tender 24 tanks and dry boxes shall include units sold separately from 25 a motor vehicle required to be licensed and units sold 26 mounted on a motor vehicle required to be licensed if the 27 selling price of the tender is separately stated. 28 Farm machinery and equipment shall include precision 29 farming equipment that is installed or purchased to be 30 installed on farm machinery and equipment including, but not 31 limited to, tractors, harvesters, sprayers, planters, 32 seeders, or spreaders. Precision farming equipment includes, 33 but is not limited to, soil testing sensors, computers, 34 monitors, software, global positioning and mapping systems, HB0539 Engrossed -4- LRB9203973SMdv 1 and other such equipment. 2 Farm machinery and equipment also includes computers, 3 sensors, software, and related equipment used primarily in 4 the computer-assisted operation of production agriculture 5 facilities, equipment, and activities such as, but not 6 limited to, the collection, monitoring, and correlation of 7 animal and crop data for the purpose of formulating animal 8 diets and agricultural chemicals. This item (11) is exempt 9 from the provisions of Section 3-90. 10 (12) Fuel and petroleum products sold to or used by an 11 air common carrier, certified by the carrier to be used for 12 consumption, shipment, or storage in the conduct of its 13 business as an air common carrier, for a flight destined for 14 or returning from a location or locations outside the United 15 States without regard to previous or subsequent domestic 16 stopovers. 17 (13) Proceeds of mandatory service charges separately 18 stated on customers' bills for the purchase and consumption 19 of food and beverages purchased at retail from a retailer, to 20 the extent that the proceeds of the service charge are in 21 fact turned over as tips or as a substitute for tips to the 22 employees who participate directly in preparing, serving, 23 hosting or cleaning up the food or beverage function with 24 respect to which the service charge is imposed. 25 (14) Oil field exploration, drilling, and production 26 equipment, including (i) rigs and parts of rigs, rotary rigs, 27 cable tool rigs, and workover rigs, (ii) pipe and tubular 28 goods, including casing and drill strings, (iii) pumps and 29 pump-jack units, (iv) storage tanks and flow lines, (v) any 30 individual replacement part for oil field exploration, 31 drilling, and production equipment, and (vi) machinery and 32 equipment purchased for lease; but excluding motor vehicles 33 required to be registered under the Illinois Vehicle Code. 34 (15) Photoprocessing machinery and equipment, including HB0539 Engrossed -5- LRB9203973SMdv 1 repair and replacement parts, both new and used, including 2 that manufactured on special order, certified by the 3 purchaser to be used primarily for photoprocessing, and 4 including photoprocessing machinery and equipment purchased 5 for lease. 6 (16) Coal exploration, mining, offhighway hauling, 7 processing, maintenance, and reclamation equipment, including 8 replacement parts and equipment, and including equipment 9 purchased for lease, but excluding motor vehicles required to 10 be registered under the Illinois Vehicle Code. 11 (17) Distillation machinery and equipment, sold as a 12 unit or kit, assembled or installed by the retailer, 13 certified by the user to be used only for the production of 14 ethyl alcohol that will be used for consumption as motor fuel 15 or as a component of motor fuel for the personal use of the 16 user, and not subject to sale or resale. 17 (18) Manufacturing and assembling machinery and 18 equipment used primarily in the process of manufacturing or 19 assembling tangible personal property for wholesale or retail 20 sale or lease, whether that sale or lease is made directly by 21 the manufacturer or by some other person, whether the 22 materials used in the process are owned by the manufacturer 23 or some other person, or whether that sale or lease is made 24 apart from or as an incident to the seller's engaging in the 25 service occupation of producing machines, tools, dies, jigs, 26 patterns, gauges, or other similar items of no commercial 27 value on special order for a particular purchaser. 28 (19) Personal property delivered to a purchaser or 29 purchaser's donee inside Illinois when the purchase order for 30 that personal property was received by a florist located 31 outside Illinois who has a florist located inside Illinois 32 deliver the personal property. 33 (20) Semen used for artificial insemination of livestock 34 for direct agricultural production. HB0539 Engrossed -6- LRB9203973SMdv 1 (21) Horses, or interests in horses, registered with and 2 meeting the requirements of any of the Arabian Horse Club 3 Registry of America, Appaloosa Horse Club, American Quarter 4 Horse Association, United States Trotting Association, or 5 Jockey Club, as appropriate, used for purposes of breeding or 6 racing for prizes. 7 (22) Computers and communications equipment utilized for 8 any hospital purpose and equipment used in the diagnosis, 9 analysis, or treatment of hospital patients purchased by a 10 lessor who leases the equipment, under a lease of one year or 11 longer executed or in effect at the time the lessor would 12 otherwise be subject to the tax imposed by this Act, 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. If the equipment is 16 leased in a manner that does not qualify for this exemption 17 or is used in any other non-exempt manner, the lessor shall 18 be liable for the tax imposed under this Act or the Service 19 Use Tax Act, as the case may be, based on the fair market 20 value of the property at the time the non-qualifying use 21 occurs. No lessor shall collect or attempt to collect an 22 amount (however designated) that purports to reimburse that 23 lessor for the tax imposed by this Act or the Service Use Tax 24 Act, as the case may be, if the tax has not been paid by the 25 lessor. If a lessor improperly collects any such amount from 26 the lessee, the lessee shall have a legal right to claim a 27 refund of that amount from the lessor. If, however, that 28 amount is not refunded to the lessee for any reason, the 29 lessor is liable to pay that amount to the Department. 30 (23) Personal property purchased by a lessor who leases 31 the property, under a lease of one year or longer executed 32 or in effect at the time the lessor would otherwise be 33 subject to the tax imposed by this Act, to a governmental 34 body that has been issued an active sales tax exemption HB0539 Engrossed -7- LRB9203973SMdv 1 identification number by the Department under Section 1g of 2 the Retailers' Occupation Tax Act. If the property is leased 3 in a manner that does not qualify for this exemption or used 4 in any other non-exempt manner, the lessor shall be liable 5 for the tax imposed under this Act or the Service Use Tax 6 Act, as the case may be, based on the fair market value of 7 the property at the time the non-qualifying use occurs. No 8 lessor shall collect or attempt to collect an amount (however 9 designated) that purports to reimburse that lessor for the 10 tax imposed by this Act or the Service Use Tax Act, as the 11 case may be, if the tax has not been paid by the lessor. If 12 a lessor improperly collects any such amount from the lessee, 13 the lessee shall have a legal right to claim a refund of that 14 amount from the lessor. If, however, that amount is not 15 refunded to the lessee for any reason, the lessor is liable 16 to pay that amount to the Department. 17 (24) 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 donated 20 for disaster relief to be used in a State or federally 21 declared disaster area in Illinois or bordering Illinois by a 22 manufacturer or retailer that is registered in this State to 23 a corporation, society, association, foundation, or 24 institution that has been issued a sales tax exemption 25 identification number by the Department that assists victims 26 of the disaster who reside within the declared disaster area. 27 (25) Beginning with taxable years ending on or after 28 December 31, 1995 and ending with taxable years ending on or 29 before December 31, 2004, personal property that is used in 30 the performance of infrastructure repairs in this State, 31 including but not limited to municipal roads and streets, 32 access roads, bridges, sidewalks, waste disposal systems, 33 water and sewer line extensions, water distribution and 34 purification facilities, storm water drainage and retention HB0539 Engrossed -8- LRB9203973SMdv 1 facilities, and sewage treatment facilities, resulting from a 2 State or federally declared disaster in Illinois or bordering 3 Illinois when such repairs are initiated on facilities 4 located in the declared disaster area within 6 months after 5 the disaster. 6 (26) Beginning July 1, 1999, game or game birds 7 purchased at a "game breeding and hunting preserve area" or 8 an "exotic game hunting area" as those terms are used in the 9 Wildlife Code or at a hunting enclosure approved through 10 rules adopted by the Department of Natural Resources. This 11 paragraph is exempt from the provisions of Section 3-90. 12 (27) A motor vehicle, as that term is defined in Section 13 1-146 of the Illinois Vehicle Code, that is donated to a 14 corporation, limited liability company, society, association, 15 foundation, or institution that is determined by the 16 Department to be organized and operated exclusively for 17 educational purposes. For purposes of this exemption, "a 18 corporation, limited liability company, society, association, 19 foundation, or institution organized and operated exclusively 20 for educational purposes" means all tax-supported public 21 schools, private schools that offer systematic instruction in 22 useful branches of learning by methods common to public 23 schools and that compare favorably in their scope and 24 intensity with the course of study presented in tax-supported 25 schools, and vocational or technical schools or institutes 26 organized and operated exclusively to provide a course of 27 study of not less than 6 weeks duration and designed to 28 prepare individuals to follow a trade or to pursue a manual, 29 technical, mechanical, industrial, business, or commercial 30 occupation. 31 (28) Beginning January 1, 2000, personal property, 32 including food, purchased through fundraising events for the 33 benefit of a public or private elementary or secondary 34 school, a group of those schools, or one or more school HB0539 Engrossed -9- LRB9203973SMdv 1 districts if the events are sponsored by an entity recognized 2 by the school district that consists primarily of volunteers 3 and includes parents and teachers of the school children. 4 This paragraph does not apply to fundraising events (i) for 5 the benefit of private home instruction or (ii) for which the 6 fundraising entity purchases the personal property sold at 7 the events from another individual or entity that sold the 8 property for the purpose of resale by the fundraising entity 9 and that profits from the sale to the fundraising entity. 10 This paragraph is exempt from the provisions of Section 3-90. 11 (29) Beginning January 1, 2000, new or used automatic 12 vending machines that prepare and serve hot food and 13 beverages, including coffee, soup, and other items, and 14 replacement parts for these machines. This paragraph is 15 exempt from the provisions of Section 3-90. 16 (30) Food for human consumption that is to be consumed 17 off the premises where it is sold (other than alcoholic 18 beverages, soft drinks, and food that has been prepared for 19 immediate consumption) and prescription and nonprescription 20 medicines, drugs, medical appliances, and insulin, urine 21 testing materials, syringes, and needles used by diabetics, 22 for human use, when purchased for use by a person receiving 23 medical assistance under Article 5 of the Illinois Public Aid 24 Code who resides in a licensed long-term care facility, as 25 defined in the Nursing Home Care Act. 26 (Source: P.A. 90-14, eff. 7-1-97; 90-552, eff. 12-12-97; 27 90-605, eff. 6-30-98; 91-51, eff. 6-30-99; 91-200, eff. 28 7-20-99; 91-439, eff. 8-6-99; 91-637, eff. 8-20-99; 91-644, 29 eff. 8-20-99; 91-901, eff. 1-1-01.)