SB 841 — TAX-MOTOR FUEL-TECH

TheSB841 SecretaryEnrolled of-8- StateLRB093 shall,02887 onSJM or02903 beforeb April(19) 15Personal ofproperty eachdelivered year, transmit to thea Departmentpurchaser ofor Transportationpurchaser's adonee fullinside andIllinois completewhen report showing the amountpurchase oforder motorfor vehiclethat licensepersonal feesproperty was received SB841by Engrosseda -6-florist LRB093located 02887outside SJMIllinois 02903who bhas froma theflorist residentslocated ofinside eachIllinois county,deliver respectively, during the precedingpersonal calendarproperty. year.

The(20) DepartmentSemen ofused Transportationfor shall,artificial eachinsemination month,of uselivestock for allotmentdirect purposesagricultural theproduction. last such report received from the Secretary of State.

As(21) soonHorses, asor mayinterests bein afterhorses, theregistered firstwith dayand meeting the requirements of eachany month,of the DepartmentArabian Horse Club Registry of TransportationAmerica, shallAppaloosa allotHorse toClub, theAmerican severalQuarter countiesHorse theirAssociation, shareUnited ofStates theTrotting amountAssociation, apportionedor forJockey theClub, useas appropriate, used for purposes of roadbreeding districts.or racing for prizes.

The(22) allotmentComputers shalland becommunications apportionedequipment amongutilized thefor severalany countieshospital inpurpose theand Stateequipment used in the proportiondiagnosis, whichanalysis, or treatment of hospital patients purchased by a lessor who leases the totalequipment, mileageunder a lease of townshipone year or districtlonger roadsexecuted or in effect at the respectivetime countiesthe bearslessor would otherwise be subject to the totaltax mileageimposed ofby allthis townshipAct, andto districta roadshospital inthat has been issued an active tax exemption identification number by the State.Department under Section 1g of the Retailers' Occupation Tax Act.

FundsIf allottedthe toequipment theis respectiveleased countiesin fora themanner usethat ofdoes roadnot districtsqualify thereinfor shallthis beexemption allocatedor tois theused severalin roadany districtsother innon-exempt manner, the countylessor inshall thebe proportionliable whichfor the totaltax mileageimposed ofunder suchthis townshipAct or districtthe roadsService inUse Tax Act, as the respectivecase roadmay districtsbe, bearsbased toon the totalfair mileagemarket value of allthe suchproperty townshipat orthe districttime roadsthe innon-qualifying theuse county.occurs.

AfterNo Julylessor 1 of any year, no allocation shall becollect madeor forattempt anyto roadcollect district unless it levied a tax for road and bridge purposes in an amount which(however willdesignated) requirethat thepurports extensionto ofreimburse suchthat taxlessor againstfor the taxabletax propertyimposed inby anythis suchAct roador district at a rate of not less than either .08% of the valueService thereof,Use basedTax uponAct, theas assessment for the yearcase immediatelymay priorbe, toif the year in which such tax washas leviednot andbeen aspaid equalized by the Departmentlessor. of Revenue or, in DuPage County, an amount equal to or greater than $12,000 per mile of road under the jurisdiction of the road district, whichever is less.

If any road district has levied a speciallessor taximproperly forcollects roadany purposes pursuant to Sections 6-601, 6-602 and 6-603 of the Illinois Highway Code, and such tax was levied in an amount whichfrom would require extension at a rate of not less than .08% of the valuelessee, of the taxablelessee propertyshall thereof,have asa equalizedlegal orright assessedto byclaim thea Departmentrefund of Revenue,that or, in DuPage County, an amount equalfrom to or greater than $12,000 per SB841 Engrossed -7- LRB093 02887 SJM 02903 b mile of road under the jurisdictionlessor. of the road district, whichever is less, such levy shall, however, be deemed a proper compliance with this Section and shall qualify such road district for an allotment under this Section.

IfIf, ahowever, townshipthat hasSB841 transferredEnrolled to-9- theLRB093 road02887 andSJM bridge02903 fundb moneyamount which,is whennot addedrefunded to the amountlessee offor any taxreason, levy of the roadlessor districtis wouldliable beto thepay equivalentthat of a tax levy requiring extension at a rate of at least .08%, or, in DuPage County, an amount equal to or greater than $12,000 per mile of road under the jurisdictionDepartment. of the road district, whichever is less, such transfer, together with any such tax levy, shall be deemed a proper compliance with this Section and shall qualify the road district for an allotment under this Section.

In(23) countiesPersonal in which a property taxpurchased extensionby limitationa islessor imposedwho underleases the Propertyproperty, Taxunder Extensiona Limitationlease Law,of roadone districtsyear mayor retainlonger theirexecuted entitlementor toin aeffect motor fuel tax allotment if, at the time the propertylessor taxwould extensionotherwise limitationbe wassubject imposed,to the roadtax districtimposed wasby levyingthis aAct, roadto and bridge tax at a rategovernmental sufficientbody tothat entitlehas itbeen toissued aan motoractive fuelsales tax allotmentexemption andidentification continuesnumber toby levy the maximumDepartment allowableunder amountSection after1g the imposition of the propertyRetailers' taxOccupation extensionTax limitation.Act.

AnyIf roadthe districtproperty mayis leased in all circumstances retain its entitlement to a motormanner fuel tax allotment if it levied a road and bridge tax in an amount that willdoes requirenot thequalify extensionfor ofthis theexemption taxor againstused the taxable property in theany roadother districtnon-exempt atmanner, a rate of not less than 0.08% of the assessedlessor valueshall ofbe theliable property, based upon the assessment for the yeartax immediatelyimposed precedingunder thethis yearAct inor which the taxService wasUse leviedTax andAct, as equalized by the Departmentcase ofmay Revenuebe, or,based inon DuPagethe County,fair anmarket amountvalue equal to or greater than $12,000 per mile of road under the jurisdictionproperty ofat the roadtime district,the whichevernon-qualifying isuse less.occurs.

AsNo usedlessor inshall thiscollect Sectionor theattempt termto "roadcollect district"an meansamount SB841(however Engrosseddesignated) -8-that LRB093purports 02887to SJMreimburse 02903that blessor anyfor roadthe district,tax includingimposed aby countythis unitAct roador district,the providedService forUse byTax Act, as the Illinoiscase Highwaymay Code;be, if the tax has not been paid by the lessor.

andIf thea termlessor "townshipimproperly orcollects districtany road"such meansamount anyfrom roadthe inlessee, the townshiplessee andshall districthave roada systemlegal asright definedto inclaim thea Illinoisrefund Highwayof Code.that amount from the lessor.

ForIf, thehowever, purposesthat ofamount thisis Section,not "roadrefunded district"to alsothe includeslessee parkfor districts,any forestreason, preservethe districtslessor andis conservationliable districtsto organizedpay underthat Illinoisamount lawto andthe "townshipDepartment. or district road" also includes such roads as are maintained by park districts, forest preserve districts and conservation districts.

The(24) DepartmentBeginning ofwith Transportationtaxable shallyears determineending theon mileageor ofafter allDecember township31, 1995 and districtending roadswith fortaxable theyears purposesending ofon makingor allotmentsbefore andDecember allocations31, of2004, motorpersonal fuelproperty taxthat fundsis donated for usedisaster relief to be used in roada districts.State or federally declared disaster area in Illinois or bordering Illinois by a manufacturer or retailer that is registered in this State to a corporation, society, association, foundation, or institution that has been issued a sales tax exemption identification number by the Department that assists victims of the disaster who reside within the declared disaster area.

Payment(25) Beginning with taxable years ending on or after SB841 Enrolled -10- LRB093 02887 SJM 02903 b December 31, 1995 and ending with taxable years ending on or before December 31, 2004, personal property that is used in the performance of motorinfrastructure fuelrepairs taxin moneysthis State, including but not limited to municipalitiesmunicipal roads and countiesstreets, shallaccess beroads, madebridges, assidewalks, soonwaste asdisposal possiblesystems, afterwater and sewer line extensions, water distribution and purification facilities, storm water drainage and retention facilities, and sewage treatment facilities, resulting from a State or federally declared disaster in Illinois or bordering Illinois when such repairs are initiated on facilities located in the allotmentdeclared isdisaster made.area within 6 months after the disaster.

The(26) treasurerBeginning ofJuly the1, municipality1999, game or countygame maybirds investpurchased theseat fundsa until"game theirbreeding useand ishunting requiredpreserve andarea" theor interestan earned"exotic bygame thesehunting investmentsarea" shallas bethose limitedterms toare used in the sameWildlife usesCode asor at a hunting enclosure approved through rules adopted by the principalDepartment funds.of Natural Resources.

This paragraph is exempt from the provisions of Section 3-90.

(27) A motor vehicle, as that term is defined in Section 1-146 of the Illinois Vehicle Code, that is donated to a corporation, limited liability company, society, association, foundation, or institution that is determined by the Department to be organized and operated exclusively for educational purposes.

For purposes of this exemption, "a corporation, limited liability company, society, association, foundation, or institution organized and operated exclusively for educational purposes" means all tax-supported public schools, private schools that offer systematic instruction in useful branches of learning by methods common to public schools and that compare favorably in their scope and intensity with the course of study presented in tax-supported schools, and vocational or technical schools or institutes organized and operated exclusively to provide a course of study of not less than 6 weeks duration and designed to SB841 Enrolled -11- LRB093 02887 SJM 02903 b prepare individuals to follow a trade or to pursue a manual, technical, mechanical, industrial, business, or commercial occupation.

(28) Beginning January 1, 2000, personal property, including food, purchased through fundraising events for the benefit of a public or private elementary or secondary school, a group of those schools, or one or more school districts if the events are sponsored by an entity recognized by the school district that consists primarily of volunteers and includes parents and teachers of the school children.

This paragraph does not apply to fundraising events (i) for the benefit of private home instruction or (ii) for which the fundraising entity purchases the personal property sold at the events from another individual or entity that sold the property for the purpose of resale by the fundraising entity and that profits from the sale to the fundraising entity.

This paragraph is exempt from the provisions of Section 3-90.

(29) Beginning January 1, 2000 and through December 31, 2001, new or used automatic vending machines that prepare and serve hot food and beverages, including coffee, soup, and other items, and replacement parts for these machines.

Beginning January 1, 2002, machines and parts for machines used in commercial, coin-operated amusement and vending business if a use or occupation tax is paid on the gross receipts derived from the use of the commercial, coin-operated amusement and vending machines.

This paragraph is exempt from the provisions of Section 3-90.

(30) Food for human consumption that is to be consumed off the premises where it is sold (other than alcoholic beverages, soft drinks, and food that has been prepared for immediate consumption) and prescription and nonprescription medicines, drugs, medical appliances, and insulin, urine testing materials, syringes, and needles used by diabetics, for human use, when purchased for use by a person receiving SB841 Enrolled -12- LRB093 02887 SJM 02903 b medical assistance under Article 5 of the Illinois Public Aid Code who resides in a licensed long-term care facility, as defined in the Nursing Home Care Act.

(31) Beginning on the effective date of this amendatory Act of the 92nd General Assembly, computers and communications equipment utilized for any hospital purpose and equipment used in the diagnosis, analysis, or treatment of hospital patients purchased by a lessor who leases the equipment, under a lease of one year or longer executed or in effect at the time the lessor would otherwise be subject to the tax imposed by this Act, to a hospital that has been issued an active tax exemption identification number by the Department under Section 1g of the Retailers' Occupation Tax Act.

If the equipment is leased in a manner that does not qualify for this exemption or is used in any other nonexempt manner, the lessor shall be liable for the tax imposed under this Act or the Service Use Tax Act, as the case may be, based on the fair market value of the property at the time the nonqualifying use occurs.

No lessor shall collect or attempt to collect an amount (however designated) that purports to reimburse that lessor for the tax imposed by this Act or the Service Use Tax Act, as the case may be, if the tax has not been paid by the lessor.

If a lessor improperly collects any such amount from the lessee, the lessee shall have a legal right to claim a refund of that amount from the lessor.

If, however, that amount is not refunded to the lessee for any reason, the lessor is liable to pay that amount to the Department.

This paragraph is exempt from the provisions of Section 3-90.

(32) Beginning on the effective date of this amendatory Act of the 92nd General Assembly, personal property purchased by a lessor who leases the property, under a lease of one year or longer executed or in effect at the time the lessor would otherwise be subject to the tax imposed by this Act, to SB841 Enrolled -13- LRB093 02887 SJM 02903 b a governmental body that has been issued an active sales tax exemption identification number by the Department under Section 1g of the Retailers' Occupation Tax Act.

If the property is leased in a manner that does not qualify for this exemption or used in any other nonexempt manner, the lessor shall be liable for the tax imposed under this Act or the Service Use Tax Act, as the case may be, based on the fair market value of the property at the time the nonqualifying use occurs.

No lessor shall collect or attempt to collect an amount (however designated) that purports to reimburse that lessor for the tax imposed by this Act or the Service Use Tax Act, as the case may be, if the tax has not been paid by the lessor.

If a lessor improperly collects any such amount from the lessee, the lessee shall have a legal right to claim a refund of that amount from the lessor.

If, however, that amount is not refunded to the lessee for any reason, the lessor is liable to pay that amount to the Department.

This paragraph is exempt from the provisions of Section 3-90.

_3_____________________y______________________t_____________ ______v____________________n______________________r_____________ _____t______________________p_____________________u_____________ _____r_____________________e______________________n_____________ _____I_____________________e______________________i_____________ _____e_____________________d_______________________p____________ ______a____________________f_______________________i____________ _____r_____________________f______________________c_____________ _____w_____________________t_________ (Source:

P.A.

91-51, eff.

6-30-99;

91-200, eff.

7-20-99;

91-439, eff.

8-6-99;

91-637, eff.

8-20-99;

91-644, eff.

8-20-99;

91-901, eff.

1-1-01;

92-35, eff.

7-1-01;

92-227, eff.

8-2-01;

92-337, eff.

8-10-01;

92-484, eff.

8-23-01;

92-651, eff.

7-11-02.) (35 ILCS 105/3-55) (from Ch.

120, par.

439.3-55) SB841 Enrolled -14- LRB093 02887 SJM 02903 b Sec.

3-55.

Multistate exemption.

_______e_____________ _____y_____________________,_ the tax imposed by this Act does not apply to the use of tangible personal property in this State under the following circumstances:

(a) The use, in this State, of tangible personal property acquired outside this State by a nonresident individual and brought into this State by the individual for his or her own use while temporarily within this State or while passing through this State.

(b) The use, in this State, of tangible personal property by an interstate carrier for hire as rolling stock moving in interstate commerce or by lessors under a lease of one year or longer executed or in effect at the time of purchase of tangible personal property by interstate carriers for-hire for use as rolling stock moving in interstate commerce as long as so used by the interstate carriers for-hire, and equipment operated by a telecommunications provider, licensed as a common carrier by the Federal Communications Commission, which is permanently installed in or affixed to aircraft moving in interstate commerce.

(c) The use, in this State, by owners, lessors, or shippers of tangible personal property that is utilized by interstate carriers for hire for use as rolling stock moving in interstate commerce as long as so used by the interstate carriers for hire, and equipment operated by a telecommunications provider, licensed as a common carrier by the Federal Communications Commission, which is permanently installed in or affixed to aircraft moving in interstate commerce.

(d) The use, in this State, of tangible personal property that is acquired outside this State and caused to be brought into this State by a person who has already paid a tax in another State in respect to the sale, purchase, or use of that property, to the extent of the amount of the tax SB841 Enrolled -15- LRB093 02887 SJM 02903 b properly due and paid in the other State.

(e) The temporary storage, in this State, of tangible personal property that is acquired outside this State and that, after being brought into this State and stored here temporarily, is used solely outside this State or is physically attached to or incorporated into other tangible personal property that is used solely outside this State, or is altered by converting, fabricating, manufacturing, printing, processing, or shaping, and, as altered, is used solely outside this State.

(f) The temporary storage in this State of building materials and fixtures that are acquired either in this State or outside this State by an Illinois registered combination retailer and construction contractor, and that the purchaser thereafter uses outside this State by incorporating that property into real estate located outside this State.

(g) The use or purchase of tangible personal property by a common carrier by rail or motor that receives the physical possession of the property in Illinois, and that transports the property, or shares with another common carrier in the transportation of the property, out of Illinois on a standard uniform bill of lading showing the seller of the property as the shipper or consignor of the property to a destination outside Illinois, for use outside Illinois.

(h) The use, in this State, of a motor vehicle that was sold in this State to a nonresident, even though the motor vehicle is delivered to the nonresident in this State, if the motor vehicle is not to be titled in this State, and if a drive-away permit is issued to the motor vehicle as provided in Section 3-603 of the Illinois Vehicle Code or if the nonresident purchaser has vehicle registration plates to transfer to the motor vehicle upon returning to his or her home state.

The issuance of the drive-away permit or having the out-of-state registration plates to be transferred shall SB841 Enrolled -16- LRB093 02887 SJM 02903 b be prima facie evidence that the motor vehicle will not be titled in this State.

(i) Beginning July 1, 1999, the use, in this State, of fuel acquired outside this State and brought into this State in the fuel supply tanks of locomotives engaged in freight hauling and passenger service for interstate commerce.

This subsection is exempt from the provisions of Section 3-90.

(j) Beginning on January 1, 2002, the use of tangible personal property purchased from an Illinois retailer by a taxpayer engaged in centralized purchasing activities in Illinois who will, upon receipt of the property in Illinois, temporarily store the property in Illinois (i) for the purpose of subsequently transporting it outside this State for use or consumption thereafter solely outside this State or (ii) for the purpose of being processed, fabricated, or manufactured into, attached to, or incorporated into other tangible personal property to be transported outside this State and thereafter used or consumed solely outside this State.

The Director of Revenue shall, pursuant to rules adopted in accordance with the Illinois Administrative Procedure Act, issue a permit to any taxpayer in good standing with the Department who is eligible for the exemption under this subsection (j).

The permit issued under this subsection (j) shall authorize the holder, to the extent and in the manner specified in the rules adopted under this Act, to purchase tangible personal property from a retailer exempt from the taxes imposed by this Act.

Taxpayers shall maintain all necessary books and records to substantiate the use and consumption of all such tangible personal property outside of the State of Illinois.

91-37,91-51, eff.

7-1-99;

91-59, eff.

91-173,91-313, eff.

1-1-00;

91-357, eff.

91-704,91-587, eff.

7-1-00;8-14-99;

91-725, eff.

6-2-00;

91-794, eff.

6-9-00;

92-30,92-488, eff.

7-1-01.)8-23-01;

92-680, eff.

7-16-02.) SB841 Enrolled -17- LRB093 02887 SJM 02903 b (35 ILCS 105/3-60) (from Ch.

120, par.

439.3-60) Sec.

3-60.

Rolling stock exemption.

_______a____________ _____e_____________________s_______ the rolling stock exemption applies to rolling stock used by an interstate carrier for hire, even just between points in Illinois, if the rolling stock transports, for hire, persons whose journeys or property whose shipments originate or terminate outside Illinois.

(Source:

P.A.

91-51, eff.

6-30-99.) (35 ILCS 105/3-61) Sec.

3-61.

_______v_________ use as rolling stock definition.

_____________3_________ "use as rolling stock moving in interstate commerce" in subsections (b) and (c) of Section 3-55 means for motor vehicles, as defined in Section 1-146 of the Illinois Vehicle Code, and trailers, as defined in Section 1-209 of the Illinois Vehicle Code, when on 15 or more occasions in a 12-month period the motor vehicle and trailer has carried persons or property for hire in interstate commerce, even just between points in Illinois, if the motor vehicle and trailer transports persons whose journeys or property whose shipments originate or terminate outside Illinois.

This definition applies to all property purchased for the purpose of being attached to those motor vehicles or trailers as a part thereof.

O ________f_____________ ______"____________________k_______________________c____________ _____r______________________o_____________________u_____________ _____l_____________________c______________________i_____________ ______w____________________t______________________g_____________ _____e_____________________r______________________t_____________ _____1_____________________p______________________e_____________ _____e_____________________s_______________________o____________ _____d_____________________h______________________n_____________ _____o_____________________c______________________e_____________ SB841 Enrolled -18- LRB093 02887 SJM 02903 b _____l_____________________n______________________t_____________ _____t_____________________c______________________u_____________ ______t______ (Source:

P.A.

91-587, eff.

8-14-99.) Section 10.

The Service Use Tax Act is amended by changing Sections 2, 3-45, 3-50, and 3-51 as follows:

(35 ILCS 110/2) (from Ch.

120, par.

439.32) Sec.

2.

"Use" means the exercise by any person of any right or power over tangible personal property incident to the ownership of that property, but does not include the sale or use for demonstration by him of that property in any form as tangible personal property in the regular course of business.

"Use" does not mean the interim use of tangible personal property nor the physical incorporation of tangible personal property, as an ingredient or constituent, into other tangible personal property, (a) which is sold in the regular course of business or (b) which the person incorporating such ingredient or constituent therein has undertaken at the time of such purchase to cause to be transported in interstate commerce to destinations outside the State of Illinois.

"Purchased from a serviceman" means the acquisition of the ownership of, or title to, tangible personal property through a sale of service.

"Purchaser" means any person who, through a sale of service, acquires the ownership of, or title to, any tangible personal property.

"Cost price" means the consideration paid by the serviceman for a purchase valued in money, whether paid in money or otherwise, including cash, credits and services, and shall be determined without any deduction on account of the supplier's cost of the property sold or on account of any SB841 Enrolled -19- LRB093 02887 SJM 02903 b other expense incurred by the supplier.

When a serviceman contracts out part or all of the services required in his sale of service, it shall be presumed that the cost price to the serviceman of the property transferred to him or her by his or her subcontractor is equal to 50% of the subcontractor's charges to the serviceman in the absence of proof of the consideration paid by the subcontractor for the purchase of such property.

"Selling price" means the consideration for a sale valued in money whether received in money or otherwise, including cash, credits and service, and shall be determined without any deduction on account of the serviceman's cost of the property sold, the cost of materials used, labor or service cost or any other expense whatsoever, but does not include interest or finance charges which appear as separate items on the bill of sale or sales contract nor charges that are added to prices by sellers on account of the seller's duty to collect, from the purchaser, the tax that is imposed by this Act.

"Department" means the Department of Revenue.

"Person" means any natural individual, firm, partnership, association, joint stock company, joint venture, public or private corporation, limited liability company, and any receiver, executor, trustee, guardian or other representative appointed by order of any court.

"Sale of service" means any transaction except:

(1) a retail sale of tangible personal property taxable under the Retailers' Occupation Tax Act or under the Use Tax Act.

(2) a sale of tangible personal property for the purpose of resale made in compliance with Section 2c of the Retailers' Occupation Tax Act.

(3) except as hereinafter provided, a sale or transfer of tangible personal property as an incident to SB841 Enrolled -20- LRB093 02887 SJM 02903 b the rendering of service for or by any governmental body, or for or by any corporation, society, association, foundation or institution organized and operated exclusively for charitable, religious or educational purposes or any not-for-profit corporation, society, association, foundation, institution or organization which has no compensated officers or employees and which is organized and operated primarily for the recreation of persons 55 years of age or older.

A limited liability company may qualify for the exemption under this paragraph only if the limited liability company is organized and operated exclusively for educational purposes.

(4) a sale or transfer of tangible personal property as an incident to the rendering of service for interstate carriers for hire for use as rolling stock moving in interstate commerce or by lessors under a lease of one year or longer, executed or in effect at the time of purchase of personal property, to interstate carriers for hire for use as rolling stock moving in interstate commerce so long as so used by such interstate carriers for hire, and equipment operated by a telecommunications provider, licensed as a common carrier by the Federal Communications Commission, which is permanently installed in or affixed to aircraft moving in interstate commerce.

(4a) a sale or transfer of tangible personal property as an incident to the rendering of service for owners, lessors, or shippers of tangible personal property which is utilized by interstate carriers for hire for use as rolling stock moving in interstate commerce so long as so used by interstate carriers for hire, and equipment operated by a telecommunications provider, licensed as a common carrier by the Federal Communications Commission, which is permanently installed SB841 Enrolled -21- LRB093 02887 SJM 02903 b in or affixed to aircraft moving in interstate commerce.

_________________a________________________a___________ _r_____________________h______________________i_____________ ___g___________________g_______________________p____________ _n_____________________e________________________t___________ _e______________________t_____________________t_____________ _m_____________________3______________________n_____________ _o_____________________n______________________d_____________ _a_____________________i______________________u_____________ _e_____________________o______________________a_____________ _o______________________r_____________________o_____________ _r_____________________c___ (5) a sale or transfer of machinery and equipment used primarily in the process of the manufacturing or assembling, either in an existing, an expanded or a new manufacturing facility, of tangible personal property for wholesale or retail sale or lease, whether such sale or lease is made directly by the manufacturer or by some other person, whether the materials used in the process are owned by the manufacturer or some other person, or whether such sale or lease is made apart from or as an incident to the seller's engaging in a service occupation and the applicable tax is a Service Use Tax or Service Occupation Tax, rather than Use Tax or Retailers' Occupation Tax.

(5a) the repairing, reconditioning or remodeling, for a common carrier by rail, of tangible personal property which belongs to such carrier for hire, and as to which such carrier receives the physical possession of the repaired, reconditioned or remodeled item of tangible personal property in Illinois, and which such carrier transports, or shares with another common carrier in the transportation of such property, out of Illinois on a standard uniform bill of lading showing the person who SB841 Enrolled -22- LRB093 02887 SJM 02903 b repaired, reconditioned or remodeled the property to a destination outside Illinois, for use outside Illinois.

(5b) a sale or transfer of tangible personal property which is produced by the seller thereof on special order in such a way as to have made the applicable tax the Service Occupation Tax or the Service Use Tax, rather than the Retailers' Occupation Tax or the Use Tax, for an interstate carrier by rail which receives the physical possession of such property in Illinois, and which transports such property, or shares with another common carrier in the transportation of such property, out of Illinois on a standard uniform bill of lading showing the seller of the property as the shipper or consignor of such property to a destination outside Illinois, for use outside Illinois.

(6) a sale or transfer of distillation machinery and equipment, sold as a unit or kit and assembled or installed by the retailer, which machinery and equipment is certified by the user to be used only for the production of ethyl alcohol that will be used for consumption as motor fuel or as a component of motor fuel for the personal use of such user and not subject to sale or resale.

(7) at the election of any serviceman not required to be otherwise registered as a retailer under Section 2a of the Retailers' Occupation Tax Act, made for each fiscal year sales of service in which the aggregate annual cost price of tangible personal property transferred as an incident to the sales of service is less than 35%, or 75% in the case of servicemen transferring prescription drugs or servicemen engaged in graphic arts production, of the aggregate annual total gross receipts from all sales of service.

The purchase of such tangible personal property by the serviceman shall SB841 Enrolled -23- LRB093 02887 SJM 02903 b be subject to tax under the Retailers' Occupation Tax Act and the Use Tax Act.

However, if a primary serviceman who has made the election described in this paragraph subcontracts service work to a secondary serviceman who has also made the election described in this paragraph, the primary serviceman does not incur a Use Tax liability if the secondary serviceman (i) has paid or will pay Use Tax on his or her cost price of any tangible personal property transferred to the primary serviceman and (ii) certifies that fact in writing to the primary serviceman.

Tangible personal property transferred incident to the completion of a maintenance agreement is exempt from the tax imposed pursuant to this Act.

Exemption (5) also includes machinery and equipment used in the general maintenance or repair of such exempt machinery and equipment or for in-house manufacture of exempt machinery and equipment.

For the purposes of exemption (5), each of these terms shall have the following meanings:

(1) "manufacturing process" shall mean the production of any article of tangible personal property, whether such article is a finished product or an article for use in the process of manufacturing or assembling a different article of tangible personal property, by procedures commonly regarded as manufacturing, processing, fabricating, or refining which changes some existing material or materials into a material with a different form, use or name.

In relation to a recognized integrated business composed of a series of operations which collectively constitute manufacturing, or individually constitute manufacturing operations, the manufacturing process shall be deemed to commence with the first operation or stage of production in the series, and shall not be deemed to end until the completion of the final product in the last operation or stage of production in the series;

and further, for purposes of exemption (5), SB841 Enrolled -24- LRB093 02887 SJM 02903 b photoprocessing is deemed to be a manufacturing process of tangible personal property for wholesale or retail sale;

(2) "assembling process" shall mean the production of any article of tangible personal property, whether such article is a finished product or an article for use in the process of manufacturing or assembling a different article of tangible personal property, by the combination of existing materials in a manner commonly regarded as assembling which results in a material of a different form, use or name;

(3) "machinery" shall mean major mechanical machines or major components of such machines contributing to a manufacturing or assembling process;

and (4) "equipment" shall include any independent device or tool separate from any machinery but essential to an integrated manufacturing or assembly process;

including computers used primarily in a manufacturer's computer assisted design, computer assisted manufacturing (CAD/CAM) system;

or any subunit or assembly comprising a component of any machinery or auxiliary, adjunct or attachment parts of machinery, such as tools, dies, jigs, fixtures, patterns and molds;

or any parts which require periodic replacement in the course of normal operation;

but shall not include hand tools.

Equipment includes chemicals or chemicals acting as catalysts but only if the chemicals or chemicals acting as catalysts effect a direct and immediate change upon a product being manufactured or assembled for wholesale or retail sale or lease.

The purchaser of such machinery and equipment who has an active resale registration number shall furnish such number to the seller at the time of purchase.

The user of such machinery and equipment and tools without an active resale registration number shall prepare a certificate of exemption for each transaction stating facts establishing the exemption for that transaction, which certificate shall be available to the Department for inspection or audit.

The Department shall prescribe the form of the certificate.

SB841 Enrolled -25- LRB093 02887 SJM 02903 b Any informal rulings, opinions or letters issued by the Department in response to an inquiry or request for any opinion from any person regarding the coverage and applicability of exemption (5) to specific devices shall be published, maintained as a public record, and made available for public inspection and copying.

If the informal ruling, opinion or letter contains trade secrets or other confidential information, where possible the Department shall delete such information prior to publication.

Whenever such informal rulings, opinions, or letters contain any policy of general applicability, the Department shall formulate and adopt such policy as a rule in accordance with the provisions of the Illinois Administrative Procedure Act.

On and after July 1, 1987, no entity otherwise eligible under exemption (3) of this Section shall make tax free purchases unless it has an active exemption identification number issued by the Department.

The purchase, employment and transfer of such tangible personal property as newsprint and ink for the primary purpose of conveying news (with or without other information) is not a purchase, use or sale of service or of tangible personal property within the meaning of this Act.

"Serviceman" means any person who is engaged in the occupation of making sales of service.

"Sale at retail" means "sale at retail" as defined in the Retailers' Occupation Tax Act.

"Supplier" means any person who makes sales of tangible personal property to servicemen for the purpose of resale as an incident to a sale of service.

"Serviceman maintaining a place of business in this State", or any like term, means and includes any serviceman:

1.

having or maintaining within this State, directly or by a subsidiary, an office, distribution house, sales house, warehouse or other place of business, SB841 Enrolled -26- LRB093 02887 SJM 02903 b or any agent or other representative operating within this State under the authority of the serviceman or its subsidiary, irrespective of whether such place of business or agent or other representative is located here permanently or temporarily, or whether such serviceman or subsidiary is licensed to do business in this State;

2.

soliciting orders for tangible personal property by means of a telecommunication or television shopping system (which utilizes toll free numbers) which is intended by the retailer to be broadcast by cable television or other means of broadcasting, to consumers located in this State;

3.

pursuant to a contract with a broadcaster or publisher located in this State, soliciting orders for tangible personal property by means of advertising which is disseminated primarily to consumers located in this State and only secondarily to bordering jurisdictions;

4.

soliciting orders for tangible personal property by mail if the solicitations are substantial and recurring and if the retailer benefits from any banking, financing, debt collection, telecommunication, or marketing activities occurring in this State or benefits from the location in this State of authorized installation, servicing, or repair facilities;

5.

being owned or controlled by the same interests which own or control any retailer engaging in business in the same or similar line of business in this State;

6.

having a franchisee or licensee operating under its trade name if the franchisee or licensee is required to collect the tax under this Section;

7.

pursuant to a contract with a cable television operator located in this State, soliciting orders for tangible personal property by means of advertising which is transmitted or distributed over a cable television SB841 Enrolled -27- LRB093 02887 SJM 02903 b system in this State;

or 8.

engaging in activities in Illinois, which activities in the state in which the supply business engaging in such activities is located would constitute maintaining a place of business in that state.

(Source:

P.A.

91-51, eff.

6-30-99;

92-484, eff.

8-23-01.) (35 ILCS 110/3-45) (from Ch.

120, par.

439.33-45) Sec.

3-45.

Multistate exemption.

_______e_____________ _____y_____________________,_ the tax imposed by this Act does not apply to the use of tangible personal property in this State under the following circumstances:

(a) The use, in this State, of property acquired outside this State by a nonresident individual and brought into this State by the individual for his or her own use while temporarily within this State or while passing through this State.

(b) The use, in this State, of property that is acquired outside this State and that is moved into this State for use as rolling stock moving in interstate commerce.

(c) The use, in this State, of property that is acquired outside this State and caused to be brought into this State by a person who has already paid a tax in another state in respect to the sale, purchase, or use of that property, to the extent of the amount of the tax properly due and paid in the other state.

(d) The temporary storage, in this State, of property that is acquired outside this State and that after being brought into this State and stored here temporarily, is used solely outside this State or is physically attached to or incorporated into other property that is used solely outside this State, or is altered by converting, fabricating, manufacturing, printing, processing, or shaping, and, as altered, is used solely outside this State.

SB841 Enrolled -28- LRB093 02887 SJM 02903 b (e) Beginning July 1, 1999, the use, in this State, of fuel acquired outside this State and brought into this State in the fuel supply tanks of locomotives engaged in freight hauling and passenger service for interstate commerce.

This subsection is exempt from the provisions of Section 3-75.

(f) Beginning on January 1, 2002, the use of tangible personal property purchased from an Illinois retailer by a taxpayer engaged in centralized purchasing activities in Illinois who will, upon receipt of the property in Illinois, temporarily store the property in Illinois (i) for the purpose of subsequently transporting it outside this State for use or consumption thereafter solely outside this State or (ii) for the purpose of being processed, fabricated, or manufactured into, attached to, or incorporated into other tangible personal property to be transported outside this State and thereafter used or consumed solely outside this State.

The Director of Revenue shall, pursuant to rules adopted in accordance with the Illinois Administrative Procedure Act, issue a permit to any taxpayer in good standing with the Department who is eligible for the exemption under this subsection (f).

The permit issued under this subsection (f) shall authorize the holder, to the extent and in the manner specified in the rules adopted under this Act, to purchase tangible personal property from a retailer exempt from the taxes imposed by this Act.

Taxpayers shall maintain all necessary books and records to substantiate the use and consumption of all such tangible personal property outside of the State of Illinois.

(Source:

P.A.

91-51, eff.

6-30-99;

91-313, eff.

7-29-99;

91-587, eff.

8-14-99;

92-16, eff.

6-28-01;

92-488, eff.

8-23-01.) (35 ILCS 110/3-50) (from Ch.

120, par.

439.33-50) Sec.

3-50.

Rolling stock exemption.

_____t_____________ SB841 Enrolled -29- LRB093 02887 SJM 02903 b _____c_____________________c___ the rolling stock exemption applies to rolling stock used by an interstate carrier for hire, even just between points in Illinois, if the rolling stock transports, for hire, persons whose journeys or property whose shipments originate or terminate outside Illinois.

(Source:

P.A.

91-51, eff.

6-30-99.) (35 ILCS 110/3-51) Sec.

3-51.

________e________ use as rolling stock definition.

____________e_____________ "use as rolling stock moving in interstate commerce" in subsection (b) of Section 3-45 means for motor vehicles, as defined in Section 1-46 of the Illinois Vehicle Code, and trailers, as defined in Section 1-209 of the Illinois Vehicle Code, when on 15 or more occasions in a 12-month period the motor vehicle and trailer has carried persons or property for hire in interstate commerce, even just between points in Illinois, if the motor vehicle and trailer transports persons whose journeys or property whose shipments originate or terminate outside Illinois.

This definition applies to all property purchased for the purpose of being attached to those motor vehicles or trailers as a part thereof.

O_______a_____________ ______"____________________k_______________________c____________ _____r______________________o_____________________o_____________ _____c_____________________a_______________________S____________ _____s______________________a______________________1____________ _____o_____________________n________________________p___________ _____n_____________________e______________________y_____________ _____s_____________________%______________________n_____________ _____n______________________p_____________________n_____________ _____r_____________________o______________________o_____________ _____s_____________________o______________________r_____________ ______c________________________t__________________o_____________ SB841 Enrolled -30- LRB093 02887 SJM 02903 b _____f_____________________n_______________________b____________ _____t________________ (Source:

P.A.

91-587, eff.

8-14-99.) Section 15.

The Service Occupation Tax Act is amended by changing Sections 2 and 2d as follows:

(35 ILCS 115/2) (from Ch.

120, par.

439.102) Sec.

2.

"Transfer" means any transfer of the title to property or of the ownership of property whether or not the transferor retains title as security for the payment of amounts due him from the transferee.

"Cost Price" means the consideration paid by the serviceman for a purchase valued in money, whether paid in money or otherwise, including cash, credits and services, and shall be determined without any deduction on account of the supplier's cost of the property sold or on account of any other expense incurred by the supplier.

When a serviceman contracts out part or all of the services required in his sale of service, it shall be presumed that the cost price to the serviceman of the property transferred to him by his or her subcontractor is equal to 50% of the subcontractor's charges to the serviceman in the absence of proof of the consideration paid by the subcontractor for the purchase of such property.

"Department" means the Department of Revenue.

"Person" means any natural individual, firm, partnership, association, joint stock company, joint venture, public or private corporation, limited liability company, and any receiver, executor, trustee, guardian or other representative appointed by order of any court.

"Sale of Service" means any transaction except:

(a) A retail sale of tangible personal property taxable under the Retailers' Occupation Tax Act or under the Use Tax SB841 Enrolled -31- LRB093 02887 SJM 02903 b Act.

(b) A sale of tangible personal property for the purpose of resale made in compliance with Section 2c of the Retailers' Occupation Tax Act.

(c) Except as hereinafter provided, a sale or transfer of tangible personal property as an incident to the rendering of service for or by any governmental body or for or by any corporation, society, association, foundation or institution organized and operated exclusively for charitable, religious or educational purposes or any not-for-profit corporation, society, association, foundation, institution or organization which has no compensated officers or employees and which is organized and operated primarily for the recreation of persons 55 years of age or older.

A limited liability company may qualify for the exemption under this paragraph only if the limited liability company is organized and operated exclusively for educational purposes.

(d) A sale or transfer of tangible personal property as an incident to the rendering of service for interstate carriers for hire for use as rolling stock moving in interstate commerce or lessors under leases of one year or longer, executed or in effect at the time of purchase, to interstate carriers for hire for use as rolling stock moving in interstate commerce, and equipment operated by a telecommunications provider, licensed as a common carrier by the Federal Communications Commission, which is permanently installed in or affixed to aircraft moving in interstate commerce.

(d-1) A sale or transfer of tangible personal property as an incident to the rendering of service for owners, lessors or shippers of tangible personal property which is utilized by interstate carriers for hire for use as rolling stock moving in interstate commerce, and equipment operated by a telecommunications provider, licensed as a common SB841 Enrolled -32- LRB093 02887 SJM 02903 b carrier by the Federal Communications Commission, which is permanently installed in or affixed to aircraft moving in interstate commerce.

_d_____________________J______________________r_____________ _____o_____________________o______________________r_____________ _____t_____________________0______________________c_____________ _____r_____________________a______________________b_____________ _____r_____________________e______________________o_____________ _____l______________________T_____________________s_____________ _____r_____________________d______________________l_____________ _____a_____________________a________________________u___________ _____r_____________________f______________________o_____________ _____w_____________________t_________ (d-2) The repairing, reconditioning or remodeling, for a common carrier by rail, of tangible personal property which belongs to such carrier for hire, and as to which such carrier receives the physical possession of the repaired, reconditioned or remodeled item of tangible personal property in Illinois, and which such carrier transports, or shares with another common carrier in the transportation of such property, out of Illinois on a standard uniform bill of lading showing the person who repaired, reconditioned or remodeled the property as the shipper or consignor of such property to a destination outside Illinois, for use outside Illinois.

(d-3) A sale or transfer of tangible personal property which is produced by the seller thereof on special order in such a way as to have made the applicable tax the Service Occupation Tax or the Service Use Tax, rather than the Retailers' Occupation Tax or the Use Tax, for an interstate carrier by rail which receives the physical possession of such property in Illinois, and which transports such property, or shares with another common carrier in the transportation of such property, out of Illinois on a SB841 Enrolled -33- LRB093 02887 SJM 02903 b standard uniform bill of lading showing the seller of the property as the shipper or consignor of such property to a destination outside Illinois, for use outside Illinois.

(d-4) Until January 1, 1997, a sale, by a registered serviceman paying tax under this Act to the Department, of special order printed materials delivered outside Illinois and which are not returned to this State, if delivery is made by the seller or agent of the seller, including an agent who causes the product to be delivered outside Illinois by a common carrier or the U.S.

postal service.

(e) A sale or transfer of machinery and equipment used primarily in the process of the manufacturing or assembling, either in an existing, an expanded or a new manufacturing facility, of tangible personal property for wholesale or retail sale or lease, whether such sale or lease is made directly by the manufacturer or by some other person, whether the materials used in the process are owned by the manufacturer or some other person, or whether such sale or lease is made apart from or as an incident to the seller's engaging in a service occupation and the applicable tax is a Service Occupation Tax or Service Use Tax, rather than Retailers' Occupation Tax or Use Tax.

(f) The sale or transfer of distillation machinery and equipment, sold as a unit or kit and assembled or installed by the retailer, which machinery and equipment is certified by the user to be used only for the production of ethyl alcohol that will be used for consumption as motor fuel or as a component of motor fuel for the personal use of such user and not subject to sale or resale.

(g) At the election of any serviceman not required to be otherwise registered as a retailer under Section 2a of the Retailers' Occupation Tax Act, made for each fiscal year sales of service in which the aggregate annual cost price of tangible personal property transferred as an incident to the SB841 Enrolled -34- LRB093 02887 SJM 02903 b sales of service is less than 35% (75% in the case of servicemen transferring prescription drugs or servicemen engaged in graphic arts production) of the aggregate annual total gross receipts from all sales of service.

The purchase of such tangible personal property by the serviceman shall be subject to tax under the Retailers' Occupation Tax Act and the Use Tax Act.

However, if a primary serviceman who has made the election described in this paragraph subcontracts service work to a secondary serviceman who has also made the election described in this paragraph, the primary serviceman does not incur a Use Tax liability if the secondary serviceman (i) has paid or will pay Use Tax on his or her cost price of any tangible personal property transferred to the primary serviceman and (ii) certifies that fact in writing to the primary serviceman.

Tangible personal property transferred incident to the completion of a maintenance agreement is exempt from the tax imposed pursuant to this Act.

Exemption (e) also includes machinery and equipment used in the general maintenance or repair of such exempt machinery and equipment or for in-house manufacture of exempt machinery and equipment.

For the purposes of exemption (e), each of these terms shall have the following meanings:

(1) "manufacturing process" shall mean the production of any article of tangible personal property, whether such article is a finished product or an article for use in the process of manufacturing or assembling a different article of tangible personal property, by procedures commonly regarded as manufacturing, processing, fabricating, or refining which changes some existing material or materials into a material with a different form, use or name.

In relation to a recognized integrated business composed of a series of operations which collectively constitute manufacturing, or individually constitute manufacturing operations, the SB841 Enrolled -35- LRB093 02887 SJM 02903 b manufacturing process shall be deemed to commence with the first operation or stage of production in the series, and shall not be deemed to end until the completion of the final product in the last operation or stage of production in the series;

and further for purposes of exemption (e), photoprocessing is deemed to be a manufacturing process of tangible personal property for wholesale or retail sale;

(2) "assembling process" shall mean the production of any article of tangible personal property, whether such article is a finished product or an article for use in the process of manufacturing or assembling a different article of tangible personal property, by the combination of existing materials in a manner commonly regarded as assembling which results in a material of a different form, use or name;

(3) "machinery" shall mean major mechanical machines or major components of such machines contributing to a manufacturing or assembling process;

and (4) "equipment" shall include any independent device or tool separate from any machinery but essential to an integrated manufacturing or assembly process;

including computers used primarily in a m ______________ --n------------- computer assisted design, computer assisted manufacturing (CAD/CAM) system;

or any subunit or assembly comprising a component of any machinery or auxiliary, adjunct or attachment parts of machinery, such as tools, dies, jigs, fixtures, patterns and molds;

or any parts which require periodic replacement in the course of normal operation;

but shall not include hand tools.

Equipment includes chemicals or chemicals acting as catalysts but only if the chemicals or chemicals acting as catalysts effect a direct and immediate change upon a product being manufactured or assembled for wholesale or retail sale or lease.

The purchaser of such machinery and equipment who has an active resale registration number shall furnish such number to the seller at the time of purchase.

The purchaser of such machinery and equipment and SB841 Enrolled -36- LRB093 02887 SJM 02903 b tools without an active resale registration number shall furnish to the seller a certificate of exemption for each transaction stating facts establishing the exemption for that transaction, which certificate shall be available to the Department for inspection or audit.

_x_____________________S______________________,_ the rolling stock exemption applies to rolling stock used by an interstate carrier for hire, even just between points in Illinois, if such rolling stock transports, for hire, persons whose journeys or property whose shipments originate or terminate outside Illinois.

Any informal rulings, opinions or letters issued by the Department in response to an inquiry or request for any opinion from any person regarding the coverage and applicability of exemption (e) to specific devices shall be published, maintained as a public record, and made available for public inspection and copying.

If the informal ruling, opinion or letter contains trade secrets or other confidential information, where possible the Department shall delete such information prior to publication.

Whenever such informal rulings, opinions, or letters contain any policy of general applicability, the Department shall formulate and adopt such policy as a rule in accordance with the provisions of the Illinois Administrative Procedure Act.

On and after July 1, 1987, no entity otherwise eligible under exemption (c) of this Section shall make tax free purchases unless it has an active exemption identification number issued by the Department.

"Serviceman" means any person who is engaged in the occupation of making sales of service.

"Sale at Retail" means "sale at retail" as defined in the Retailers' Occupation Tax Act.

"Supplier" means any person who makes sales of tangible personal property to servicemen for the purpose of resale as SB841 Enrolled -37- LRB093 02887 SJM 02903 b an incident to a sale of service.

(Source:

P.A.

91-51, eff.

6-30-99;

92-484, eff.

8-23-01;

revised 11-22-02.) (35 ILCS 115/2d) Sec.

2d.

M_____________s__ use as rolling stock definition.

_____g____________________ "use as rolling stock moving in interstate commerce" in subsections (d) and (d-1) of the definition of "sale of service" in Section 2 means for motor vehicles, as defined in Section 1-146 of the Illinois Vehicle Code, and trailers, as defined in Section 1-209 of the Illinois Vehicle Code, when on 15 or more occasions in a 12-month period the motor vehicle and trailer has carried persons or property for hire in interstate commerce, even just between points in Illinois, if the motor vehicle and trailer transports persons whose journeys or property whose shipments originate or terminate outside Illinois.

This definition applies to all property purchased for the purpose of being attached to those motor vehicles or trailers as a part thereof.

__________f______________________s_____________ ______m_____________________c_____________________p_____________ _______o_____________________o_____________________i____________ _____s______________________a______________________1____________ _____o_____________________n________________________p___________ _____n_____________________e______________________y_____________ _____s_____________________%______________________n_____________ _____n_____________________p______________________t_____________ _____e_____________________l_______________________o____________ _____s_____________________t______________________r_____________ ______c______________________t____________________n_____________ _____f_____________________i______________________l_____________ _____t________________ (Source:

P.A.

91-587, eff.

8-14-99.) SB841 Enrolled -38- LRB093 02887 SJM 02903 b Section 20.

The Retailers' Occupation Tax Act is amended by changing Sections 2-5, 2-50, and 2-51 as follows:

(35 ILCS 120/2-5) (from Ch.

120, par.

441-5) Sec.

2-5.

Exemptions.

Gross receipts from proceeds from the sale of the following tangible personal property are exempt from the tax imposed by this Act:

(1) Farm chemicals.

(2) Farm machinery and equipment, both new and used, including that manufactured on special order, certified by the purchaser to be used primarily for production agriculture or State or federal agricultural programs, including individual replacement parts for the machinery and equipment, including machinery and equipment purchased for lease, and including implements of husbandry defined in Section 1-130 of the Illinois Vehicle Code, farm machinery and agricultural chemical and fertilizer spreaders, and nurse wagons required to be registered under Section 3-809 of the Illinois Vehicle Code, but excluding other motor vehicles required to be registered under the Illinois Vehicle Code.

Horticultural polyhouses or hoop houses used for propagating, growing, or overwintering plants shall be considered farm machinery and equipment under this item (2).

Agricultural chemical tender tanks and dry boxes shall include units sold separately from a motor vehicle required to be licensed and units sold mounted on a motor vehicle required to be licensed, if the selling price of the tender is separately stated.

Farm machinery and equipment shall include precision farming equipment that is installed or purchased to be installed on farm machinery and equipment including, but not limited to, tractors, harvesters, sprayers, planters, seeders, or spreaders.

Precision farming equipment includes, but is not limited to, soil testing sensors, computers, monitors, software, global positioning and mapping systems, SB841 Enrolled -39- LRB093 02887 SJM 02903 b and other such equipment.

Farm machinery and equipment also includes computers, sensors, software, and related equipment used primarily in the computer-assisted operation of production agriculture facilities, equipment, and activities such as, but not limited to, the collection, monitoring, and correlation of animal and crop data for the purpose of formulating animal diets and agricultural chemicals.

This item (7) is exempt from the provisions of Section 2-70.

(3) Distillation machinery and equipment, sold as a unit or kit, assembled or installed by the retailer, certified by the user to be used only for the production of ethyl alcohol that will be used for consumption as motor fuel or as a component of motor fuel for the personal use of the user, and not subject to sale or resale.

(4) Graphic arts machinery and equipment, including repair and replacement parts, both new and used, and including that manufactured on special order or purchased for lease, certified by the purchaser to be used primarily for graphic arts production.

Equipment includes chemicals or chemicals acting as catalysts but only if the chemicals or chemicals acting as catalysts effect a direct and immediate change upon a graphic arts product.

(5) A motor vehicle of the first division, a motor vehicle of the second division that is a self-contained motor vehicle designed or permanently converted to provide living quarters for recreational, camping, or travel use, with direct walk through access to the living quarters from the driver's seat, or a motor vehicle of the second division that is of the van configuration designed for the transportation of not less than 7 nor more than 16 passengers, as defined in Section 1-146 of the Illinois Vehicle Code, that is used for automobile renting, as defined in the Automobile Renting Occupation and Use Tax Act.

SB841 Enrolled -40- LRB093 02887 SJM 02903 b (6) Personal property sold by a teacher-sponsored student organization affiliated with an elementary or secondary school located in Illinois.

(7) Proceeds of that portion of the selling price of a passenger car the sale of which is subject to the Replacement Vehicle Tax.

(8) Personal property sold to an Illinois county fair association for use in conducting, operating, or promoting the county fair.

(9) Personal property sold to a not-for-profit arts or cultural organization that establishes, by proof required by the Department by rule, that it has received an exemption under Section 501(c)(3) of the Internal Revenue Code and that is organized and operated primarily for the presentation or support of arts or cultural programming, activities, or services.

These organizations include, but are not limited to, music and dramatic arts organizations such as symphony orchestras and theatrical groups, arts and cultural service organizations, local arts councils, visual arts organizations, and media arts organizations.

On and after the effective date of this amendatory Act of the 92nd General Assembly, however, an entity otherwise eligible for this exemption shall not make tax-free purchases unless it has an active identification number issued by the Department.

(10) Personal property sold by a corporation, society, association, foundation, institution, or organization, other than a limited liability company, that is organized and operated as a not-for-profit service enterprise for the benefit of persons 65 years of age or older if the personal property was not purchased by the enterprise for the purpose of resale by the enterprise.

(11) Personal property sold to a governmental body, to a corporation, society, association, foundation, or institution organized and operated exclusively for charitable, religious, SB841 Enrolled -41- LRB093 02887 SJM 02903 b or educational purposes, or to a not-for-profit corporation, society, association, foundation, institution, or organization that has no compensated officers or employees and that is organized and operated primarily for the recreation of persons 55 years of age or older.

A limited liability company may qualify for the exemption under this paragraph only if the limited liability company is organized and operated exclusively for educational purposes.

On and after July 1, 1987, however, no entity otherwise eligible for this exemption shall make tax-free purchases unless it has an active identification number issued by the Department.

(12) ________ personal property sold to interstate carriers for hire for use as rolling stock moving in interstate commerce or to lessors under leases of one year or longer executed or in effect at the time of purchase by interstate carriers for hire for use as rolling stock moving in interstate commerce and equipment operated by a telecommunications provider, licensed as a common carrier by the Federal Communications Commission, which is permanently installed in or affixed to aircraft moving in interstate commerce.

_1_____________________J______________________h_____________ _____d_____________________s______________________n_____________ _______p___________________j_______________________d____________ _____m_____________________3______________________n_____________ _______T___________________i______________________a_____________ ______a____________________r________________________v___________ _____m______________________i_____________________d_____________ _____r_____________________t______________________d_____________ ____ (13) Proceeds from sales to owners, lessors, or shippers of tangible personal property that is utilized by interstate carriers for hire for use as rolling stock moving in interstate commerce and equipment operated by a SB841 Enrolled -42- LRB093 02887 SJM 02903 b telecommunications provider, licensed as a common carrier by the Federal Communications Commission, which is permanently installed in or affixed to aircraft moving in interstate commerce.

(14) Machinery and equipment that will be used by the purchaser, or a lessee of the purchaser, primarily in the process of manufacturing or assembling tangible personal property for wholesale or retail sale or lease, whether the sale or lease is made directly by the manufacturer or by some other person, whether the materials used in the process are owned by the manufacturer or some other person, or whether the sale or lease is made apart from or as an incident to the seller's engaging in the service occupation of producing machines, tools, dies, jigs, patterns, gauges, or other similar items of no commercial value on special order for a particular purchaser.

(15) Proceeds of mandatory service charges separately stated on customers' bills for purchase and consumption of food and beverages, to the extent that the proceeds of the service charge are in fact turned over as tips or as a substitute for tips to the employees who participate directly in preparing, serving, hosting or cleaning up the food or beverage function with respect to which the service charge is imposed.

(16) Petroleum products sold to a purchaser if the seller is prohibited by federal law from charging tax to the purchaser.

(17) Tangible personal property sold to a common carrier by rail or motor that receives the physical possession of the property in Illinois and that transports the property, or shares with another common carrier in the transportation of the property, out of Illinois on a standard uniform bill of lading showing the seller of the property as the shipper or consignor of the property to a destination outside Illinois, SB841 Enrolled -43- LRB093 02887 SJM 02903 b for use outside Illinois.

(18) Legal tender, currency, medallions, or gold or silver coinage issued by the State of Illinois, the government of the United States of America, or the government of any foreign country, and bullion.

(19) Oil field exploration, drilling, and production equipment, including (i) rigs and parts of rigs, rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and tubular goods, including casing and drill strings, (iii) pumps and pump-jack units, (iv) storage tanks and flow lines, (v) any individual replacement part for oil field exploration, drilling, and production equipment, and (vi) machinery and equipment purchased for lease;

but excluding motor vehicles required to be registered under the Illinois Vehicle Code.

(20) Photoprocessing machinery and equipment, including repair and replacement parts, both new and used, including that manufactured on special order, certified by the purchaser to be used primarily for photoprocessing, and including photoprocessing machinery and equipment purchased for lease.

(21) Coal exploration, mining, offhighway hauling, processing, maintenance, and reclamation equipment, including replacement parts and equipment, and including equipment purchased for lease, but excluding motor vehicles required to be registered under the Illinois Vehicle Code.

(22) Fuel and petroleum products sold to or used by an air carrier, certified by the carrier to be used for consumption, shipment, or storage in the conduct of its business as an air common carrier, for a flight destined for or returning from a location or locations outside the United States without regard to previous or subsequent domestic stopovers.

(23) A transaction in which the purchase order is received by a florist who is located outside Illinois, but SB841 Enrolled -44- LRB093 02887 SJM 02903 b who has a florist located in Illinois deliver the property to the purchaser or the purchaser's donee in Illinois.

(24) Fuel consumed or used in the operation of ships, barges, or vessels that are used primarily in or for the transportation of property or the conveyance of persons for hire on rivers bordering on this State if the fuel is delivered by the seller to the purchaser's barge, ship, or vessel while it is afloat upon that bordering river.

(25) A motor vehicle sold in this State to a nonresident even though the motor vehicle is delivered to the nonresident in this State, if the motor vehicle is not to be titled in this State, and if a drive-away permit is issued to the motor vehicle as provided in Section 3-603 of the Illinois Vehicle Code or if the nonresident purchaser has vehicle registration plates to transfer to the motor vehicle upon returning to his or her home state.

The issuance of the drive-away permit or having the out-of-state registration plates to be transferred is prima facie evidence that the motor vehicle will not be titled in this State.

(26) Semen used for artificial insemination of livestock for direct agricultural production.

(27) Horses, or interests in horses, registered with and meeting the requirements of any of the Arabian Horse Club Registry of America, Appaloosa Horse Club, American Quarter Horse Association, United States Trotting Association, or Jockey Club, as appropriate, used for purposes of breeding or racing for prizes.

(28) Computers and communications equipment utilized for any hospital purpose and equipment used in the diagnosis, analysis, or treatment of hospital patients sold to a lessor who leases the equipment, under a lease of one year or longer executed or in effect at the time of the purchase, to a hospital that has been issued an active tax exemption identification number by the Department under Section 1g of SB841 Enrolled -45- LRB093 02887 SJM 02903 b this Act.

(29) Personal property sold to a lessor who leases the property, under a lease of one year or longer executed or in effect at the time of the purchase, to a governmental body that has been issued an active tax exemption identification number by the Department under Section 1g of this Act.

(30) Beginning with taxable years ending on or after December 31, 1995 and ending with taxable years ending on or before December 31, 2004, personal property that is donated for disaster relief to be used in a State or federally declared disaster area in Illinois or bordering Illinois by a manufacturer or retailer that is registered in this State to a corporation, society, association, foundation, or institution that has been issued a sales tax exemption identification number by the Department that assists victims of the disaster who reside within the declared disaster area.

(31) Beginning with taxable years ending on or after December 31, 1995 and ending with taxable years ending on or before December 31, 2004, personal property that is used in the performance of infrastructure repairs in this State, including but not limited to municipal roads and streets, access roads, bridges, sidewalks, waste disposal systems, water and sewer line extensions, water distribution and purification facilities, storm water drainage and retention facilities, and sewage treatment facilities, resulting from a State or federally declared disaster in Illinois or bordering Illinois when such repairs are initiated on facilities located in the declared disaster area within 6 months after the disaster.

(32) Beginning July 1, 1999, game or game birds sold at a "game breeding and hunting preserve area" or an "exotic game hunting area" as those terms are used in the Wildlife Code or at a hunting enclosure approved through rules adopted by the Department of Natural Resources.

This paragraph is SB841 Enrolled -46- LRB093 02887 SJM 02903 b exempt from the provisions of Section 2-70.

(33) A motor vehicle, as that term is defined in Section 1-146 of the Illinois Vehicle Code, that is donated to a corporation, limited liability company, society, association, foundation, or institution that is determined by the Department to be organized and operated exclusively for educational purposes.

For purposes of this exemption, "a corporation, limited liability company, society, association, foundation, or institution organized and operated exclusively for educational purposes" means all tax-supported public schools, private schools that offer systematic instruction in useful branches of learning by methods common to public schools and that compare favorably in their scope and intensity with the course of study presented in tax-supported schools, and vocational or technical schools or institutes organized and operated exclusively to provide a course of study of not less than 6 weeks duration and designed to prepare individuals to follow a trade or to pursue a manual, technical, mechanical, industrial, business, or commercial occupation.

(34) Beginning January 1, 2000, personal property, including food, purchased through fundraising events for the benefit of a public or private elementary or secondary school, a group of those schools, or one or more school districts if the events are sponsored by an entity recognized by the school district that consists primarily of volunteers and includes parents and teachers of the school children.

This paragraph does not apply to fundraising events (i) for the benefit of private home instruction or (ii) for which the fundraising entity purchases the personal property sold at the events from another individual or entity that sold the property for the purpose of resale by the fundraising entity and that profits from the sale to the fundraising entity.

This paragraph is exempt from the provisions of Section 2-70.

SB841 Enrolled -47- LRB093 02887 SJM 02903 b (35) Beginning January 1, 2000 and through December 31, 2001, new or used automatic vending machines that prepare and serve hot food and beverages, including coffee, soup, and other items, and replacement parts for these machines.

Beginning January 1, 2002, machines and parts for machines used in commercial, coin-operated amusement and vending business if a use or occupation tax is paid on the gross receipts derived from the use of the commercial, coin-operated amusement and vending machines.

This paragraph is exempt from the provisions of Section 2-70.

_3_____ ---- Food for human consumption that is to be consumed off the premises where it is sold (other than alcoholic beverages, soft drinks, and food that has been prepared for immediate consumption) and prescription and nonprescription medicines, drugs, medical appliances, and insulin, urine testing materials, syringes, and needles used by diabetics, for human use, when purchased for use by a person receiving medical assistance under Article 5 of the Illinois Public Aid Code who resides in a licensed long-term care facility, as defined in the Nursing Home Care Act.

(36) Beginning _______2_______ -------------i------------- ------a--------------------h----------------------l--, computers and communications equipment utilized for any hospital purpose and equipment used in the diagnosis, analysis, or treatment of hospital patients sold to a lessor who leases the equipment, under a lease of one year or longer executed or in effect at the time of the purchase, to a hospital that has been issued an active tax exemption identification number by the Department under Section 1g of this Act.

This paragraph is exempt from the provisions of Section 2-70.

(37) Beginning _______2_______ -------------i------------- ------a--------------------t----------------------b---, personal property sold to a lessor who leases the property, under a lease of one year or longer executed or in effect at the time SB841 Enrolled -48- LRB093 02887 SJM 02903 b of the purchase, to a governmental body that has been issued an active tax exemption identification number by the Department under Section 1g of this Act.

This paragraph is exempt from the provisions of Section 2-70.

(38) Beginning on January 1, 2002, tangible personal property purchased from an Illinois retailer by a taxpayer engaged in centralized purchasing activities in Illinois who will, upon receipt of the property in Illinois, temporarily store the property in Illinois (i) for the purpose of subsequently transporting it outside this State for use or consumption thereafter solely outside this State or (ii) for the purpose of being processed, fabricated, or manufactured into, attached to, or incorporated into other tangible personal property to be transported outside this State and thereafter used or consumed solely outside this State.

The Director of Revenue shall, pursuant to rules adopted in accordance with the Illinois Administrative Procedure Act, issue a permit to any taxpayer in good standing with the Department who is eligible for the exemption under this paragraph (38).

The permit issued under this paragraph (38) shall authorize the holder, to the extent and in the manner specified in the rules adopted under this Act, to purchase tangible personal property from a retailer exempt from the taxes imposed by this Act.

Taxpayers shall maintain all necessary books and records to substantiate the use and consumption of all such tangible personal property outside of the State of Illinois.

(Source:

P.A.

91-51, eff.

6-30-99;

91-200, eff.

7-20-99;

91-439, eff.

8-6-99;

91-533, eff.

8-13-99;

91-637, eff.

8-20-99;

91-644, eff.

8-20-99;

92-16, eff.

6-28-01;

92-35, eff.

7-1-01;

92-227, eff.

8-2-01;

92-337, eff.

8-10-01;

92-484, eff.

8-23-01;

92-488, eff.

8-23-01;

92-651, eff.

7-11-02;

92-680, eff.

7-16-02;

revised 1-26-03.) SB841 Enrolled -49- LRB093 02887 SJM 02903 b (35 ILCS 120/2-50) (from Ch.

120, par.

441-50) Sec.

2-50.

Rolling stock exemption.

_____t_____________ _____c_____________________c___ the rolling stock exemption applies to rolling stock used by an interstate carrier for hire, even just between points in Illinois, if the rolling stock transports, for hire, persons whose journeys or property whose shipments originate or terminate outside Illinois.

(Source:

P.A.

91-51, eff.

6-30-99.) (35 ILCS 120/2-51) Sec.

2-51.

________e________ use as rolling stock definition.

____________e_____________ "use as rolling stock moving in interstate commerce" in paragraphs (12) and (13) of Section 2-5 means for motor vehicles, as defined in Section 1-146 of the Illinois Vehicle Code, and trailers, as defined in Section 1-209 of the Illinois Vehicle Code, when on 15 or more occasions in a 12-month period the motor vehicle and trailer has carried persons or property for hire in interstate commerce, even just between points in Illinois, if the motor vehicle and trailer transports persons whose journeys or property whose shipments originate or terminate outside Illinois.

This definition applies to all property purchased for the purpose of being attached to those motor vehicles or trailers as a part thereof.

O ________f_____________ ______"____________________k_______________________c____________ _____r_____________________)______________________u_____________ _____l_____________________c______________________i_____________ ______w____________________t______________________g_____________ _____e_____________________r______________________t_____________ _____1_____________________p______________________e_____________ _____e_____________________s_______________________o____________ _____d_____________________h______________________n_____________ _____o_____________________c______________________e_____________ SB841 Enrolled -50- LRB093 02887 SJM 02903 b _____l_____________________n______________________t_____________ _____t_____________________c______________________u_____________ ______t______ (Source:

P.A.

91-587, eff.

8-14-99.) Section 25.

The Illinois Vehicle Code is amended by changing Sections 3-402.1 and 20-101 and by adding Section 3-815.1 as follows:

(625 ILCS 5/3-402.1) (from Ch.

95 1/2, par.

3-402.1) Sec.

3-402.1.

Proportional Registration.

Any owner or rental owner engaged in operating a fleet of apportionable vehicles in this state and one or more other states may, in lieu of registration of such vehicles under the general provisions of sections 3-402, 3-815___________ and 3-819, register and license such fleet for operations in this state by filing an application statement, signed under penalties of perjury, with the Secretary of State which shall be in such form and contain such information as the Secretary of State shall require, declaring the total mileage operated in all states by such fleet, the total mileage operated in this state by such fleet during the preceding year, and describing and identifying each apportionable vehicle to be operated in this state during the ensuing year.

If mileage data is not available for the preceding year, the Secretary of State may accept the latest 12-month period available.

"Preceding year" means the period of 12 consecutive months immediately prior to July 1st of the year immediately preceding the registration or license year for which proportional registration is sought.

Such owner shall determine the proportion of in-state miles to total fleet miles.

Such percentage figure shall be such owner's apportionment factor.

In determining the total fee payment, such owner shall first compute the license fee SB841 Enrolled -51- LRB093 02887 SJM 02903 b _____e__ for each vehicle within the fleet which would otherwise be required, and then multiply the said amount by the Illinois apportionment factor adding the fees for each vehicle to arrive at a total amount for the fleet.

Apportionable trailers and semitrailers will be registered in accordance with the provisions of Section 3-813 of this Code.

Upon receipt of the appropriate fees from such owner as computed under the provisions of this section, the Secretary of State shall, when this state is the base jurisdiction, issue to such owner number plates or other distinctive tags or such evidence of registration as the Secretary of State shall deem appropriate to identify each vehicle in the fleet as a part of a proportionally registered interstate fleet.

Vehicles registered under the provision of this section shall be considered fully licensed and properly registered in Illinois for any type of movement or operation.

The proportional registration and licensing provisions of this section shall apply to vehicles added to fleets and operated in this state during the registration year, applying the same apportionment factor to such fees as would be payable for the remainder of the registration year.

Apportionment factors for apportionable vehicles not operated in this state during the preceding year shall be determined by the Secretary of State on the basis of a full statement of the proposed methods of operation and in conformity with an estimated mileage chart as calculated by the Secretary of State.

An established fleet adding states at the time of renewal shall estimate mileage for the added states in conformity with a mileage chart developed by the Secretary of State.

(Source:

P.A.

90-89, eff.

1-1-98.) (625 ILCS 5/3-815.1 new) _e_____________________c______________________e_____________ SB841 Enrolled -52- LRB093 02887 SJM 02903 b _____1_____________________t______________________m_____________ _____C_____ _a_____________________e______________________g_____________ _____t_____________________p_______________________a____________ _____u_____________________)_______________________t____________ _____c_____________________3________________________a___________ _____s_____________________S______________________a_____________ _____i_____________________h______________________o_____________ _____p_____________________a________________________a___________ _____c______________________e_____________________a_____________ _____r_____________________(______________________f_____________ _____s_____________________S______________________i_____________ _____c_____________________t______________________a___ _b_____________________e______________________g_____________ _____t_____________________l______________________y_____________ _______s_____________________S____________________t_____________ _____c_____________________3________________________a___________ _____h_____________________o______________________o_____________ _____l_____________________x______________________c_____________ _____a_____________________e______________________l_____________ _____o_____________________e______________________r_____________ _________a_________________e_________________________c__________ _____i______________________r_____________________r_____________ ______p_____________________S_____________________,_____________ _____c_____________________a______________________e_____________ _____r_____________________n_______________________o____________ _____u_____________________e______________________s_____________ _____c_____________________t______________________a___ _h______________________t______________________d____________ _____e_____________________o______________________F_____ (625 ILCS 5/20-101) (from Ch.

95 1/2, par.

20-101) Sec.

20-101.

Moneys derived from registration, operation and use of automobiles and from fuel taxes - Use.

From and SB841 Enrolled -53- LRB093 02887 SJM 02903 b after the effective date of this Act, e ___________p____________ _____o_____________________C_____ no public moneys derived from fees, excises or license taxes relating to registration, operation and use of vehicles on public highways or to fuels used for the propulsion of such vehicles, shall be appropriated or expended other than for costs of administering the laws imposing such fees, excises and license taxes, statutory refunds and adjustments allowed thereunder, administrative costs of the Department of Transportation, payment of debts and liabilities incurred in construction and reconstruction of public highways and bridges, acquisition of rights-of-way for, and the cost of construction, reconstruction, maintenance, repair and operation of public highways and bridges under the direction and supervision of the State, political subdivision or municipality collecting such moneys, and the costs for patrolling and policing the public highways (by the State, political subdivision or municipality collecting such money) for enforcement of traffic laws;

provided, that such moneys may be used for the retirement of and interest on bonds heretofore issued for purposes other than the construction of public highways or bridges but not to a greater extent, nor a greater length of time, than is provided in acts heretofore adopted and now in force.

Further the separation of grades of such highways with railroads and costs associated with protection of at-grade highway and railroad crossings shall also be permissible.

(Source:

P.A.

81-2nd S.S.-3.) Section 99.

Effective date.

This Act takes effect upon becoming law.