SB 2207 — BUDGET IMPLEMENTATION-FY2005

(b) Beginning on the effective date of this amendatory Act of 2004 the 93rd General Assembly and on July 1 of each year thereafter, the Chairman shall charge and collect an annual Industrial Commission Operations Fund Fee from every employer subject to subsection (a) of this Section equal to 0.0075% 0.045% of its annual actual wages paid in this State as reported in each employer’s annual self-insurance renewal filed for the previous year as required by Section 4 of this Act and Section 4 of the Workers’ Occupational Diseases Act.

All sums collected by the Commission under the provisions of SB2207 Enrolled - 5 - LRB093 15831 RCE 41448 b this Section shall be paid promptly after the receipt of the same, accompanied by a detailed statement thereof, into the Industrial Commission Operations Fund.

The fee due pursuant to this amendatory Act of 2004 shall be collected instead of the fee due on July 1, 2004 under Public Act 93-32.

Payment of the fee due under this amendatory Act of 2004 shall discharge the employer’s obligations due on July 1, 2004.

(c) In addition to the authority specifically granted under Section 16, the Chairman shall have such authority to adopt rules or establish forms as may be reasonably necessary for purposes of enforcing this Section.

The Commission shall have authority to defer, waive, or abate the fee or any penalties imposed by this Section if in the Commission’s opinion the employer’s solvency and ability to meet its obligations to pay workers’ compensation benefits would be immediately threatened by payment of the fee due.

(d) When an employer fails to pay the full amount of any annual Industrial Commission Operations Fund Fee of $100 or more due under this Section, there shall be added to the amount due as a penalty the greater of $1,000 or an amount equal to 5% of the deficiency for each month or part of a month that the deficiency remains unpaid.

(e) The Commission may enforce the collection of any delinquent payment, penalty or portion thereof by legal action or in any other manner by which the collection of debts due the State of Illinois may be enforced under the laws of this State.

(f) Whenever it appears to the satisfaction of the Chairman that an employer has paid pursuant to this Act an Industrial Commission Operations Fund Fee in an amount in excess of the amount legally collectable from the employer, the Chairman shall issue a credit memorandum for an amount equal to the amount of such overpayment.

A credit memorandum may be applied for the 2-year period from the date of issuance against the payment of any amount due during that period under the fee imposed by this Section or, subject to reasonable rule of the Commission including requirement of notification, may be SB2207 Enrolled - 6 - LRB093 15831 RCE 41448 b assigned to any other employer subject to regulation under this Act.

Any application of credit memoranda after the period provided for in this Section is void.

(Source:

P.A.

93-32, eff.

6-20-03.) ARTICLE 10 Section 10-5.

The Illinois Identification Card Act is amended by changing Sections 2 and 12 as follows:

(15 ILCS 335/2) (from Ch.

124, par.

22) Sec.

2.

Administration and powers and duties of the Administrator.

(a) The Secretary of State is the Administrator of this Act, and he is charged with the duty of observing, administering and enforcing the provisions of this Act.

(b) The Secretary is vested with the powers and duties for the proper administration of this Act as follows:

1.

He shall organize the administration of this Act as he may deem necessary and appoint such subordinate officers, clerks and other employees as may be necessary.

2.

From time to time, he may make, amend or rescind rules and regulations as may be in the public interest to implement the Act.

3.

He may prescribe or provide suitable forms as necessary, including such forms as are necessary to establish that an applicant for an Illinois Disabled Person Identification Card is a "disabled person" as defined in Section 4A of this Act.

4.

He may prepare under the seal of the Secretary of State certified copies of any records utilized under this Act and any such certified copy shall be admissible in any proceeding in any court in like manner as the original thereof.

5.

Records compiled under this Act shall be maintained for 6 years, but the Secretary may destroy such records with the prior approval of the State Records Commission.

6.

He shall examine and determine the genuineness, regularity and legality of every application filed with him SB2207 Enrolled - 7 - LRB093 15831 RCE 41448 b under this Act, and he may in all cases investigate the same, require additional information or proof or documentation from any applicant.

7.

He shall require the payment of all fees prescribed in this Act, and all such fees received by him shall be placed in the Road Fund of the State treasury except as otherwise provided in Section 12 of this Act.

(Source:

P.A.

83-1421.) (15 ILCS 335/12) (from Ch.

124, par.

32) Sec.

12.

Fees concerning Standard Illinois Identification Cards.

The fees required under this Act for standard Illinois Identification Cards must accompany any application provided for in this Act, and the Secretary shall collect such fees as follows:

a.

Original card issued on or before December 31, 2004 .........................

$4 Original card issued on or after January 1, 2005 ...........................

$20 b.

Renewal card issued on or before December 31, 2004 .........................

4 Renewal card issued on or after January 1, 2005 ...........................

20 c.

Corrected card issued on or before December 31, 2004 .........................

2 Corrected card issued on or after January 1, 2005 ...........................

10 d.

Duplicate card issued on or before December 31, 2004 .........................

4 Duplicate card issued on or after January 1, 2005 ...........................

20 e.

Certified copy with seal ...................

5 f.

Search.....................................

2 g.

Applicant 65 years of age or over...........

No Fee h.

Disabled applicant .........................

No Fee i.

Individual living in Veterans SB2207 Enrolled - 8 - LRB093 15831 RCE 41448 b Home or Hospital .........................

No Fee All fees collected under this Act shall be paid into the Road Fund of the State treasury, except that the following amounts shall be paid into the General Revenue Fund:

(i) $16 of the $20 fee for an original, renewal, or duplicate Illinois Identification Card issued on or after January 1, 2005;

and (ii) $8 of the $10 fee for a corrected Illinois Identification Card issued on or after January 1, 2005.

Any disabled person making an application for a standard Illinois Identification Card for no fee must, along with the application, submit an affirmation by the applicant on a form to be provided by the Secretary of State, attesting that such person is a disabled person as defined in Section 4A of this Act.

An individual, who resides in a veterans home or veterans hospital operated by the state or federal government, who makes an application for an Illinois Identification Card to be issued at no fee, must submit, along with the application, an affirmation by the applicant on a form provided by the Secretary of State, that such person resides in a veterans home or veterans hospital operated by the state or federal government.

(Source:

P.A.

83-1528.) Section 10-10.

The Illinois Lottery Law is amended by changing Section 10.2 as follows:

(20 ILCS 1605/10.2) (from Ch.

120, par.

1160.2) Sec.

10.2.

Application and other fees.

Each application for a new lottery license must be accompanied by a one-time application fee of $50;

the Department, however, may waive the fee for licenses of limited duration as provided by Department rule.

Each application for renewal of a lottery license must be accompanied by a renewal fee of $25.

Each lottery licensee granted on-line status pursuant to the Department’s rules must pay a fee of $10 per week as partial reimbursement for SB2207 Enrolled - 9 - LRB093 15831 RCE 41448 b telecommunications charges incurred by the Department in providing access to the lottery’s on-line gaming system.

The Department, by rule, may increase or decrease the amount of these fees.

The Department may charge an application fee except that such fee shall not exceed $10.00 per annum.

(Source:

P.A.

81-477.) ARTICLE 15 Section 15-1.

Short title.

This Article may be cited as the Watercraft Use Tax Law, and references in this Article to "this Law" mean this Article.

Section 15-5.

Definitions.

For the purposes of this Law:

"Department" means the Department of Revenue.

"Purchase price" means the reasonable consideration paid for a watercraft whether received in money or otherwise, including, but not limited to, cash, credits, property, and services, and including the value of any motor sold with, or in conjunction with, the watercraft.

Except in the case of transfers between immediate family members, reasonable consideration ordinarily means the fair market value on the date the watercraft or the share of the watercraft was acquired or the date the watercraft was brought into this State, whichever is later, unless the taxpayer can demonstrate that a different value is reasonable.

In the case of transfers between immediate family members, reasonable consideration ordinarily means the consideration actually paid, unless it appears from the facts and circumstances that the primary motivation of the transfer was the avoidance of tax.

"Watercraft" means:

(1) Class 2, Class 3, and Class 4 watercraft, as defined in Section 3-2 of the Boat Registration and Safety Act;

or (2) personal watercraft, as defined in Section 1-2 of the Boat Registration and Safety Act.

SB2207 Enrolled - 10 - LRB093 15831 RCE 41448 b Section 15-10.

Tax imposed.

A tax is hereby imposed on the privilege of using, in this State, any watercraft acquired by gift, transfer, or purchase after September 1, 2004.

This tax does not apply if:

(i) the use of the watercraft is otherwise taxed under the Use Tax Act;

(ii) the watercraft is bought and used by a governmental agency or a society, association, foundation, or institution organized and operated exclusively for charitable, religious, or educational purposes and that entity has been issued an exemption identification number under Section 1g of the Retailers’ Occupation Tax Act;

(iii) the use of the watercraft is not subject to the Use Tax Act by reason of subsection (a), (b), (c), (d), or (e) of Section 3-55 of that Act dealing with the prevention of actual or likely multi-state taxation;

(iv) the transfer is a gift to a beneficiary in the administration of an estate and the beneficiary is a surviving spouse;

or (v) the watercraft is exempted from the numbering provisions of Section 3-12 of the Boat Registration and Safety Act.

However, the exemption from tax provided by item (v) shall not apply to a watercraft exempted under paragraphs A, B, C, F, and G of Section 3-12 of the Boat Registration and Safety Act if such watercraft are used upon the waters of this State for more than 30 days in any calendar year.

Section 15-15.

Rate of tax.

The rate of tax is 6.25% of the purchase price for each purchase of watercraft that is subject to tax under this Law.

When an ownership share of a watercraft is acquired, the tax is imposed on the purchase price of that share.

All owners are jointly and severally liable for any tax due as a result of the purchase, gift, or transfer of an ownership share of the watercraft.

Section 15-20.

Returns.

(a) The purchaser, transferee, or donee shall file with the SB2207 Enrolled - 11 - LRB093 15831 RCE 41448 b Department a return signed by the purchaser, transferee, or donee on a form prescribed by the Department.

The return shall contain a verification in substantially the following form and such other information as the Department may reasonably require:

VERIFICATION I declare that I have examined this return and, to the best of my knowledge, it is true, correct, and complete.

I understand that the penalty for willfully filing a false return is a fine not to exceed $1,000 or imprisonment in a penal institution other than the penitentiary not to exceed one year, or both a fine and imprisonment.

(b) The return and payment from the purchaser, transferee, or donee shall be submitted to the Department within 30 days after the date of purchase, donation, or other transfer or the date the watercraft is brought into this State, whichever is later.

Payment of tax is a condition to securing certificate of title for the watercraft from the Department of Natural Resources.

When a purchaser, transferee, or donee pays the tax imposed by Section 5-10 of this Law, the Department (upon request therefor from the purchaser, transferee, or donee) shall issue an appropriate receipt to the purchaser, transferee, or donee showing that he or she has paid the tax to the Department.

The receipt shall be sufficient to relieve the purchaser, transferee, or donee from further liability for the tax to which the receipt may refer.

Section 15-25.

Filing false or incomplete return.

Any person required to file a return under this Law who willfully files a false or incomplete return is guilty of a Class A misdemeanor.

Section 15-30.

Determining purchase price.

For the purpose of assisting in determining the validity of the purchase price reported on returns filed with the Department, the Department may furnish the following information to persons with whom the SB2207 Enrolled - 12 - LRB093 15831 RCE 41448 b Department has contracted for service related to making that determination:

(i) the purchase price stated on the return;

(ii) the watercraft identification number;

(iii) the year, the make, and the model name or number of the watercraft;

(iv) the purchase date;

and (v) the hours of operation.

Section 15-35.

Powers of Department.

The Department has full power to:

(i) administer and enforce this Law;

(ii) collect all taxes, penalties, and interest due under this Law;

(iii) dispose of taxes, penalties, and interest so collected in the manner set forth in this Law;

and (iv) determine all rights to credit memoranda or refunds arising on account of the erroneous payment of tax, penalty, or interest under this Law.

In the administration of, and compliance with, this Law, the Department and persons who are subject to this Law have the same rights, remedies, privileges, immunities, powers, and duties, and are subject to the same conditions, restrictions, limitations, penalties, and definitions of terms, and employ the same modes of procedure, as are prescribed in the Use Tax Act (except for the provisions of Section 3-70), that are not inconsistent with this Law, as fully as if the provisions of the Use Tax Act were set forth in this Law.

In addition to any other penalties imposed under law, any person convicted of violating the provisions of this Law shall be assessed a fine of $1,000.

Section 15-40.

Payments to State and Local Sales Tax Reform Fund and General Revenue Fund.

The Department shall each month, upon collecting any taxes as provided in this Law, pay 20% of the money collected into the State and Local Sales Tax Reform Fund, a special fund in the State treasury, and 80% into the General Revenue Fund.

Section 15-45.

Rules.

The Department has the authority to adopt such rules as are reasonable and necessary to implement the provisions of this Law.

SB2207 Enrolled - 13 - LRB093 15831 RCE 41448 b Section 15-990.

The Retailers’ Occupation Tax Act is amended by changing Section 1c as follows:

(35 ILCS 120/1c) (from Ch.

120, par.

440c) Sec.

1c.

A person who is engaged in the business of leasing or renting motor vehicles or, beginning July 1, 2003, aircraft or, beginning September 1, 2004, watercraft to others and who, in connection with such business sells any used motor vehicle, or aircraft, or watercraft to a purchaser for his use and not for the purpose of resale, is a retailer engaged in the business of selling tangible personal property at retail under this Act to the extent of the value of the motor vehicle, or aircraft, or watercraft sold.

For the purpose of this Section "motor vehicle" has the meaning prescribed in Section 1-157 of the Illinois Vehicle Code, as now or hereafter amended.

For the purpose of this Section "aircraft" has the meaning prescribed in Section 3 of the Illinois Aeronautics Act.

For the purpose of this Section, "watercraft" has the meaning prescribed in Section 5-5 of the Watercraft Use Tax Law.

(Nothing provided herein shall affect liability incurred under this Act because of the sale at retail of such motor vehicles, or aircraft, or watercraft to a lessor.) (Source:

P.A.

93-24, eff.

6-20-03.) Section 15-995.

The Boat Registration and Safety Act is amended by changing Section 3A-5 as follows:

(625 ILCS 45/3A-5) (from Ch.

95 1/2, par.

313A-5) Sec.

3A-5.

Certificate of title - Issuance - Records.

(a) The Department of Natural Resources shall file each application received and, when satisfied as to its genuineness and regularity, and that no tax imposed by the "Use Tax Act" or the Watercraft Use Tax Law is owed as evidenced by the receipt for payment or determination of exemption from the Department of Revenue provided for in Section 3A-3 of this Article, and SB2207 Enrolled - 14 - LRB093 15831 RCE 41448 b that the applicant is entitled to the issuance of a certificate of title, shall issue a certificate of title.

(b) The Department of Natural Resources shall maintain a record of all certificates of title issued under a distinctive title number assigned to the watercraft and, in the discretion of the Department, in any other method determined.

(Source:

P.A.

89-445, eff.

2-7-96.) ARTICLE 20 Section 20-10.

The Use Tax Act is amended by changing Sections 3-5 and 3-85 as follows:

(35 ILCS 105/3-5) (from Ch.

120, par.

439.3-5) Sec.

3-5.

Exemptions.

Use of the following tangible personal property is exempt from the tax imposed by this Act:

(1) Personal property purchased from 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.

(2) Personal property purchased by a not-for-profit Illinois county fair association for use in conducting, operating, or promoting the county fair.

(3) Personal property purchased by 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, SB2207 Enrolled - 15 - LRB093 15831 RCE 41448 b 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.

(4) Personal property purchased by a governmental body, by a corporation, society, association, foundation, or institution organized and operated exclusively for charitable, religious, or educational purposes, or by 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 exemption identification number issued by the Department.

(5) Until July 1, 2003, a passenger car that is a replacement vehicle to the extent that the purchase price of the car is subject to the Replacement Vehicle Tax.

(6) Until July 1, 2003 and beginning again on September 1, 2004, graphic arts machinery and equipment, including repair and replacement parts, both new and used, and including that manufactured on special order, certified by the purchaser to be used primarily for graphic arts production, and including machinery and equipment purchased for lease.

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.

(7) Farm chemicals.

(8) 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.

SB2207 Enrolled - 16 - LRB093 15831 RCE 41448 b (9) Personal property purchased from a teacher-sponsored student organization affiliated with an elementary or secondary school located in Illinois.

(10) 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 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.

(11) 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 (11).

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 SB2207 Enrolled - 17 - LRB093 15831 RCE 41448 b 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, 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 (11) is exempt from the provisions of Section 3-90.

(12) Fuel and petroleum products sold to or used by an air common 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.

(13) Proceeds of mandatory service charges separately stated on customers’ bills for the purchase and consumption of food and beverages purchased at retail from a retailer, 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.

(14) Until July 1, 2003, 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 SB2207 Enrolled - 18 - LRB093 15831 RCE 41448 b required to be registered under the Illinois Vehicle Code.

(15) 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.

(16) Until July 1, 2003, 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.

(17) Until July 1, 2003, 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.

(18) Manufacturing and assembling machinery and equipment used primarily in the process of manufacturing or assembling tangible personal property for wholesale or retail sale or lease, whether that 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 that 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.

(19) Personal property delivered to a purchaser or purchaser’s donee inside Illinois when the purchase order for that personal property was received by a florist located outside Illinois who has a florist located inside Illinois deliver the personal property.

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

SB2207 Enrolled - 19 - LRB093 15831 RCE 41448 b (21) 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.

(22) 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 non-exempt 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 non-qualifying 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.

(23) 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 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 SB2207 Enrolled - 20 - LRB093 15831 RCE 41448 b qualify for this exemption or used in any other non-exempt 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 non-qualifying 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.

(24) 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.

(25) 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.

(26) Beginning July 1, 1999, game or game birds purchased SB2207 Enrolled - 21 - LRB093 15831 RCE 41448 b 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 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 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 SB2207 Enrolled - 22 - LRB093 15831 RCE 41448 b 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 and through June 30, 2003, 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 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 SB2207 Enrolled - 23 - LRB093 15831 RCE 41448 b 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 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.

(33) On and after July 1, 2003, the use in this State of motor vehicles of the second division with a gross vehicle weight in excess of 8,000 pounds and that are subject to the SB2207 Enrolled - 24 - LRB093 15831 RCE 41448 b commercial distribution fee imposed under Section 3-815.1 of the Illinois Vehicle Code.

This exemption applies to repair and replacement parts added after the initial purchase of such a motor vehicle if that motor vehicle is used in a manner that would qualify for the rolling stock exemption otherwise provided for in this Act.

(Source:

P.A.

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;

93-23, eff.

6-20-03;

93-24, eff.

6-20-03;

revised 9-11-03.) (35 ILCS 105/3-85) Sec.

3-85.

Manufacturer’s Purchase Credit.

For purchases of machinery and equipment made on and after January 1, 1995 and through June 30, 2003, and on and after September 1, 2004, a purchaser of manufacturing machinery and equipment that qualifies for the exemption provided by paragraph (18) of Section 3-5 of this Act earns a credit in an amount equal to a fixed percentage of the tax which would have been incurred under this Act on those purchases.

For purchases of graphic arts machinery and equipment made on or after July 1, 1996 and through June 30, 2003, and on and after September 1, 2004, a purchaser of graphic arts machinery and equipment that qualifies for the exemption provided by paragraph (6) of Section 3-5 of this Act earns a credit in an amount equal to a fixed percentage of the tax that would have been incurred under this Act on those purchases.

The credit earned for purchases of manufacturing machinery and equipment or graphic arts machinery and equipment shall be referred to as the Manufacturer’s Purchase Credit.

A graphic arts producer is a person engaged in graphic arts production as defined in Section 2-30 of the Retailers’ Occupation Tax Act.

Beginning July 1, 1996, all references in this Section to manufacturers or manufacturing shall also be deemed to refer to graphic arts producers or graphic arts production.

The amount of credit shall be a percentage of the tax that would have been incurred on the purchase of manufacturing SB2207 Enrolled - 25 - LRB093 15831 RCE 41448 b machinery and equipment or graphic arts machinery and equipment if the exemptions provided by paragraph (6) or paragraph (18) of Section 3-5 of this Act had not been applicable.

The percentage shall be as follows:

(1) 15% for purchases made on or before June 30, 1995.

(2) 25% for purchases made after June 30, 1995, and on or before June 30, 1996.

(3) 40% for purchases made after June 30, 1996, and on or before June 30, 1997.

(4) 50% for purchases made on or after July 1, 1997.

(a) Manufacturer’s Purchase Credit earned prior to July 1, 2003.

This subsection (a) applies to Manufacturer’s Purchase Credit earned prior to July 1, 2003.

A purchaser of production related tangible personal property desiring to use the Manufacturer’s Purchase Credit shall certify to the seller prior to October 1, 2003 that the purchaser is satisfying all or part of the liability under the Use Tax Act or the Service Use Tax Act that is due on the purchase of the production related tangible personal property by use of Manufacturer’s Purchase Credit.

The Manufacturer’s Purchase Credit certification must be dated and shall include the name and address of the purchaser, the purchaser’s registration number, if registered, the credit being applied, and a statement that the State Use Tax or Service Use Tax liability is being satisfied with the manufacturer’s or graphic arts producer’s accumulated purchase credit.

Certification may be incorporated into the manufacturer’s or graphic arts producer’s purchase order.

Manufacturer’s Purchase Credit certification provided by the manufacturer or graphic arts producer prior to October 1, 2003 may be used to satisfy the retailer’s or serviceman’s liability under the Retailers’ Occupation Tax Act or Service Occupation Tax Act for the credit claimed, not to exceed 6.25% of the receipts subject to tax from a qualifying purchase, but only if the retailer or serviceman reports the Manufacturer’s Purchase Credit claimed as required by the Department.

A Manufacturer’s Purchase Credit reported on any original or SB2207 Enrolled - 26 - LRB093 15831 RCE 41448 b amended return filed under this Act after October 20, 2003 shall be disallowed.

The Manufacturer’s Purchase Credit earned by purchase of exempt manufacturing machinery and equipment or graphic arts machinery and equipment is a non-transferable credit.

A manufacturer or graphic arts producer that enters into a contract involving the installation of tangible personal property into real estate within a manufacturing or graphic arts production facility may, prior to October 1, 2003, authorize a construction contractor to utilize credit accumulated by the manufacturer or graphic arts producer to purchase the tangible personal property.

A manufacturer or graphic arts producer intending to use accumulated credit to purchase such tangible personal property shall execute a written contract authorizing the contractor to utilize a specified dollar amount of credit.

The contractor shall furnish, prior to October 1, 2003, the supplier with the manufacturer’s or graphic arts producer’s name, registration or resale number, and a statement that a specific amount of the Use Tax or Service Use Tax liability, not to exceed 6.25% of the selling price, is being satisfied with the credit.

The manufacturer or graphic arts producer shall remain liable to timely report all information required by the annual Report of Manufacturer’s Purchase Credit Used for all credit utilized by a construction contractor.

No Manufacturer’s Purchase Credit earned prior to July 1, 2003 may be used after October 1, 2003.

The Manufacturer’s Purchase Credit may be used to satisfy liability under the Use Tax Act or the Service Use Tax Act due on the purchase of production related tangible personal property (including purchases by a manufacturer, by a graphic arts producer, or by a lessor who rents or leases the use of the property to a manufacturer or graphic arts producer) that does not otherwise qualify for the manufacturing machinery and equipment exemption or the graphic arts machinery and equipment exemption.

"Production related tangible personal property" means (i) all tangible personal property used or consumed by SB2207 Enrolled - 27 - LRB093 15831 RCE 41448 b the purchaser in a manufacturing facility in which a manufacturing process described in Section 2-45 of the Retailers’ Occupation Tax Act takes place, including tangible personal property purchased for incorporation into real estate within a manufacturing facility and including, but not limited to, tangible personal property used or consumed in activities such as preproduction material handling, receiving, quality control, inventory control, storage, staging, and packaging for shipping and transportation purposes;

(ii) all tangible personal property used or consumed by the purchaser in a graphic arts facility in which graphic arts production as described in Section 2-30 of the Retailers’ Occupation Tax Act takes place, including tangible personal property purchased for incorporation into real estate within a graphic arts facility and including, but not limited to, all tangible personal property used or consumed in activities such as graphic arts preliminary or pre-press production, pre-production material handling, receiving, quality control, inventory control, storage, staging, sorting, labeling, mailing, tying, wrapping, and packaging;

and (iii) all tangible personal property used or consumed by the purchaser for research and development.

"Production related tangible personal property" does not include (i) tangible personal property used, within or without a manufacturing facility, in sales, purchasing, accounting, fiscal management, marketing, personnel recruitment or selection, or landscaping or (ii) tangible personal property required to be titled or registered with a department, agency, or unit of federal, state, or local government.

The Manufacturer’s Purchase Credit may be used, prior to October 1, 2003, to satisfy the tax arising either from the purchase of machinery and equipment on or after January 1, 1995 for which the exemption provided by paragraph (18) of Section 3-5 of this Act was erroneously claimed, or the purchase of machinery and equipment on or after July 1, 1996 for which the exemption provided by paragraph (6) of Section 3-5 of this Act was erroneously claimed, but not in SB2207 Enrolled - 28 - LRB093 15831 RCE 41448 b satisfaction of penalty, if any, and interest for failure to pay the tax when due.

A purchaser of production related tangible personal property who is required to pay Illinois Use Tax or Service Use Tax on the purchase directly to the Department may, prior to October 1, 2003, utilize the Manufacturer’s Purchase Credit in satisfaction of the tax arising from that purchase, but not in satisfaction of penalty and interest.

A purchaser who uses the Manufacturer’s Purchase Credit to purchase property which is later determined not to be production related tangible personal property may be liable for tax, penalty, and interest on the purchase of that property as of the date of purchase but shall be entitled to use the disallowed Manufacturer’s Purchase Credit, so long as it has not expired and is used prior to October 1, 2003, on qualifying purchases of production related tangible personal property not previously subject to credit usage.

The Manufacturer’s Purchase Credit earned by a manufacturer or graphic arts producer expires the last day of the second calendar year following the calendar year in which the credit arose.

No Manufacturer’s Purchase Credit may be used after September 30, 2003 regardless of when that credit was earned.

A purchaser earning Manufacturer’s Purchase Credit shall sign and file an annual Report of Manufacturer’s Purchase Credit Earned for each calendar year no later than the last day of the sixth month following the calendar year in which a Manufacturer’s Purchase Credit is earned.

A Report of Manufacturer’s Purchase Credit Earned shall be filed on forms as prescribed or approved by the Department and shall state, for each month of the calendar year:

(i) the total purchase price of all purchases of exempt manufacturing or graphic arts machinery on which the credit was earned;

(ii) the total State Use Tax or Service Use Tax which would have been due on those items;

(iii) the percentage used to calculate the amount of credit earned;

(iv) the amount of credit earned;

and (v) such other information as the Department may reasonably require.

A purchaser earning Manufacturer’s Purchase Credit shall SB2207 Enrolled - 29 - LRB093 15831 RCE 41448 b maintain records which identify, as to each purchase of manufacturing or graphic arts machinery and equipment on which the purchaser earned Manufacturer’s Purchase Credit, the vendor (including, if applicable, either the vendor’s registration number or Federal Employer Identification Number), the purchase price, and the amount of Manufacturer’s Purchase Credit earned on each purchase.

A purchaser using Manufacturer’s Purchase Credit shall sign and file an annual Report of Manufacturer’s Purchase Credit Used for each calendar year no later than the last day of the sixth month following the calendar year in which a Manufacturer’s Purchase Credit is used.

A Report of Manufacturer’s Purchase Credit Used shall be filed on forms as prescribed or approved by the Department and shall state, for each month of the calendar year:

(i) the total purchase price of production related tangible personal property purchased from Illinois suppliers;

(ii) the total purchase price of production related tangible personal property purchased from out-of-state suppliers;

(iii) the total amount of credit used during such month;

and (iv) such other information as the Department may reasonably require.

A purchaser using Manufacturer’s Purchase Credit shall maintain records that identify, as to each purchase of production related tangible personal property on which the purchaser used Manufacturer’s Purchase Credit, the vendor (including, if applicable, either the vendor’s registration number or Federal Employer Identification Number), the purchase price, and the amount of Manufacturer’s Purchase Credit used on each purchase.

No annual report shall be filed before May 1, 1996 or after June 30, 2004.

A purchaser that fails to file an annual Report of Manufacturer’s Purchase Credit Earned or an annual Report of Manufacturer’s Purchase Credit Used by the last day of the sixth month following the end of the calendar year shall forfeit all Manufacturer’s Purchase Credit for that calendar year unless it establishes that its failure to file was due to reasonable cause.

Manufacturer’s Purchase Credit reports may SB2207 Enrolled - 30 - LRB093 15831 RCE 41448 b be amended to report and claim credit on qualifying purchases not previously reported at any time before the credit would have expired, unless both the Department and the purchaser have agreed to an extension of the statute of limitations for the issuance of a notice of tax liability as provided in Section 4 of the Retailers’ Occupation Tax Act.

If the time for assessment or refund has been extended, then amended reports for a calendar year may be filed at any time prior to the date to which the statute of limitations for the calendar year or portion thereof has been extended.

No Manufacturer’s Purchase Credit report filed with the Department for periods prior to January 1, 1995 shall be approved.

Manufacturer’s Purchase Credit claimed on an amended report may be used, until October 1, 2003, to satisfy tax liability under the Use Tax Act or the Service Use Tax Act (i) on qualifying purchases of production related tangible personal property made after the date the amended report is filed or (ii) assessed by the Department on qualifying purchases of production related tangible personal property made in the case of manufacturers on or after January 1, 1995, or in the case of graphic arts producers on or after July 1, 1996.

If the purchaser is not the manufacturer or a graphic arts producer, but rents or leases the use of the property to a manufacturer or graphic arts producer, the purchaser may earn, report, and use Manufacturer’s Purchase Credit in the same manner as a manufacturer or graphic arts producer.

A purchaser shall not be entitled to any Manufacturer’s Purchase Credit for a purchase that is required to be reported and is not timely reported as provided in this Section.

A purchaser remains liable for (i) any tax that was satisfied by use of a Manufacturer’s Purchase Credit, as of the date of purchase, if that use is not timely reported as required in this Section and (ii) for any applicable penalties and interest for failing to pay the tax when due.

No Manufacturer’s Purchase Credit may be used after September 30, 2003 to satisfy any tax liability imposed under this Act, including any audit SB2207 Enrolled - 31 - LRB093 15831 RCE 41448 b liability.

(b) Manufacturer’s Purchase Credit earned on and after September 1, 2004.

This subsection (b) applies to Manufacturer’s Purchase Credit earned on and after September 1, 2004.

Manufacturer’s Purchase Credit earned on or after September 1, 2004 may only be used to satisfy the Use Tax or Service Use Tax liability incurred on production related tangible personal property purchased on or after September 1, 2004.

A purchaser of production related tangible personal property desiring to use the Manufacturer’s Purchase Credit shall certify to the seller that the purchaser is satisfying all or part of the liability under the Use Tax Act or the Service Use Tax Act that is due on the purchase of the production related tangible personal property by use of Manufacturer’s Purchase Credit.

The Manufacturer’s Purchase Credit certification must be dated and shall include the name and address of the purchaser, the purchaser’s registration number, if registered, the credit being applied, and a statement that the State Use Tax or Service Use Tax liability is being satisfied with the manufacturer’s or graphic arts producer’s accumulated purchase credit.

Certification may be incorporated into the manufacturer’s or graphic arts producer’s purchase order.

Manufacturer’s Purchase Credit certification provided by the manufacturer or graphic arts producer may be used to satisfy the retailer’s or serviceman’s liability under the Retailers’ Occupation Tax Act or Service Occupation Tax Act for the credit claimed, not to exceed 6.25% of the receipts subject to tax from a qualifying purchase, but only if the retailer or serviceman reports the Manufacturer’s Purchase Credit claimed as required by the Department.

The Manufacturer’s Purchase Credit earned by purchase of exempt manufacturing machinery and equipment or graphic arts machinery and equipment is a non-transferable credit.

A manufacturer or graphic arts producer that enters into a contract involving the installation of tangible personal property into real estate within a manufacturing or graphic SB2207 Enrolled - 32 - LRB093 15831 RCE 41448 b arts production facility may, on or after September 1, 2004, authorize a construction contractor to utilize credit accumulated by the manufacturer or graphic arts producer to purchase the tangible personal property.

A manufacturer or graphic arts producer intending to use accumulated credit to purchase such tangible personal property shall execute a written contract authorizing the contractor to utilize a specified dollar amount of credit.

The contractor shall furnish the supplier with the manufacturer’s or graphic arts producer’s name, registration or resale number, and a statement that a specific amount of the Use Tax or Service Use Tax liability, not to exceed 6.25% of the selling price, is being satisfied with the credit.

The manufacturer or graphic arts producer shall remain liable to timely report all information required by the annual Report of Manufacturer’s Purchase Credit Used for all credit utilized by a construction contractor.

The Manufacturer’s Purchase Credit may be used to satisfy liability under the Use Tax Act or the Service Use Tax Act due on the purchase, made on or after September 1, 2004, of production related tangible personal property (including purchases by a manufacturer, by a graphic arts producer, or by a lessor who rents or leases the use of the property to a manufacturer or graphic arts producer) that does not otherwise qualify for the manufacturing machinery and equipment exemption or the graphic arts machinery and equipment exemption.

"Production related tangible personal property" means (i) all tangible personal property used or consumed by the purchaser in a manufacturing facility in which a manufacturing process described in Section 2-45 of the Retailers’ Occupation Tax Act takes place, including tangible personal property purchased for incorporation into real estate within a manufacturing facility and including, but not limited to, tangible personal property used or consumed in activities such as preproduction material handling, receiving, quality control, inventory control, storage, staging, and packaging for shipping and transportation purposes;

(ii) all tangible SB2207 Enrolled - 33 - LRB093 15831 RCE 41448 b personal property used or consumed by the purchaser in a graphic arts facility in which graphic arts production as described in Section 2-30 of the Retailers’ Occupation Tax Act takes place, including tangible personal property purchased for incorporation into real estate within a graphic arts facility and including, but not limited to, all tangible personal property used or consumed in activities such as graphic arts preliminary or pre-press production, pre-production material handling, receiving, quality control, inventory control, storage, staging, sorting, labeling, mailing, tying, wrapping, and packaging;

and (iii) all tangible personal property used or consumed by the purchaser for research and development.

"Production related tangible personal property" does not include (i) tangible personal property used, within or without a manufacturing facility, in sales, purchasing, accounting, fiscal management, marketing, personnel recruitment or selection, or landscaping or (ii) tangible personal property required to be titled or registered with a department, agency, or unit of federal, state, or local government.

The Manufacturer’s Purchase Credit may be used to satisfy the tax arising either from the purchase of machinery and equipment on or after September 1, 2004 for which the exemption provided by paragraph (18) of Section 3-5 of this Act was erroneously claimed, or the purchase of machinery and equipment on or after September 1, 2004 for which the exemption provided by paragraph (6) of Section 3-5 of this Act was erroneously claimed, but not in satisfaction of penalty, if any, and interest for failure to pay the tax when due.

A purchaser of production related tangible personal property that is purchased on or after September 1, 2004 who is required to pay Illinois Use Tax or Service Use Tax on the purchase directly to the Department may utilize the Manufacturer’s Purchase Credit in satisfaction of the tax arising from that purchase, but not in satisfaction of penalty and interest.

A purchaser who uses the Manufacturer’s Purchase Credit to purchase property on and after September 1, 2004 which is later SB2207 Enrolled - 34 - LRB093 15831 RCE 41448 b determined not to be production related tangible personal property may be liable for tax, penalty, and interest on the purchase of that property as of the date of purchase but shall be entitled to use the disallowed Manufacturer’s Purchase Credit, so long as it has not expired and is used on qualifying purchases of production related tangible personal property not previously subject to credit usage.

The Manufacturer’s Purchase Credit earned by a manufacturer or graphic arts producer expires the last day of the second calendar year following the calendar year in which the credit arose.

A purchaser earning Manufacturer’s Purchase Credit shall sign and file an annual Report of Manufacturer’s Purchase Credit Earned for each calendar year no later than the last day of the sixth month following the calendar year in which a Manufacturer’s Purchase Credit is earned.

A Report of Manufacturer’s Purchase Credit Earned shall be filed on forms as prescribed or approved by the Department and shall state, for each month of the calendar year:

(i) the total purchase price of all purchases of exempt manufacturing or graphic arts machinery on which the credit was earned;

(ii) the total State Use Tax or Service Use Tax which would have been due on those items;

(iii) the percentage used to calculate the amount of credit earned;

(iv) the amount of credit earned;

and (v) such other information as the Department may reasonably require.

A purchaser earning Manufacturer’s Purchase Credit shall maintain records which identify, as to each purchase of manufacturing or graphic arts machinery and equipment on which the purchaser earned Manufacturer’s Purchase Credit, the vendor (including, if applicable, either the vendor’s registration number or Federal Employer Identification Number), the purchase price, and the amount of Manufacturer’s Purchase Credit earned on each purchase.

A purchaser using Manufacturer’s Purchase Credit shall sign and file an annual Report of Manufacturer’s Purchase Credit Used for each calendar year no later than the last day of the sixth month following the calendar year in which a Manufacturer’s Purchase Credit is SB2207 Enrolled - 35 - LRB093 15831 RCE 41448 b used.

A Report of Manufacturer’s Purchase Credit Used shall be filed on forms as prescribed or approved by the Department and shall state, for each month of the calendar year:

(i) the total purchase price of production related tangible personal property purchased from Illinois suppliers;

(ii) the total purchase price of production related tangible personal property purchased from out-of-state suppliers;

(iii) the total amount of credit used during such month;

and (iv) such other information as the Department may reasonably require.

A purchaser using Manufacturer’s Purchase Credit shall maintain records that identify, as to each purchase of production related tangible personal property on which the purchaser used Manufacturer’s Purchase Credit, the vendor (including, if applicable, either the vendor’s registration number or Federal Employer Identification Number), the purchase price, and the amount of Manufacturer’s Purchase Credit used on each purchase.

A purchaser that fails to file an annual Report of Manufacturer’s Purchase Credit Earned or an annual Report of Manufacturer’s Purchase Credit Used by the last day of the sixth month following the end of the calendar year shall forfeit all Manufacturer’s Purchase Credit for that calendar year unless it establishes that its failure to file was due to reasonable cause.

Manufacturer’s Purchase Credit reports may be amended to report and claim credit on qualifying purchases not previously reported at any time before the credit would have expired, unless both the Department and the purchaser have agreed to an extension of the statute of limitations for the issuance of a notice of tax liability as provided in Section 4 of the Retailers’ Occupation Tax Act.

If the time for assessment or refund has been extended, then amended reports for a calendar year may be filed at any time prior to the date to which the statute of limitations for the calendar year or portion thereof has been extended.

Manufacturer’s Purchase Credit claimed on an amended report may be used to satisfy tax liability under the Use Tax Act or the Service Use Tax Act (i) on qualifying purchases of production related tangible SB2207 Enrolled - 36 - LRB093 15831 RCE 41448 b personal property made after the date the amended report is filed or (ii) assessed by the Department on qualifying production related tangible personal property purchased on or after September 1, 2004.

If the purchaser is not the manufacturer or a graphic arts producer, but rents or leases the use of the property to a manufacturer or graphic arts producer, the purchaser may earn, report, and use Manufacturer’s Purchase Credit in the same manner as a manufacturer or graphic arts producer.

A purchaser shall not be entitled to any Manufacturer’s Purchase Credit for a purchase that is required to be reported and is not timely reported as provided in this Section.

A purchaser remains liable for (i) any tax that was satisfied by use of a Manufacturer’s Purchase Credit, as of the date of purchase, if that use is not timely reported as required in this Section and (ii) for any applicable penalties and interest for failing to pay the tax when due.

(Source:

P.A.

93-24, eff.

6-20-03.) Section 20-15.

The Service Use Tax Act is amended by changing Sections 3-5 and 3-70 as follows:

(35 ILCS 110/3-5) (from Ch.

120, par.

439.33-5) Sec.

3-5.

Exemptions.

Use of the following tangible personal property is exempt from the tax imposed by this Act:

(1) Personal property purchased from 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.

(2) Personal property purchased by a non-profit Illinois county fair association for use in conducting, operating, or promoting the county fair.

(3) Personal property purchased by a not-for-profit arts or SB2207 Enrolled - 37 - LRB093 15831 RCE 41448 b 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.

(4) 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.

(5) Until July 1, 2003 and beginning again on September 1, 2004, 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.

(6) Personal property purchased from a teacher-sponsored student organization affiliated with an elementary or secondary school located in Illinois.

(7) 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 SB2207 Enrolled - 38 - LRB093 15831 RCE 41448 b 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 (7).

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, 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 3-75.

(8) Fuel and petroleum products sold to or used by an air common 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.

SB2207 Enrolled - 39 - LRB093 15831 RCE 41448 b (9) Proceeds of mandatory service charges separately stated on customers’ bills for the purchase and consumption of food and beverages acquired as an incident to the purchase of a service from a serviceman, 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.

(10) Until July 1, 2003, 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.

(11) Proceeds from the sale of 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.

(12) Until July 1, 2003, 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.

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

(14) 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 SB2207 Enrolled - 40 - LRB093 15831 RCE 41448 b Jockey Club, as appropriate, used for purposes of breeding or racing for prizes.

(15) 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 non-exempt manner, the lessor shall be liable for the tax imposed under this Act or the Use Tax Act, as the case may be, based on the fair market value of the property at the time the non-qualifying 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 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.

(16) 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 a governmental body that has been issued an active 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 is used in any other non-exempt manner, the lessor shall be liable for the tax imposed under this Act or the Use Tax Act, as the case may be, based on the fair market value of the property at the time the non-qualifying use occurs.

No lessor shall collect or attempt SB2207 Enrolled - 41 - LRB093 15831 RCE 41448 b to collect an amount (however designated) that purports to reimburse that lessor for the tax imposed by this Act or the 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.

(17) 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.

(18) 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.

(19) Beginning July 1, 1999, game or game birds purchased 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 exempt from the provisions of Section 3-75.

SB2207 Enrolled - 42 - LRB093 15831 RCE 41448 b (20) 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.

(21) 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 3-75.

(22) 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 SB2207 Enrolled - 43 - LRB093 15831 RCE 41448 b January 1, 2002 and through June 30, 2003, 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 3-75.

(23) 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.

(24) 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 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 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 SB2207 Enrolled - 44 - LRB093 15831 RCE 41448 b 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 3-75.

(25) 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 a governmental body that has been issued an active 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 is used in any other nonexempt manner, the lessor shall be liable for the tax imposed under this Act or the 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 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 3-75.

(Source:

P.A.

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;

92-651, eff.