Bill Text: IL HB0160 | 2017-2018 | 100th General Assembly | Engrossed


Bill Title: Amends the Illinois Income Tax Act. Makes a technical change in a Section concerning the earned income tax credit.

Spectrum: Partisan Bill (Democrat 19-0)

Status: (Engrossed) 2017-09-28 - Rule 19(b) / Motion Referred to Rules Committee [HB0160 Detail]

Download: Illinois-2017-HB0160-Engrossed.html



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1 AN ACT concerning revenue.
2 Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4
ARTICLE 3. KEEP ILLINOIS BUSINESS ACT
5 Section 3-1. Short title. This Act may be cited as the Keep
6Illinois Business Act.
7 Section 3-5. Purpose. The purpose of this Act is to
8encourage businesses with primary business operations in the
9State of Illinois to remain in this State by removing and
10recouping any economic development assistance or benefit
11provided to those businesses by the State should those
12businesses decide to relocate jobs out-of-State.
13 Section 3-10. Definitions. As used in this Act:
14 "Economic development assistance" means (1) tax credits
15and tax exemptions given as an incentive to a recipient
16business organization under an initial certification or an
17initial designation made by the Department of Commerce and
18Economic Opportunity under the Economic Development for a
19Growing Economy Tax Credit Act, River Edge Redevelopment Zone
20Act, and the Illinois Enterprise Zone Act, including the High
21Impact Business program; (2) grants or loans given to a

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1recipient as an incentive to a business organization under the
2River Edge Redevelopment Zone Act, Large Business Development
3Program, the Business Development Public Infrastructure
4Program, or the Industrial Training Program; (3) the State
5Treasurer's Economic Program Loans; (4) the Illinois
6Department of Transportation Economic Development Program; (5)
7all successor and subsequent programs and tax credits designed
8to promote business relocations and expansions; (6) any
9assistance provided by the Illinois Emergency Employment
10Program under the Illinois Emergency Development Act; and (7)
11any other economic incentive, benefit, assistance, credit,
12loan, or grant provided by a State granting agency to a
13recipient business with primary business operations in this
14State.
15 "Recipient business" means any corporation, limited
16liability company, partnership, joint venture, association,
17sole proprietorship, or other legally recognized entity with
18primary business operations in this State that receives
19economic development assistance.
20 "State agency" has the meaning provided in Section 1-7 of
21the Illinois State Auditing Act.
22 "State granting agency" means any State department or State
23agency that provides economic development assistance to a
24recipient business.
25 Section 3-15. Recovery of economic development assistance.

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1 (a) Subject to the procedures outlined in this Section, any
2recipient business that chooses to move all or part of its
3business operations and the jobs created by its business
4out-of-State shall be deemed to no longer qualify for State
5economic development assistance, and shall be required to pay
6to the relevant State granting agency the full amount of any
7economic development assistance it received.
8 (b) Whenever a State granting agency believes that the
9economic development assistance it provided to a recipient
10business is subject to recovery, the State granting agency
11shall provide the recipient business the opportunity for at
12least one informal hearing to determine the facts and issues,
13and to resolve any conflicts as amicably as possible before
14taking any formal recovery actions.
15 (c) If a State granting agency determines that economic
16development assistance is to be recovered, then, prior to
17taking any action to recover, the State granting agency shall
18provide the recipient business with a written notice of the
19intended recovery. This notice shall identify the funds and the
20amount to be recovered and the specific facts which permit
21recovery.
22 (d) A recipient business shall have 35 days from the
23receipt of the notice required in subsection (c) of this
24Section to request a hearing to show why recovery is not
25justified or proper. If a recipient business requests a hearing
26under this subsection (d), then:

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1 (1) the State granting agency shall hold a hearing
2 before the Director of that agency, or his or her designee,
3 at which a representative of the recipient business may
4 present an argument for why recovery should not be
5 permitted; and
6 (2) after the conclusion of the hearing, the Director
7 of the State granting agency, or his or her designee, shall
8 issue a written final recovery order and send a copy of the
9 order to the recipient business.
10 (e) A recipient business may seek judicial review of any
11final recovery order under the provisions of the Administrative
12Review Law.
13 (f) If a recipient business requests a hearing under
14subsection (d) of this Section, then the State granting agency
15may not take any action of recovery until at least 35 days
16after the State granting agency has issued a final recovery
17order under the requirements of subsection (d) of this Section.
18If a recipient business does not request a hearing as permitted
19in subsection (d) of this Section, then the State granting
20agency may proceed with recovery of the economic development
21assistance amount specified in the notice issued under the
22requirements of subsection (c) of this Section, at any time
23after the expiration of the 35-day request period established
24in subsection (d) of this Section.
25 (g) Any notice or mailing required or permitted by this
26Section shall be deemed received 5 days after the notice or

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1mailing is deposited in the United States mail, properly
2addressed with the current business address of the recipient
3business and with sufficient U.S. postage affixed.
4
ARTICLE 4. NEW MARKETS DEVELOPMENT PROGRAM
5 Section 4-5. The New Markets Development Program Act is
6amended by changing Sections 5, 25, 40, and 50 and by adding
7Sections 43 and 55 as follows:
8 (20 ILCS 663/5)
9 Sec. 5. Definitions. As used in this Act:
10 "Applicable percentage" means 0% for each of the first 2
11credit allowance dates, 7% for the third credit allowance date,
12and 8% for the next 4 credit allowance dates.
13 "Credit allowance date" means with respect to any qualified
14equity investment:
15 (1) the date on which the investment is initially made;
16 and
17 (2) each of the 6 anniversary dates of that date
18 thereafter.
19 "Department" means the Department of Commerce and Economic
20Opportunity.
21 "Long-term debt security" means any debt instrument issued
22by a qualified community development entity, at par value or a
23premium, with an original maturity date of at least 7 years

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1from the date of its issuance, with no acceleration of
2repayment, amortization, or prepayment features prior to its
3original maturity date. Cumulative cash payments of interest on
4the qualified debt instrument during the period commencing with
5the issuance of the qualified debt instrument and ending with
6the seventh anniversary of its issuance shall not exceed the
7sum of such cash interest payments and the cumulative net
8income of the issuing community development entity for the same
9period. This definition in no way limits the holder's ability
10to accelerate payments on the debt instrument in situations
11where the issuer has defaulted on covenants designed to ensure
12compliance with this Act or Section 45D of the Internal Revenue
13Code of 1986, as amended.
14 "Purchase price" means the amount paid to the issuer of a
15qualified equity investment for that qualified equity
16investment.
17 "Qualified active low-income community business" has the
18meaning given to that term in Section 45D of the Internal
19Revenue Code of 1986, as amended; except that any business that
20derives or projects to derive 15% or more of its annual revenue
21from the rental or sale of real estate is not considered to be
22a qualified active low-income community business. This
23exception does not apply to a business that is controlled by or
24under common control with another business if the second
25business (i) does not derive or project to derive 15% or more
26of its annual revenue from the rental or sale of real estate

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1and (ii) is the primary tenant of the real estate leased from
2the initial business. A business shall be considered a
3qualified active low-income community business for the
4duration of the qualified community development entity's
5investment in or loan to the business if the entity reasonably
6expects, at the time it makes the investment or loan, that the
7business will continue to satisfy the requirements for being a
8qualified active low-income community business throughout the
9entire period of the investment or loan.
10 "Qualified community development entity" has the meaning
11given to that term in Section 45D of the Internal Revenue Code
12of 1986, as amended; provided that such entity has entered
13into, or is controlled by an entity that has entered into, an
14allocation agreement with the Community Development Financial
15Institutions Fund of the U.S. Treasury Department with respect
16to credits authorized by Section 45D of the Internal Revenue
17Code of 1986, as amended, that includes the State of Illinois
18within the service area set forth in that allocation agreement.
19 "Qualified equity investment" means any equity investment
20in, or long-term debt security issued by, a qualified community
21development entity that:
22 (1) is acquired after the effective date of this Act at
23 its original issuance solely in exchange for cash;
24 (2) with respect to qualified equity investments made
25 before January 1, 2017, has at least 85% of its cash
26 purchase price used by the issuer to make qualified

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1 low-income community investments in the State of Illinois,
2 and, with respect to qualified equity investments made on
3 or after January 1, 2017, has 100% of the cash purchase
4 price used by the issuer to make qualified low-income
5 community investments in the State of Illinois; and
6 (3) is designated by the issuer as a qualified equity
7 investment under this Act; with respect to qualified equity
8 investments made on or after January 1, 2017, is designated
9 by the issuer as a qualified equity investment under
10 Section 45D of the Internal Revenue Code of 1986, as
11 amended; and is certified by the Department as not
12 exceeding the limitation contained in Section 20.
13 This term includes any qualified equity investment that
14does not meet the provisions of item (1) of this definition if
15the investment was a qualified equity investment in the hands
16of a prior holder.
17 "Qualified low-income community investment" means any
18capital or equity investment in, or loan to, any qualified
19active low-income community business. With respect to any one
20qualified active low-income community business, the maximum
21amount of qualified low-income community investments made in
22that business, on a collective basis with all of its affiliates
23that may be counted towards the satisfaction of paragraph (2)
24of the definition of qualified equity investment, shall be
25$10,000,000 whether issued to one or several qualified
26community development entities.

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1 "Tax credit" means a credit against any income, franchise,
2or insurance premium taxes, including insurance retaliatory
3taxes, otherwise due under Illinois law.
4 "Taxpayer" means any individual or entity subject to any
5income, franchise, or insurance premium tax under Illinois law.
6(Source: P.A. 95-1024, eff. 12-31-08.)
7 (20 ILCS 663/25)
8 Sec. 25. Certification of qualified equity investments.
9 (a) A qualified community development entity that seeks to
10have an equity investment or long-term debt security designated
11as a qualified equity investment and eligible for tax credits
12under this Section shall apply to the Department. The qualified
13community development entity must submit an application on a
14form that the Department provides that includes:
15 (1) The name, address, tax identification number of the
16 entity, and evidence of the entity's certification as a
17 qualified community development entity.
18 (2) A copy of the allocation agreement executed by the
19 entity, or its controlling entity, and the Community
20 Development Financial Institutions Fund.
21 (3) A certificate executed by an executive officer of
22 the entity attesting that the allocation agreement remains
23 in effect and has not been revoked or cancelled by the
24 Community Development Financial Institutions Fund.
25 (4) A description of the proposed amount, structure,

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1 and purchaser of the equity investment or long-term debt
2 security.
3 (5) The name and tax identification number of any
4 taxpayer eligible to utilize tax credits earned as a result
5 of the issuance of the qualified equity investment.
6 (6) Information regarding the proposed use of proceeds
7 from the issuance of the qualified equity investment.
8 (7) A nonrefundable application fee of $5,000. This fee
9 shall be paid to the Department and shall be required of
10 each application submitted.
11 (8) With respect to qualified equity investments made
12 on or after January 1, 2017, the amount of qualified equity
13 investment authority the applicant agrees to designate as a
14 federal qualified equity investment under Section 45D of
15 the Internal Revenue Code, including a copy of the screen
16 shot from the Community Development Financial Institutions
17 Fund's Allocation Tracking System of the applicant's
18 remaining federal qualified equity investment authority.
19 (b) Within 30 days after receipt of a completed application
20containing the information necessary for the Department to
21certify a potential qualified equity investment, including the
22payment of the application fee, the Department shall grant or
23deny the application in full or in part. If the Department
24denies any part of the application, it shall inform the
25qualified community development entity of the grounds for the
26denial. If the qualified community development entity provides

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1any additional information required by the Department or
2otherwise completes its application within 15 days of the
3notice of denial, the application shall be considered completed
4as of the original date of submission. If the qualified
5community development entity fails to provide the information
6or complete its application within the 15-day period, the
7application remains denied and must be resubmitted in full with
8a new submission date.
9 (c) If the application is deemed complete, the Department
10shall certify the proposed equity investment or long-term debt
11security as a qualified equity investment that is eligible for
12tax credits under this Section, subject to the limitations
13contained in Section 20. The Department shall provide written
14notice of the certification to the qualified community
15development entity. The notice shall include the names of those
16taxpayers who are eligible to utilize the credits and their
17respective credit amounts. If the names of the taxpayers who
18are eligible to utilize the credits change due to a transfer of
19a qualified equity investment or a change in an allocation
20pursuant to Section 15, the qualified community development
21entity shall notify the Department of such change.
22 (d) With respect to applications received before January 1,
232017, the The Department shall certify qualified equity
24investments in the order applications are received by the
25Department. Applications received on the same day shall be
26deemed to have been received simultaneously. For applications

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1received on the same day and deemed complete, the Department
2shall certify, consistent with remaining tax credit capacity,
3qualified equity investments in proportionate percentages
4based upon the ratio of the amount of qualified equity
5investment requested in an application to the total amount of
6qualified equity investments requested in all applications
7received on the same day.
8 (d-5) With respect to applications received on or after
9January 1, 2017, the Department shall certify applications by
10applicants that agree to designate qualified equity
11investments as federal qualified equity investments in
12accordance with item (8) of subsection (a) of this Section in
13proportionate percentages based upon the ratio of the amount of
14qualified equity investments requested in an application to be
15designated as federal qualified equity investments to the total
16amount of qualified equity investments to be designated as
17federal qualified equity investments requested in all
18applications received on the same day.
19 (d-10) With respect to applications received on or after
20January 1, 2017, after complying with subsection (d-5), the
21Department shall certify the qualified equity investments of
22all other applicants, including the remaining qualified equity
23investment authority requested by applicants not designated as
24federal qualified equity investments in accordance with item
25(8) of subsection (a) of this Section, in proportionate
26percentages based upon the ratio of the amount of qualified

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1equity investments requested in the applications to the total
2amount of qualified equity investments requested in all
3applications received on the same day.
4 (e) Once the Department has certified qualified equity
5investments that, on a cumulative basis, are eligible for
6$20,000,000 in tax credits, the Department may not certify any
7more qualified equity investments. If a pending request cannot
8be fully certified, the Department shall certify the portion
9that may be certified unless the qualified community
10development entity elects to withdraw its request rather than
11receive partial credit.
12 (f) Within 30 days after receiving notice of certification,
13the qualified community development entity shall (i) issue the
14qualified equity investment and receive cash in the amount of
15the certified amount and (ii) with respect to qualified equity
16investments made on or after January 1, 2017, if applicable,
17designate the required amount of qualified equity investment
18authority as a federal qualified equity investment. The
19qualified community development entity must provide the
20Department with evidence of the receipt of the cash investment
21within 10 business days after receipt and, with respect to
22qualified equity investments made on or after January 1, 2017,
23if applicable, provide evidence that the required amount of
24qualified equity investment authority was designated as a
25federal qualified equity investment. If the qualified
26community development entity does not receive the cash

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1investment and issue the qualified equity investment within 30
2days following receipt of the certification notice, the
3certification shall lapse and the entity may not issue the
4qualified equity investment without reapplying to the
5Department for certification. A certification that lapses
6reverts back to the Department and may be reissued only in
7accordance with the application process outline in this Section
825.
9 (g) Allocation rounds enabled by this Act shall be applied
10for according to the following schedule:
11 (1) on January 2, 2019, $125,000,000 of qualified
12 equity investments; and
13 (2) on January 2, 2020, $125,000,000 of qualified
14 equity investments.
15(Source: P.A. 95-1024, eff. 12-31-08; 96-939, eff. 7-1-10.)
16 (20 ILCS 663/40)
17 Sec. 40. Recapture. The Department of Revenue shall
18recapture, from the taxpayer that claimed the credit on a
19return, the tax credit allowed under this Act if:
20 (1) any amount of the federal tax credit available with
21 respect to a qualified equity investment that is eligible
22 for a tax credit under this Act is recaptured under Section
23 45D of the Internal Revenue Code of 1986, as amended. In
24 that case, the Department of Revenue's recapture shall be
25 proportionate to the federal recapture with respect to that

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1 qualified equity investment;
2 (2) the issuer redeems or makes principal repayment
3 with respect to a qualified equity investment prior to the
4 7th anniversary of the issuance of the qualified equity
5 investment. In that case, the Department of Revenue's
6 recapture shall be proportionate to the amount of the
7 redemption or repayment with respect to the qualified
8 equity investment; or
9 (3) the issuer fails to invest at least 85% of the cash
10 purchase price of the qualified equity investment with
11 respect to qualified equity investments made before
12 January 1, 2017 and 100% of the cash purchase price of the
13 qualified equity investment with respect to qualified
14 equity investments made on or after January 1, 2017 in
15 qualified low-income community investments in the State of
16 Illinois within 12 months of the issuance of the qualified
17 equity investment and maintain such level of investment in
18 qualified low-income community investments in Illinois
19 until the last credit allowance date for such qualified
20 equity investment; or .
21 (4) with respect to qualified equity investments made
22 on or after January 1, 2017, the issuer violates Section 43
23 of this Act.
24 For purposes of this Section, an investment shall be
25considered held by an issuer even if the investment has been
26sold or repaid; provided that the issuer reinvests an amount

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1equal to the capital returned to or recovered by the issuer
2from the original investment, exclusive of any profits
3realized, in another qualified low-income community investment
4in this State within 12 months after the receipt of that
5capital. An issuer is not required to reinvest capital returned
6from qualified low-income community investments after the 6th
7anniversary of the issuance of the qualified equity investment,
8the proceeds of which were used to make the qualified
9low-income community investment, and the qualified low-income
10community investment shall be considered held by the issuer
11through the 7th anniversary of the qualified equity
12investment's issuance.
13 The Department of Revenue shall provide notice to the
14qualified community development entity of any proposed
15recapture of tax credits pursuant to this Section. The entity
16shall have 90 days to cure any deficiency indicated in the
17Department of Revenue's original recapture notice and avoid
18such recapture. If the entity fails or is unable to cure such
19deficiency with the 90-day period, the Department of Revenue
20shall provide the entity and the taxpayer from whom the credit
21is to be recaptured with a final order of recapture. Any tax
22credit for which a final recapture order has been issued shall
23be recaptured by the Department of Revenue from the taxpayer
24who claimed the tax credit on a tax return.
25(Source: P.A. 95-1024, eff. 12-31-08.)

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1 (20 ILCS 663/43 new)
2 Sec. 43. Prohibited activities and interests. For
3qualified equity investments made on or after January 1, 2017,
4no qualified active low-income community business that
5receives a qualified low-income community investment from a
6qualified community development entity that issues qualified
7equity investments under this Act, or any affiliates of such a
8qualified active low-income community business, may directly
9or indirectly (i) own or have the right to acquire an ownership
10interest in a qualified community development entity or member
11or affiliate of a qualified community development entity,
12including, but not limited to, a holder of a qualified equity
13investment issued by the qualified community development
14entity or (ii) loan to or invest in a qualified community
15development entity or member or affiliate of a qualified
16community development entity, including, but not limited to, a
17holder of a qualified equity investment issued by a qualified
18community development entity, where the proceeds of such loan
19or investment are directly or indirectly used to fund or
20refinance the purchase of a qualified equity investment under
21this Act. For purposes of this Section, "affiliate" means an
22entity that directly, or indirectly through one or more
23intermediaries, controls, is controlled by, or is under common
24control with another entity. For purposes of this Section, an
25entity is "controlled by" another entity if the controlling
26person holds, directly or indirectly, the majority voting or

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1ownership interest in the controlled person or has control over
2the day-to-day operations of the controlled person by contract
3or law, provided that a qualified community development entity
4shall not be considered an affiliate of a qualified active
5low-income community business solely as a result of its
6qualified low-income community investment in such business.
7This Section is not intended to affect ownership or affiliate
8interests that arise following the sixth anniversary of the
9issuance of the qualified equity investment.
10 (20 ILCS 663/50)
11 Sec. 50. Sunset. No qualified equity investment shall be
12certified on or after June 30, 2021. For fiscal years following
13fiscal year 2017, qualified equity investments shall not be
14made under this Act unless reauthorization is made pursuant to
15this Section. For all fiscal years following fiscal year 2017,
16unless the General Assembly adopts a joint resolution granting
17authority to the Department to approve qualified equity
18investments for the Illinois new markets development program
19and clearly describing the amount of tax credits available for
20the next fiscal year, or otherwise complies with the provisions
21of this Section, no qualified equity investments may be
22permitted to be made under this Act. The amount of available
23tax credits contained in such a resolution shall not exceed the
24limitation provided under Section 20. Nothing in this Section
25precludes a taxpayer who makes a qualified equity investment

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1prior to the expiration of authority to make qualified equity
2investments from claiming tax credits relating to that
3qualified equity investment for each applicable credit
4allowance date.
5(Source: P.A. 97-636, eff. 6-1-12.)
6 (20 ILCS 663/55 new)
7 Sec. 55. Annual report. Each qualified community
8development entity shall submit an annual report to the
9Department within 45 days after the beginning of each calendar
10year during the compliance period. No annual report shall be
11due prior to the first anniversary of the initial credit
12allowance date. The report shall include, but is not limited
13to, the following:
14 (1) an attestation from an authorized officer of the
15 qualified community development entity that the entity has
16 not been the subject of any investigation by a government
17 agency relating to tax credits or financial services during
18 the preceding calendar year;
19 (2) information with respect to all qualified
20 low-income community investments made by the qualified
21 community development entity, including:
22 (A) the date and amount of, and bank statements or
23 wire transfer reports documenting, such qualified
24 low-income community investments;
25 (B) the name, address, and EIN of each qualified

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1 active low-income community business funded by the
2 qualified community development entity, the number of
3 persons employed by such business at the time of the
4 initial investment, and a brief description of the
5 business, the financing, and community benefits of the
6 financing; and
7 (C) the number of employment positions maintained
8 by each qualified active low-income community business
9 as of the date of report or the end of the preceding
10 calendar year and the average annual salaries of such
11 positions; and
12 (D) the total number of employment positions
13 created and retained as a result of qualified
14 low-income community investments and the average
15 annual salaries of those positions; and
16 (3) any changes with respect to the taxpayers entitled
17 to claim tax credits with respect to qualified equity
18 investments issued by the qualified community development
19 entity since its last report pursuant to this Section.
20 The qualified community development entity is not required
21to provide the annual report set forth in this Section for
22qualified low-income community investments that have been
23redeemed or repaid.
24
ARTICLE 5. ILLINOIS INCOME TAX ACT

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1 Section 5-5. The Illinois Income Tax Act is amended by
2changing Sections 212, 218, 220, 221, 704A, and 901 and by
3adding Sections 224, 225, 226, and 227 as follows:
4 (35 ILCS 5/212)
5 Sec. 212. Earned income tax credit.
6 (a) With respect to the federal earned income tax credit
7allowed for the taxable year under Section 32 of the federal
8Internal Revenue Code, 26 U.S.C. 32, each individual taxpayer
9is entitled to a credit against the tax imposed by subsections
10(a) and (b) of Section 201 in an amount equal to (i) 5% of the
11federal tax credit for each taxable year beginning on or after
12January 1, 2000 and ending prior to December 31, 2012, (ii)
137.5% of the federal tax credit for each taxable year beginning
14on or after January 1, 2012 and ending prior to December 31,
152013, and (iii) 10% of the federal tax credit for each taxable
16year beginning on or after January 1, 2013 and beginning prior
17to January 1, 2017, (iv) 12.5% of the federal tax credit for
18each taxable year beginning on or after January 1, 2017 and
19beginning prior to January 1, 2018, and (v) 15% of the federal
20tax credit for each taxable year beginning on or after January
211, 2018.
22 For a non-resident or part-year resident, the amount of the
23credit under this Section shall be in proportion to the amount
24of income attributable to this State.
25 (b) For taxable years beginning before January 1, 2003, in

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1no event shall a credit under this Section reduce the
2taxpayer's liability to less than zero. For each taxable year
3beginning on or after January 1, 2003, if the amount of the
4credit exceeds the income tax liability for the applicable tax
5year, then the excess credit shall be refunded to the taxpayer.
6The amount of a refund shall not be included in the taxpayer's
7income or resources for the purposes of determining eligibility
8or benefit level in any means-tested benefit program
9administered by a governmental entity unless required by
10federal law.
11 (c) This Section is exempt from the provisions of Section
12250.
13(Source: P.A. 97-652, eff. 6-1-12.)
14 (35 ILCS 5/218)
15 Sec. 218. Credit for student-assistance contributions.
16 (a) For taxable years ending on or after December 31, 2009
17and on or before December 30, 2025 December 30, 2020, each
18taxpayer who, during the taxable year, makes a contribution (i)
19to a specified individual College Savings Pool Account under
20Section 16.5 of the State Treasurer Act or (ii) to the Illinois
21Prepaid Tuition Trust Fund in an amount matching a contribution
22made in the same taxable year by an employee of the taxpayer to
23that Account or Fund is entitled to a credit against the tax
24imposed under subsections (a) and (b) of Section 201 in an
25amount equal to 25% of that matching contribution, but not to

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1exceed (i) $500 per contributing employee per taxable year for
2taxable years ending prior to December 31, 2017 and (ii) $1,000
3per contributing employee per taxable year for taxable years
4ending on or after December 31, 2017.
5 (b) For partners, shareholders of Subchapter S
6corporations, and owners of limited liability companies, if the
7liability company is treated as a partnership for purposes of
8federal and State income taxation, there is allowed a credit
9under this Section to be determined in accordance with the
10determination of income and distributive share of income under
11Sections 702 and 704 and Subchapter S of the Internal Revenue
12Code.
13 (c) The credit may not be carried back. If the amount of
14the credit exceeds the tax liability for the year, the excess
15may be carried forward and applied to the tax liability of the
165 taxable years following the excess credit year. The tax
17credit shall be applied to the earliest year for which there is
18a tax liability. If there are credits for more than one year
19that are available to offset a liability, the earlier credit
20shall be applied first.
21 (d) A taxpayer claiming the credit under this Section must
22maintain and record any information that the Illinois Student
23Assistance Commission, the Office of the State Treasurer, or
24the Department may require regarding the matching contribution
25for which the credit is claimed.
26(Source: P.A. 96-198, eff. 8-10-09.)

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1 (35 ILCS 5/220)
2 Sec. 220. Angel investment credit.
3 (a) As used in this Section:
4 "Applicant" means a corporation, partnership, limited
5liability company, or a natural person that makes an investment
6in a qualified new business venture. The term "applicant" does
7not include a corporation, partnership, limited liability
8company, or a natural person who has a direct or indirect
9ownership interest of at least 51% in the profits, capital, or
10value of the investment or a related member.
11 "Claimant" means an applicant certified by the Department
12who files a claim for a credit under this Section.
13 "Department" means the Department of Commerce and Economic
14Opportunity.
15 "Investment" means money (or its equivalent) given to a
16qualified new business venture, at a risk of loss, in
17consideration for an equity interest of the qualified new
18business venture. The Department may adopt rules to permit
19certain forms of contingent equity investments to be considered
20eligible for a tax credit under this Section.
21 "Qualified new business venture" means a business that is
22registered with the Department under this Section.
23 "Related member" means a person that, with respect to the
24applicant investment, is any one of the following:
25 (1) An individual, if the individual and the members of

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1 the individual's family (as defined in Section 318 of the
2 Internal Revenue Code) own directly, indirectly,
3 beneficially, or constructively, in the aggregate, at
4 least 50% of the value of the outstanding profits, capital,
5 stock, or other ownership interest in the applicant.
6 (2) A partnership, estate, or trust and any partner or
7 beneficiary, if the partnership, estate, or trust and its
8 partners or beneficiaries own directly, indirectly,
9 beneficially, or constructively, in the aggregate, at
10 least 50% of the profits, capital, stock, or other
11 ownership interest in the applicant.
12 (3) A corporation, and any party related to the
13 corporation in a manner that would require an attribution
14 of stock from the corporation under the attribution rules
15 of Section 318 of the Internal Revenue Code, if the
16 applicant and any other related member own, in the
17 aggregate, directly, indirectly, beneficially, or
18 constructively, at least 50% of the value of the
19 corporation's outstanding stock.
20 (4) A corporation and any party related to that
21 corporation in a manner that would require an attribution
22 of stock from the corporation to the party or from the
23 party to the corporation under the attribution rules of
24 Section 318 of the Internal Revenue Code, if the
25 corporation and all such related parties own, in the
26 aggregate, at least 50% of the profits, capital, stock, or

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1 other ownership interest in the applicant.
2 (5) A person to or from whom there is attribution of
3 stock ownership in accordance with Section 1563(e) of the
4 Internal Revenue Code, except that for purposes of
5 determining whether a person is a related member under this
6 paragraph, "20%" shall be substituted for "5%" whenever
7 "5%" appears in Section 1563(e) of the Internal Revenue
8 Code.
9 (b) For taxable years beginning after December 31, 2010,
10and ending on or before December 31, 2021 December 31, 2016,
11subject to the limitations provided in this Section, a claimant
12may claim, as a credit against the tax imposed under
13subsections (a) and (b) of Section 201 of this Act, an amount
14equal to 25% of the claimant's investment made directly in a
15qualified new business venture. In order for an investment in a
16qualified new business venture to be eligible for tax credits,
17the business must have applied for and received certification
18under subsection (e) for the taxable year in which the
19investment was made prior to the date on which the investment
20was made. The credit under this Section may not exceed the
21taxpayer's Illinois income tax liability for the taxable year.
22If the amount of the credit exceeds the tax liability for the
23year, the excess may be carried forward and applied to the tax
24liability of the 5 taxable years following the excess credit
25year. The credit shall be applied to the earliest year for
26which there is a tax liability. If there are credits from more

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1than one tax year that are available to offset a liability, the
2earlier credit shall be applied first. In the case of a
3partnership or Subchapter S Corporation, the credit is allowed
4to the partners or shareholders in accordance with the
5determination of income and distributive share of income under
6Sections 702 and 704 and Subchapter S of the Internal Revenue
7Code.
8 (c) The minimum amount an applicant must invest in any
9single qualified new business venture in order to be eligible
10for a credit under this Section is $10,000. The maximum amount
11of an applicant's total investment made in any single qualified
12new business venture that may be used as the basis for a credit
13under this Section is $2,000,000 for each investment made
14directly in a qualified new business venture.
15 (d) The Department shall implement a program to certify an
16applicant for an angel investment credit. Upon satisfactory
17review, the Department shall issue a tax credit certificate
18stating the amount of the tax credit to which the applicant is
19entitled. The Department shall annually certify that: (i) each
20qualified new business venture that receives an angel
21investment under this Section has maintained a minimum
22employment threshold, as defined by rule, in the State (and
23continues to maintain a minimum employment threshold in the
24State for a period of no less than 3 years from the issue date
25of the last tax credit certificate issued by the Department
26with respect to such business pursuant to this Section); and

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1(ii) the claimant's investment has been made and remains,
2except in the event of a qualifying liquidity event, in the
3qualified new business venture for no less than 3 years.
4 If an investment for which a claimant is allowed a credit
5under subsection (b) is held by the claimant for less than 3
6years, other than as a result of a permitted sale of the
7investment to person who is not a related member, or, if within
8that period of time the qualified new business venture is moved
9from the State of Illinois, the claimant shall pay to the
10Department of Revenue, in the manner prescribed by the
11Department of Revenue, the aggregate amount of the disqualified
12credits credit that the claimant received related to the
13subject investment.
14 If the Department determines that a qualified new business
15venture failed to maintain a minimum employment threshold in
16the State through the date which is 3 years from the issue date
17of the last tax credit certificate issued by the Department
18with respect to the subject business pursuant to this Section,
19the claimant or claimants shall pay to the Department of
20Revenue, in the manner prescribed by the Department of Revenue,
21the aggregate amount of the disqualified credits that claimant
22or claimants received related to investments in that business.
23 (e) The Department shall implement a program to register
24qualified new business ventures for purposes of this Section. A
25business desiring registration under this Section shall be
26required to submit a full and complete an application to the

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1Department in each taxable year for which the business desires
2registration. A submitted application shall be effective only
3for the taxable year in which it is submitted, and a business
4desiring registration under this Section shall be required to
5submit a separate application in and for each taxable year for
6which the business desires registration. Further, if at any
7time prior to the acceptance of an application for registration
8under this Section by the Department one or more events occurs
9which makes the information provided in that application
10materially false or incomplete (in whole or in part), the
11business shall promptly notify the Department of the same. Any
12failure of a business to promptly provide the foregoing
13information to the Department may, at the discretion of the
14Department, result in a revocation of a previously approved
15application for that business, or disqualification of the
16business from future registration under this Section, or both.
17The Department may register the business only if the business
18satisfies all of the following conditions are satisfied:
19 (1) it has its principal place of business headquarters
20 in this State;
21 (2) at least 51% of the employees employed by the
22 business are employed in this State;
23 (3) the business it has the potential for increasing
24 jobs in this State, increasing capital investment in this
25 State, or both, as determined by the Department, and either
26 of the following apply:

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1 (A) it is principally engaged in innovation in any
2 of the following: manufacturing; biotechnology;
3 nanotechnology; communications; agricultural sciences;
4 clean energy creation or storage technology;
5 processing or assembling products, including medical
6 devices, pharmaceuticals, computer software, computer
7 hardware, semiconductors, other innovative technology
8 products, or other products that are produced using
9 manufacturing methods that are enabled by applying
10 proprietary technology; or providing services that are
11 enabled by applying proprietary technology; or
12 (B) it is undertaking pre-commercialization
13 activity related to proprietary technology that
14 includes conducting research, developing a new product
15 or business process, or developing a service that is
16 principally reliant on applying proprietary
17 technology;
18 (4) it is not principally engaged in real estate
19 development (except for development projects anticipated
20 to take more than 3 years to complete), insurance, banking,
21 lending, lobbying, political consulting, professional
22 services provided by attorneys, accountants, business
23 consultants, physicians, or health care consultants,
24 wholesale or retail trade, leisure, hospitality,
25 transportation, or construction, except construction of
26 power production plants that derive energy from a renewable

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1 energy resource, as defined in Section 1 of the Illinois
2 Power Agency Act;
3 (5) at the time it is first certified:
4 (A) it has fewer than 100 employees;
5 (B) it has been in operation in Illinois for not
6 more than 10 consecutive years prior to the year of
7 certification; and
8 (C) it has received not more than $10,000,000 in
9 aggregate investments private equity investment in
10 cash;
11 (5.1) it agrees to maintain a minimum employment
12 threshold in the State of Illinois prior to the date which
13 is 3 years from the issue date of the last tax credit
14 certificate issued by the Department with respect to that
15 business pursuant to this Section;
16 (6) it agrees not to move its operations from the State
17 of Illinois prior to the date which is 3 years from the
18 issue date of the last tax credit certificate issued by the
19 Department with respect to such business (blank); and
20 (7) it has received not more than $4,000,000 in
21 investments that qualified for tax credits under this
22 Section.
23 (f) The Department, in consultation with the Department of
24Revenue, shall adopt rules to administer this Section. The
25aggregate amount of the tax credits that may be claimed under
26this Section for investments made in qualified new business

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1ventures shall be limited at $10,000,000 per calendar year, of
2which $500,000 shall be reserved for investments made in
3qualified new business ventures which are "minority owned
4businesses", "female owned businesses", or "businesses owned
5by a person with a disability" (as those terms are used and
6defined in the Business Enterprise for Minorities, Females, and
7Persons with Disabilities Act), and an additional $500,000
8shall be reserved for investments made in qualified new
9business ventures with their principal place of business in
10counties with a population of not more than 250,000. The
11foregoing annual allowable amounts shall be allocated by the
12Department, on a per calendar quarter basis and prior to the
13commencement of each calendar year, in such proportion as
14determined by the Department, provided that: (i) the amount
15initially allocated by the Department for any one calendar
16quarter shall not exceed 35% of the total allowable amount; and
17(ii) any portion of the allocated allowable amount remaining
18unused as of the end of any of the first 2 calendar quarters of
19a given calendar year shall be rolled into, and added to, the
20total allocated amount for the next available calendar quarter.
21 (g) A claimant may not sell or otherwise transfer a credit
22awarded under this Section to another person.
23 (h) On or before March 1 of each year, the Department shall
24report to the Governor and to the General Assembly on the tax
25credit certificates awarded under this Section for the prior
26calendar year.

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1 (1) This report must include, for each tax credit
2 certificate awarded:
3 (A) the name of the claimant, and the amount of
4 credit awarded or allocated to that claimant, and the
5 name of the recipient qualified new business venture
6 that received the investment;
7 (B) the name and address (including the county) of
8 the qualified new business venture that received the
9 investment giving rise to the credit, the North
10 American Industry Classification System (NAICS) code
11 applicable to that qualified new business venture, and
12 the number of employees of the the qualified new
13 business venture that received the investment giving
14 rise to the credit and the county in which the
15 qualified new business venture is located; and
16 (C) the date of approval by the Department of each
17 claimant's the applications for the tax credit
18 certificate.
19 (2) The report must also include:
20 (A) the total number of applicants and the total
21 number of claimants, including the amount of each tax
22 credit certificate and amount for tax credit
23 certificates awarded to a claimant under this Section
24 in the prior calendar year;
25 (B) the total number of applications from
26 businesses seeking registration under this Section,

HB0160 Engrossed- 34 -LRB100 02289 HLH 12294 b
1 the total number of new qualified business ventures
2 registered by the Department, and the aggregate amount
3 of investment upon which tax credit certificates were
4 issued in the prior calendar year the total number of
5 applications and amount for which tax credit
6 certificates were issued in the prior calendar year;
7 and
8 (C) the total amount of tax credit certificates
9 sought by applicants, the amount of each tax credit
10 certificate issued to a claimant, the aggregate amount
11 of all tax credit certificates issued in the prior
12 calendar year and the aggregate amount of tax credit
13 certificates issued as authorized under this Section
14 for all calendar years the total tax credit
15 certificates and amount authorized under this Section
16 for all calendar years.
17 (3) On and after the effective date of this amendatory
18 Act of the 100th General Assembly, the Department shall
19 require a business seeking registration as a qualified new
20 business venture to include in its application the North
21 American Industry Classification System (NAICS) code
22 associated with the business and the number of employees at
23 the time of application. Each business registered by the
24 Department as a qualified new business venture that
25 receives an investment giving rise to the issuance of a tax
26 credit certificate shall, for each of the 3 subsequent

HB0160 Engrossed- 35 -LRB100 02289 HLH 12294 b
1 years, report to the Department the following:
2 (A) the number of employees at the end of each
3 year;
4 (B) the amount of additional new capital
5 investment raised within each year; and
6 (C) any liquidity event transpiring within the
7 3-year period; for purposes of this paragraph (C), a
8 liquidity event shall mean an event that allows some or
9 all investors in a company to cash out some or all of
10 their ownership shares or that is considered an exit
11 strategy for an illiquid investment.
12 (i) For each business seeking registration under this
13Section after December 31, 2016, the Department shall require
14the business to include in its application the North American
15Industry Classification System (NAICS) code applicable to the
16business and the number of employees of the business at the
17time of application. Each business registered by the Department
18as a qualified new business venture that receives an investment
19giving rise to the issuance of a tax credit certificate
20pursuant to this Section shall, for each of the 3 years
21following the issue date of the last tax credit certificate
22issued by the Department with respect to such business pursuant
23to this Section, report to the Department the following:
24 (1) the number of employees and the location at which
25 those employees are employed, both as of the end of each
26 year;

HB0160 Engrossed- 36 -LRB100 02289 HLH 12294 b
1 (2) the amount of additional new capital investment
2 raised as of the end of each year, if any; and
3 (3) the terms of any liquidity event occurring during
4 such year; for the purposes of this Section, a "liquidity
5 event" means any event that would be considered an exit for
6 an illiquid investment, including any event that allows the
7 equity holders of the business (or any material portion
8 thereof) to cash out some or all of their respective equity
9 interests.
10(Source: P.A. 96-939, eff. 1-1-11; 97-507, eff. 8-23-11;
1197-1097, eff. 8-24-12.)
12 (35 ILCS 5/221)
13 Sec. 221. Rehabilitation costs; qualified historic
14properties; River Edge Redevelopment Zone.
15 (a) For taxable years beginning on or after January 1, 2012
16and ending prior to January 1, 2023 January 1, 2018, there
17shall be allowed a tax credit against the tax imposed by
18subsections (a) and (b) of Section 201 in an amount equal to
1925% of qualified expenditures incurred by a qualified taxpayer
20during the taxable year in the restoration and preservation of
21a qualified historic structure located in a River Edge
22Redevelopment Zone pursuant to a qualified rehabilitation
23plan, provided that the total amount of such expenditures (i)
24must equal $5,000 or more and (ii) must exceed 50% of the
25purchase price of the property.

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1 (b) To obtain a tax credit pursuant to this Section, the
2taxpayer must apply with the Department of Commerce and
3Economic Opportunity. The Department of Commerce and Economic
4Opportunity, in consultation with the Historic Preservation
5Agency, shall determine the amount of eligible rehabilitation
6costs and expenses. The Historic Preservation Agency shall
7determine whether the rehabilitation is consistent with the
8standards of the Secretary of the United States Department of
9the Interior for rehabilitation. Upon completion and review of
10the project, the Department of Commerce and Economic
11Opportunity shall issue a certificate in the amount of the
12eligible credits. At the time the certificate is issued, an
13issuance fee up to the maximum amount of 2% of the amount of
14the credits issued by the certificate may be collected from the
15applicant to administer the provisions of this Section. If
16collected, this issuance fee shall be deposited into the
17Historic Property Administrative Fund, a special fund created
18in the State treasury. Subject to appropriation, moneys in the
19Historic Property Administrative Fund shall be evenly divided
20between the Department of Commerce and Economic Opportunity and
21the Historic Preservation Agency to reimburse the Department of
22Commerce and Economic Opportunity and the Historic
23Preservation Agency for the costs associated with
24administering this Section. The taxpayer must attach the
25certificate to the tax return on which the credits are to be
26claimed. The Department of Commerce and Economic Opportunity

HB0160 Engrossed- 38 -LRB100 02289 HLH 12294 b
1may adopt rules to implement this Section.
2 (c) The tax credit under this Section may not reduce the
3taxpayer's liability to less than zero.
4 (d) As used in this Section, the following terms have the
5following meanings.
6 "Qualified expenditure" means all the costs and expenses
7defined as qualified rehabilitation expenditures under Section
847 of the federal Internal Revenue Code that were incurred in
9connection with a qualified historic structure.
10 "Qualified historic structure" means a certified historic
11structure as defined under Section 47 (c)(3) of the federal
12Internal Revenue Code.
13 "Qualified rehabilitation plan" means a project that is
14approved by the Historic Preservation Agency as being
15consistent with the standards in effect on the effective date
16of this amendatory Act of the 97th General Assembly for
17rehabilitation as adopted by the federal Secretary of the
18Interior.
19 "Qualified taxpayer" means the owner of the qualified
20historic structure or any other person who qualifies for the
21federal rehabilitation credit allowed by Section 47 of the
22federal Internal Revenue Code with respect to that qualified
23historic structure. Partners, shareholders of subchapter S
24corporations, and owners of limited liability companies (if the
25limited liability company is treated as a partnership for
26purposes of federal and State income taxation) are entitled to

HB0160 Engrossed- 39 -LRB100 02289 HLH 12294 b
1a credit under this Section to be determined in accordance with
2the determination of income and distributive share of income
3under Sections 702 and 703 and subchapter S of the Internal
4Revenue Code, provided that credits granted to a partnership, a
5limited liability company taxed as a partnership, or other
6multiple owners of property shall be passed through to the
7partners, members, or owners respectively on a pro rata basis
8or pursuant to an executed agreement among the partners,
9members, or owners documenting any alternate distribution
10method.
11(Source: P.A. 99-914, eff. 12-20-16.)
12 (35 ILCS 5/224 new)
13 Sec. 224. Business Occupation Assessment credit. For tax
14years ending on or after December 31, 2017, a taxpayer is
15entitled to a credit against the taxes imposed under
16subsections (a) and (b) of Section 201 of this Act in an amount
17equal to the amount paid by the taxpayer pursuant to the
18Business Occupation Assessment Act during the tax year. If the
19amount of the credit exceeds the tax liability for the year,
20such excess shall not reduce the tax liability to less than
21zero, and it shall not be carried forward to any subsequent
22taxable year.
23 (35 ILCS 5/225 new)
24 Sec. 225. Internship credit.

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1 (a) For each taxable year ending on or after December 31,
22017, each taxpayer is entitled to a credit against the tax
3imposed by subsections (a) and (b) of Section 201 of this Act
4in an amount equal to 10% of the stipend or salary paid by the
5taxpayer during the taxable year to (i) up to 5 qualified
6college interns and (ii) up to 5 full-time employees, provided
7that the full-time employee had been a qualified college intern
8during either of the 2 taxable years immediately preceding the
9taxable year for which the credit is claimed. For partners,
10shareholders of Subchapter S corporations, and owners of
11limited liability companies, if the liability company is
12treated as a partnership for purposes of federal and State
13income taxation, there shall be allowed a credit under this
14Section to be determined in accordance with the determination
15of income and distributive share of income under Sections 702
16and 704 and Subchapter S of the Internal Revenue Code.
17 (b) For the purposes of this Section, "qualified college
18intern" means an Illinois resident (i) who is an enrolled
19student in an institution of higher education or vocational
20technical education program located in Illinois, (ii) who is
21seeking a degree or certification of completion in a major
22field of study closely related to the work experience performed
23for the taxpayer, (iii) whose internship is taken for academic
24credit or counts toward the completion of a vocational
25technical education program, (iv) who is supervised and
26evaluated by the taxpayer, and (v) whose position is located in

HB0160 Engrossed- 41 -LRB100 02289 HLH 12294 b
1Illinois. For purposes of this Section, "full-time employee"
2means an Illinois resident (i) who is employed by the taxpayer
3for consideration for at least 35 hours each week or who
4renders any other standard of service generally accepted by
5industry custom or practice as full-time employment, and (ii)
6whose position is located in Illinois.
7 (c) In no event shall a credit under this Section reduce
8the taxpayer's liability to less than zero. If the amount of
9the credit exceeds the tax liability for the year, the excess
10may not be carried forward or carried back.
11 (35 ILCS 5/226 new)
12 Sec. 226. Federal child tax credit. For taxable years
13beginning on or after January 1, 2017 and beginning prior to
14January 1, 2022, with respect to the federal child tax credit
15allowed for the taxable year under Section 24 of the federal
16Internal Revenue Code, 26 U.S.C. 24, each individual taxpayer
17is entitled to a credit against the tax imposed by subsections
18(a) and (b) of Section 201 in an amount equal to 20% of the
19federal tax credit.
20 For a non-resident or part-year resident, the amount of the
21credit under this Section shall be in proportion to the amount
22of income attributable to this State.
23 If the amount of the credit exceeds the income tax
24liability for the applicable tax year, then the excess credit
25shall be refunded to the taxpayer. The amount of a refund shall

HB0160 Engrossed- 42 -LRB100 02289 HLH 12294 b
1not be included in the taxpayer's income or resources for the
2purposes of determining eligibility or benefit level in any
3means-tested benefit program administered by a governmental
4entity unless required by federal law.
5 (35 ILCS 5/227 new)
6 Sec. 227. Apprenticeship training credit.
7 (a) For tax years beginning on or after January 1, 2017 and
8ending prior to January 1, 2022, a taxpayer shall be allowed a
9credit against the tax imposed by subsections (a) and (b) of
10Section 201 for certain amounts paid by the taxpayer as wages
11pursuant to a qualified apprenticeship program. The credit may
12not exceed the lesser of (i) 50% of the wages paid by the
13taxpayer to each apprentice during the taxable year or (ii)
14$4,800 per apprentice. The taxpayer shall apply with the
15Department of Commerce and Economic Opportunity annually for
16certification as a "qualified apprenticeship program". The
17application shall be in the form and manner prescribed by the
18Department of Commerce and Economic Opportunity.
19 (b) For partners, shareholders of Subchapter S
20corporations, and owners of limited liability companies, if the
21liability company is treated as a partnership for purposes of
22federal and State income taxation, the credit under this
23Section shall be determined in accordance with the
24determination of income and distributive share of income under
25Sections 702 and 704 and Subchapter S of the Internal Revenue

HB0160 Engrossed- 43 -LRB100 02289 HLH 12294 b
1Code.
2 (c) In no event shall a credit under this Section reduce
3the taxpayer's liability to less than zero. If the amount of
4the credit exceeds the tax liability for the year, the excess
5may be carried forward and applied to the tax liability of the
65 taxable years following the excess credit year. The tax
7credit shall be applied to the earliest year for which there is
8a tax liability. If there are credits for more than one year
9that are available to offset a liability, the earlier credit
10shall be applied first.
11 (d) For the purposes of this Section, "qualified
12apprenticeship program" means an apprenticeship program in
13manufacturing, plastics, or construction trades that is
14certified by the Department of Commerce and Economic
15Opportunity under this Section and at least 3 years in
16duration.
17 (35 ILCS 5/704A)
18 Sec. 704A. Employer's return and payment of tax withheld.
19 (a) In general, every employer who deducts and withholds or
20is required to deduct and withhold tax under this Act on or
21after January 1, 2008 shall make those payments and returns as
22provided in this Section.
23 (b) Returns. Every employer shall, in the form and manner
24required by the Department, make returns with respect to taxes
25withheld or required to be withheld under this Article 7 for

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1each quarter beginning on or after January 1, 2008, on or
2before the last day of the first month following the close of
3that quarter. On and after January 1, 2017, an employer with an
4average employee head count of fewer than 25 employees during
5the previous calendar year shall make returns with respect to
6taxes withheld or required to be withheld under this Article 7
7annually.
8 (c) Payments. With respect to amounts withheld or required
9to be withheld on or after January 1, 2008:
10 (1) Semi-weekly payments. For each calendar year, each
11 employer who withheld or was required to withhold more than
12 $12,000 during the one-year period ending on June 30 of the
13 immediately preceding calendar year, payment must be made:
14 (A) on or before each Friday of the calendar year,
15 for taxes withheld or required to be withheld on the
16 immediately preceding Saturday, Sunday, Monday, or
17 Tuesday;
18 (B) on or before each Wednesday of the calendar
19 year, for taxes withheld or required to be withheld on
20 the immediately preceding Wednesday, Thursday, or
21 Friday.
22 Beginning with calendar year 2011, payments made under
23 this paragraph (1) of subsection (c) must be made by
24 electronic funds transfer.
25 (2) Semi-weekly payments. Any employer who withholds
26 or is required to withhold more than $12,000 in any quarter

HB0160 Engrossed- 45 -LRB100 02289 HLH 12294 b
1 of a calendar year is required to make payments on the
2 dates set forth under item (1) of this subsection (c) for
3 each remaining quarter of that calendar year and for the
4 subsequent calendar year.
5 (3) Monthly payments. Each employer, other than an
6 employer described in items (1) or (2) of this subsection,
7 shall pay to the Department, on or before the 15th day of
8 each month the taxes withheld or required to be withheld
9 during the immediately preceding month.
10 (4) Payments with returns. Each employer shall pay to
11 the Department, on or before the due date for each return
12 required to be filed under this Section, any tax withheld
13 or required to be withheld during the period for which the
14 return is due and not previously paid to the Department.
15 (d) Regulatory authority. The Department may, by rule:
16 (1) Permit employers, in lieu of the requirements of
17 subsections (b) and (c), to file annual returns due on or
18 before January 31 of the year for taxes withheld or
19 required to be withheld during the previous calendar year
20 and, if the aggregate amounts required to be withheld by
21 the employer under this Article 7 (other than amounts
22 required to be withheld under Section 709.5) do not exceed
23 $1,000 for the previous calendar year, to pay the taxes
24 required to be shown on each such return no later than the
25 due date for such return.
26 (2) Provide that any payment required to be made under

HB0160 Engrossed- 46 -LRB100 02289 HLH 12294 b
1 subsection (c)(1) or (c)(2) is deemed to be timely to the
2 extent paid by electronic funds transfer on or before the
3 due date for deposit of federal income taxes withheld from,
4 or federal employment taxes due with respect to, the wages
5 from which the Illinois taxes were withheld.
6 (3) Designate one or more depositories to which payment
7 of taxes required to be withheld under this Article 7 must
8 be paid by some or all employers.
9 (4) Increase the threshold dollar amounts at which
10 employers are required to make semi-weekly payments under
11 subsection (c)(1) or (c)(2).
12 (e) Annual return and payment. Every employer who deducts
13and withholds or is required to deduct and withhold tax from a
14person engaged in domestic service employment, as that term is
15defined in Section 3510 of the Internal Revenue Code, may
16comply with the requirements of this Section with respect to
17such employees by filing an annual return and paying the taxes
18required to be deducted and withheld on or before the 15th day
19of the fourth month following the close of the employer's
20taxable year. The Department may allow the employer's return to
21be submitted with the employer's individual income tax return
22or to be submitted with a return due from the employer under
23Section 1400.2 of the Unemployment Insurance Act.
24 (f) Magnetic media and electronic filing. Any W-2 Form
25that, under the Internal Revenue Code and regulations
26promulgated thereunder, is required to be submitted to the

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1Internal Revenue Service on magnetic media or electronically
2must also be submitted to the Department on magnetic media or
3electronically for Illinois purposes, if required by the
4Department.
5 (g) For amounts deducted or withheld after December 31,
62009, a taxpayer who makes an election under subsection (f) of
7Section 5-15 of the Economic Development for a Growing Economy
8Tax Credit Act for a taxable year shall be allowed a credit
9against payments due under this Section for amounts withheld
10during the first calendar year beginning after the end of that
11taxable year equal to the amount of the credit for the
12incremental income tax attributable to full-time employees of
13the taxpayer awarded to the taxpayer by the Department of
14Commerce and Economic Opportunity under the Economic
15Development for a Growing Economy Tax Credit Act for the
16taxable year and credits not previously claimed and allowed to
17be carried forward under Section 211(4) of this Act as provided
18in subsection (f) of Section 5-15 of the Economic Development
19for a Growing Economy Tax Credit Act. The credit or credits may
20not reduce the taxpayer's obligation for any payment due under
21this Section to less than zero. If the amount of the credit or
22credits exceeds the total payments due under this Section with
23respect to amounts withheld during the calendar year, the
24excess may be carried forward and applied against the
25taxpayer's liability under this Section in the succeeding
26calendar years as allowed to be carried forward under paragraph

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1(4) of Section 211 of this Act. The credit or credits shall be
2applied to the earliest year for which there is a tax
3liability. If there are credits from more than one taxable year
4that are available to offset a liability, the earlier credit
5shall be applied first. Each employer who deducts and withholds
6or is required to deduct and withhold tax under this Act and
7who retains income tax withholdings under subsection (f) of
8Section 5-15 of the Economic Development for a Growing Economy
9Tax Credit Act must make a return with respect to such taxes
10and retained amounts in the form and manner that the
11Department, by rule, requires and pay to the Department or to a
12depositary designated by the Department those withheld taxes
13not retained by the taxpayer. For purposes of this subsection
14(g), the term taxpayer shall include taxpayer and members of
15the taxpayer's unitary business group as defined under
16paragraph (27) of subsection (a) of Section 1501 of this Act.
17This Section is exempt from the provisions of Section 250 of
18this Act. No credit awarded under the Economic Development for
19a Growing Economy Tax Credit Act for agreements entered into on
20or after January 1, 2015 may be credited against payments due
21under this Section.
22 (h) An employer may claim a credit against payments due
23under this Section for amounts withheld during the first
24calendar year ending after the date on which a tax credit
25certificate was issued under Section 35 of the Small Business
26Job Creation Tax Credit Act. The credit shall be equal to the

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1amount shown on the certificate, but may not reduce the
2taxpayer's obligation for any payment due under this Section to
3less than zero. If the amount of the credit exceeds the total
4payments due under this Section with respect to amounts
5withheld during the calendar year, the excess may be carried
6forward and applied against the taxpayer's liability under this
7Section in the 5 succeeding calendar years. The credit shall be
8applied to the earliest year for which there is a tax
9liability. If there are credits from more than one calendar
10year that are available to offset a liability, the earlier
11credit shall be applied first. This Section is exempt from the
12provisions of Section 250 of this Act.
13(Source: P.A. 96-834, eff. 12-14-09; 96-888, eff. 4-13-10;
1496-905, eff. 6-4-10; 96-1027, eff. 7-12-10; 97-333, eff.
158-12-11; 97-507, eff. 8-23-11.)
16 (35 ILCS 5/901) (from Ch. 120, par. 9-901)
17 Sec. 901. Collection authority.
18 (a) In general.
19 The Department shall collect the taxes imposed by this Act.
20The Department shall collect certified past due child support
21amounts under Section 2505-650 of the Department of Revenue Law
22(20 ILCS 2505/2505-650). Except as provided in subsections (c),
23(e), (f), (g), and (h) of this Section, money collected
24pursuant to subsections (a) and (b) of Section 201 of this Act
25shall be paid into the General Revenue Fund in the State

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1treasury; money collected pursuant to subsections (c) and (d)
2of Section 201 of this Act shall be paid into the Personal
3Property Tax Replacement Fund, a special fund in the State
4Treasury; and money collected under Section 2505-650 of the
5Department of Revenue Law (20 ILCS 2505/2505-650) shall be paid
6into the Child Support Enforcement Trust Fund, a special fund
7outside the State Treasury, or to the State Disbursement Unit
8established under Section 10-26 of the Illinois Public Aid
9Code, as directed by the Department of Healthcare and Family
10Services.
11 (b) Local Government Distributive Fund.
12 Beginning August 1, 1969, and continuing through June 30,
131994, the Treasurer shall transfer each month from the General
14Revenue Fund to a special fund in the State treasury, to be
15known as the "Local Government Distributive Fund", an amount
16equal to 1/12 of the net revenue realized from the tax imposed
17by subsections (a) and (b) of Section 201 of this Act during
18the preceding month. Beginning July 1, 1994, and continuing
19through June 30, 1995, the Treasurer shall transfer each month
20from the General Revenue Fund to the Local Government
21Distributive Fund an amount equal to 1/11 of the net revenue
22realized from the tax imposed by subsections (a) and (b) of
23Section 201 of this Act during the preceding month. Beginning
24July 1, 1995 and continuing through January 31, 2011, the
25Treasurer shall transfer each month from the General Revenue
26Fund to the Local Government Distributive Fund an amount equal

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1to the net of (i) 1/10 of the net revenue realized from the tax
2imposed by subsections (a) and (b) of Section 201 of the
3Illinois Income Tax Act during the preceding month (ii) minus,
4beginning July 1, 2003 and ending June 30, 2004, $6,666,666,
5and beginning July 1, 2004, zero. Beginning February 1, 2011,
6and continuing through January 31, 2015, the Treasurer shall
7transfer each month from the General Revenue Fund to the Local
8Government Distributive Fund an amount equal to the sum of (i)
96% (10% of the ratio of the 3% individual income tax rate prior
10to 2011 to the 5% individual income tax rate after 2010) of the
11net revenue realized from the tax imposed by subsections (a)
12and (b) of Section 201 of this Act upon individuals, trusts,
13and estates during the preceding month and (ii) 6.86% (10% of
14the ratio of the 4.8% corporate income tax rate prior to 2011
15to the 7% corporate income tax rate after 2010) of the net
16revenue realized from the tax imposed by subsections (a) and
17(b) of Section 201 of this Act upon corporations during the
18preceding month. Beginning February 1, 2015 and continuing
19through January 31, 2025, the Treasurer shall transfer each
20month from the General Revenue Fund to the Local Government
21Distributive Fund an amount equal to the sum of (i) 8% (10% of
22the ratio of the 3% individual income tax rate prior to 2011 to
23the 3.75% individual income tax rate after 2014) of the net
24revenue realized from the tax imposed by subsections (a) and
25(b) of Section 201 of this Act upon individuals, trusts, and
26estates during the preceding month and (ii) 9.14% (10% of the

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1ratio of the 4.8% corporate income tax rate prior to 2011 to
2the 5.25% corporate income tax rate after 2014) of the net
3revenue realized from the tax imposed by subsections (a) and
4(b) of Section 201 of this Act upon corporations during the
5preceding month. Beginning February 1, 2025, the Treasurer
6shall transfer each month from the General Revenue Fund to the
7Local Government Distributive Fund an amount equal to the sum
8of (i) 9.23% (10% of the ratio of the 3% individual income tax
9rate prior to 2011 to the 3.25% individual income tax rate
10after 2024) of the net revenue realized from the tax imposed by
11subsections (a) and (b) of Section 201 of this Act upon
12individuals, trusts, and estates during the preceding month and
13(ii) 10% of the net revenue realized from the tax imposed by
14subsections (a) and (b) of Section 201 of this Act upon
15corporations during the preceding month. Net revenue realized
16for a month shall be defined as the revenue from the tax
17imposed by subsections (a) and (b) of Section 201 of this Act
18which is deposited in the General Revenue Fund, the Education
19Assistance Fund, the Income Tax Surcharge Local Government
20Distributive Fund, the Fund for the Advancement of Education,
21and the Commitment to Human Services Fund during the month
22minus the amount paid out of the General Revenue Fund in State
23warrants during that same month as refunds to taxpayers for
24overpayment of liability under the tax imposed by subsections
25(a) and (b) of Section 201 of this Act.
26 Beginning on August 26, 2014 (the effective date of Public

HB0160 Engrossed- 53 -LRB100 02289 HLH 12294 b
1Act 98-1052), the Comptroller shall perform the transfers
2required by this subsection (b) no later than 60 days after he
3or she receives the certification from the Treasurer as
4provided in Section 1 of the State Revenue Sharing Act.
5 (c) Deposits Into Income Tax Refund Fund.
6 (1) Beginning on January 1, 1989 and thereafter, the
7 Department shall deposit a percentage of the amounts
8 collected pursuant to subsections (a) and (b)(1), (2), and
9 (3), (4), (5), (5.1), (5.2), (5.3), and (5.4) of Section
10 201 of this Act into a fund in the State treasury known as
11 the Income Tax Refund Fund. The Department shall deposit 6%
12 of such amounts during the period beginning January 1, 1989
13 and ending on June 30, 1989. Beginning with State fiscal
14 year 1990 and for each fiscal year thereafter, the
15 percentage deposited into the Income Tax Refund Fund during
16 a fiscal year shall be the Annual Percentage. For fiscal
17 years 1999 through 2001, the Annual Percentage shall be
18 7.1%. For fiscal year 2003, the Annual Percentage shall be
19 8%. For fiscal year 2004, the Annual Percentage shall be
20 11.7%. Upon the effective date of this amendatory Act of
21 the 93rd General Assembly, the Annual Percentage shall be
22 10% for fiscal year 2005. For fiscal year 2006, the Annual
23 Percentage shall be 9.75%. For fiscal year 2007, the Annual
24 Percentage shall be 9.75%. For fiscal year 2008, the Annual
25 Percentage shall be 7.75%. For fiscal year 2009, the Annual
26 Percentage shall be 9.75%. For fiscal year 2010, the Annual

HB0160 Engrossed- 54 -LRB100 02289 HLH 12294 b
1 Percentage shall be 9.75%. For fiscal year 2011, the Annual
2 Percentage shall be 8.75%. For fiscal year 2012, the Annual
3 Percentage shall be 8.75%. For fiscal year 2013, the Annual
4 Percentage shall be 9.75%. For fiscal year 2014, the Annual
5 Percentage shall be 9.5%. For fiscal year 2015, the Annual
6 Percentage shall be 10%. For all other fiscal years, the
7 Annual Percentage shall be calculated as a fraction, the
8 numerator of which shall be the amount of refunds approved
9 for payment by the Department during the preceding fiscal
10 year as a result of overpayment of tax liability under
11 subsections (a) and (b)(1), (2), and (3), (4), (5), (5.1),
12 (5.2), (5.3), and (5.4) of Section 201 of this Act plus the
13 amount of such refunds remaining approved but unpaid at the
14 end of the preceding fiscal year, minus the amounts
15 transferred into the Income Tax Refund Fund from the
16 Tobacco Settlement Recovery Fund, and the denominator of
17 which shall be the amounts which will be collected pursuant
18 to subsections (a) and (b)(1), (2), and (3), (4), (5),
19 (5.1), (5.2), (5.3), and (5.4) of Section 201 of this Act
20 during the preceding fiscal year; except that in State
21 fiscal year 2002, the Annual Percentage shall in no event
22 exceed 7.6%. The Director of Revenue shall certify the
23 Annual Percentage to the Comptroller on the last business
24 day of the fiscal year immediately preceding the fiscal
25 year for which it is to be effective.
26 (2) Beginning on January 1, 1989 and thereafter, the

HB0160 Engrossed- 55 -LRB100 02289 HLH 12294 b
1 Department shall deposit a percentage of the amounts
2 collected pursuant to subsections (a), and (b)(6), (7), and
3 (8), (9), (10), (11), (12), (13), and (14), (c), and (d) of
4 Section 201 of this Act and pursuant to the Business
5 Occupation Assessment Act into a fund in the State treasury
6 known as the Income Tax Refund Fund. The Department shall
7 deposit 18% of such amounts during the period beginning
8 January 1, 1989 and ending on June 30, 1989. Beginning with
9 State fiscal year 1990 and for each fiscal year thereafter,
10 the percentage deposited into the Income Tax Refund Fund
11 during a fiscal year shall be the Annual Percentage. For
12 fiscal years 1999, 2000, and 2001, the Annual Percentage
13 shall be 19%. For fiscal year 2003, the Annual Percentage
14 shall be 27%. For fiscal year 2004, the Annual Percentage
15 shall be 32%. Upon the effective date of this amendatory
16 Act of the 93rd General Assembly, the Annual Percentage
17 shall be 24% for fiscal year 2005. For fiscal year 2006,
18 the Annual Percentage shall be 20%. For fiscal year 2007,
19 the Annual Percentage shall be 17.5%. For fiscal year 2008,
20 the Annual Percentage shall be 15.5%. For fiscal year 2009,
21 the Annual Percentage shall be 17.5%. For fiscal year 2010,
22 the Annual Percentage shall be 17.5%. For fiscal year 2011,
23 the Annual Percentage shall be 17.5%. For fiscal year 2012,
24 the Annual Percentage shall be 17.5%. For fiscal year 2013,
25 the Annual Percentage shall be 14%. For fiscal year 2014,
26 the Annual Percentage shall be 13.4%. For fiscal year 2015,

HB0160 Engrossed- 56 -LRB100 02289 HLH 12294 b
1 the Annual Percentage shall be 14%. For all other fiscal
2 years, the Annual Percentage shall be calculated as a
3 fraction, the numerator of which shall be the amount of
4 refunds approved for payment by the Department during the
5 preceding fiscal year as a result of overpayment of tax
6 liability under subsections (a), and (b)(6), (7), and (8),
7 (9), (10), (11), (12), (13), and (14), (c), and (d) of
8 Section 201 of this Act and pursuant to the Business
9 Occupation Assessment Act plus the amount of such refunds
10 remaining approved but unpaid at the end of the preceding
11 fiscal year, and the denominator of which shall be the
12 amounts which will be collected pursuant to subsections
13 (a), and (b)(6), (7), and (8), (9), (10), (11), (12), (13),
14 and (14), (c), and (d) of Section 201 of this Act and
15 pursuant to the Business Occupation Assessment Act during
16 the preceding fiscal year; except that in State fiscal year
17 2002, the Annual Percentage shall in no event exceed 23%.
18 The Director of Revenue shall certify the Annual Percentage
19 to the Comptroller on the last business day of the fiscal
20 year immediately preceding the fiscal year for which it is
21 to be effective.
22 (3) The Comptroller shall order transferred and the
23 Treasurer shall transfer from the Tobacco Settlement
24 Recovery Fund to the Income Tax Refund Fund (i) $35,000,000
25 in January, 2001, (ii) $35,000,000 in January, 2002, and
26 (iii) $35,000,000 in January, 2003.

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1 (d) Expenditures from Income Tax Refund Fund.
2 (1) Beginning January 1, 1989, money in the Income Tax
3 Refund Fund shall be expended exclusively for the purpose
4 of paying refunds resulting from overpayment of tax
5 liability under Section 201 of this Act or an overpayment
6 of the assessment under the Business Occupation Assessment
7 Act, for paying rebates under Section 208.1 in the event
8 that the amounts in the Homeowners' Tax Relief Fund are
9 insufficient for that purpose, and for making transfers
10 pursuant to this subsection (d).
11 (2) The Director shall order payment of refunds
12 resulting from overpayment of tax liability under Section
13 201 of this Act or an overpayment of the assessment under
14 the Business Occupation Assessment Act from the Income Tax
15 Refund Fund only to the extent that amounts collected
16 pursuant to Section 201 of this Act and transfers pursuant
17 to this subsection (d) and item (3) of subsection (c) have
18 been deposited and retained in the Fund.
19 (3) As soon as possible after the end of each fiscal
20 year, the Director shall order transferred and the State
21 Treasurer and State Comptroller shall transfer from the
22 Income Tax Refund Fund to the Personal Property Tax
23 Replacement Fund an amount, certified by the Director to
24 the Comptroller, equal to the excess of the amount
25 collected pursuant to subsections (c) and (d) of Section
26 201 of this Act deposited into the Income Tax Refund Fund

HB0160 Engrossed- 58 -LRB100 02289 HLH 12294 b
1 during the fiscal year over the amount of refunds resulting
2 from overpayment of tax liability under subsections (c) and
3 (d) of Section 201 of this Act paid from the Income Tax
4 Refund Fund during the fiscal year.
5 (4) As soon as possible after the end of each fiscal
6 year, the Director shall order transferred and the State
7 Treasurer and State Comptroller shall transfer from the
8 Personal Property Tax Replacement Fund to the Income Tax
9 Refund Fund an amount, certified by the Director to the
10 Comptroller, equal to the excess of the amount of refunds
11 resulting from overpayment of tax liability under
12 subsections (c) and (d) of Section 201 of this Act paid
13 from the Income Tax Refund Fund during the fiscal year over
14 the amount collected pursuant to subsections (c) and (d) of
15 Section 201 of this Act deposited into the Income Tax
16 Refund Fund during the fiscal year.
17 (4.5) As soon as possible after the end of fiscal year
18 1999 and of each fiscal year thereafter, the Director shall
19 order transferred and the State Treasurer and State
20 Comptroller shall transfer from the Income Tax Refund Fund
21 to the General Revenue Fund any surplus remaining in the
22 Income Tax Refund Fund as of the end of such fiscal year;
23 excluding for fiscal years 2000, 2001, and 2002 amounts
24 attributable to transfers under item (3) of subsection (c)
25 less refunds resulting from the earned income tax credit.
26 (5) This Act shall constitute an irrevocable and

HB0160 Engrossed- 59 -LRB100 02289 HLH 12294 b
1 continuing appropriation from the Income Tax Refund Fund
2 for the purpose of paying refunds upon the order of the
3 Director in accordance with the provisions of this Section.
4 (e) Deposits into the Education Assistance Fund and the
5Income Tax Surcharge Local Government Distributive Fund.
6 On July 1, 1991, and thereafter, of the amounts collected
7pursuant to subsections (a) and (b) of Section 201 of this Act,
8minus deposits into the Income Tax Refund Fund, the Department
9shall deposit 7.3% into the Education Assistance Fund in the
10State Treasury. Beginning July 1, 1991, and continuing through
11January 31, 1993, of the amounts collected pursuant to
12subsections (a) and (b) of Section 201 of the Illinois Income
13Tax Act, minus deposits into the Income Tax Refund Fund, the
14Department shall deposit 3.0% into the Income Tax Surcharge
15Local Government Distributive Fund in the State Treasury.
16Beginning February 1, 1993 and continuing through June 30,
171993, of the amounts collected pursuant to subsections (a) and
18(b) of Section 201 of the Illinois Income Tax Act, minus
19deposits into the Income Tax Refund Fund, the Department shall
20deposit 4.4% into the Income Tax Surcharge Local Government
21Distributive Fund in the State Treasury. Beginning July 1,
221993, and continuing through June 30, 1994, of the amounts
23collected under subsections (a) and (b) of Section 201 of this
24Act, minus deposits into the Income Tax Refund Fund, the
25Department shall deposit 1.475% into the Income Tax Surcharge
26Local Government Distributive Fund in the State Treasury.

HB0160 Engrossed- 60 -LRB100 02289 HLH 12294 b
1 (f) Deposits into the Fund for the Advancement of
2Education. Beginning February 1, 2015, the Department shall
3deposit the following portions of the revenue realized from the
4tax imposed upon individuals, trusts, and estates by
5subsections (a) and (b) of Section 201 of this Act during the
6preceding month, minus deposits into the Income Tax Refund
7Fund, into the Fund for the Advancement of Education:
8 (1) beginning February 1, 2015, and prior to February
9 1, 2025, 1/30; and
10 (2) beginning February 1, 2025, 1/26.
11 If the rate of tax imposed by subsection (a) and (b) of
12Section 201 is reduced pursuant to Section 201.5 of this Act,
13the Department shall not make the deposits required by this
14subsection (f) on or after the effective date of the reduction.
15 (g) Deposits into the Commitment to Human Services Fund.
16Beginning February 1, 2015, the Department shall deposit the
17following portions of the revenue realized from the tax imposed
18upon individuals, trusts, and estates by subsections (a) and
19(b) of Section 201 of this Act during the preceding month,
20minus deposits into the Income Tax Refund Fund, into the
21Commitment to Human Services Fund:
22 (1) beginning February 1, 2015, and prior to February
23 1, 2025, 1/30; and
24 (2) beginning February 1, 2025, 1/26.
25 If the rate of tax imposed by subsection (a) and (b) of
26Section 201 is reduced pursuant to Section 201.5 of this Act,

HB0160 Engrossed- 61 -LRB100 02289 HLH 12294 b
1the Department shall not make the deposits required by this
2subsection (g) on or after the effective date of the reduction.
3 (h) Deposits into the Tax Compliance and Administration
4Fund. Beginning on the first day of the first calendar month to
5occur on or after August 26, 2014 (the effective date of Public
6Act 98-1098), each month the Department shall pay into the Tax
7Compliance and Administration Fund, to be used, subject to
8appropriation, to fund additional auditors and compliance
9personnel at the Department, an amount equal to 1/12 of 5% of
10the cash receipts collected during the preceding fiscal year by
11the Audit Bureau of the Department from the tax imposed by
12subsections (a), (b), (c), and (d) of Section 201 of this Act,
13net of deposits into the Income Tax Refund Fund made from those
14cash receipts.
15(Source: P.A. 98-24, eff. 6-19-13; 98-674, eff. 6-30-14;
1698-1052, eff. 8-26-14; 98-1098, eff. 8-26-14; 99-78, eff.
177-20-15.)
18
ARTICLE 10. ECONOMIC DEVELOPMENT FOR A GROWING ECONOMY TAX
19
CREDIT ACT
20 Section 10-5. The Economic Development for a Growing
21Economy Tax Credit Act is amended by changing Sections 5-5,
225-10, 5-15, 5-20, 5-25, 5-50, 5-65, 5-70 and 5-77 and by adding
23Section 5-57 as follows:

HB0160 Engrossed- 62 -LRB100 02289 HLH 12294 b
1 (35 ILCS 10/5-5)
2 Sec. 5-5. Definitions. As used in this Act:
3 "Agreement" means the Agreement between a Taxpayer and the
4Department under the provisions of Section 5-50 of this Act.
5 "Applicant" means a Taxpayer that is operating a business
6located or that the Taxpayer plans to locate within the State
7of Illinois and that is engaged in interstate or intrastate
8commerce for the purpose of manufacturing, processing,
9assembling, warehousing, or distributing products, conducting
10research and development, providing tourism services, or
11providing services in interstate commerce, office industries,
12health services, professional services, or agricultural
13processing, but excluding retail and , retail food, health, or
14professional services. "Applicant" does not include a Taxpayer
15who closes or substantially reduces an operation at one
16location in the State and relocates substantially the same
17operation to another location in the State. This does not
18prohibit a Taxpayer from expanding its operations at another
19location in the State, provided that existing operations of a
20similar nature located within the State are not closed or
21substantially reduced. This also does not prohibit a Taxpayer
22from moving its operations from one location in the State to
23another location in the State for the purpose of expanding the
24operation provided that the Department determines that
25expansion cannot reasonably be accommodated within the
26municipality in which the business is located, or in the case

HB0160 Engrossed- 63 -LRB100 02289 HLH 12294 b
1of a business located in an incorporated area of the county,
2within the county in which the business is located, after
3conferring with the chief elected official of the municipality
4or county and taking into consideration any evidence offered by
5the municipality or county regarding the ability to accommodate
6expansion within the municipality or county.
7 "Committee" means the Illinois Business Investment
8Committee created under Section 5-25 of this Act within the
9Illinois Economic Development Board.
10 "Credit" means the amount agreed to between the Department
11and Applicant under this Act, but not to exceed the lesser of:
12(1) the sum of (i) 50% of the Incremental Income Tax
13attributable to the Applicant's project and (ii) 10% of the
14training costs of New Employees; or (2) 100% of the Incremental
15Income Tax attributable to the Applicant's project. However, if
16the project is located in an underserved area, then the amount
17of the Credit may not exceed the lesser of: (1) the sum of (i)
1875% of the Incremental Income Tax attributable to the
19Applicant's project and (ii) 10% of the training costs of New
20Employees; or (2) 100% of the Incremental Income Tax
21attributable to the Applicant's project.
22 "Department" means the Department of Commerce and Economic
23Opportunity.
24 "Director" means the Director of Commerce and Economic
25Opportunity.
26 "Full-time Employee" means an individual who is employed

HB0160 Engrossed- 64 -LRB100 02289 HLH 12294 b
1for consideration for at least 35 hours each week or who
2renders any other standard of service generally accepted by
3industry custom or practice as full-time employment. An
4individual for whom a W-2 is issued by a Professional Employer
5Organization (PEO) is a full-time employee if employed in the
6service of the Applicant for consideration for at least 35
7hours each week or who renders any other standard of service
8generally accepted by industry custom or practice as full-time
9employment to Applicant.
10 "Incremental Income Tax" means the total amount withheld
11during the taxable year from the compensation of New Employees
12under Article 7 of the Illinois Income Tax Act arising from
13employment at a project that is the subject of an Agreement.
14 "New Employee" means:
15 (a) A Full-time Employee first employed by a Taxpayer
16 in the project that is the subject of an Agreement and who
17 is hired after the Taxpayer enters into the tax credit
18 Agreement.
19 (b) The term "New Employee" does not include:
20 (1) an employee of the Taxpayer who performs a job
21 that was previously performed by another employee, if
22 that job existed for at least 6 months before hiring
23 the employee;
24 (2) an employee of the Taxpayer who was previously
25 employed in Illinois by a Related Member of the
26 Taxpayer and whose employment was shifted to the

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1 Taxpayer after the Taxpayer entered into the tax credit
2 Agreement; or
3 (3) a child, grandchild, parent, or spouse, other
4 than a spouse who is legally separated from the
5 individual, of any individual who has a direct or an
6 indirect ownership interest of at least 5% in the
7 profits, capital, or value of the Taxpayer.
8 (c) Notwithstanding paragraph (1) of subsection (b),
9 an employee may be considered a New Employee under the
10 Agreement if the employee performs a job that was
11 previously performed by an employee who was:
12 (1) treated under the Agreement as a New Employee;
13 and
14 (2) promoted by the Taxpayer to another job.
15 (d) Notwithstanding subsection (a), the Department may
16 award Credit to an Applicant with respect to an employee
17 hired prior to the date of the Agreement if:
18 (1) the Applicant is in receipt of a letter from
19 the Department stating an intent to enter into a credit
20 Agreement;
21 (2) the letter described in paragraph (1) is issued
22 by the Department not later than 15 days after the
23 effective date of this Act; and
24 (3) the employee was hired after the date the
25 letter described in paragraph (1) was issued.
26 "Noncompliance Date" means, in the case of a Taxpayer that

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1is not complying with the requirements of the Agreement or the
2provisions of this Act, the day following the last date upon
3which the Taxpayer was in compliance with the requirements of
4the Agreement and the provisions of this Act, as determined by
5the Director, pursuant to Section 5-65.
6 "Pass Through Entity" means an entity that is exempt from
7the tax under subsection (b) or (c) of Section 205 of the
8Illinois Income Tax Act.
9 "Professional Employer Organization" (PEO) means an
10employee leasing company, as defined in Section 206.1(A)(2) of
11the Illinois Unemployment Insurance Act.
12 "Related Member" means a person that, with respect to the
13Taxpayer during any portion of the taxable year, is any one of
14the following:
15 (1) An individual stockholder, if the stockholder and
16 the members of the stockholder's family (as defined in
17 Section 318 of the Internal Revenue Code) own directly,
18 indirectly, beneficially, or constructively, in the
19 aggregate, at least 50% of the value of the Taxpayer's
20 outstanding stock.
21 (2) A partnership, estate, or trust and any partner or
22 beneficiary, if the partnership, estate, or trust, and its
23 partners or beneficiaries own directly, indirectly,
24 beneficially, or constructively, in the aggregate, at
25 least 50% of the profits, capital, stock, or value of the
26 Taxpayer.

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1 (3) A corporation, and any party related to the
2 corporation in a manner that would require an attribution
3 of stock from the corporation to the party or from the
4 party to the corporation under the attribution rules of
5 Section 318 of the Internal Revenue Code, if the Taxpayer
6 owns directly, indirectly, beneficially, or constructively
7 at least 50% of the value of the corporation's outstanding
8 stock.
9 (4) A corporation and any party related to that
10 corporation in a manner that would require an attribution
11 of stock from the corporation to the party or from the
12 party to the corporation under the attribution rules of
13 Section 318 of the Internal Revenue Code, if the
14 corporation and all such related parties own in the
15 aggregate at least 50% of the profits, capital, stock, or
16 value of the Taxpayer.
17 (5) A person to or from whom there is attribution of
18 stock ownership in accordance with Section 1563(e) of the
19 Internal Revenue Code, except, for purposes of determining
20 whether a person is a Related Member under this paragraph,
21 20% shall be substituted for 5% wherever 5% appears in
22 Section 1563(e) of the Internal Revenue Code.
23 "Taxpayer" means an individual, corporation, partnership,
24or other entity that has any Illinois Income Tax liability.
25 "Underserved area" means a geographic area that meets one
26or more of the following conditions:

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1 (1) the area has a poverty rate of at least 20%
2 according to the latest federal decennial census;
3 (2) 50% or more of the children in the area participate
4 in the federal free lunch program according to reported
5 statistics from the State Board of Education;
6 (3) at least 20% of the households in the area receive
7 assistance under the Supplemental Nutrition Assistance
8 Program (SNAP); or
9 (4) the area has an average unemployment rate, as
10 determined by the Illinois Department of Employment
11 Security, that is more than 120% of the national
12 unemployment average, as determined by the U.S. Department
13 of Labor, for a period of at least 2 consecutive calendar
14 years preceding the date of the application.
15(Source: P.A. 94-793, eff. 5-19-06; 95-375, eff. 8-23-07.)
16 (35 ILCS 10/5-10)
17 Sec. 5-10. Powers of the Department. The Department, in
18addition to those powers granted under the Civil Administrative
19Code of Illinois, is granted and shall have all the powers
20necessary or convenient to carry out and effectuate the
21purposes and provisions of this Act, including, but not limited
22to, power and authority to:
23 (a) Promulgate procedures, rules, or regulations deemed
24necessary and appropriate for the administration of the
25programs; establish forms for applications, notifications,

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1contracts, or any other agreements; and accept applications at
2any time during the year.
3 (b) Provide and assist Taxpayers pursuant to the provisions
4of this Act, and cooperate with Taxpayers that are parties to
5Agreements to promote, foster, and support economic
6development, capital investment, and job creation or retention
7within the State.
8 (c) Enter into agreements and memoranda of understanding
9for participation of and engage in cooperation with agencies of
10the federal government, local units of government,
11universities, research foundations or institutions, regional
12economic development corporations, or other organizations for
13the purposes of this Act.
14 (d) Gather information and conduct inquiries, in the manner
15and by the methods as it deems desirable, including without
16limitation, gathering information with respect to Applicants
17for the purpose of making any designations or certifications
18necessary or desirable or to gather information to assist the
19Committee with any recommendation or guidance in the
20furtherance of the purposes of this Act.
21 (e) Establish, negotiate and effectuate any term,
22agreement or other document with any person, necessary or
23appropriate to accomplish the purposes of this Act; and to
24consent, subject to the provisions of any Agreement with
25another party, to the modification or restructuring of any
26Agreement to which the Department is a party.

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1 (f) Fix, determine, charge, and collect any premiums, fees,
2charges, costs, and expenses from Applicants, including,
3without limitation, any application fees, commitment fees,
4program fees, financing charges, or publication fees as deemed
5appropriate to pay expenses necessary or incident to the
6administration, staffing, or operation in connection with the
7Department's or Committee's activities under this Act, or for
8preparation, implementation, and enforcement of the terms of
9the Agreement, or for consultation, advisory and legal fees,
10and other costs; however, all fees and expenses incident
11thereto shall be the responsibility of the Applicant.
12 (g) Provide for sufficient personnel to permit
13administration, staffing, operation, and related support
14required to adequately discharge its duties and
15responsibilities described in this Act from funds made
16available through charges to Applicants or from funds as may be
17appropriated by the General Assembly for the administration of
18this Act.
19 (h) Require Applicants, upon written request, to issue any
20necessary authorization to the appropriate federal, state, or
21local authority for the release of information concerning a
22project being considered under the provisions of this Act, with
23the information requested to include, but not be limited to,
24financial reports, returns, or records relating to the
25Taxpayers' or its project.
26 (i) Require that a Taxpayer shall at all times keep proper

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1books of record and account in accordance with generally
2accepted accounting principles consistently applied, with the
3books, records, or papers related to the Agreement in the
4custody or control of the Taxpayer open for reasonable
5Department inspection and audits, and including, without
6limitation, the making of copies of the books, records, or
7papers, and the inspection or appraisal of any of the Taxpayer
8or project assets.
9 (j) Take whatever actions are necessary or appropriate to
10protect the State's interest in the event of bankruptcy,
11default, foreclosure, or noncompliance with the terms and
12conditions of financial assistance or participation required
13under this Act, including the power to sell, dispose, lease, or
14rent, upon terms and conditions determined by the Director to
15be appropriate, real or personal property that the Department
16may receive as a result of these actions.
17(Source: P.A. 91-476, eff. 8-11-99.)
18 (35 ILCS 10/5-15)
19 Sec. 5-15. Tax Credit Awards. Subject to the conditions set
20forth in this Act, a Taxpayer is entitled to a Credit against
21or, as described in subsection (g) of this Section, a payment
22towards taxes imposed pursuant to subsections (a) and (b) of
23Section 201 of the Illinois Income Tax Act that may be imposed
24on the Taxpayer for a taxable year beginning on or after
25January 1, 1999, if the Taxpayer is awarded a Credit by the

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1Department under this Act for that taxable year.
2 (a) The Department shall make Credit awards under this Act
3to foster job creation and retention in Illinois.
4 (b) A person that proposes a project to create new jobs in
5Illinois must enter into an Agreement with the Department for
6the Credit under this Act.
7 (c) The Credit shall be claimed for the taxable years
8specified in the Agreement.
9 (d) The Credit shall not exceed the Incremental Income Tax
10attributable to the project that is the subject of the
11Agreement.
12 (e) Nothing herein shall prohibit a Tax Credit Award to an
13Applicant that uses a PEO if all other award criteria are
14satisfied.
15 (f) In lieu of the Credit allowed under this Act against
16the taxes imposed pursuant to subsections (a) and (b) of
17Section 201 of the Illinois Income Tax Act for any taxable year
18ending on or after December 31, 2009, for Taxpayers that
19entered into Agreements prior to January 1, 2015 and otherwise
20meet the criteria set forth in this subsection (f), the
21Taxpayer may elect to claim the Credit against its obligation
22to pay over withholding under Section 704A of the Illinois
23Income Tax Act.
24 (1) The election under this subsection (f) may be made
25 only by a Taxpayer that (i) is primarily engaged in one of
26 the following business activities: water purification and

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1 treatment, motor vehicle metal stamping, automobile
2 manufacturing, automobile and light duty motor vehicle
3 manufacturing, motor vehicle manufacturing, light truck
4 and utility vehicle manufacturing, heavy duty truck
5 manufacturing, motor vehicle body manufacturing, cable
6 television infrastructure design or manufacturing, or
7 wireless telecommunication or computing terminal device
8 design or manufacturing for use on public networks and (ii)
9 meets the following criteria:
10 (A) the Taxpayer (i) had an Illinois net loss or an
11 Illinois net loss deduction under Section 207 of the
12 Illinois Income Tax Act for the taxable year in which
13 the Credit is awarded, (ii) employed a minimum of 1,000
14 full-time employees in this State during the taxable
15 year in which the Credit is awarded, (iii) has an
16 Agreement under this Act on December 14, 2009 (the
17 effective date of Public Act 96-834), and (iv) is in
18 compliance with all provisions of that Agreement;
19 (B) the Taxpayer (i) had an Illinois net loss or an
20 Illinois net loss deduction under Section 207 of the
21 Illinois Income Tax Act for the taxable year in which
22 the Credit is awarded, (ii) employed a minimum of 1,000
23 full-time employees in this State during the taxable
24 year in which the Credit is awarded, and (iii) has
25 applied for an Agreement within 365 days after December
26 14, 2009 (the effective date of Public Act 96-834);

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1 (C) the Taxpayer (i) had an Illinois net operating
2 loss carryforward under Section 207 of the Illinois
3 Income Tax Act in a taxable year ending during calendar
4 year 2008, (ii) has applied for an Agreement within 150
5 days after the effective date of this amendatory Act of
6 the 96th General Assembly, (iii) creates at least 400
7 new jobs in Illinois, (iv) retains at least 2,000 jobs
8 in Illinois that would have been at risk of relocation
9 out of Illinois over a 10-year period, and (v) makes a
10 capital investment of at least $75,000,000;
11 (D) the Taxpayer (i) had an Illinois net operating
12 loss carryforward under Section 207 of the Illinois
13 Income Tax Act in a taxable year ending during calendar
14 year 2009, (ii) has applied for an Agreement within 150
15 days after the effective date of this amendatory Act of
16 the 96th General Assembly, (iii) creates at least 150
17 new jobs, (iv) retains at least 1,000 jobs in Illinois
18 that would have been at risk of relocation out of
19 Illinois over a 10-year period, and (v) makes a capital
20 investment of at least $57,000,000; or
21 (E) the Taxpayer (i) employed at least 2,500
22 full-time employees in the State during the year in
23 which the Credit is awarded, (ii) commits to make at
24 least $500,000,000 in combined capital improvements
25 and project costs under the Agreement, (iii) applies
26 for an Agreement between January 1, 2011 and June 30,

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1 2011, (iv) executes an Agreement for the Credit during
2 calendar year 2011, and (v) was incorporated no more
3 than 5 years before the filing of an application for an
4 Agreement.
5 (1.5) The election under this subsection (f) may also
6 be made by a Taxpayer for any Credit awarded pursuant to an
7 agreement that was executed between January 1, 2011 and
8 June 30, 2011, if the Taxpayer (i) is primarily engaged in
9 the manufacture of inner tubes or tires, or both, from
10 natural and synthetic rubber, (ii) employs a minimum of
11 2,400 full-time employees in Illinois at the time of
12 application, (iii) creates at least 350 full-time jobs and
13 retains at least 250 full-time jobs in Illinois that would
14 have been at risk of being created or retained outside of
15 Illinois, and (iv) makes a capital investment of at least
16 $200,000,000 at the project location.
17 (1.6) The election under this subsection (f) may also
18 be made by a Taxpayer for any Credit awarded pursuant to an
19 agreement that was executed within 150 days after the
20 effective date of this amendatory Act of the 97th General
21 Assembly, if the Taxpayer (i) is primarily engaged in the
22 operation of a discount department store, (ii) maintains
23 its corporate headquarters in Illinois, (iii) employs a
24 minimum of 4,250 full-time employees at its corporate
25 headquarters in Illinois at the time of application, (iv)
26 retains at least 4,250 full-time jobs in Illinois that

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1 would have been at risk of being relocated outside of
2 Illinois, (v) had a minimum of $40,000,000,000 in total
3 revenue in 2010, and (vi) makes a capital investment of at
4 least $300,000,000 at the project location.
5 (1.7) Notwithstanding any other provision of law, the
6 election under this subsection (f) may also be made by a
7 Taxpayer for any Credit awarded pursuant to an agreement
8 that was executed or applied for on or after July 1, 2011
9 and on or before March 31, 2012, if the Taxpayer is
10 primarily engaged in the manufacture of original and
11 aftermarket filtration parts and products for automobiles,
12 motor vehicles, light duty motor vehicles, light trucks and
13 utility vehicles, and heavy duty trucks, (ii) employs a
14 minimum of 1,000 full-time employees in Illinois at the
15 time of application, (iii) creates at least 250 full-time
16 jobs in Illinois, (iv) relocates its corporate
17 headquarters to Illinois from another state, and (v) makes
18 a capital investment of at least $4,000,000 at the project
19 location.
20 (2) An election under this subsection shall allow the
21 credit to be taken against payments otherwise due under
22 Section 704A of the Illinois Income Tax Act during the
23 first calendar year beginning after the end of the taxable
24 year in which the credit is awarded under this Act.
25 (3) The election shall be made in the form and manner
26 required by the Illinois Department of Revenue and, once

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1 made, shall be irrevocable.
2 (4) If a Taxpayer who meets the requirements of
3 subparagraph (A) of paragraph (1) of this subsection (f)
4 elects to claim the Credit against its withholdings as
5 provided in this subsection (f), then, on and after the
6 date of the election, the terms of the Agreement between
7 the Taxpayer and the Department may not be further amended
8 during the term of the Agreement.
9 (g) A pass-through entity that has been awarded a credit
10under this Act, its shareholders, or its partners may treat
11some or all of the credit awarded pursuant to this Act as a tax
12payment for purposes of the Illinois Income Tax Act. The term
13"tax payment" means a payment as described in Article 6 or
14Article 8 of the Illinois Income Tax Act or a composite payment
15made by a pass-through entity on behalf of any of its
16shareholders or partners to satisfy such shareholders' or
17partners' taxes imposed pursuant to subsections (a) and (b) of
18Section 201 of the Illinois Income Tax Act. In no event shall
19the amount of the award credited pursuant to this Act exceed
20the Illinois income tax liability of the pass-through entity or
21its shareholders or partners for the taxable year.
22(Source: P.A. 96-834, eff. 12-14-09; 96-836, eff. 12-16-09;
2396-905, eff. 6-4-10; 96-1000, eff. 7-2-10; 96-1534, eff.
243-4-11; 97-2, eff. 5-6-11; 97-636, eff. 6-1-12.)
25 (35 ILCS 10/5-20)

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1 Sec. 5-20. Application for a project to create and retain
2new jobs.
3 (a) Any Taxpayer proposing a project located or planned to
4be located in Illinois may request consideration for
5designation of its project, by formal written letter of request
6or by formal application to the Department, in which the
7Applicant states its intent to make at least a specified level
8of investment and intends to hire or retain a specified number
9of full-time employees at a designated location in Illinois. As
10circumstances require, the Department may require a formal
11application from an Applicant and a formal letter of request
12for assistance.
13 (b) In order to qualify for Credits under this Act, an
14Applicant's project must:
15 (1) if the Applicant has more than 100 employees,
16 involve an investment of at least $2,500,000 $5,000,000 in
17 capital improvements to be placed in service and to employ
18 at least 25 New Employees within the State as a direct
19 result of the project; if the Applicant has 100 or fewer
20 employees, then there is no capital investment
21 requirement; and
22 (1.5) if the Applicant has more than 100 employees,
23 employ a number of new employees in the State equal to the
24 lesser of (A) 10% of the number of full-time employees
25 employed by the applicant world-wide on the date the
26 application is filed with the Department or (B) 50 New

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1 Employees; and, if the Applicant has 100 or fewer
2 employees, employ a number of new employees in the State
3 equal to the lesser of (A) 5% of the number of full-time
4 employees employed by the applicant world-wide on the date
5 the application is filed with the Department or (B) 50 New
6 Employees;
7 (2) (blank); involve an investment of at least an
8 amount (to be expressly specified by the Department and the
9 Committee) in capital improvements to be placed in service
10 and will employ at least an amount (to be expressly
11 specified by the Department and the Committee) of New
12 Employees within the State, provided that the Department
13 and the Committee have determined that the project will
14 provide a substantial economic benefit to the State; or
15 (3) (blank). if the applicant has 100 or fewer
16 employees, involve an investment of at least $1,000,000 in
17 capital improvements to be placed in service and to employ
18 at least 5 New Employees within the State as a direct
19 result of the project.
20 (c) After receipt of an application, the Department may
21enter into an Agreement with the Applicant if the application
22is accepted in accordance with Section 5-25.
23(Source: P.A. 93-882, eff. 1-1-05.)
24 (35 ILCS 10/5-25)
25 Sec. 5-25. Review of Application.

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1 (a) In addition to those duties granted under the Illinois
2Economic Development Board Act, the Illinois Economic
3Development Board shall form a Business Investment Committee
4for the purpose of making recommendations for applications. At
5the request of the Board, the Director of Commerce and Economic
6Opportunity or his or her designee, the Director of the
7Governor's Office of Management and Budget or his or her
8designee, the Director of Revenue or his or her designee, the
9Director of Employment Security or his or her designee, and an
10elected official of the affected locality, such as the chair of
11the county board or the mayor, may serve as members of the
12Committee to assist with its analysis and deliberations.
13 (b) At the Department's request, the Committee shall
14convene, make inquiries, and conduct studies in the manner and
15by the methods as it deems desirable, review information with
16respect to Applicants, and make recommendations for projects to
17benefit the State. In making its recommendation that an
18Applicant's application for Credit should or should not be
19accepted, which shall occur within a reasonable time frame as
20determined by the nature of the application, the Committee
21shall determine that all the following conditions exist:
22 (1) The Applicant's project intends, as required by
23 subsection (b) of Section 5-20 to make the required
24 investment in the State and intends to hire the required
25 number of New Employees in Illinois as a result of that
26 project.

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1 (2) The Applicant's project is economically sound and
2 will benefit the people of the State of Illinois by
3 increasing opportunities for employment and strengthen the
4 economy of Illinois.
5 (3) That, if not for the Credit, the project would not
6 occur in Illinois, which may be demonstrated by evidence
7 that receipt of the Credit is essential to the Applicant's
8 decision to create new jobs in the State, such as the
9 magnitude of the cost differential between Illinois and a
10 competing State any means including, but not limited to,
11 evidence the Applicant has multi-state location options
12 and could reasonably and efficiently locate outside of the
13 State, or demonstration that at least one other state is
14 being considered for the project, or evidence the receipt
15 of the Credit is a major factor in the Applicant's decision
16 and that without the Credit, the Applicant likely would not
17 create new jobs in Illinois, or demonstration that
18 receiving the Credit is essential to the Applicant's
19 decision to create or retain new jobs in the State.
20 (4) A cost differential is identified, using best
21 available data, in the projected costs for the Applicant's
22 project compared to the costs in the competing state,
23 including the impact of the competing state's incentive
24 programs. The competing state's incentive programs shall
25 include state, local, private, and federal funds
26 available.

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1 (5) The political subdivisions affected by the project
2 have committed local incentives with respect to the
3 project, considering local ability to assist.
4 (6) Awarding the Credit will result in an overall
5 positive fiscal impact to the State, as certified by the
6 Committee using the best available data.
7 (7) The Credit is not prohibited by Section 5-35 of
8 this Act.
9(Source: P.A. 94-793, eff. 5-19-06.)
10 (35 ILCS 10/5-50)
11 Sec. 5-50. Contents of Agreements with Applicants. The
12Department shall enter into an Agreement with an Applicant that
13is awarded a Credit under this Act. The Agreement must include
14all of the following:
15 (1) A detailed description of the project that is the
16 subject of the Agreement, including the location and amount
17 of the investment and jobs created or retained.
18 (2) The duration of the Credit and the first taxable
19 year for which the Credit may be claimed.
20 (3) The Credit amount that will be allowed for each
21 taxable year.
22 (4) A requirement that the Taxpayer shall maintain
23 operations at the project location that shall be stated as
24 a minimum number of years not to exceed 10.
25 (5) A specific method for determining the number of New

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1 Employees employed during a taxable year.
2 (6) A requirement that the Taxpayer shall annually
3 report to the Department the number of New Employees, the
4 Incremental Income Tax withheld in connection with the New
5 Employees, and any other information the Director needs to
6 perform the Director's duties under this Act.
7 (7) A requirement that the Director is authorized to
8 verify with the appropriate State agencies the amounts
9 reported under paragraph (6), and after doing so shall
10 issue a certificate to the Taxpayer stating that the
11 amounts have been verified.
12 (8) A requirement that the Taxpayer shall provide
13 written notification to the Director not more than 30 days
14 after the Taxpayer makes or receives a proposal that would
15 transfer the Taxpayer's State tax liability obligations to
16 a successor Taxpayer.
17 (9) A detailed description of the number of New
18 Employees to be hired, and the occupation and payroll of
19 the full-time jobs to be created or retained as a result of
20 the project.
21 (10) The minimum investment the business enterprise
22 will make in capital improvements, the time period for
23 placing the property in service, and the designated
24 location in Illinois for the investment.
25 (11) A requirement that the Taxpayer shall provide
26 written notification to the Director and the Committee not

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1 more than 30 days after the Taxpayer determines that the
2 minimum job creation or retention, employment payroll, or
3 investment no longer is being or will be achieved or
4 maintained as set forth in the terms and conditions of the
5 Agreement.
6 (12) A provision that, if the total number of New
7 Employees falls below a specified level, the allowance of
8 Credit shall be suspended until the number of New Employees
9 equals or exceeds the Agreement amount.
10 (13) A detailed description of the items for which the
11 costs incurred by the Taxpayer will be included in the
12 limitation on the Credit provided in Section 5-30.
13 (13.5) A provision that, if the Taxpayer never meets
14 either the investment or job creation and retention
15 requirements specified in the Agreement during the entire
16 5-year period beginning on the first day of the first
17 taxable year in which the Agreement is executed and ending
18 on the last day of the fifth taxable year after the
19 Agreement is executed, then the Agreement is automatically
20 terminated on the last day of the fifth taxable year after
21 the Agreement is executed and the Taxpayer is not entitled
22 to the award of any credits for any of that 5-year period.
23 (14) Any other performance conditions or contract
24 provisions as the Department determines are appropriate.
25 The Department shall post on its website the terms of each
26Agreement entered into under this Act on or after the effective

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1date of this amendatory Act of the 97th General Assembly. Such
2information shall be posted within 10 days after entering into
3the Agreement and must include the following:
4 (1) the name of the recipient business;
5 (2) the location of the project;
6 (3) the estimated value of the credit;
7 (4) the number of new jobs pledged as a result of the
8 project; and
9 (5) whether or not the project is located in an
10 underserved area.
11(Source: P.A. 97-2, eff. 5-6-11; 97-749, eff. 7-6-12.)
12 (35 ILCS 10/5-57 new)
13 Sec. 5-57. Supplier diversity goals; reports. Each
14taxpayer claiming a credit under this Act shall, no later than
15April 15 of each taxable year for which the taxpayer claims a
16credit under this Act, submit to the Department of Commerce and
17Economic Opportunity an annual report containing the
18information described in subsections (b), (c), (d), and (e) of
19Section 5-117 of the Public Utilities Act. Those reports shall
20be submitted in the form and manner required by the Department
21of Commerce and Economic Opportunity.
22 (35 ILCS 10/5-65)
23 Sec. 5-65. Noncompliance; notice; assessment. If the
24Director determines that a Taxpayer who has received a Credit

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1under this Act is not complying with the requirements of the
2Agreement or all of the provisions of this Act, the Director
3shall provide notice to the Taxpayer of the alleged
4noncompliance, and allow the Taxpayer a hearing under the
5provisions of the Illinois Administrative Procedure Act. If,
6after such notice and any hearing, the Director determines that
7a noncompliance exists, the Director shall issue to the
8Department of Revenue notice to that effect, stating the
9Noncompliance Date. If the Taxpayer ceases operations at a
10project location that is the subject of an Agreement with the
11intent to terminate operations in the State, then the Taxpayer
12shall be subject to the provisions of the Keep Illinois
13Business Act.
14(Source: P.A. 91-476, eff. 8-11-99.)
15 (35 ILCS 10/5-70)
16 Sec. 5-70. Annual report. On or before July 1 each year,
17the Committee shall submit a report to the Department on the
18tax credit program under this Act to the Governor and the
19General Assembly. The report shall include information on the
20number of Agreements that were entered into under this Act
21during the preceding calendar year, a description of the
22project that is the subject of each Agreement, an update on the
23status of projects under Agreements entered into before the
24preceding calendar year, and the sum of the Credits awarded
25under this Act. A copy of the report shall be delivered to the

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1Governor and to each member of the General Assembly.
2 The report must include, for each Agreement:
3 (1) the original estimates of the value of the Credit
4 and the number of new jobs to be created;
5 (2) any relevant modifications to existing Agreements;
6 (3) a statement of the progress made by each Taxpayer
7 in meeting the terms of the original Agreement;
8 (4) a statement of wages paid to New Employees and
9 existing employees in the State;
10 (5) any information reported under Section 5-57 of this
11 Act; and
12 (6) a copy of the original Agreement.
13(Source: P.A. 91-476, eff. 8-11-99.)
14 (35 ILCS 10/5-77)
15 Sec. 5-77. Sunset of new Agreements. The Department shall
16not enter into any new Agreements under the provisions of
17Section 5-50 of this Act after April 30, 2022 April 30, 2017.
18(Source: P.A. 99-925, eff. 1-20-17.)
19
ARTICLE 15. FILM AND THEATER TAX CREDITS
20 Section 15-5. The Film Production Services Tax Credit Act
21of 2008 is amended by changing Sections 35 and 45 as follows:
22 (35 ILCS 16/35)

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1 Sec. 35. Issuance of Tax Credit Certificate.
2 (a) In order to qualify for a tax credit under this Act, an
3applicant must file an application, on forms prescribed by the
4Department, providing information necessary to calculate the
5tax credit, and any additional information as required by the
6Department. As part of the application, the applicant must
7commit to supplying the Department with the following
8information, at a minimum:
9 (1) an identification of each vendor that provides
10 goods or services that were included in the accredited
11 production's Illinois production spending;
12 (2) the amount of Illinois production spending
13 attributable to each vendor; and
14 (3) for each vendor identified under item (1), a
15 statement as to whether the vendor is a minority-owned
16 business or a female-owned business, as defined under
17 Section 2 of the Business Enterprise for Minorities,
18 Females, and Persons with Disabilities Act.
19 (b) Upon satisfactory review of the application, the
20Department shall issue a Tax Credit Certificate stating the
21amount of the tax credit to which the applicant is entitled.
22(Source: P.A. 95-720, eff. 5-27-08.)
23 (35 ILCS 16/45)
24 Sec. 45. Evaluation of tax credit program; reports to the
25General Assembly.

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1 (a) The Department shall evaluate the tax credit program.
2The evaluation must include an assessment of the effectiveness
3of the program in creating and retaining new jobs in Illinois
4and of the revenue impact of the program, and may include a
5review of the practices and experiences of other states or
6nations with similar programs. Upon completion of this
7evaluation, the Department shall determine the overall success
8of the program, and may make a recommendation to extend,
9modify, or not extend the program based on this evaluation.
10 (b) At the end of each fiscal quarter, the Department must
11submit to the General Assembly a report that includes, without
12limitation, the following information:
13 (1) the economic impact of the tax credit program,
14 including the number of jobs created and retained,
15 including whether the job positions are entry level,
16 management, talent-related, vendor-related, or
17 production-related;
18 (2) the amount of film production spending brought to
19 Illinois, including the amount of spending and type of
20 Illinois vendors hired in connection with an accredited
21 production; and
22 (3) an overall picture of whether the human
23 infrastructure of the motion picture industry in Illinois
24 reflects the geographical, racial and ethnic, gender, and
25 income-level diversity of the State of Illinois.
26 (c) At the end of each fiscal year, the Department must

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1submit to the General Assembly a report that includes, without
2limitation, the following information:
3 (1) an identification of each vendor that provided
4 goods or services that were included in an accredited
5 production's Illinois production spending and a statement
6 of whether the vendor is a minority-owned business or a
7 female-owned business, as defined under Section 2 of the
8 Business Enterprise for Minorities, Females, and Persons
9 with Disabilities Act;
10 (2) the aggregate amount paid to all each identified
11 vendors vendor by the accredited production;
12 (3) the aggregate amount paid to all identified vendors
13 that are for each identified vendor, a statement as to
14 whether the vendor is a minority owned businesses business
15 or a female owned businesses business, as defined under
16 Section 2 of the Business Enterprise for Minorities,
17 Females, and Persons with Disabilities Act; and
18 (4) a description of any steps taken by the Department
19 to encourage accredited productions to use vendors who are
20 a minority owned business or a female owned business.
21(Source: P.A. 95-720, eff. 5-27-08.)
22 Section 15-10. The Live Theater Production Tax Credit Act
23is amended by changing Sections 10-40 and 10-50 as follows:
24 (35 ILCS 17/10-40)

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1 Sec. 10-40. Issuance of Tax Credit Award Certificate.
2 (a) In order to qualify for a tax credit award under this
3Act, an applicant must file an application for each accredited
4theater production at each of the applicant's qualified
5production facilities, on forms prescribed by the Department,
6providing information necessary to calculate the tax credit
7award and any additional information as reasonably required by
8the Department. As part of the application, the applicant must
9commit to supplying the Department with the following
10information, at a minimum:
11 (1) an identification of each vendor that provides
12 goods or services that were included in the accredited
13 production's Illinois production spending;
14 (2) the amount of Illinois production spending
15 attributable to each vendor; and
16 (3) for each vendor identified under item (1), a
17 statement as to whether the vendor is a minority-owned
18 business or a female-owned business, as defined under
19 Section 2 of the Business Enterprise for Minorities,
20 Females, and Persons with Disabilities Act.
21 (b) Upon satisfactory review of the application, the
22Department shall issue a tax credit award certificate stating
23the amount of the tax credit award to which the applicant is
24entitled for that tax year and shall contemporaneously notify
25the applicant and Illinois Department of Revenue in accordance
26with Section 222 of the Illinois Income Tax Act.

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1(Source: P.A. 97-636, eff. 6-1-12.)
2 (35 ILCS 17/10-50)
3 Sec. 10-50. Live theater tax credit award program
4evaluation and reports.
5 (a) The Department's live theater tax credit award
6evaluation must include:
7 (i) an assessment of the effectiveness of the program
8 in creating and retaining new jobs in Illinois;
9 (ii) an assessment of the revenue impact of the
10 program;
11 (iii) in the discretion of the Department, a review of
12 the practices and experiences of other states or nations
13 with similar programs; and
14 (iv) an assessment of the overall success of the
15 program. The Department may make a recommendation to
16 extend, modify, or not extend the program based on the
17 evaluation.
18 (b) At the end of each fiscal quarter, the Department shall
19submit to the General Assembly a report that includes, without
20limitation:
21 (i) an assessment of the economic impact of the
22 program, including the number of jobs created and retained,
23 and whether the job positions are entry level, management,
24 vendor, or production related;
25 (ii) the amount of accredited theater production

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1 spending brought to Illinois, including the amount of
2 spending and type of Illinois vendors hired in connection
3 with an accredited theater production; and
4 (iii) a determination of whether those receiving
5 qualifying Illinois labor expenditure salaries or wages
6 reflect the geographical, racial and ethnic, gender, and
7 income level diversity of the State of Illinois.
8 (c) At the end of each fiscal year, the Department shall
9submit to the General Assembly a report that includes, without
10limitation:
11 (i) the identification of each vendor that provided
12 goods or services that were included in an accredited
13 theater production's Illinois production spending and a
14 statement of whether the vendor is a minority-owned
15 business or a female-owned business, as defined under
16 Section 2 of the Business Enterprise for Minorities,
17 Females, and Persons with Disabilities Act;
18 (ii) a statement of (A) the aggregate amount paid to
19 all each identified vendors vendor by the accredited
20 theater production and (B) the aggregate amount paid to all
21 identified vendors that are minority-owned businesses or
22 female-owned businesses, as defined under Section 2 of the
23 Business Enterprise for Minorities, Females, and Persons
24 with Disabilities Act and whether the vendor is a minority
25 or female owned business as defined in Section 2 of the
26 Business Enterprise for Minorities, Females, and Persons

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1 with Disabilities Act; and
2 (iii) a description of the steps taken by the
3 Department to encourage accredited theater productions to
4 use vendors who are minority or female owned businesses.
5(Source: P.A. 97-636, eff. 6-1-12.)
6
ARTICLE 20. USE AND OCCUPATION TAXES
7 Section 20-5. The Use Tax Act is amended by changing
8Sections 2 and 3-5 as follows:
9 (35 ILCS 105/2) (from Ch. 120, par. 439.2)
10 Sec. 2. Definitions.
11 "Use" means the exercise by any person of any right or
12power over tangible personal property incident to the ownership
13of that property, except that it does not include the sale of
14such property in any form as tangible personal property in the
15regular course of business to the extent that such property is
16not first subjected to a use for which it was purchased, and
17does not include the use of such property by its owner for
18demonstration purposes: Provided that the property purchased
19is deemed to be purchased for the purpose of resale, despite
20first being used, to the extent to which it is resold as an
21ingredient of an intentionally produced product or by-product
22of manufacturing. "Use" does not mean the demonstration use or
23interim use of tangible personal property by a retailer before

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1he sells that tangible personal property. For watercraft or
2aircraft, if the period of demonstration use or interim use by
3the retailer exceeds 18 months, the retailer shall pay on the
4retailers' original cost price the tax imposed by this Act, and
5no credit for that tax is permitted if the watercraft or
6aircraft is subsequently sold by the retailer. "Use" does not
7mean the physical incorporation of tangible personal property,
8to the extent not first subjected to a use for which it was
9purchased, as an ingredient or constituent, into other tangible
10personal property (a) which is sold in the regular course of
11business or (b) which the person incorporating such ingredient
12or constituent therein has undertaken at the time of such
13purchase to cause to be transported in interstate commerce to
14destinations outside the State of Illinois: Provided that the
15property purchased is deemed to be purchased for the purpose of
16resale, despite first being used, to the extent to which it is
17resold as an ingredient of an intentionally produced product or
18by-product of manufacturing.
19 "Watercraft" means a Class 2, Class 3, or Class 4
20watercraft as defined in Section 3-2 of the Boat Registration
21and Safety Act, a personal watercraft, or any boat equipped
22with an inboard motor.
23 "Purchase at retail" means the acquisition of the ownership
24of or title to tangible personal property through a sale at
25retail.
26 "Purchaser" means anyone who, through a sale at retail,

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1acquires the ownership of tangible personal property for a
2valuable consideration.
3 "Sale at retail" means any transfer of the ownership of or
4title to tangible personal property to a purchaser, for the
5purpose of use, and not for the purpose of resale in any form
6as tangible personal property to the extent not first subjected
7to a use for which it was purchased, for a valuable
8consideration: Provided that the property purchased is deemed
9to be purchased for the purpose of resale, despite first being
10used, to the extent to which it is resold as an ingredient of
11an intentionally produced product or by-product of
12manufacturing. For this purpose, slag produced as an incident
13to manufacturing pig iron or steel and sold is considered to be
14an intentionally produced by-product of manufacturing. "Sale
15at retail" includes any such transfer made for resale unless
16made in compliance with Section 2c of the Retailers' Occupation
17Tax Act, as incorporated by reference into Section 12 of this
18Act. Transactions whereby the possession of the property is
19transferred but the seller retains the title as security for
20payment of the selling price are sales.
21 "Sale at retail" shall also be construed to include any
22Illinois florist's sales transaction in which the purchase
23order is received in Illinois by a florist and the sale is for
24use or consumption, but the Illinois florist has a florist in
25another state deliver the property to the purchaser or the
26purchaser's donee in such other state.

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1 Nonreusable tangible personal property that is used by
2persons engaged in the business of operating a restaurant,
3cafeteria, or drive-in is a sale for resale when it is
4transferred to customers in the ordinary course of business as
5part of the sale of food or beverages and is used to deliver,
6package, or consume food or beverages, regardless of where
7consumption of the food or beverages occurs. Examples of those
8items include, but are not limited to nonreusable, paper and
9plastic cups, plates, baskets, boxes, sleeves, buckets or other
10containers, utensils, straws, placemats, napkins, doggie bags,
11and wrapping or packaging materials that are transferred to
12customers as part of the sale of food or beverages in the
13ordinary course of business.
14 The purchase, employment and transfer of such tangible
15personal property as newsprint and ink for the primary purpose
16of conveying news (with or without other information) is not a
17purchase, use or sale of tangible personal property.
18 "Selling price" means the consideration for a sale valued
19in money whether received in money or otherwise, including
20cash, credits, property other than as hereinafter provided, and
21services, but not including the value of or credit given for
22traded-in tangible personal property where the item that is
23traded-in is of like kind and character as that which is being
24sold, and shall be determined without any deduction on account
25of the cost of the property sold, the cost of materials used,
26labor or service cost or any other expense whatsoever, but does

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1not include interest or finance charges which appear as
2separate items on the bill of sale or sales contract nor
3charges that are added to prices by sellers on account of the
4seller's tax liability under the "Retailers' Occupation Tax
5Act", or on account of the seller's duty to collect, from the
6purchaser, the tax that is imposed by this Act, or, except as
7otherwise provided with respect to any cigarette tax imposed by
8a home rule unit, on account of the seller's tax liability
9under any local occupation tax administered by the Department,
10or, except as otherwise provided with respect to any cigarette
11tax imposed by a home rule unit on account of the seller's duty
12to collect, from the purchasers, the tax that is imposed under
13any local use tax administered by the Department. Effective
14December 1, 1985, "selling price" shall include charges that
15are added to prices by sellers on account of the seller's tax
16liability under the Cigarette Tax Act, on account of the
17seller's duty to collect, from the purchaser, the tax imposed
18under the Cigarette Use Tax Act, and on account of the seller's
19duty to collect, from the purchaser, any cigarette tax imposed
20by a home rule unit. Beginning January 1, 2018, "selling price"
21shall not include any shipping or delivery charges, which means
22any freight, express, mail, truck, or other carrier conveyance
23or delivery process.
24 Notwithstanding any law to the contrary, for any motor
25vehicle, as defined in Section 1-146 of the Vehicle Code, that
26is sold on or after January 1, 2015 for the purpose of leasing

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1the vehicle for a defined period that is longer than one year
2and (1) is a motor vehicle of the second division that: (A) is
3a self-contained motor vehicle designed or permanently
4converted to provide living quarters for recreational,
5camping, or travel use, with direct walk through access to the
6living quarters from the driver's seat; (B) is of the van
7configuration designed for the transportation of not less than
87 nor more than 16 passengers; or (C) has a gross vehicle
9weight rating of 8,000 pounds or less or (2) is a motor vehicle
10of the first division, "selling price" or "amount of sale"
11means the consideration received by the lessor pursuant to the
12lease contract, including amounts due at lease signing and all
13monthly or other regular payments charged over the term of the
14lease. Also included in the selling price is any amount
15received by the lessor from the lessee for the leased vehicle
16that is not calculated at the time the lease is executed,
17including, but not limited to, excess mileage charges and
18charges for excess wear and tear. For sales that occur in
19Illinois, with respect to any amount received by the lessor
20from the lessee for the leased vehicle that is not calculated
21at the time the lease is executed, the lessor who purchased the
22motor vehicle does not incur the tax imposed by the Use Tax Act
23on those amounts, and the retailer who makes the retail sale of
24the motor vehicle to the lessor is not required to collect the
25tax imposed by this Act or to pay the tax imposed by the
26Retailers' Occupation Tax Act on those amounts. However, the

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1lessor who purchased the motor vehicle assumes the liability
2for reporting and paying the tax on those amounts directly to
3the Department in the same form (Illinois Retailers' Occupation
4Tax, and local retailers' occupation taxes, if applicable) in
5which the retailer would have reported and paid such tax if the
6retailer had accounted for the tax to the Department. For
7amounts received by the lessor from the lessee that are not
8calculated at the time the lease is executed, the lessor must
9file the return and pay the tax to the Department by the due
10date otherwise required by this Act for returns other than
11transaction returns. If the retailer is entitled under this Act
12to a discount for collecting and remitting the tax imposed
13under this Act to the Department with respect to the sale of
14the motor vehicle to the lessor, then the right to the discount
15provided in this Act shall be transferred to the lessor with
16respect to the tax paid by the lessor for any amount received
17by the lessor from the lessee for the leased vehicle that is
18not calculated at the time the lease is executed; provided that
19the discount is only allowed if the return is timely filed and
20for amounts timely paid. The "selling price" of a motor vehicle
21that is sold on or after January 1, 2015 for the purpose of
22leasing for a defined period of longer than one year shall not
23be reduced by the value of or credit given for traded-in
24tangible personal property owned by the lessor, nor shall it be
25reduced by the value of or credit given for traded-in tangible
26personal property owned by the lessee, regardless of whether

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1the trade-in value thereof is assigned by the lessee to the
2lessor. In the case of a motor vehicle that is sold for the
3purpose of leasing for a defined period of longer than one
4year, the sale occurs at the time of the delivery of the
5vehicle, regardless of the due date of any lease payments. A
6lessor who incurs a Retailers' Occupation Tax liability on the
7sale of a motor vehicle coming off lease may not take a credit
8against that liability for the Use Tax the lessor paid upon the
9purchase of the motor vehicle (or for any tax the lessor paid
10with respect to any amount received by the lessor from the
11lessee for the leased vehicle that was not calculated at the
12time the lease was executed) if the selling price of the motor
13vehicle at the time of purchase was calculated using the
14definition of "selling price" as defined in this paragraph.
15Notwithstanding any other provision of this Act to the
16contrary, lessors shall file all returns and make all payments
17required under this paragraph to the Department by electronic
18means in the manner and form as required by the Department.
19This paragraph does not apply to leases of motor vehicles for
20which, at the time the lease is entered into, the term of the
21lease is not a defined period, including leases with a defined
22initial period with the option to continue the lease on a
23month-to-month or other basis beyond the initial defined
24period.
25 The phrase "like kind and character" shall be liberally
26construed (including but not limited to any form of motor

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1vehicle for any form of motor vehicle, or any kind of farm or
2agricultural implement for any other kind of farm or
3agricultural implement), while not including a kind of item
4which, if sold at retail by that retailer, would be exempt from
5retailers' occupation tax and use tax as an isolated or
6occasional sale.
7 "Department" means the Department of Revenue.
8 "Person" means any natural individual, firm, partnership,
9association, joint stock company, joint adventure, public or
10private corporation, limited liability company, or a receiver,
11executor, trustee, guardian or other representative appointed
12by order of any court.
13 "Retailer" means and includes every person engaged in the
14business of making sales at retail as defined in this Section.
15 A person who holds himself or herself out as being engaged
16(or who habitually engages) in selling tangible personal
17property at retail is a retailer hereunder with respect to such
18sales (and not primarily in a service occupation)
19notwithstanding the fact that such person designs and produces
20such tangible personal property on special order for the
21purchaser and in such a way as to render the property of value
22only to such purchaser, if such tangible personal property so
23produced on special order serves substantially the same
24function as stock or standard items of tangible personal
25property that are sold at retail.
26 A person whose activities are organized and conducted

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1primarily as a not-for-profit service enterprise, and who
2engages in selling tangible personal property at retail
3(whether to the public or merely to members and their guests)
4is a retailer with respect to such transactions, excepting only
5a person organized and operated exclusively for charitable,
6religious or educational purposes either (1), to the extent of
7sales by such person to its members, students, patients or
8inmates of tangible personal property to be used primarily for
9the purposes of such person, or (2), to the extent of sales by
10such person of tangible personal property which is not sold or
11offered for sale by persons organized for profit. The selling
12of school books and school supplies by schools at retail to
13students is not "primarily for the purposes of" the school
14which does such selling. This paragraph does not apply to nor
15subject to taxation occasional dinners, social or similar
16activities of a person organized and operated exclusively for
17charitable, religious or educational purposes, whether or not
18such activities are open to the public.
19 A person who is the recipient of a grant or contract under
20Title VII of the Older Americans Act of 1965 (P.L. 92-258) and
21serves meals to participants in the federal Nutrition Program
22for the Elderly in return for contributions established in
23amount by the individual participant pursuant to a schedule of
24suggested fees as provided for in the federal Act is not a
25retailer under this Act with respect to such transactions.
26 Persons who engage in the business of transferring tangible

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1personal property upon the redemption of trading stamps are
2retailers hereunder when engaged in such business.
3 The isolated or occasional sale of tangible personal
4property at retail by a person who does not hold himself out as
5being engaged (or who does not habitually engage) in selling
6such tangible personal property at retail or a sale through a
7bulk vending machine does not make such person a retailer
8hereunder. However, any person who is engaged in a business
9which is not subject to the tax imposed by the "Retailers'
10Occupation Tax Act" because of involving the sale of or a
11contract to sell real estate or a construction contract to
12improve real estate, but who, in the course of conducting such
13business, transfers tangible personal property to users or
14consumers in the finished form in which it was purchased, and
15which does not become real estate, under any provision of a
16construction contract or real estate sale or real estate sales
17agreement entered into with some other person arising out of or
18because of such nontaxable business, is a retailer to the
19extent of the value of the tangible personal property so
20transferred. If, in such transaction, a separate charge is made
21for the tangible personal property so transferred, the value of
22such property, for the purposes of this Act, is the amount so
23separately charged, but not less than the cost of such property
24to the transferor; if no separate charge is made, the value of
25such property, for the purposes of this Act, is the cost to the
26transferor of such tangible personal property.

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1 "Retailer maintaining a place of business in this State",
2or any like term, means and includes any of the following
3retailers:
4 1. A retailer having or maintaining within this State,
5 directly or by a subsidiary, an office, distribution house,
6 sales house, warehouse or other place of business, or any
7 agent or other representative operating within this State
8 under the authority of the retailer or its subsidiary,
9 irrespective of whether such place of business or agent or
10 other representative is located here permanently or
11 temporarily, or whether such retailer or subsidiary is
12 licensed to do business in this State. However, the
13 ownership of property that is located at the premises of a
14 printer with which the retailer has contracted for printing
15 and that consists of the final printed product, property
16 that becomes a part of the final printed product, or copy
17 from which the printed product is produced shall not result
18 in the retailer being deemed to have or maintain an office,
19 distribution house, sales house, warehouse, or other place
20 of business within this State.
21 1.1. A retailer having a contract with a person located
22 in this State under which the person, for a commission or
23 other consideration based upon the sale of tangible
24 personal property by the retailer, directly or indirectly
25 refers potential customers to the retailer by providing to
26 the potential customers a promotional code or other

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1 mechanism that allows the retailer to track purchases
2 referred by such persons. Examples of mechanisms that allow
3 the retailer to track purchases referred by such persons
4 include but are not limited to the use of a link on the
5 person's Internet website, promotional codes distributed
6 through the person's hand-delivered or mailed material,
7 and promotional codes distributed by the person through
8 radio or other broadcast media. The provisions of this
9 paragraph 1.1 shall apply only if the cumulative gross
10 receipts from sales of tangible personal property by the
11 retailer to customers who are referred to the retailer by
12 all persons in this State under such contracts exceed
13 $10,000 during the preceding 4 quarterly periods ending on
14 the last day of March, June, September, and December. A
15 retailer meeting the requirements of this paragraph 1.1
16 shall be presumed to be maintaining a place of business in
17 this State but may rebut this presumption by submitting
18 proof that the referrals or other activities pursued within
19 this State by such persons were not sufficient to meet the
20 nexus standards of the United States Constitution during
21 the preceding 4 quarterly periods.
22 1.2. Beginning July 1, 2011, a retailer having a
23 contract with a person located in this State under which:
24 A. the retailer sells the same or substantially
25 similar line of products as the person located in this
26 State and does so using an identical or substantially

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1 similar name, trade name, or trademark as the person
2 located in this State; and
3 B. the retailer provides a commission or other
4 consideration to the person located in this State based
5 upon the sale of tangible personal property by the
6 retailer.
7 The provisions of this paragraph 1.2 shall apply only if
8 the cumulative gross receipts from sales of tangible
9 personal property by the retailer to customers in this
10 State under all such contracts exceed $10,000 during the
11 preceding 4 quarterly periods ending on the last day of
12 March, June, September, and December.
13 2. A retailer soliciting orders for tangible personal
14 property by means of a telecommunication or television
15 shopping system (which utilizes toll free numbers) which is
16 intended by the retailer to be broadcast by cable
17 television or other means of broadcasting, to consumers
18 located in this State.
19 3. A retailer, pursuant to a contract with a
20 broadcaster or publisher located in this State, soliciting
21 orders for tangible personal property by means of
22 advertising which is disseminated primarily to consumers
23 located in this State and only secondarily to bordering
24 jurisdictions.
25 4. A retailer soliciting orders for tangible personal
26 property by mail if the solicitations are substantial and

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1 recurring and if the retailer benefits from any banking,
2 financing, debt collection, telecommunication, or
3 marketing activities occurring in this State or benefits
4 from the location in this State of authorized installation,
5 servicing, or repair facilities.
6 5. A retailer that is owned or controlled by the same
7 interests that own or control any retailer engaging in
8 business in the same or similar line of business in this
9 State.
10 6. A retailer having a franchisee or licensee operating
11 under its trade name if the franchisee or licensee is
12 required to collect the tax under this Section.
13 7. A retailer, pursuant to a contract with a cable
14 television operator located in this State, soliciting
15 orders for tangible personal property by means of
16 advertising which is transmitted or distributed over a
17 cable television system in this State.
18 8. A retailer engaging in activities in Illinois, which
19 activities in the state in which the retail business
20 engaging in such activities is located would constitute
21 maintaining a place of business in that state.
22 "Bulk vending machine" means a vending machine, containing
23unsorted confections, nuts, toys, or other items designed
24primarily to be used or played with by children which, when a
25coin or coins of a denomination not larger than $0.50 are
26inserted, are dispensed in equal portions, at random and

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1without selection by the customer.
2(Source: P.A. 98-628, eff. 1-1-15; 98-1080, eff. 8-26-14;
398-1089, eff. 1-1-15; 99-78, eff. 7-20-15.)
4 (35 ILCS 105/3-5)
5 Sec. 3-5. Exemptions. Use of the following tangible
6personal property is exempt from the tax imposed by this Act:
7 (1) Personal property purchased from a corporation,
8society, association, foundation, institution, or
9organization, other than a limited liability company, that is
10organized and operated as a not-for-profit service enterprise
11for the benefit of persons 65 years of age or older if the
12personal property was not purchased by the enterprise for the
13purpose of resale by the enterprise.
14 (2) Personal property purchased by a not-for-profit
15Illinois county fair association for use in conducting,
16operating, or promoting the county fair.
17 (3) Personal property purchased by a not-for-profit arts or
18cultural organization that establishes, by proof required by
19the Department by rule, that it has received an exemption under
20Section 501(c)(3) of the Internal Revenue Code and that is
21organized and operated primarily for the presentation or
22support of arts or cultural programming, activities, or
23services. These organizations include, but are not limited to,
24music and dramatic arts organizations such as symphony
25orchestras and theatrical groups, arts and cultural service

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1organizations, local arts councils, visual arts organizations,
2and media arts organizations. On and after the effective date
3of this amendatory Act of the 92nd General Assembly, however,
4an entity otherwise eligible for this exemption shall not make
5tax-free purchases unless it has an active identification
6number issued by the Department.
7 (4) Personal property purchased by a governmental body, by
8a corporation, society, association, foundation, or
9institution organized and operated exclusively for charitable,
10religious, or educational purposes, or by a not-for-profit
11corporation, society, association, foundation, institution, or
12organization that has no compensated officers or employees and
13that is organized and operated primarily for the recreation of
14persons 55 years of age or older. A limited liability company
15may qualify for the exemption under this paragraph only if the
16limited liability company is organized and operated
17exclusively for educational purposes. On and after July 1,
181987, however, no entity otherwise eligible for this exemption
19shall make tax-free purchases unless it has an active exemption
20identification number issued by the Department.
21 (5) Until July 1, 2003, a passenger car that is a
22replacement vehicle to the extent that the purchase price of
23the car is subject to the Replacement Vehicle Tax.
24 (6) Until July 1, 2003 and beginning again on September 1,
252004 through August 30, 2014, graphic arts machinery and
26equipment, including repair and replacement parts, both new and

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1used, and including that manufactured on special order,
2certified by the purchaser to be used primarily for graphic
3arts production, and including machinery and equipment
4purchased for lease. Equipment includes chemicals or chemicals
5acting as catalysts but only if the chemicals or chemicals
6acting as catalysts effect a direct and immediate change upon a
7graphic arts product.
8 (7) Farm chemicals.
9 (8) Legal tender, currency, medallions, or gold or silver
10coinage issued by the State of Illinois, the government of the
11United States of America, or the government of any foreign
12country, and bullion.
13 (9) Personal property purchased from a teacher-sponsored
14student organization affiliated with an elementary or
15secondary school located in Illinois.
16 (10) A motor vehicle that is used for automobile renting,
17as defined in the Automobile Renting Occupation and Use Tax
18Act.
19 (11) Farm machinery and equipment, both new and used,
20including that manufactured on special order, certified by the
21purchaser to be used primarily for production agriculture or
22State or federal agricultural programs, including individual
23replacement parts for the machinery and equipment, including
24machinery and equipment purchased for lease, and including
25implements of husbandry defined in Section 1-130 of the
26Illinois Vehicle Code, farm machinery and agricultural

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1chemical and fertilizer spreaders, and nurse wagons required to
2be registered under Section 3-809 of the Illinois Vehicle Code,
3but excluding other motor vehicles required to be registered
4under the Illinois Vehicle Code. Horticultural polyhouses or
5hoop houses used for propagating, growing, or overwintering
6plants shall be considered farm machinery and equipment under
7this item (11). Agricultural chemical tender tanks and dry
8boxes shall include units sold separately from a motor vehicle
9required to be licensed and units sold mounted on a motor
10vehicle required to be licensed if the selling price of the
11tender is separately stated.
12 Farm machinery and equipment shall include precision
13farming equipment that is installed or purchased to be
14installed on farm machinery and equipment including, but not
15limited to, tractors, harvesters, sprayers, planters, seeders,
16or spreaders. Precision farming equipment includes, but is not
17limited to, soil testing sensors, computers, monitors,
18software, global positioning and mapping systems, and other
19such equipment.
20 Farm machinery and equipment also includes computers,
21sensors, software, and related equipment used primarily in the
22computer-assisted operation of production agriculture
23facilities, equipment, and activities such as, but not limited
24to, the collection, monitoring, and correlation of animal and
25crop data for the purpose of formulating animal diets and
26agricultural chemicals. This item (11) is exempt from the

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1provisions of Section 3-90.
2 (12) Until June 30, 2013, fuel and petroleum products sold
3to or used by an air common carrier, certified by the carrier
4to be used for consumption, shipment, or storage in the conduct
5of its business as an air common carrier, for a flight destined
6for or returning from a location or locations outside the
7United States without regard to previous or subsequent domestic
8stopovers.
9 Beginning July 1, 2013, fuel and petroleum products sold to
10or used by an air carrier, certified by the carrier to be used
11for consumption, shipment, or storage in the conduct of its
12business as an air common carrier, for a flight that (i) is
13engaged in foreign trade or is engaged in trade between the
14United States and any of its possessions and (ii) transports at
15least one individual or package for hire from the city of
16origination to the city of final destination on the same
17aircraft, without regard to a change in the flight number of
18that aircraft.
19 (13) Proceeds of mandatory service charges separately
20stated on customers' bills for the purchase and consumption of
21food and beverages purchased at retail from a retailer, to the
22extent that the proceeds of the service charge are in fact
23turned over as tips or as a substitute for tips to the
24employees who participate directly in preparing, serving,
25hosting or cleaning up the food or beverage function with
26respect to which the service charge is imposed.

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1 (14) Until July 1, 2003, oil field exploration, drilling,
2and production equipment, including (i) rigs and parts of rigs,
3rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
4tubular goods, including casing and drill strings, (iii) pumps
5and pump-jack units, (iv) storage tanks and flow lines, (v) any
6individual replacement part for oil field exploration,
7drilling, and production equipment, and (vi) machinery and
8equipment purchased for lease; but excluding motor vehicles
9required to be registered under the Illinois Vehicle Code.
10 (15) Photoprocessing machinery and equipment, including
11repair and replacement parts, both new and used, including that
12manufactured on special order, certified by the purchaser to be
13used primarily for photoprocessing, and including
14photoprocessing machinery and equipment purchased for lease.
15 (16) Until December 31, 2022, coal Coal and aggregate
16exploration, mining, off-highway hauling, processing,
17maintenance, and reclamation equipment, including replacement
18parts and equipment, and including equipment purchased for
19lease, but excluding motor vehicles required to be registered
20under the Illinois Vehicle Code. The changes made to this
21Section by Public Act 97-767 apply on and after July 1, 2003,
22but no claim for credit or refund is allowed on or after August
2316, 2013 (the effective date of Public Act 98-456) for such
24taxes paid during the period beginning July 1, 2003 and ending
25on August 16, 2013 (the effective date of Public Act 98-456).
26 (17) Until July 1, 2003, distillation machinery and

HB0160 Engrossed- 115 -LRB100 02289 HLH 12294 b
1equipment, sold as a unit or kit, assembled or installed by the
2retailer, certified by the user to be used only for the
3production of ethyl alcohol that will be used for consumption
4as motor fuel or as a component of motor fuel for the personal
5use of the user, and not subject to sale or resale.
6 (18) Manufacturing and assembling machinery and equipment
7used primarily in the process of manufacturing or assembling
8tangible personal property for wholesale or retail sale or
9lease, whether that sale or lease is made directly by the
10manufacturer or by some other person, whether the materials
11used in the process are owned by the manufacturer or some other
12person, or whether that sale or lease is made apart from or as
13an incident to the seller's engaging in the service occupation
14of producing machines, tools, dies, jigs, patterns, gauges, or
15other similar items of no commercial value on special order for
16a particular purchaser. The exemption provided by this
17paragraph (18) does not include machinery and equipment used in
18(i) the generation of electricity for wholesale or retail sale;
19(ii) the generation or treatment of natural or artificial gas
20for wholesale or retail sale that is delivered to customers
21through pipes, pipelines, or mains; or (iii) the treatment of
22water for wholesale or retail sale that is delivered to
23customers through pipes, pipelines, or mains. The provisions of
24Public Act 98-583 are declaratory of existing law as to the
25meaning and scope of this exemption.
26 (19) Personal property delivered to a purchaser or

HB0160 Engrossed- 116 -LRB100 02289 HLH 12294 b
1purchaser's donee inside Illinois when the purchase order for
2that personal property was received by a florist located
3outside Illinois who has a florist located inside Illinois
4deliver the personal property.
5 (20) Semen used for artificial insemination of livestock
6for direct agricultural production.
7 (21) Horses, or interests in horses, registered with and
8meeting the requirements of any of the Arabian Horse Club
9Registry of America, Appaloosa Horse Club, American Quarter
10Horse Association, United States Trotting Association, or
11Jockey Club, as appropriate, used for purposes of breeding or
12racing for prizes. This item (21) is exempt from the provisions
13of Section 3-90, and the exemption provided for under this item
14(21) applies for all periods beginning May 30, 1995, but no
15claim for credit or refund is allowed on or after January 1,
162008 for such taxes paid during the period beginning May 30,
172000 and ending on January 1, 2008.
18 (22) Computers and communications equipment utilized for
19any hospital purpose and equipment used in the diagnosis,
20analysis, or treatment of hospital patients purchased by a
21lessor who leases the equipment, under a lease of one year or
22longer executed or in effect at the time the lessor would
23otherwise be subject to the tax imposed by this Act, to a
24hospital that has been issued an active tax exemption
25identification number by the Department under Section 1g of the
26Retailers' Occupation Tax Act. If the equipment is leased in a

HB0160 Engrossed- 117 -LRB100 02289 HLH 12294 b
1manner that does not qualify for this exemption or is used in
2any other non-exempt manner, the lessor shall be liable for the
3tax imposed under this Act or the Service Use Tax Act, as the
4case may be, based on the fair market value of the property at
5the time the non-qualifying use occurs. No lessor shall collect
6or attempt to collect an amount (however designated) that
7purports to reimburse that lessor for the tax imposed by this
8Act or the Service Use Tax Act, as the case may be, if the tax
9has not been paid by the lessor. If a lessor improperly
10collects any such amount from the lessee, the lessee shall have
11a legal right to claim a refund of that amount from the lessor.
12If, however, that amount is not refunded to the lessee for any
13reason, the lessor is liable to pay that amount to the
14Department.
15 (23) Personal property purchased by a lessor who leases the
16property, under a lease of one year or longer executed or in
17effect at the time the lessor would otherwise be subject to the
18tax imposed by this Act, to a governmental body that has been
19issued an active sales tax exemption identification number by
20the Department under Section 1g of the Retailers' Occupation
21Tax Act. If the property is leased in a manner that does not
22qualify for this exemption or used in any other non-exempt
23manner, the lessor shall be liable for the tax imposed under
24this Act or the Service Use Tax Act, as the case may be, based
25on the fair market value of the property at the time the
26non-qualifying use occurs. No lessor shall collect or attempt

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1to collect an amount (however designated) that purports to
2reimburse that lessor for the tax imposed by this Act or the
3Service Use Tax Act, as the case may be, if the tax has not been
4paid by the lessor. If a lessor improperly collects any such
5amount from the lessee, the lessee shall have a legal right to
6claim a refund of that amount from the lessor. If, however,
7that amount is not refunded to the lessee for any reason, the
8lessor is liable to pay that amount to the Department.
9 (24) Beginning with taxable years ending on or after
10December 31, 1995 and ending with taxable years ending on or
11before December 31, 2004, personal property that is donated for
12disaster relief to be used in a State or federally declared
13disaster area in Illinois or bordering Illinois by a
14manufacturer or retailer that is registered in this State to a
15corporation, society, association, foundation, or institution
16that has been issued a sales tax exemption identification
17number by the Department that assists victims of the disaster
18who reside within the declared disaster area.
19 (25) Beginning with taxable years ending on or after
20December 31, 1995 and ending with taxable years ending on or
21before December 31, 2004, personal property that is used in the
22performance of infrastructure repairs in this State, including
23but not limited to municipal roads and streets, access roads,
24bridges, sidewalks, waste disposal systems, water and sewer
25line extensions, water distribution and purification
26facilities, storm water drainage and retention facilities, and

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1sewage treatment facilities, resulting from a State or
2federally declared disaster in Illinois or bordering Illinois
3when such repairs are initiated on facilities located in the
4declared disaster area within 6 months after the disaster.
5 (26) Beginning July 1, 1999, game or game birds purchased
6at a "game breeding and hunting preserve area" as that term is
7used in the Wildlife Code. This paragraph is exempt from the
8provisions of Section 3-90.
9 (27) A motor vehicle, as that term is defined in Section
101-146 of the Illinois Vehicle Code, that is donated to a
11corporation, limited liability company, society, association,
12foundation, or institution that is determined by the Department
13to be organized and operated exclusively for educational
14purposes. For purposes of this exemption, "a corporation,
15limited liability company, society, association, foundation,
16or institution organized and operated exclusively for
17educational purposes" means all tax-supported public schools,
18private schools that offer systematic instruction in useful
19branches of learning by methods common to public schools and
20that compare favorably in their scope and intensity with the
21course of study presented in tax-supported schools, and
22vocational or technical schools or institutes organized and
23operated exclusively to provide a course of study of not less
24than 6 weeks duration and designed to prepare individuals to
25follow a trade or to pursue a manual, technical, mechanical,
26industrial, business, or commercial occupation.

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1 (28) Beginning January 1, 2000, personal property,
2including food, purchased through fundraising events for the
3benefit of a public or private elementary or secondary school,
4a group of those schools, or one or more school districts if
5the events are sponsored by an entity recognized by the school
6district that consists primarily of volunteers and includes
7parents and teachers of the school children. This paragraph
8does not apply to fundraising events (i) for the benefit of
9private home instruction or (ii) for which the fundraising
10entity purchases the personal property sold at the events from
11another individual or entity that sold the property for the
12purpose of resale by the fundraising entity and that profits
13from the sale to the fundraising entity. This paragraph is
14exempt from the provisions of Section 3-90.
15 (29) Beginning January 1, 2000 and through December 31,
162001, new or used automatic vending machines that prepare and
17serve hot food and beverages, including coffee, soup, and other
18items, and replacement parts for these machines. Beginning
19January 1, 2002 and through June 30, 2003, machines and parts
20for machines used in commercial, coin-operated amusement and
21vending business if a use or occupation tax is paid on the
22gross receipts derived from the use of the commercial,
23coin-operated amusement and vending machines. This paragraph
24is exempt from the provisions of Section 3-90.
25 (30) Beginning January 1, 2001 and through June 30, 2016,
26food for human consumption that is to be consumed off the

HB0160 Engrossed- 121 -LRB100 02289 HLH 12294 b
1premises where it is sold (other than alcoholic beverages, soft
2drinks, and food that has been prepared for immediate
3consumption) and prescription and nonprescription medicines,
4drugs, medical appliances, and insulin, urine testing
5materials, syringes, and needles used by diabetics, for human
6use, when purchased for use by a person receiving medical
7assistance under Article V of the Illinois Public Aid Code who
8resides in a licensed long-term care facility, as defined in
9the Nursing Home Care Act, or in a licensed facility as defined
10in the ID/DD Community Care Act, the MC/DD Act, or the
11Specialized Mental Health Rehabilitation Act of 2013.
12 (31) Beginning on the effective date of this amendatory Act
13of the 92nd General Assembly, computers and communications
14equipment utilized for any hospital purpose and equipment used
15in the diagnosis, analysis, or treatment of hospital patients
16purchased by a lessor who leases the equipment, under a lease
17of one year or longer executed or in effect at the time the
18lessor would otherwise be subject to the tax imposed by this
19Act, to a hospital that has been issued an active tax exemption
20identification number by the Department under Section 1g of the
21Retailers' Occupation Tax Act. If the equipment is leased in a
22manner that does not qualify for this exemption or is used in
23any other nonexempt manner, the lessor shall be liable for the
24tax imposed under this Act or the Service Use Tax Act, as the
25case may be, based on the fair market value of the property at
26the time the nonqualifying use occurs. No lessor shall collect

HB0160 Engrossed- 122 -LRB100 02289 HLH 12294 b
1or attempt to collect an amount (however designated) that
2purports to reimburse that lessor for the tax imposed by this
3Act or the Service Use Tax Act, as the case may be, if the tax
4has not been paid by the lessor. If a lessor improperly
5collects any such amount from the lessee, the lessee shall have
6a legal right to claim a refund of that amount from the lessor.
7If, however, that amount is not refunded to the lessee for any
8reason, the lessor is liable to pay that amount to the
9Department. This paragraph is exempt from the provisions of
10Section 3-90.
11 (32) Beginning on the effective date of this amendatory Act
12of the 92nd General Assembly, personal property purchased by a
13lessor who leases the property, under a lease of one year or
14longer executed or in effect at the time the lessor would
15otherwise be subject to the tax imposed by this Act, to a
16governmental body that has been issued an active sales tax
17exemption identification number by the Department under
18Section 1g of the Retailers' Occupation Tax Act. If the
19property is leased in a manner that does not qualify for this
20exemption or used in any other nonexempt manner, the lessor
21shall be liable for the tax imposed under this Act or the
22Service Use Tax Act, as the case may be, based on the fair
23market value of the property at the time the nonqualifying use
24occurs. No lessor shall collect or attempt to collect an amount
25(however designated) that purports to reimburse that lessor for
26the tax imposed by this Act or the Service Use Tax Act, as the

HB0160 Engrossed- 123 -LRB100 02289 HLH 12294 b
1case may be, if the tax has not been paid by the lessor. If a
2lessor improperly collects any such amount from the lessee, the
3lessee shall have a legal right to claim a refund of that
4amount from the lessor. If, however, that amount is not
5refunded to the lessee for any reason, the lessor is liable to
6pay that amount to the Department. This paragraph is exempt
7from the provisions of Section 3-90.
8 (33) On and after July 1, 2003 and through June 30, 2004,
9the use in this State of motor vehicles of the second division
10with a gross vehicle weight in excess of 8,000 pounds and that
11are subject to the commercial distribution fee imposed under
12Section 3-815.1 of the Illinois Vehicle Code. Beginning on July
131, 2004 and through June 30, 2005, the use in this State of
14motor vehicles of the second division: (i) with a gross vehicle
15weight rating in excess of 8,000 pounds; (ii) that are subject
16to the commercial distribution fee imposed under Section
173-815.1 of the Illinois Vehicle Code; and (iii) that are
18primarily used for commercial purposes. Through June 30, 2005,
19this exemption applies to repair and replacement parts added
20after the initial purchase of such a motor vehicle if that
21motor vehicle is used in a manner that would qualify for the
22rolling stock exemption otherwise provided for in this Act. For
23purposes of this paragraph, the term "used for commercial
24purposes" means the transportation of persons or property in
25furtherance of any commercial or industrial enterprise,
26whether for-hire or not.

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1 (34) Beginning January 1, 2008, tangible personal property
2used in the construction or maintenance of a community water
3supply, as defined under Section 3.145 of the Environmental
4Protection Act, that is operated by a not-for-profit
5corporation that holds a valid water supply permit issued under
6Title IV of the Environmental Protection Act. This paragraph is
7exempt from the provisions of Section 3-90.
8 (35) Beginning January 1, 2010, materials, parts,
9equipment, components, and furnishings incorporated into or
10upon an aircraft as part of the modification, refurbishment,
11completion, replacement, repair, or maintenance of the
12aircraft. This exemption includes consumable supplies used in
13the modification, refurbishment, completion, replacement,
14repair, and maintenance of aircraft, but excludes any
15materials, parts, equipment, components, and consumable
16supplies used in the modification, replacement, repair, and
17maintenance of aircraft engines or power plants, whether such
18engines or power plants are installed or uninstalled upon any
19such aircraft. "Consumable supplies" include, but are not
20limited to, adhesive, tape, sandpaper, general purpose
21lubricants, cleaning solution, latex gloves, and protective
22films. This exemption applies only to the use of qualifying
23tangible personal property by persons who modify, refurbish,
24complete, repair, replace, or maintain aircraft and who (i)
25hold an Air Agency Certificate and are empowered to operate an
26approved repair station by the Federal Aviation

HB0160 Engrossed- 125 -LRB100 02289 HLH 12294 b
1Administration, (ii) have a Class IV Rating, and (iii) conduct
2operations in accordance with Part 145 of the Federal Aviation
3Regulations. The exemption does not include aircraft operated
4by a commercial air carrier providing scheduled passenger air
5service pursuant to authority issued under Part 121 or Part 129
6of the Federal Aviation Regulations. The changes made to this
7paragraph (35) by Public Act 98-534 are declarative of existing
8law.
9 (36) Tangible personal property purchased by a
10public-facilities corporation, as described in Section
1111-65-10 of the Illinois Municipal Code, for purposes of
12constructing or furnishing a municipal convention hall, but
13only if the legal title to the municipal convention hall is
14transferred to the municipality without any further
15consideration by or on behalf of the municipality at the time
16of the completion of the municipal convention hall or upon the
17retirement or redemption of any bonds or other debt instruments
18issued by the public-facilities corporation in connection with
19the development of the municipal convention hall. This
20exemption includes existing public-facilities corporations as
21provided in Section 11-65-25 of the Illinois Municipal Code.
22This paragraph is exempt from the provisions of Section 3-90.
23 (37) Beginning January 1, 2017, menstrual pads, tampons,
24and menstrual cups.
25(Source: P.A. 98-104, eff. 7-22-13; 98-422, eff. 8-16-13;
2698-456, eff. 8-16-13; 98-534, eff. 8-23-13; 98-574, eff.

HB0160 Engrossed- 126 -LRB100 02289 HLH 12294 b
11-1-14; 98-583, eff. 1-1-14; 98-756, eff. 7-16-14; 99-180, eff.
27-29-15; 99-855, eff. 8-19-16.)
3 Section 20-10. The Service Use Tax Act is amended by
4changing Sections 2 and 3-5 as follows:
5 (35 ILCS 110/2) (from Ch. 120, par. 439.32)
6 Sec. 2. Definitions.
7 "Use" means the exercise by any person of any right or
8power over tangible personal property incident to the ownership
9of that property, but does not include the sale or use for
10demonstration by him of that property in any form as tangible
11personal property in the regular course of business. "Use" does
12not mean the interim use of tangible personal property nor the
13physical incorporation of tangible personal property, as an
14ingredient or constituent, into other tangible personal
15property, (a) which is sold in the regular course of business
16or (b) which the person incorporating such ingredient or
17constituent therein has undertaken at the time of such purchase
18to cause to be transported in interstate commerce to
19destinations outside the State of Illinois.
20 "Purchased from a serviceman" means the acquisition of the
21ownership of, or title to, tangible personal property through a
22sale of service.
23 "Purchaser" means any person who, through a sale of
24service, acquires the ownership of, or title to, any tangible

HB0160 Engrossed- 127 -LRB100 02289 HLH 12294 b
1personal property.
2 "Cost price" means the consideration paid by the serviceman
3for a purchase valued in money, whether paid in money or
4otherwise, including cash, credits and services, and shall be
5determined without any deduction on account of the supplier's
6cost of the property sold or on account of any other expense
7incurred by the supplier. When a serviceman contracts out part
8or all of the services required in his sale of service, it
9shall be presumed that the cost price to the serviceman of the
10property transferred to him or her by his or her subcontractor
11is equal to 50% of the subcontractor's charges to the
12serviceman in the absence of proof of the consideration paid by
13the subcontractor for the purchase of such property.
14 "Selling price" means the consideration for a sale valued
15in money whether received in money or otherwise, including
16cash, credits and service, and shall be determined without any
17deduction on account of the serviceman's cost of the property
18sold, the cost of materials used, labor or service cost or any
19other expense whatsoever, but does not include interest or
20finance charges which appear as separate items on the bill of
21sale or sales contract nor charges that are added to prices by
22sellers on account of the seller's duty to collect, from the
23purchaser, the tax that is imposed by this Act. Beginning
24January 1, 2018, "selling price" shall not include any shipping
25or delivery charges, which means any freight, express, mail,
26truck, or other carrier conveyance or delivery process.

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1 "Department" means the Department of Revenue.
2 "Person" means any natural individual, firm, partnership,
3association, joint stock company, joint venture, public or
4private corporation, limited liability company, and any
5receiver, executor, trustee, guardian or other representative
6appointed by order of any court.
7 "Sale of service" means any transaction except:
8 (1) a retail sale of tangible personal property taxable
9 under the Retailers' Occupation Tax Act or under the Use
10 Tax Act.
11 (2) a sale of tangible personal property for the
12 purpose of resale made in compliance with Section 2c of the
13 Retailers' Occupation Tax Act.
14 (3) except as hereinafter provided, a sale or transfer
15 of tangible personal property as an incident to the
16 rendering of service for or by any governmental body, or
17 for or by any corporation, society, association,
18 foundation or institution organized and operated
19 exclusively for charitable, religious or educational
20 purposes or any not-for-profit corporation, society,
21 association, foundation, institution or organization which
22 has no compensated officers or employees and which is
23 organized and operated primarily for the recreation of
24 persons 55 years of age or older. A limited liability
25 company may qualify for the exemption under this paragraph
26 only if the limited liability company is organized and

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1 operated exclusively for educational purposes.
2 (4) a sale or transfer of tangible personal property as
3 an incident to the rendering of service for interstate
4 carriers for hire for use as rolling stock moving in
5 interstate commerce or by lessors under a lease of one year
6 or longer, executed or in effect at the time of purchase of
7 personal property, to interstate carriers for hire for use
8 as rolling stock moving in interstate commerce so long as
9 so used by such interstate carriers for hire, and equipment
10 operated by a telecommunications provider, licensed as a
11 common carrier by the Federal Communications Commission,
12 which is permanently installed in or affixed to aircraft
13 moving in interstate commerce.
14 (4a) a sale or transfer of tangible personal property
15 as an incident to the rendering of service for owners,
16 lessors, or shippers of tangible personal property which is
17 utilized by interstate carriers for hire for use as rolling
18 stock moving in interstate commerce so long as so used by
19 interstate carriers for hire, and equipment operated by a
20 telecommunications provider, licensed as a common carrier
21 by the Federal Communications Commission, which is
22 permanently installed in or affixed to aircraft moving in
23 interstate commerce.
24 (4a-5) on and after July 1, 2003 and through June 30,
25 2004, a sale or transfer of a motor vehicle of the second
26 division with a gross vehicle weight in excess of 8,000

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1 pounds as an incident to the rendering of service if that
2 motor vehicle is subject to the commercial distribution fee
3 imposed under Section 3-815.1 of the Illinois Vehicle Code.
4 Beginning on July 1, 2004 and through June 30, 2005, the
5 use in this State of motor vehicles of the second division:
6 (i) with a gross vehicle weight rating in excess of 8,000
7 pounds; (ii) that are subject to the commercial
8 distribution fee imposed under Section 3-815.1 of the
9 Illinois Vehicle Code; and (iii) that are primarily used
10 for commercial purposes. Through June 30, 2005, this
11 exemption applies to repair and replacement parts added
12 after the initial purchase of such a motor vehicle if that
13 motor vehicle is used in a manner that would qualify for
14 the rolling stock exemption otherwise provided for in this
15 Act. For purposes of this paragraph, "used for commercial
16 purposes" means the transportation of persons or property
17 in furtherance of any commercial or industrial enterprise
18 whether for-hire or not.
19 (5) a sale or transfer of machinery and equipment used
20 primarily in the process of the manufacturing or
21 assembling, either in an existing, an expanded or a new
22 manufacturing facility, of tangible personal property for
23 wholesale or retail sale or lease, whether such sale or
24 lease is made directly by the manufacturer or by some other
25 person, whether the materials used in the process are owned
26 by the manufacturer or some other person, or whether such

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1 sale or lease is made apart from or as an incident to the
2 seller's engaging in a service occupation and the
3 applicable tax is a Service Use Tax or Service Occupation
4 Tax, rather than Use Tax or Retailers' Occupation Tax. The
5 exemption provided by this paragraph (5) does not include
6 machinery and equipment used in (i) the generation of
7 electricity for wholesale or retail sale; (ii) the
8 generation or treatment of natural or artificial gas for
9 wholesale or retail sale that is delivered to customers
10 through pipes, pipelines, or mains; or (iii) the treatment
11 of water for wholesale or retail sale that is delivered to
12 customers through pipes, pipelines, or mains. The
13 provisions of this amendatory Act of the 98th General
14 Assembly are declaratory of existing law as to the meaning
15 and scope of this exemption.
16 (5a) the repairing, reconditioning or remodeling, for
17 a common carrier by rail, of tangible personal property
18 which belongs to such carrier for hire, and as to which
19 such carrier receives the physical possession of the
20 repaired, reconditioned or remodeled item of tangible
21 personal property in Illinois, and which such carrier
22 transports, or shares with another common carrier in the
23 transportation of such property, out of Illinois on a
24 standard uniform bill of lading showing the person who
25 repaired, reconditioned or remodeled the property to a
26 destination outside Illinois, for use outside Illinois.

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1 (5b) a sale or transfer of tangible personal property
2 which is produced by the seller thereof on special order in
3 such a way as to have made the applicable tax the Service
4 Occupation Tax or the Service Use Tax, rather than the
5 Retailers' Occupation Tax or the Use Tax, for an interstate
6 carrier by rail which receives the physical possession of
7 such property in Illinois, and which transports such
8 property, or shares with another common carrier in the
9 transportation of such property, out of Illinois on a
10 standard uniform bill of lading showing the seller of the
11 property as the shipper or consignor of such property to a
12 destination outside Illinois, for use outside Illinois.
13 (6) until July 1, 2003, a sale or transfer of
14 distillation machinery and equipment, sold as a unit or kit
15 and assembled or installed by the retailer, which machinery
16 and equipment is certified by the user to be used only for
17 the production of ethyl alcohol that will be used for
18 consumption as motor fuel or as a component of motor fuel
19 for the personal use of such user and not subject to sale
20 or resale.
21 (7) at the election of any serviceman not required to
22 be otherwise registered as a retailer under Section 2a of
23 the Retailers' Occupation Tax Act, made for each fiscal
24 year sales of service in which the aggregate annual cost
25 price of tangible personal property transferred as an
26 incident to the sales of service is less than 35%, or 75%

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1 in the case of servicemen transferring prescription drugs
2 or servicemen engaged in graphic arts production, of the
3 aggregate annual total gross receipts from all sales of
4 service. The purchase of such tangible personal property by
5 the serviceman shall be subject to tax under the Retailers'
6 Occupation Tax Act and the Use Tax Act. However, if a
7 primary serviceman who has made the election described in
8 this paragraph subcontracts service work to a secondary
9 serviceman who has also made the election described in this
10 paragraph, the primary serviceman does not incur a Use Tax
11 liability if the secondary serviceman (i) has paid or will
12 pay Use Tax on his or her cost price of any tangible
13 personal property transferred to the primary serviceman
14 and (ii) certifies that fact in writing to the primary
15 serviceman.
16 Tangible personal property transferred incident to the
17completion of a maintenance agreement is exempt from the tax
18imposed pursuant to this Act.
19 Exemption (5) also includes machinery and equipment used in
20the general maintenance or repair of such exempt machinery and
21equipment or for in-house manufacture of exempt machinery and
22equipment. The machinery and equipment exemption does not
23include machinery and equipment used in (i) the generation of
24electricity for wholesale or retail sale; (ii) the generation
25or treatment of natural or artificial gas for wholesale or
26retail sale that is delivered to customers through pipes,

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1pipelines, or mains; or (iii) the treatment of water for
2wholesale or retail sale that is delivered to customers through
3pipes, pipelines, or mains. The provisions of this amendatory
4Act of the 98th General Assembly are declaratory of existing
5law as to the meaning and scope of this exemption. For the
6purposes of exemption (5), each of these terms shall have the
7following meanings: (1) "manufacturing process" shall mean the
8production of any article of tangible personal property,
9whether such article is a finished product or an article for
10use in the process of manufacturing or assembling a different
11article of tangible personal property, by procedures commonly
12regarded as manufacturing, processing, fabricating, or
13refining which changes some existing material or materials into
14a material with a different form, use or name. In relation to a
15recognized integrated business composed of a series of
16operations which collectively constitute manufacturing, or
17individually constitute manufacturing operations, the
18manufacturing process shall be deemed to commence with the
19first operation or stage of production in the series, and shall
20not be deemed to end until the completion of the final product
21in the last operation or stage of production in the series; and
22further, for purposes of exemption (5), photoprocessing is
23deemed to be a manufacturing process of tangible personal
24property for wholesale or retail sale; (2) "assembling process"
25shall mean the production of any article of tangible personal
26property, whether such article is a finished product or an

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1article for use in the process of manufacturing or assembling a
2different article of tangible personal property, by the
3combination of existing materials in a manner commonly regarded
4as assembling which results in a material of a different form,
5use or name; (3) "machinery" shall mean major mechanical
6machines or major components of such machines contributing to a
7manufacturing or assembling process; and (4) "equipment" shall
8include any independent device or tool separate from any
9machinery but essential to an integrated manufacturing or
10assembly process; including computers used primarily in a
11manufacturer's computer assisted design, computer assisted
12manufacturing (CAD/CAM) system; or any subunit or assembly
13comprising a component of any machinery or auxiliary, adjunct
14or attachment parts of machinery, such as tools, dies, jigs,
15fixtures, patterns and molds; or any parts which require
16periodic replacement in the course of normal operation; but
17shall not include hand tools. Equipment includes chemicals or
18chemicals acting as catalysts but only if the chemicals or
19chemicals acting as catalysts effect a direct and immediate
20change upon a product being manufactured or assembled for
21wholesale or retail sale or lease. The purchaser of such
22machinery and equipment who has an active resale registration
23number shall furnish such number to the seller at the time of
24purchase. The user of such machinery and equipment and tools
25without an active resale registration number shall prepare a
26certificate of exemption for each transaction stating facts

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1establishing the exemption for that transaction, which
2certificate shall be available to the Department for inspection
3or audit. The Department shall prescribe the form of the
4certificate.
5 Any informal rulings, opinions or letters issued by the
6Department in response to an inquiry or request for any opinion
7from any person regarding the coverage and applicability of
8exemption (5) to specific devices shall be published,
9maintained as a public record, and made available for public
10inspection and copying. If the informal ruling, opinion or
11letter contains trade secrets or other confidential
12information, where possible the Department shall delete such
13information prior to publication. Whenever such informal
14rulings, opinions, or letters contain any policy of general
15applicability, the Department shall formulate and adopt such
16policy as a rule in accordance with the provisions of the
17Illinois Administrative Procedure Act.
18 On and after July 1, 1987, no entity otherwise eligible
19under exemption (3) of this Section shall make tax free
20purchases unless it has an active exemption identification
21number issued by the Department.
22 The purchase, employment and transfer of such tangible
23personal property as newsprint and ink for the primary purpose
24of conveying news (with or without other information) is not a
25purchase, use or sale of service or of tangible personal
26property within the meaning of this Act.

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1 "Serviceman" means any person who is engaged in the
2occupation of making sales of service.
3 "Sale at retail" means "sale at retail" as defined in the
4Retailers' Occupation Tax Act.
5 "Supplier" means any person who makes sales of tangible
6personal property to servicemen for the purpose of resale as an
7incident to a sale of service.
8 "Serviceman maintaining a place of business in this State",
9or any like term, means and includes any serviceman:
10 1. having or maintaining within this State, directly or
11 by a subsidiary, an office, distribution house, sales
12 house, warehouse or other place of business, or any agent
13 or other representative operating within this State under
14 the authority of the serviceman or its subsidiary,
15 irrespective of whether such place of business or agent or
16 other representative is located here permanently or
17 temporarily, or whether such serviceman or subsidiary is
18 licensed to do business in this State;
19 1.1. having a contract with a person located in this
20 State under which the person, for a commission or other
21 consideration based on the sale of service by the
22 serviceman, directly or indirectly refers potential
23 customers to the serviceman by providing to the potential
24 customers a promotional code or other mechanism that allows
25 the serviceman to track purchases referred by such persons.
26 Examples of mechanisms that allow the serviceman to track

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1 purchases referred by such persons include but are not
2 limited to the use of a link on the person's Internet
3 website, promotional codes distributed through the
4 person's hand-delivered or mailed material, and
5 promotional codes distributed by the person through radio
6 or other broadcast media. The provisions of this paragraph
7 1.1 shall apply only if the cumulative gross receipts from
8 sales of service by the serviceman to customers who are
9 referred to the serviceman by all persons in this State
10 under such contracts exceed $10,000 during the preceding 4
11 quarterly periods ending on the last day of March, June,
12 September, and December; a serviceman meeting the
13 requirements of this paragraph 1.1 shall be presumed to be
14 maintaining a place of business in this State but may rebut
15 this presumption by submitting proof that the referrals or
16 other activities pursued within this State by such persons
17 were not sufficient to meet the nexus standards of the
18 United States Constitution during the preceding 4
19 quarterly periods;
20 1.2. beginning July 1, 2011, having a contract with a
21 person located in this State under which:
22 A. the serviceman sells the same or substantially
23 similar line of services as the person located in this
24 State and does so using an identical or substantially
25 similar name, trade name, or trademark as the person
26 located in this State; and

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1 B. the serviceman provides a commission or other
2 consideration to the person located in this State based
3 upon the sale of services by the serviceman.
4 The provisions of this paragraph 1.2 shall apply only if
5 the cumulative gross receipts from sales of service by the
6 serviceman to customers in this State under all such
7 contracts exceed $10,000 during the preceding 4 quarterly
8 periods ending on the last day of March, June, September,
9 and December;
10 2. soliciting orders for tangible personal property by
11 means of a telecommunication or television shopping system
12 (which utilizes toll free numbers) which is intended by the
13 retailer to be broadcast by cable television or other means
14 of broadcasting, to consumers located in this State;
15 3. pursuant to a contract with a broadcaster or
16 publisher located in this State, soliciting orders for
17 tangible personal property by means of advertising which is
18 disseminated primarily to consumers located in this State
19 and only secondarily to bordering jurisdictions;
20 4. soliciting orders for tangible personal property by
21 mail if the solicitations are substantial and recurring and
22 if the retailer benefits from any banking, financing, debt
23 collection, telecommunication, or marketing activities
24 occurring in this State or benefits from the location in
25 this State of authorized installation, servicing, or
26 repair facilities;

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1 5. being owned or controlled by the same interests
2 which own or control any retailer engaging in business in
3 the same or similar line of business in this State;
4 6. having a franchisee or licensee operating under its
5 trade name if the franchisee or licensee is required to
6 collect the tax under this Section;
7 7. pursuant to a contract with a cable television
8 operator located in this State, soliciting orders for
9 tangible personal property by means of advertising which is
10 transmitted or distributed over a cable television system
11 in this State; or
12 8. engaging in activities in Illinois, which
13 activities in the state in which the supply business
14 engaging in such activities is located would constitute
15 maintaining a place of business in that state.
16(Source: P.A. 98-583, eff. 1-1-14; 98-1089, eff. 1-1-15.)
17 (35 ILCS 110/3-5)
18 Sec. 3-5. Exemptions. Use of the following tangible
19personal property is exempt from the tax imposed by this Act:
20 (1) Personal property purchased from a corporation,
21society, association, foundation, institution, or
22organization, other than a limited liability company, that is
23organized and operated as a not-for-profit service enterprise
24for the benefit of persons 65 years of age or older if the
25personal property was not purchased by the enterprise for the

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1purpose of resale by the enterprise.
2 (2) Personal property purchased by a non-profit Illinois
3county fair association for use in conducting, operating, or
4promoting the county fair.
5 (3) Personal property purchased by a not-for-profit arts or
6cultural organization that establishes, by proof required by
7the Department by rule, that it has received an exemption under
8Section 501(c)(3) of the Internal Revenue Code and that is
9organized and operated primarily for the presentation or
10support of arts or cultural programming, activities, or
11services. These organizations include, but are not limited to,
12music and dramatic arts organizations such as symphony
13orchestras and theatrical groups, arts and cultural service
14organizations, local arts councils, visual arts organizations,
15and media arts organizations. On and after the effective date
16of this amendatory Act of the 92nd General Assembly, however,
17an entity otherwise eligible for this exemption shall not make
18tax-free purchases unless it has an active identification
19number issued by the Department.
20 (4) Legal tender, currency, medallions, or gold or silver
21coinage issued by the State of Illinois, the government of the
22United States of America, or the government of any foreign
23country, and bullion.
24 (5) Until July 1, 2003 and beginning again on September 1,
252004 through August 30, 2014, graphic arts machinery and
26equipment, including repair and replacement parts, both new and

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1used, and including that manufactured on special order or
2purchased for lease, certified by the purchaser to be used
3primarily for graphic arts production. Equipment includes
4chemicals or chemicals acting as catalysts but only if the
5chemicals or chemicals acting as catalysts effect a direct and
6immediate change upon a graphic arts product.
7 (6) Personal property purchased from a teacher-sponsored
8student organization affiliated with an elementary or
9secondary school located in Illinois.
10 (7) Farm machinery and equipment, both new and used,
11including that manufactured on special order, certified by the
12purchaser to be used primarily for production agriculture or
13State or federal agricultural programs, including individual
14replacement parts for the machinery and equipment, including
15machinery and equipment purchased for lease, and including
16implements of husbandry defined in Section 1-130 of the
17Illinois Vehicle Code, farm machinery and agricultural
18chemical and fertilizer spreaders, and nurse wagons required to
19be registered under Section 3-809 of the Illinois Vehicle Code,
20but excluding other motor vehicles required to be registered
21under the Illinois Vehicle Code. Horticultural polyhouses or
22hoop houses used for propagating, growing, or overwintering
23plants shall be considered farm machinery and equipment under
24this item (7). Agricultural chemical tender tanks and dry boxes
25shall include units sold separately from a motor vehicle
26required to be licensed and units sold mounted on a motor

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1vehicle required to be licensed if the selling price of the
2tender is separately stated.
3 Farm machinery and equipment shall include precision
4farming equipment that is installed or purchased to be
5installed on farm machinery and equipment including, but not
6limited to, tractors, harvesters, sprayers, planters, seeders,
7or spreaders. Precision farming equipment includes, but is not
8limited to, soil testing sensors, computers, monitors,
9software, global positioning and mapping systems, and other
10such equipment.
11 Farm machinery and equipment also includes computers,
12sensors, software, and related equipment used primarily in the
13computer-assisted operation of production agriculture
14facilities, equipment, and activities such as, but not limited
15to, the collection, monitoring, and correlation of animal and
16crop data for the purpose of formulating animal diets and
17agricultural chemicals. This item (7) is exempt from the
18provisions of Section 3-75.
19 (8) Until June 30, 2013, fuel and petroleum products sold
20to or used by an air common carrier, certified by the carrier
21to be used for consumption, shipment, or storage in the conduct
22of its business as an air common carrier, for a flight destined
23for or returning from a location or locations outside the
24United States without regard to previous or subsequent domestic
25stopovers.
26 Beginning July 1, 2013, fuel and petroleum products sold to

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1or used by an air carrier, certified by the carrier to be used
2for consumption, shipment, or storage in the conduct of its
3business as an air common carrier, for a flight that (i) is
4engaged in foreign trade or is engaged in trade between the
5United States and any of its possessions and (ii) transports at
6least one individual or package for hire from the city of
7origination to the city of final destination on the same
8aircraft, without regard to a change in the flight number of
9that aircraft.
10 (9) Proceeds of mandatory service charges separately
11stated on customers' bills for the purchase and consumption of
12food and beverages acquired as an incident to the purchase of a
13service from a serviceman, to the extent that the proceeds of
14the service charge are in fact turned over as tips or as a
15substitute for tips to the employees who participate directly
16in preparing, serving, hosting or cleaning up the food or
17beverage function with respect to which the service charge is
18imposed.
19 (10) Until July 1, 2003, oil field exploration, drilling,
20and production equipment, including (i) rigs and parts of rigs,
21rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
22tubular goods, including casing and drill strings, (iii) pumps
23and pump-jack units, (iv) storage tanks and flow lines, (v) any
24individual replacement part for oil field exploration,
25drilling, and production equipment, and (vi) machinery and
26equipment purchased for lease; but excluding motor vehicles

HB0160 Engrossed- 145 -LRB100 02289 HLH 12294 b
1required to be registered under the Illinois Vehicle Code.
2 (11) Proceeds from the sale of photoprocessing machinery
3and equipment, including repair and replacement parts, both new
4and used, including that manufactured on special order,
5certified by the purchaser to be used primarily for
6photoprocessing, and including photoprocessing machinery and
7equipment purchased for lease.
8 (12) Until December 31, 2022, coal Coal and aggregate
9exploration, mining, off-highway hauling, processing,
10maintenance, and reclamation equipment, including replacement
11parts and equipment, and including equipment purchased for
12lease, but excluding motor vehicles required to be registered
13under the Illinois Vehicle Code. The changes made to this
14Section by Public Act 97-767 apply on and after July 1, 2003,
15but no claim for credit or refund is allowed on or after August
1616, 2013 (the effective date of Public Act 98-456) for such
17taxes paid during the period beginning July 1, 2003 and ending
18on August 16, 2013 (the effective date of Public Act 98-456).
19 (13) Semen used for artificial insemination of livestock
20for direct agricultural production.
21 (14) Horses, or interests in horses, registered with and
22meeting the requirements of any of the Arabian Horse Club
23Registry of America, Appaloosa Horse Club, American Quarter
24Horse Association, United States Trotting Association, or
25Jockey Club, as appropriate, used for purposes of breeding or
26racing for prizes. This item (14) is exempt from the provisions

HB0160 Engrossed- 146 -LRB100 02289 HLH 12294 b
1of Section 3-75, and the exemption provided for under this item
2(14) applies for all periods beginning May 30, 1995, but no
3claim for credit or refund is allowed on or after the effective
4date of this amendatory Act of the 95th General Assembly for
5such taxes paid during the period beginning May 30, 2000 and
6ending on the effective date of this amendatory Act of the 95th
7General Assembly.
8 (15) Computers and communications equipment utilized for
9any hospital purpose and equipment used in the diagnosis,
10analysis, or treatment of hospital patients purchased by a
11lessor who leases the equipment, under a lease of one year or
12longer executed or in effect at the time the lessor would
13otherwise be subject to the tax imposed by this Act, to a
14hospital that has been issued an active tax exemption
15identification number by the Department under Section 1g of the
16Retailers' Occupation Tax Act. If the equipment is leased in a
17manner that does not qualify for this exemption or is used in
18any other non-exempt manner, the lessor shall be liable for the
19tax imposed under this Act or the Use Tax Act, as the case may
20be, based on the fair market value of the property at the time
21the non-qualifying use occurs. No lessor shall collect or
22attempt to collect an amount (however designated) that purports
23to reimburse that lessor for the tax imposed by this Act or the
24Use Tax Act, as the case may be, if the tax has not been paid by
25the lessor. If a lessor improperly collects any such amount
26from the lessee, the lessee shall have a legal right to claim a

HB0160 Engrossed- 147 -LRB100 02289 HLH 12294 b
1refund of that amount from the lessor. If, however, that amount
2is not refunded to the lessee for any reason, the lessor is
3liable to pay that amount to the Department.
4 (16) Personal property purchased by a lessor who leases the
5property, under a lease of one year or longer executed or in
6effect at the time the lessor would otherwise be subject to the
7tax imposed by this Act, to a governmental body that has been
8issued an active tax exemption identification number by the
9Department under Section 1g of the Retailers' Occupation Tax
10Act. If the property is leased in a manner that does not
11qualify for this exemption or is used in any other non-exempt
12manner, the lessor shall be liable for the tax imposed under
13this Act or the Use Tax Act, as the case may be, based on the
14fair market value of the property at the time the
15non-qualifying use occurs. No lessor shall collect or attempt
16to collect an amount (however designated) that purports to
17reimburse that lessor for the tax imposed by this Act or the
18Use Tax Act, as the case may be, if the tax has not been paid by
19the lessor. If a lessor improperly collects any such amount
20from the lessee, the lessee shall have a legal right to claim a
21refund of that amount from the lessor. If, however, that amount
22is not refunded to the lessee for any reason, the lessor is
23liable to pay that amount to the Department.
24 (17) Beginning with taxable years ending on or after
25December 31, 1995 and ending with taxable years ending on or
26before December 31, 2004, personal property that is donated for

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1disaster relief to be used in a State or federally declared
2disaster area in Illinois or bordering Illinois by a
3manufacturer or retailer that is registered in this State to a
4corporation, society, association, foundation, or institution
5that has been issued a sales tax exemption identification
6number by the Department that assists victims of the disaster
7who reside within the declared disaster area.
8 (18) Beginning with taxable years ending on or after
9December 31, 1995 and ending with taxable years ending on or
10before December 31, 2004, personal property that is used in the
11performance of infrastructure repairs in this State, including
12but not limited to municipal roads and streets, access roads,
13bridges, sidewalks, waste disposal systems, water and sewer
14line extensions, water distribution and purification
15facilities, storm water drainage and retention facilities, and
16sewage treatment facilities, resulting from a State or
17federally declared disaster in Illinois or bordering Illinois
18when such repairs are initiated on facilities located in the
19declared disaster area within 6 months after the disaster.
20 (19) Beginning July 1, 1999, game or game birds purchased
21at a "game breeding and hunting preserve area" as that term is
22used in the Wildlife Code. This paragraph is exempt from the
23provisions of Section 3-75.
24 (20) A motor vehicle, as that term is defined in Section
251-146 of the Illinois Vehicle Code, that is donated to a
26corporation, limited liability company, society, association,

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1foundation, or institution that is determined by the Department
2to be organized and operated exclusively for educational
3purposes. For purposes of this exemption, "a corporation,
4limited liability company, society, association, foundation,
5or institution organized and operated exclusively for
6educational purposes" means all tax-supported public schools,
7private schools that offer systematic instruction in useful
8branches of learning by methods common to public schools and
9that compare favorably in their scope and intensity with the
10course of study presented in tax-supported schools, and
11vocational or technical schools or institutes organized and
12operated exclusively to provide a course of study of not less
13than 6 weeks duration and designed to prepare individuals to
14follow a trade or to pursue a manual, technical, mechanical,
15industrial, business, or commercial occupation.
16 (21) Beginning January 1, 2000, personal property,
17including food, purchased through fundraising events for the
18benefit of a public or private elementary or secondary school,
19a group of those schools, or one or more school districts if
20the events are sponsored by an entity recognized by the school
21district that consists primarily of volunteers and includes
22parents and teachers of the school children. This paragraph
23does not apply to fundraising events (i) for the benefit of
24private home instruction or (ii) for which the fundraising
25entity purchases the personal property sold at the events from
26another individual or entity that sold the property for the

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1purpose of resale by the fundraising entity and that profits
2from the sale to the fundraising entity. This paragraph is
3exempt from the provisions of Section 3-75.
4 (22) Beginning January 1, 2000 and through December 31,
52001, new or used automatic vending machines that prepare and
6serve hot food and beverages, including coffee, soup, and other
7items, and replacement parts for these machines. Beginning
8January 1, 2002 and through June 30, 2003, machines and parts
9for machines used in commercial, coin-operated amusement and
10vending business if a use or occupation tax is paid on the
11gross receipts derived from the use of the commercial,
12coin-operated amusement and vending machines. This paragraph
13is exempt from the provisions of Section 3-75.
14 (23) Beginning August 23, 2001 and through June 30, 2016,
15food for human consumption that is to be consumed off the
16premises where it is sold (other than alcoholic beverages, soft
17drinks, and food that has been prepared for immediate
18consumption) and prescription and nonprescription medicines,
19drugs, medical appliances, and insulin, urine testing
20materials, syringes, and needles used by diabetics, for human
21use, when purchased for use by a person receiving medical
22assistance under Article V of the Illinois Public Aid Code who
23resides in a licensed long-term care facility, as defined in
24the Nursing Home Care Act, or in a licensed facility as defined
25in the ID/DD Community Care Act, the MC/DD Act, or the
26Specialized Mental Health Rehabilitation Act of 2013.

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1 (24) Beginning on the effective date of this amendatory Act
2of the 92nd General Assembly, computers and communications
3equipment utilized for any hospital purpose and equipment used
4in the diagnosis, analysis, or treatment of hospital patients
5purchased by a lessor who leases the equipment, under a lease
6of one year or longer executed or in effect at the time the
7lessor would otherwise be subject to the tax imposed by this
8Act, to a hospital that has been issued an active tax exemption
9identification number by the Department under Section 1g of the
10Retailers' Occupation Tax Act. If the equipment is leased in a
11manner that does not qualify for this exemption or is used in
12any other nonexempt manner, the lessor shall be liable for the
13tax imposed under this Act or the Use Tax Act, as the case may
14be, based on the fair market value of the property at the time
15the nonqualifying use occurs. No lessor shall collect or
16attempt to collect an amount (however designated) that purports
17to reimburse that lessor for the tax imposed by this Act or the
18Use Tax Act, as the case may be, if the tax has not been paid by
19the lessor. If a lessor improperly collects any such amount
20from the lessee, the lessee shall have a legal right to claim a
21refund of that amount from the lessor. If, however, that amount
22is not refunded to the lessee for any reason, the lessor is
23liable to pay that amount to the Department. This paragraph is
24exempt from the provisions of Section 3-75.
25 (25) Beginning on the effective date of this amendatory Act
26of the 92nd General Assembly, personal property purchased by a

HB0160 Engrossed- 152 -LRB100 02289 HLH 12294 b
1lessor who leases the property, under a lease of one year or
2longer executed or in effect at the time the lessor would
3otherwise be subject to the tax imposed by this Act, to a
4governmental body that has been issued an active tax exemption
5identification number by the Department under Section 1g of the
6Retailers' Occupation Tax Act. If the property is leased in a
7manner that does not qualify for this exemption or is used in
8any other nonexempt manner, the lessor shall be liable for the
9tax imposed under this Act or the Use Tax Act, as the case may
10be, based on the fair market value of the property at the time
11the nonqualifying use occurs. No lessor shall collect or
12attempt to collect an amount (however designated) that purports
13to reimburse that lessor for the tax imposed by this Act or the
14Use Tax Act, as the case may be, if the tax has not been paid by
15the lessor. If a lessor improperly collects any such amount
16from the lessee, the lessee shall have a legal right to claim a
17refund of that amount from the lessor. If, however, that amount
18is not refunded to the lessee for any reason, the lessor is
19liable to pay that amount to the Department. This paragraph is
20exempt from the provisions of Section 3-75.
21 (26) Beginning January 1, 2008, tangible personal property
22used in the construction or maintenance of a community water
23supply, as defined under Section 3.145 of the Environmental
24Protection Act, that is operated by a not-for-profit
25corporation that holds a valid water supply permit issued under
26Title IV of the Environmental Protection Act. This paragraph is

HB0160 Engrossed- 153 -LRB100 02289 HLH 12294 b
1exempt from the provisions of Section 3-75.
2 (27) Beginning January 1, 2010, materials, parts,
3equipment, components, and furnishings incorporated into or
4upon an aircraft as part of the modification, refurbishment,
5completion, replacement, repair, or maintenance of the
6aircraft. This exemption includes consumable supplies used in
7the modification, refurbishment, completion, replacement,
8repair, and maintenance of aircraft, but excludes any
9materials, parts, equipment, components, and consumable
10supplies used in the modification, replacement, repair, and
11maintenance of aircraft engines or power plants, whether such
12engines or power plants are installed or uninstalled upon any
13such aircraft. "Consumable supplies" include, but are not
14limited to, adhesive, tape, sandpaper, general purpose
15lubricants, cleaning solution, latex gloves, and protective
16films. This exemption applies only to the use of qualifying
17tangible personal property transferred incident to the
18modification, refurbishment, completion, replacement, repair,
19or maintenance of aircraft by persons who (i) hold an Air
20Agency Certificate and are empowered to operate an approved
21repair station by the Federal Aviation Administration, (ii)
22have a Class IV Rating, and (iii) conduct operations in
23accordance with Part 145 of the Federal Aviation Regulations.
24The exemption does not include aircraft operated by a
25commercial air carrier providing scheduled passenger air
26service pursuant to authority issued under Part 121 or Part 129

HB0160 Engrossed- 154 -LRB100 02289 HLH 12294 b
1of the Federal Aviation Regulations. The changes made to this
2paragraph (27) by Public Act 98-534 are declarative of existing
3law.
4 (28) Tangible personal property purchased by a
5public-facilities corporation, as described in Section
611-65-10 of the Illinois Municipal Code, for purposes of
7constructing or furnishing a municipal convention hall, but
8only if the legal title to the municipal convention hall is
9transferred to the municipality without any further
10consideration by or on behalf of the municipality at the time
11of the completion of the municipal convention hall or upon the
12retirement or redemption of any bonds or other debt instruments
13issued by the public-facilities corporation in connection with
14the development of the municipal convention hall. This
15exemption includes existing public-facilities corporations as
16provided in Section 11-65-25 of the Illinois Municipal Code.
17This paragraph is exempt from the provisions of Section 3-75.
18 (29) Beginning January 1, 2017, menstrual pads, tampons,
19and menstrual cups.
20(Source: P.A. 98-104, eff. 7-22-13; 98-422, eff. 8-16-13;
2198-456, eff. 8-16-13; 98-534, eff. 8-23-13; 98-756, eff.
227-16-14; 99-180, eff. 7-29-15; 99-855, eff. 8-19-16.)
23 Section 20-15. The Service Occupation Tax Act is amended by
24changing Section 3-5 as follows:

HB0160 Engrossed- 155 -LRB100 02289 HLH 12294 b
1 (35 ILCS 115/3-5)
2 Sec. 3-5. Exemptions. The following tangible personal
3property is exempt from the tax imposed by this Act:
4 (1) Personal property sold by a corporation, society,
5association, foundation, institution, or organization, other
6than a limited liability company, that is organized and
7operated as a not-for-profit service enterprise for the benefit
8of persons 65 years of age or older if the personal property
9was not purchased by the enterprise for the purpose of resale
10by the enterprise.
11 (2) Personal property purchased by a not-for-profit
12Illinois county fair association for use in conducting,
13operating, or promoting the county fair.
14 (3) Personal property purchased by any not-for-profit arts
15or cultural organization that establishes, by proof required by
16the Department by rule, that it has received an exemption under
17Section 501(c)(3) of the Internal Revenue Code and that is
18organized and operated primarily for the presentation or
19support of arts or cultural programming, activities, or
20services. These organizations include, but are not limited to,
21music and dramatic arts organizations such as symphony
22orchestras and theatrical groups, arts and cultural service
23organizations, local arts councils, visual arts organizations,
24and media arts organizations. On and after the effective date
25of this amendatory Act of the 92nd General Assembly, however,
26an entity otherwise eligible for this exemption shall not make

HB0160 Engrossed- 156 -LRB100 02289 HLH 12294 b
1tax-free purchases unless it has an active identification
2number issued by the Department.
3 (4) Legal tender, currency, medallions, or gold or silver
4coinage issued by the State of Illinois, the government of the
5United States of America, or the government of any foreign
6country, and bullion.
7 (5) Until July 1, 2003 and beginning again on September 1,
82004 through August 30, 2014, graphic arts machinery and
9equipment, including repair and replacement parts, both new and
10used, and including that manufactured on special order or
11purchased for lease, certified by the purchaser to be used
12primarily for graphic arts production. Equipment includes
13chemicals or chemicals acting as catalysts but only if the
14chemicals or chemicals acting as catalysts effect a direct and
15immediate change upon a graphic arts product.
16 (6) Personal property sold by a teacher-sponsored student
17organization affiliated with an elementary or secondary school
18located in Illinois.
19 (7) Farm machinery and equipment, both new and used,
20including that manufactured on special order, certified by the
21purchaser to be used primarily for production agriculture or
22State or federal agricultural programs, including individual
23replacement parts for the machinery and equipment, including
24machinery and equipment purchased for lease, and including
25implements of husbandry defined in Section 1-130 of the
26Illinois Vehicle Code, farm machinery and agricultural

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1chemical and fertilizer spreaders, and nurse wagons required to
2be registered under Section 3-809 of the Illinois Vehicle Code,
3but excluding other motor vehicles required to be registered
4under the Illinois Vehicle Code. Horticultural polyhouses or
5hoop houses used for propagating, growing, or overwintering
6plants shall be considered farm machinery and equipment under
7this item (7). Agricultural chemical tender tanks and dry boxes
8shall include units sold separately from a motor vehicle
9required to be licensed and units sold mounted on a motor
10vehicle required to be licensed if the selling price of the
11tender is separately stated.
12 Farm machinery and equipment shall include precision
13farming equipment that is installed or purchased to be
14installed on farm machinery and equipment including, but not
15limited to, tractors, harvesters, sprayers, planters, seeders,
16or spreaders. Precision farming equipment includes, but is not
17limited to, soil testing sensors, computers, monitors,
18software, global positioning and mapping systems, and other
19such equipment.
20 Farm machinery and equipment also includes computers,
21sensors, software, and related equipment used primarily in the
22computer-assisted operation of production agriculture
23facilities, equipment, and activities such as, but not limited
24to, the collection, monitoring, and correlation of animal and
25crop data for the purpose of formulating animal diets and
26agricultural chemicals. This item (7) is exempt from the

HB0160 Engrossed- 158 -LRB100 02289 HLH 12294 b
1provisions of Section 3-55.
2 (8) Until June 30, 2013, fuel and petroleum products sold
3to or used by an air common carrier, certified by the carrier
4to be used for consumption, shipment, or storage in the conduct
5of its business as an air common carrier, for a flight destined
6for or returning from a location or locations outside the
7United States without regard to previous or subsequent domestic
8stopovers.
9 Beginning July 1, 2013, fuel and petroleum products sold to
10or used by an air carrier, certified by the carrier to be used
11for consumption, shipment, or storage in the conduct of its
12business as an air common carrier, for a flight that (i) is
13engaged in foreign trade or is engaged in trade between the
14United States and any of its possessions and (ii) transports at
15least one individual or package for hire from the city of
16origination to the city of final destination on the same
17aircraft, without regard to a change in the flight number of
18that aircraft.
19 (9) Proceeds of mandatory service charges separately
20stated on customers' bills for the purchase and consumption of
21food and beverages, to the extent that the proceeds of the
22service charge are in fact turned over as tips or as a
23substitute for tips to the employees who participate directly
24in preparing, serving, hosting or cleaning up the food or
25beverage function with respect to which the service charge is
26imposed.

HB0160 Engrossed- 159 -LRB100 02289 HLH 12294 b
1 (10) Until July 1, 2003, oil field exploration, drilling,
2and production equipment, including (i) rigs and parts of rigs,
3rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
4tubular goods, including casing and drill strings, (iii) pumps
5and pump-jack units, (iv) storage tanks and flow lines, (v) any
6individual replacement part for oil field exploration,
7drilling, and production equipment, and (vi) machinery and
8equipment purchased for lease; but excluding motor vehicles
9required to be registered under the Illinois Vehicle Code.
10 (11) Photoprocessing machinery and equipment, including
11repair and replacement parts, both new and used, including that
12manufactured on special order, certified by the purchaser to be
13used primarily for photoprocessing, and including
14photoprocessing machinery and equipment purchased for lease.
15 (12) Until December 31, 2022, coal Coal and aggregate
16exploration, mining, off-highway hauling, processing,
17maintenance, and reclamation equipment, including replacement
18parts and equipment, and including equipment purchased for
19lease, but excluding motor vehicles required to be registered
20under the Illinois Vehicle Code. The changes made to this
21Section by Public Act 97-767 apply on and after July 1, 2003,
22but no claim for credit or refund is allowed on or after August
2316, 2013 (the effective date of Public Act 98-456) for such
24taxes paid during the period beginning July 1, 2003 and ending
25on August 16, 2013 (the effective date of Public Act 98-456).
26 (13) Beginning January 1, 1992 and through June 30, 2016,

HB0160 Engrossed- 160 -LRB100 02289 HLH 12294 b
1food for human consumption that is to be consumed off the
2premises where it is sold (other than alcoholic beverages, soft
3drinks and food that has been prepared for immediate
4consumption) and prescription and non-prescription medicines,
5drugs, medical appliances, and insulin, urine testing
6materials, syringes, and needles used by diabetics, for human
7use, when purchased for use by a person receiving medical
8assistance under Article V of the Illinois Public Aid Code who
9resides in a licensed long-term care facility, as defined in
10the Nursing Home Care Act, or in a licensed facility as defined
11in the ID/DD Community Care Act, the MC/DD Act, or the
12Specialized Mental Health Rehabilitation Act of 2013.
13 (14) Semen used for artificial insemination of livestock
14for direct agricultural production.
15 (15) Horses, or interests in horses, registered with and
16meeting the requirements of any of the Arabian Horse Club
17Registry of America, Appaloosa Horse Club, American Quarter
18Horse Association, United States Trotting Association, or
19Jockey Club, as appropriate, used for purposes of breeding or
20racing for prizes. This item (15) is exempt from the provisions
21of Section 3-55, and the exemption provided for under this item
22(15) applies for all periods beginning May 30, 1995, but no
23claim for credit or refund is allowed on or after January 1,
242008 (the effective date of Public Act 95-88) for such taxes
25paid during the period beginning May 30, 2000 and ending on
26January 1, 2008 (the effective date of Public Act 95-88).

HB0160 Engrossed- 161 -LRB100 02289 HLH 12294 b
1 (16) Computers and communications equipment utilized for
2any hospital purpose and equipment used in the diagnosis,
3analysis, or treatment of hospital patients sold to a lessor
4who leases the equipment, under a lease of one year or longer
5executed or in effect at the time of the purchase, to a
6hospital that has been issued an active tax exemption
7identification number by the Department under Section 1g of the
8Retailers' Occupation Tax Act.
9 (17) Personal property sold to a lessor who leases the
10property, under a lease of one year or longer executed or in
11effect at the time of the purchase, to a governmental body that
12has been issued an active tax exemption identification number
13by the Department under Section 1g of the Retailers' Occupation
14Tax Act.
15 (18) Beginning with taxable years ending on or after
16December 31, 1995 and ending with taxable years ending on or
17before December 31, 2004, personal property that is donated for
18disaster relief to be used in a State or federally declared
19disaster area in Illinois or bordering Illinois by a
20manufacturer or retailer that is registered in this State to a
21corporation, society, association, foundation, or institution
22that has been issued a sales tax exemption identification
23number by the Department that assists victims of the disaster
24who reside within the declared disaster area.
25 (19) Beginning with taxable years ending on or after
26December 31, 1995 and ending with taxable years ending on or

HB0160 Engrossed- 162 -LRB100 02289 HLH 12294 b
1before December 31, 2004, personal property that is used in the
2performance of infrastructure repairs in this State, including
3but not limited to municipal roads and streets, access roads,
4bridges, sidewalks, waste disposal systems, water and sewer
5line extensions, water distribution and purification
6facilities, storm water drainage and retention facilities, and
7sewage treatment facilities, resulting from a State or
8federally declared disaster in Illinois or bordering Illinois
9when such repairs are initiated on facilities located in the
10declared disaster area within 6 months after the disaster.
11 (20) Beginning July 1, 1999, game or game birds sold at a
12"game breeding and hunting preserve area" as that term is used
13in the Wildlife Code. This paragraph is exempt from the
14provisions of Section 3-55.
15 (21) A motor vehicle, as that term is defined in Section
161-146 of the Illinois Vehicle Code, that is donated to a
17corporation, limited liability company, society, association,
18foundation, or institution that is determined by the Department
19to be organized and operated exclusively for educational
20purposes. For purposes of this exemption, "a corporation,
21limited liability company, society, association, foundation,
22or institution organized and operated exclusively for
23educational purposes" means all tax-supported public schools,
24private schools that offer systematic instruction in useful
25branches of learning by methods common to public schools and
26that compare favorably in their scope and intensity with the

HB0160 Engrossed- 163 -LRB100 02289 HLH 12294 b
1course of study presented in tax-supported schools, and
2vocational or technical schools or institutes organized and
3operated exclusively to provide a course of study of not less
4than 6 weeks duration and designed to prepare individuals to
5follow a trade or to pursue a manual, technical, mechanical,
6industrial, business, or commercial occupation.
7 (22) Beginning January 1, 2000, personal property,
8including food, purchased through fundraising events for the
9benefit of a public or private elementary or secondary school,
10a group of those schools, or one or more school districts if
11the events are sponsored by an entity recognized by the school
12district that consists primarily of volunteers and includes
13parents and teachers of the school children. This paragraph
14does not apply to fundraising events (i) for the benefit of
15private home instruction or (ii) for which the fundraising
16entity purchases the personal property sold at the events from
17another individual or entity that sold the property for the
18purpose of resale by the fundraising entity and that profits
19from the sale to the fundraising entity. This paragraph is
20exempt from the provisions of Section 3-55.
21 (23) Beginning January 1, 2000 and through December 31,
222001, new or used automatic vending machines that prepare and
23serve hot food and beverages, including coffee, soup, and other
24items, and replacement parts for these machines. Beginning
25January 1, 2002 and through June 30, 2003, machines and parts
26for machines used in commercial, coin-operated amusement and

HB0160 Engrossed- 164 -LRB100 02289 HLH 12294 b
1vending business if a use or occupation tax is paid on the
2gross receipts derived from the use of the commercial,
3coin-operated amusement and vending machines. This paragraph
4is exempt from the provisions of Section 3-55.
5 (24) Beginning on the effective date of this amendatory Act
6of the 92nd General Assembly, computers and communications
7equipment utilized for any hospital purpose and equipment used
8in the diagnosis, analysis, or treatment of hospital patients
9sold to a lessor who leases the equipment, under a lease of one
10year or longer executed or in effect at the time of the
11purchase, to a hospital that has been issued an active tax
12exemption identification number by the Department under
13Section 1g of the Retailers' Occupation Tax Act. This paragraph
14is exempt from the provisions of Section 3-55.
15 (25) Beginning on the effective date of this amendatory Act
16of the 92nd General Assembly, personal property sold to a
17lessor who leases the property, under a lease of one year or
18longer executed or in effect at the time of the purchase, to a
19governmental body that has been issued an active tax exemption
20identification number by the Department under Section 1g of the
21Retailers' Occupation Tax Act. This paragraph is exempt from
22the provisions of Section 3-55.
23 (26) Beginning on January 1, 2002 and through June 30,
242016, tangible personal property purchased from an Illinois
25retailer by a taxpayer engaged in centralized purchasing
26activities in Illinois who will, upon receipt of the property

HB0160 Engrossed- 165 -LRB100 02289 HLH 12294 b
1in Illinois, temporarily store the property in Illinois (i) for
2the purpose of subsequently transporting it outside this State
3for use or consumption thereafter solely outside this State or
4(ii) for the purpose of being processed, fabricated, or
5manufactured into, attached to, or incorporated into other
6tangible personal property to be transported outside this State
7and thereafter used or consumed solely outside this State. The
8Director of Revenue shall, pursuant to rules adopted in
9accordance with the Illinois Administrative Procedure Act,
10issue a permit to any taxpayer in good standing with the
11Department who is eligible for the exemption under this
12paragraph (26). The permit issued under this paragraph (26)
13shall authorize the holder, to the extent and in the manner
14specified in the rules adopted under this Act, to purchase
15tangible personal property from a retailer exempt from the
16taxes imposed by this Act. Taxpayers shall maintain all
17necessary books and records to substantiate the use and
18consumption of all such tangible personal property outside of
19the State of Illinois.
20 (27) Beginning January 1, 2008, tangible personal property
21used in the construction or maintenance of a community water
22supply, as defined under Section 3.145 of the Environmental
23Protection Act, that is operated by a not-for-profit
24corporation that holds a valid water supply permit issued under
25Title IV of the Environmental Protection Act. This paragraph is
26exempt from the provisions of Section 3-55.

HB0160 Engrossed- 166 -LRB100 02289 HLH 12294 b
1 (28) Tangible personal property sold to a
2public-facilities corporation, as described in Section
311-65-10 of the Illinois Municipal Code, for purposes of
4constructing or furnishing a municipal convention hall, but
5only if the legal title to the municipal convention hall is
6transferred to the municipality without any further
7consideration by or on behalf of the municipality at the time
8of the completion of the municipal convention hall or upon the
9retirement or redemption of any bonds or other debt instruments
10issued by the public-facilities corporation in connection with
11the development of the municipal convention hall. This
12exemption includes existing public-facilities corporations as
13provided in Section 11-65-25 of the Illinois Municipal Code.
14This paragraph is exempt from the provisions of Section 3-55.
15 (29) Beginning January 1, 2010, materials, parts,
16equipment, components, and furnishings incorporated into or
17upon an aircraft as part of the modification, refurbishment,
18completion, replacement, repair, or maintenance of the
19aircraft. This exemption includes consumable supplies used in
20the modification, refurbishment, completion, replacement,
21repair, and maintenance of aircraft, but excludes any
22materials, parts, equipment, components, and consumable
23supplies used in the modification, replacement, repair, and
24maintenance of aircraft engines or power plants, whether such
25engines or power plants are installed or uninstalled upon any
26such aircraft. "Consumable supplies" include, but are not

HB0160 Engrossed- 167 -LRB100 02289 HLH 12294 b
1limited to, adhesive, tape, sandpaper, general purpose
2lubricants, cleaning solution, latex gloves, and protective
3films. This exemption applies only to the transfer of
4qualifying tangible personal property incident to the
5modification, refurbishment, completion, replacement, repair,
6or maintenance of an aircraft by persons who (i) hold an Air
7Agency Certificate and are empowered to operate an approved
8repair station by the Federal Aviation Administration, (ii)
9have a Class IV Rating, and (iii) conduct operations in
10accordance with Part 145 of the Federal Aviation Regulations.
11The exemption does not include aircraft operated by a
12commercial air carrier providing scheduled passenger air
13service pursuant to authority issued under Part 121 or Part 129
14of the Federal Aviation Regulations. The changes made to this
15paragraph (29) by Public Act 98-534 are declarative of existing
16law.
17 (30) Beginning January 1, 2017, menstrual pads, tampons,
18and menstrual cups.
19(Source: P.A. 98-104, eff. 7-22-13; 98-422, eff. 8-16-13;
2098-456, eff. 8-16-13; 98-534, eff. 8-23-13; 98-756, eff.
217-16-14; 99-180, eff. 7-29-15; 99-855, eff. 8-19-16.)
22 Section 20-20. The Retailers' Occupation Tax Act is amended
23by changing Sections 1, 2-5, and 2a as follows:
24 (35 ILCS 120/1) (from Ch. 120, par. 440)

HB0160 Engrossed- 168 -LRB100 02289 HLH 12294 b
1 Sec. 1. Definitions. "Sale at retail" means any transfer of
2the ownership of or title to tangible personal property to a
3purchaser, for the purpose of use or consumption, and not for
4the purpose of resale in any form as tangible personal property
5to the extent not first subjected to a use for which it was
6purchased, for a valuable consideration: Provided that the
7property purchased is deemed to be purchased for the purpose of
8resale, despite first being used, to the extent to which it is
9resold as an ingredient of an intentionally produced product or
10byproduct of manufacturing. For this purpose, slag produced as
11an incident to manufacturing pig iron or steel and sold is
12considered to be an intentionally produced byproduct of
13manufacturing. Transactions whereby the possession of the
14property is transferred but the seller retains the title as
15security for payment of the selling price shall be deemed to be
16sales.
17 "Sale at retail" shall be construed to include any transfer
18of the ownership of or title to tangible personal property to a
19purchaser, for use or consumption by any other person to whom
20such purchaser may transfer the tangible personal property
21without a valuable consideration, and to include any transfer,
22whether made for or without a valuable consideration, for
23resale in any form as tangible personal property unless made in
24compliance with Section 2c of this Act.
25 Sales of tangible personal property, which property, to the
26extent not first subjected to a use for which it was purchased,

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1as an ingredient or constituent, goes into and forms a part of
2tangible personal property subsequently the subject of a "Sale
3at retail", are not sales at retail as defined in this Act:
4Provided that the property purchased is deemed to be purchased
5for the purpose of resale, despite first being used, to the
6extent to which it is resold as an ingredient of an
7intentionally produced product or byproduct of manufacturing.
8 "Sale at retail" shall be construed to include any Illinois
9florist's sales transaction in which the purchase order is
10received in Illinois by a florist and the sale is for use or
11consumption, but the Illinois florist has a florist in another
12state deliver the property to the purchaser or the purchaser's
13donee in such other state.
14 Nonreusable tangible personal property that is used by
15persons engaged in the business of operating a restaurant,
16cafeteria, or drive-in is a sale for resale when it is
17transferred to customers in the ordinary course of business as
18part of the sale of food or beverages and is used to deliver,
19package, or consume food or beverages, regardless of where
20consumption of the food or beverages occurs. Examples of those
21items include, but are not limited to nonreusable, paper and
22plastic cups, plates, baskets, boxes, sleeves, buckets or other
23containers, utensils, straws, placemats, napkins, doggie bags,
24and wrapping or packaging materials that are transferred to
25customers as part of the sale of food or beverages in the
26ordinary course of business.

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1 The purchase, employment and transfer of such tangible
2personal property as newsprint and ink for the primary purpose
3of conveying news (with or without other information) is not a
4purchase, use or sale of tangible personal property.
5 A person whose activities are organized and conducted
6primarily as a not-for-profit service enterprise, and who
7engages in selling tangible personal property at retail
8(whether to the public or merely to members and their guests)
9is engaged in the business of selling tangible personal
10property at retail with respect to such transactions, excepting
11only a person organized and operated exclusively for
12charitable, religious or educational purposes either (1), to
13the extent of sales by such person to its members, students,
14patients or inmates of tangible personal property to be used
15primarily for the purposes of such person, or (2), to the
16extent of sales by such person of tangible personal property
17which is not sold or offered for sale by persons organized for
18profit. The selling of school books and school supplies by
19schools at retail to students is not "primarily for the
20purposes of" the school which does such selling. The provisions
21of this paragraph shall not apply to nor subject to taxation
22occasional dinners, socials or similar activities of a person
23organized and operated exclusively for charitable, religious
24or educational purposes, whether or not such activities are
25open to the public.
26 A person who is the recipient of a grant or contract under

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1Title VII of the Older Americans Act of 1965 (P.L. 92-258) and
2serves meals to participants in the federal Nutrition Program
3for the Elderly in return for contributions established in
4amount by the individual participant pursuant to a schedule of
5suggested fees as provided for in the federal Act is not
6engaged in the business of selling tangible personal property
7at retail with respect to such transactions.
8 "Purchaser" means anyone who, through a sale at retail,
9acquires the ownership of or title to tangible personal
10property for a valuable consideration.
11 "Reseller of motor fuel" means any person engaged in the
12business of selling or delivering or transferring title of
13motor fuel to another person other than for use or consumption.
14No person shall act as a reseller of motor fuel within this
15State without first being registered as a reseller pursuant to
16Section 2c or a retailer pursuant to Section 2a.
17 "Selling price" or the "amount of sale" means the
18consideration for a sale valued in money whether received in
19money or otherwise, including cash, credits, property, other
20than as hereinafter provided, and services, but not including
21the value of or credit given for traded-in tangible personal
22property where the item that is traded-in is of like kind and
23character as that which is being sold, and shall be determined
24without any deduction on account of the cost of the property
25sold, the cost of materials used, labor or service cost or any
26other expense whatsoever, but does not include charges that are

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1added to prices by sellers on account of the seller's tax
2liability under this Act, or on account of the seller's duty to
3collect, from the purchaser, the tax that is imposed by the Use
4Tax Act, or, except as otherwise provided with respect to any
5cigarette tax imposed by a home rule unit, on account of the
6seller's tax liability under any local occupation tax
7administered by the Department, or, except as otherwise
8provided with respect to any cigarette tax imposed by a home
9rule unit on account of the seller's duty to collect, from the
10purchasers, the tax that is imposed under any local use tax
11administered by the Department. Effective December 1, 1985,
12"selling price" shall include charges that are added to prices
13by sellers on account of the seller's tax liability under the
14Cigarette Tax Act, on account of the sellers' duty to collect,
15from the purchaser, the tax imposed under the Cigarette Use Tax
16Act, and on account of the seller's duty to collect, from the
17purchaser, any cigarette tax imposed by a home rule unit.
18Beginning January 1, 2018, "selling price" shall not include
19any shipping or delivery charges, which means any freight,
20express, mail, truck, or other carrier conveyance or delivery
21process.
22 Notwithstanding any law to the contrary, for any motor
23vehicle, as defined in Section 1-146 of the Vehicle Code, that
24is sold on or after January 1, 2015 for the purpose of leasing
25the vehicle for a defined period that is longer than one year
26and (1) is a motor vehicle of the second division that: (A) is

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1a self-contained motor vehicle designed or permanently
2converted to provide living quarters for recreational,
3camping, or travel use, with direct walk through access to the
4living quarters from the driver's seat; (B) is of the van
5configuration designed for the transportation of not less than
67 nor more than 16 passengers; or (C) has a gross vehicle
7weight rating of 8,000 pounds or less or (2) is a motor vehicle
8of the first division, "selling price" or "amount of sale"
9means the consideration received by the lessor pursuant to the
10lease contract, including amounts due at lease signing and all
11monthly or other regular payments charged over the term of the
12lease. Also included in the selling price is any amount
13received by the lessor from the lessee for the leased vehicle
14that is not calculated at the time the lease is executed,
15including, but not limited to, excess mileage charges and
16charges for excess wear and tear. For sales that occur in
17Illinois, with respect to any amount received by the lessor
18from the lessee for the leased vehicle that is not calculated
19at the time the lease is executed, the lessor who purchased the
20motor vehicle does not incur the tax imposed by the Use Tax Act
21on those amounts, and the retailer who makes the retail sale of
22the motor vehicle to the lessor is not required to collect the
23tax imposed by the Use Tax Act or to pay the tax imposed by this
24Act on those amounts. However, the lessor who purchased the
25motor vehicle assumes the liability for reporting and paying
26the tax on those amounts directly to the Department in the same

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1form (Illinois Retailers' Occupation Tax, and local retailers'
2occupation taxes, if applicable) in which the retailer would
3have reported and paid such tax if the retailer had accounted
4for the tax to the Department. For amounts received by the
5lessor from the lessee that are not calculated at the time the
6lease is executed, the lessor must file the return and pay the
7tax to the Department by the due date otherwise required by
8this Act for returns other than transaction returns. If the
9retailer is entitled under this Act to a discount for
10collecting and remitting the tax imposed under this Act to the
11Department with respect to the sale of the motor vehicle to the
12lessor, then the right to the discount provided in this Act
13shall be transferred to the lessor with respect to the tax paid
14by the lessor for any amount received by the lessor from the
15lessee for the leased vehicle that is not calculated at the
16time the lease is executed; provided that the discount is only
17allowed if the return is timely filed and for amounts timely
18paid. The "selling price" of a motor vehicle that is sold on or
19after January 1, 2015 for the purpose of leasing for a defined
20period of longer than one year shall not be reduced by the
21value of or credit given for traded-in tangible personal
22property owned by the lessor, nor shall it be reduced by the
23value of or credit given for traded-in tangible personal
24property owned by the lessee, regardless of whether the
25trade-in value thereof is assigned by the lessee to the lessor.
26In the case of a motor vehicle that is sold for the purpose of

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1leasing for a defined period of longer than one year, the sale
2occurs at the time of the delivery of the vehicle, regardless
3of the due date of any lease payments. A lessor who incurs a
4Retailers' Occupation Tax liability on the sale of a motor
5vehicle coming off lease may not take a credit against that
6liability for the Use Tax the lessor paid upon the purchase of
7the motor vehicle (or for any tax the lessor paid with respect
8to any amount received by the lessor from the lessee for the
9leased vehicle that was not calculated at the time the lease
10was executed) if the selling price of the motor vehicle at the
11time of purchase was calculated using the definition of
12"selling price" as defined in this paragraph. Notwithstanding
13any other provision of this Act to the contrary, lessors shall
14file all returns and make all payments required under this
15paragraph to the Department by electronic means in the manner
16and form as required by the Department. This paragraph does not
17apply to leases of motor vehicles for which, at the time the
18lease is entered into, the term of the lease is not a defined
19period, including leases with a defined initial period with the
20option to continue the lease on a month-to-month or other basis
21beyond the initial defined period.
22 The phrase "like kind and character" shall be liberally
23construed (including but not limited to any form of motor
24vehicle for any form of motor vehicle, or any kind of farm or
25agricultural implement for any other kind of farm or
26agricultural implement), while not including a kind of item

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1which, if sold at retail by that retailer, would be exempt from
2retailers' occupation tax and use tax as an isolated or
3occasional sale.
4 "Gross receipts" from the sales of tangible personal
5property at retail means the total selling price or the amount
6of such sales, as hereinbefore defined. In the case of charge
7and time sales, the amount thereof shall be included only as
8and when payments are received by the seller. Receipts or other
9consideration derived by a seller from the sale, transfer or
10assignment of accounts receivable to a wholly owned subsidiary
11will not be deemed payments prior to the time the purchaser
12makes payment on such accounts.
13 "Department" means the Department of Revenue.
14 "Person" means any natural individual, firm, partnership,
15association, joint stock company, joint adventure, public or
16private corporation, limited liability company, or a receiver,
17executor, trustee, guardian or other representative appointed
18by order of any court.
19 The isolated or occasional sale of tangible personal
20property at retail by a person who does not hold himself out as
21being engaged (or who does not habitually engage) in selling
22such tangible personal property at retail, or a sale through a
23bulk vending machine, does not constitute engaging in a
24business of selling such tangible personal property at retail
25within the meaning of this Act; provided that any person who is
26engaged in a business which is not subject to the tax imposed

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1by this Act because of involving the sale of or a contract to
2sell real estate or a construction contract to improve real
3estate or a construction contract to engineer, install, and
4maintain an integrated system of products, but who, in the
5course of conducting such business, transfers tangible
6personal property to users or consumers in the finished form in
7which it was purchased, and which does not become real estate
8or was not engineered and installed, under any provision of a
9construction contract or real estate sale or real estate sales
10agreement entered into with some other person arising out of or
11because of such nontaxable business, is engaged in the business
12of selling tangible personal property at retail to the extent
13of the value of the tangible personal property so transferred.
14If, in such a transaction, a separate charge is made for the
15tangible personal property so transferred, the value of such
16property, for the purpose of this Act, shall be the amount so
17separately charged, but not less than the cost of such property
18to the transferor; if no separate charge is made, the value of
19such property, for the purposes of this Act, is the cost to the
20transferor of such tangible personal property. Construction
21contracts for the improvement of real estate consisting of
22engineering, installation, and maintenance of voice, data,
23video, security, and all telecommunication systems do not
24constitute engaging in a business of selling tangible personal
25property at retail within the meaning of this Act if they are
26sold at one specified contract price.

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1 A person who holds himself or herself out as being engaged
2(or who habitually engages) in selling tangible personal
3property at retail is a person engaged in the business of
4selling tangible personal property at retail hereunder with
5respect to such sales (and not primarily in a service
6occupation) notwithstanding the fact that such person designs
7and produces such tangible personal property on special order
8for the purchaser and in such a way as to render the property
9of value only to such purchaser, if such tangible personal
10property so produced on special order serves substantially the
11same function as stock or standard items of tangible personal
12property that are sold at retail.
13 Persons who engage in the business of transferring tangible
14personal property upon the redemption of trading stamps are
15engaged in the business of selling such property at retail and
16shall be liable for and shall pay the tax imposed by this Act
17on the basis of the retail value of the property transferred
18upon redemption of such stamps.
19 "Bulk vending machine" means a vending machine, containing
20unsorted confections, nuts, toys, or other items designed
21primarily to be used or played with by children which, when a
22coin or coins of a denomination not larger than $0.50 are
23inserted, are dispensed in equal portions, at random and
24without selection by the customer.
25(Source: P.A. 98-628, eff. 1-1-15; 98-1080, eff. 8-26-14.)

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1 (35 ILCS 120/2-5)
2 Sec. 2-5. Exemptions. Gross receipts from proceeds from the
3sale of the following tangible personal property are exempt
4from the tax imposed by this Act:
5 (1) Farm chemicals.
6 (2) Farm machinery and equipment, both new and used,
7including that manufactured on special order, certified by the
8purchaser to be used primarily for production agriculture or
9State or federal agricultural programs, including individual
10replacement parts for the machinery and equipment, including
11machinery and equipment purchased for lease, and including
12implements of husbandry defined in Section 1-130 of the
13Illinois Vehicle Code, farm machinery and agricultural
14chemical and fertilizer spreaders, and nurse wagons required to
15be registered under Section 3-809 of the Illinois Vehicle Code,
16but excluding other motor vehicles required to be registered
17under the Illinois Vehicle Code. Horticultural polyhouses or
18hoop houses used for propagating, growing, or overwintering
19plants shall be considered farm machinery and equipment under
20this item (2). Agricultural chemical tender tanks and dry boxes
21shall include units sold separately from a motor vehicle
22required to be licensed and units sold mounted on a motor
23vehicle required to be licensed, if the selling price of the
24tender is separately stated.
25 Farm machinery and equipment shall include precision
26farming equipment that is installed or purchased to be

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1installed on farm machinery and equipment including, but not
2limited to, tractors, harvesters, sprayers, planters, seeders,
3or spreaders. Precision farming equipment includes, but is not
4limited to, soil testing sensors, computers, monitors,
5software, global positioning and mapping systems, and other
6such equipment.
7 Farm machinery and equipment also includes computers,
8sensors, software, and related equipment used primarily in the
9computer-assisted operation of production agriculture
10facilities, equipment, and activities such as, but not limited
11to, the collection, monitoring, and correlation of animal and
12crop data for the purpose of formulating animal diets and
13agricultural chemicals. This item (2) is exempt from the
14provisions of Section 2-70.
15 (3) Until July 1, 2003, distillation machinery and
16equipment, sold as a unit or kit, assembled or installed by the
17retailer, certified by the user to be used only for the
18production of ethyl alcohol that will be used for consumption
19as motor fuel or as a component of motor fuel for the personal
20use of the user, and not subject to sale or resale.
21 (4) Until July 1, 2003 and beginning again September 1,
222004 through August 30, 2014, graphic arts machinery and
23equipment, including repair and replacement parts, both new and
24used, and including that manufactured on special order or
25purchased for lease, certified by the purchaser to be used
26primarily for graphic arts production. Equipment includes

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1chemicals or chemicals acting as catalysts but only if the
2chemicals or chemicals acting as catalysts effect a direct and
3immediate change upon a graphic arts product.
4 (5) A motor vehicle that is used for automobile renting, as
5defined in the Automobile Renting Occupation and Use Tax Act.
6This paragraph is exempt from the provisions of Section 2-70.
7 (6) Personal property sold by a teacher-sponsored student
8organization affiliated with an elementary or secondary school
9located in Illinois.
10 (7) Until July 1, 2003, proceeds of that portion of the
11selling price of a passenger car the sale of which is subject
12to the Replacement Vehicle Tax.
13 (8) Personal property sold to an Illinois county fair
14association for use in conducting, operating, or promoting the
15county fair.
16 (9) Personal property sold to a not-for-profit arts or
17cultural organization that establishes, by proof required by
18the Department by rule, that it has received an exemption under
19Section 501(c)(3) of the Internal Revenue Code and that is
20organized and operated primarily for the presentation or
21support of arts or cultural programming, activities, or
22services. These organizations include, but are not limited to,
23music and dramatic arts organizations such as symphony
24orchestras and theatrical groups, arts and cultural service
25organizations, local arts councils, visual arts organizations,
26and media arts organizations. On and after the effective date

HB0160 Engrossed- 182 -LRB100 02289 HLH 12294 b
1of this amendatory Act of the 92nd General Assembly, however,
2an entity otherwise eligible for this exemption shall not make
3tax-free purchases unless it has an active identification
4number issued by the Department.
5 (10) Personal property sold by a corporation, society,
6association, foundation, institution, or organization, other
7than a limited liability company, that is organized and
8operated as a not-for-profit service enterprise for the benefit
9of persons 65 years of age or older if the personal property
10was not purchased by the enterprise for the purpose of resale
11by the enterprise.
12 (11) Personal property sold to a governmental body, to a
13corporation, society, association, foundation, or institution
14organized and operated exclusively for charitable, religious,
15or educational purposes, or to a not-for-profit corporation,
16society, association, foundation, institution, or organization
17that has no compensated officers or employees and that is
18organized and operated primarily for the recreation of persons
1955 years of age or older. A limited liability company may
20qualify for the exemption under this paragraph only if the
21limited liability company is organized and operated
22exclusively for educational purposes. On and after July 1,
231987, however, no entity otherwise eligible for this exemption
24shall make tax-free purchases unless it has an active
25identification number issued by the Department.
26 (12) Tangible personal property sold to interstate

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1carriers for hire for use as rolling stock moving in interstate
2commerce or to lessors under leases of one year or longer
3executed or in effect at the time of purchase by interstate
4carriers for hire for use as rolling stock moving in interstate
5commerce and equipment operated by a telecommunications
6provider, licensed as a common carrier by the Federal
7Communications Commission, which is permanently installed in
8or affixed to aircraft moving in interstate commerce.
9 (12-5) On and after July 1, 2003 and through June 30, 2004,
10motor vehicles of the second division with a gross vehicle
11weight in excess of 8,000 pounds that are subject to the
12commercial distribution fee imposed under Section 3-815.1 of
13the Illinois Vehicle Code. Beginning on July 1, 2004 and
14through June 30, 2005, the use in this State of motor vehicles
15of the second division: (i) with a gross vehicle weight rating
16in excess of 8,000 pounds; (ii) that are subject to the
17commercial distribution fee imposed under Section 3-815.1 of
18the Illinois Vehicle Code; and (iii) that are primarily used
19for commercial purposes. Through June 30, 2005, this exemption
20applies to repair and replacement parts added after the initial
21purchase of such a motor vehicle if that motor vehicle is used
22in a manner that would qualify for the rolling stock exemption
23otherwise provided for in this Act. For purposes of this
24paragraph, "used for commercial purposes" means the
25transportation of persons or property in furtherance of any
26commercial or industrial enterprise whether for-hire or not.

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1 (13) Proceeds from sales to owners, lessors, or shippers of
2tangible personal property that is utilized by interstate
3carriers for hire for use as rolling stock moving in interstate
4commerce and equipment operated by a telecommunications
5provider, licensed as a common carrier by the Federal
6Communications Commission, which is permanently installed in
7or affixed to aircraft moving in interstate commerce.
8 (14) Machinery and equipment that will be used by the
9purchaser, or a lessee of the purchaser, primarily in the
10process of manufacturing or assembling tangible personal
11property for wholesale or retail sale or lease, whether the
12sale or lease is made directly by the manufacturer or by some
13other person, whether the materials used in the process are
14owned by the manufacturer or some other person, or whether the
15sale or lease is made apart from or as an incident to the
16seller's engaging in the service occupation of producing
17machines, tools, dies, jigs, patterns, gauges, or other similar
18items of no commercial value on special order for a particular
19purchaser. The exemption provided by this paragraph (14) does
20not include machinery and equipment used in (i) the generation
21of electricity for wholesale or retail sale; (ii) the
22generation or treatment of natural or artificial gas for
23wholesale or retail sale that is delivered to customers through
24pipes, pipelines, or mains; or (iii) the treatment of water for
25wholesale or retail sale that is delivered to customers through
26pipes, pipelines, or mains. The provisions of Public Act 98-583

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1are declaratory of existing law as to the meaning and scope of
2this exemption.
3 (15) Proceeds of mandatory service charges separately
4stated on customers' bills for purchase and consumption of food
5and beverages, to the extent that the proceeds of the service
6charge are in fact turned over as tips or as a substitute for
7tips to the employees who participate directly in preparing,
8serving, hosting or cleaning up the food or beverage function
9with respect to which the service charge is imposed.
10 (16) Petroleum products sold to a purchaser if the seller
11is prohibited by federal law from charging tax to the
12purchaser.
13 (17) Tangible personal property sold to a common carrier by
14rail or motor that receives the physical possession of the
15property in Illinois and that transports the property, or
16shares with another common carrier in the transportation of the
17property, out of Illinois on a standard uniform bill of lading
18showing the seller of the property as the shipper or consignor
19of the property to a destination outside Illinois, for use
20outside Illinois.
21 (18) Legal tender, currency, medallions, or gold or silver
22coinage issued by the State of Illinois, the government of the
23United States of America, or the government of any foreign
24country, and bullion.
25 (19) Until July 1 2003, oil field exploration, drilling,
26and production equipment, including (i) rigs and parts of rigs,

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1rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
2tubular goods, including casing and drill strings, (iii) pumps
3and pump-jack units, (iv) storage tanks and flow lines, (v) any
4individual replacement part for oil field exploration,
5drilling, and production equipment, and (vi) machinery and
6equipment purchased for lease; but excluding motor vehicles
7required to be registered under the Illinois Vehicle Code.
8 (20) Photoprocessing machinery and equipment, including
9repair and replacement parts, both new and used, including that
10manufactured on special order, certified by the purchaser to be
11used primarily for photoprocessing, and including
12photoprocessing machinery and equipment purchased for lease.
13 (21) Until December 31, 2022, coal Coal and aggregate
14exploration, mining, off-highway hauling, processing,
15maintenance, and reclamation equipment, including replacement
16parts and equipment, and including equipment purchased for
17lease, but excluding motor vehicles required to be registered
18under the Illinois Vehicle Code. The changes made to this
19Section by Public Act 97-767 apply on and after July 1, 2003,
20but no claim for credit or refund is allowed on or after August
2116, 2013 (the effective date of Public Act 98-456) for such
22taxes paid during the period beginning July 1, 2003 and ending
23on August 16, 2013 (the effective date of Public Act 98-456).
24 (22) Until June 30, 2013, fuel and petroleum products sold
25to or used by an air carrier, certified by the carrier to be
26used for consumption, shipment, or storage in the conduct of

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1its business as an air common carrier, for a flight destined
2for or returning from a location or locations outside the
3United States without regard to previous or subsequent domestic
4stopovers.
5 Beginning July 1, 2013, fuel and petroleum products sold to
6or used by an air carrier, certified by the carrier to be used
7for consumption, shipment, or storage in the conduct of its
8business as an air common carrier, for a flight that (i) is
9engaged in foreign trade or is engaged in trade between the
10United States and any of its possessions and (ii) transports at
11least one individual or package for hire from the city of
12origination to the city of final destination on the same
13aircraft, without regard to a change in the flight number of
14that aircraft.
15 (23) A transaction in which the purchase order is received
16by a florist who is located outside Illinois, but who has a
17florist located in Illinois deliver the property to the
18purchaser or the purchaser's donee in Illinois.
19 (24) Fuel consumed or used in the operation of ships,
20barges, or vessels that are used primarily in or for the
21transportation of property or the conveyance of persons for
22hire on rivers bordering on this State if the fuel is delivered
23by the seller to the purchaser's barge, ship, or vessel while
24it is afloat upon that bordering river.
25 (25) Except as provided in item (25-5) of this Section, a
26motor vehicle sold in this State to a nonresident even though

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1the motor vehicle is delivered to the nonresident in this
2State, if the motor vehicle is not to be titled in this State,
3and if a drive-away permit is issued to the motor vehicle as
4provided in Section 3-603 of the Illinois Vehicle Code or if
5the nonresident purchaser has vehicle registration plates to
6transfer to the motor vehicle upon returning to his or her home
7state. The issuance of the drive-away permit or having the
8out-of-state registration plates to be transferred is prima
9facie evidence that the motor vehicle will not be titled in
10this State.
11 (25-5) The exemption under item (25) does not apply if the
12state in which the motor vehicle will be titled does not allow
13a reciprocal exemption for a motor vehicle sold and delivered
14in that state to an Illinois resident but titled in Illinois.
15The tax collected under this Act on the sale of a motor vehicle
16in this State to a resident of another state that does not
17allow a reciprocal exemption shall be imposed at a rate equal
18to the state's rate of tax on taxable property in the state in
19which the purchaser is a resident, except that the tax shall
20not exceed the tax that would otherwise be imposed under this
21Act. At the time of the sale, the purchaser shall execute a
22statement, signed under penalty of perjury, of his or her
23intent to title the vehicle in the state in which the purchaser
24is a resident within 30 days after the sale and of the fact of
25the payment to the State of Illinois of tax in an amount
26equivalent to the state's rate of tax on taxable property in

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1his or her state of residence and shall submit the statement to
2the appropriate tax collection agency in his or her state of
3residence. In addition, the retailer must retain a signed copy
4of the statement in his or her records. Nothing in this item
5shall be construed to require the removal of the vehicle from
6this state following the filing of an intent to title the
7vehicle in the purchaser's state of residence if the purchaser
8titles the vehicle in his or her state of residence within 30
9days after the date of sale. The tax collected under this Act
10in accordance with this item (25-5) shall be proportionately
11distributed as if the tax were collected at the 6.25% general
12rate imposed under this Act.
13 (25-7) Beginning on July 1, 2007, no tax is imposed under
14this Act on the sale of an aircraft, as defined in Section 3 of
15the Illinois Aeronautics Act, if all of the following
16conditions are met:
17 (1) the aircraft leaves this State within 15 days after
18 the later of either the issuance of the final billing for
19 the sale of the aircraft, or the authorized approval for
20 return to service, completion of the maintenance record
21 entry, and completion of the test flight and ground test
22 for inspection, as required by 14 C.F.R. 91.407;
23 (2) the aircraft is not based or registered in this
24 State after the sale of the aircraft; and
25 (3) the seller retains in his or her books and records
26 and provides to the Department a signed and dated

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1 certification from the purchaser, on a form prescribed by
2 the Department, certifying that the requirements of this
3 item (25-7) are met. The certificate must also include the
4 name and address of the purchaser, the address of the
5 location where the aircraft is to be titled or registered,
6 the address of the primary physical location of the
7 aircraft, and other information that the Department may
8 reasonably require.
9 For purposes of this item (25-7):
10 "Based in this State" means hangared, stored, or otherwise
11used, excluding post-sale customizations as defined in this
12Section, for 10 or more days in each 12-month period
13immediately following the date of the sale of the aircraft.
14 "Registered in this State" means an aircraft registered
15with the Department of Transportation, Aeronautics Division,
16or titled or registered with the Federal Aviation
17Administration to an address located in this State.
18 This paragraph (25-7) is exempt from the provisions of
19Section 2-70.
20 (26) Semen used for artificial insemination of livestock
21for direct agricultural production.
22 (27) Horses, or interests in horses, registered with and
23meeting the requirements of any of the Arabian Horse Club
24Registry of America, Appaloosa Horse Club, American Quarter
25Horse Association, United States Trotting Association, or
26Jockey Club, as appropriate, used for purposes of breeding or

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1racing for prizes. This item (27) is exempt from the provisions
2of Section 2-70, and the exemption provided for under this item
3(27) applies for all periods beginning May 30, 1995, but no
4claim for credit or refund is allowed on or after January 1,
52008 (the effective date of Public Act 95-88) for such taxes
6paid during the period beginning May 30, 2000 and ending on
7January 1, 2008 (the effective date of Public Act 95-88).
8 (28) Computers and communications equipment utilized for
9any hospital purpose and equipment used in the diagnosis,
10analysis, or treatment of hospital patients sold to a lessor
11who leases the equipment, under a lease of one year or longer
12executed or in effect at the time of the purchase, to a
13hospital that has been issued an active tax exemption
14identification number by the Department under Section 1g of
15this Act.
16 (29) Personal property sold to a lessor who leases the
17property, under a lease of one year or longer executed or in
18effect at the time of the purchase, to a governmental body that
19has been issued an active tax exemption identification number
20by the Department under Section 1g of this Act.
21 (30) Beginning with taxable years ending on or after
22December 31, 1995 and ending with taxable years ending on or
23before December 31, 2004, personal property that is donated for
24disaster relief to be used in a State or federally declared
25disaster area in Illinois or bordering Illinois by a
26manufacturer or retailer that is registered in this State to a

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1corporation, society, association, foundation, or institution
2that has been issued a sales tax exemption identification
3number by the Department that assists victims of the disaster
4who reside within the declared disaster area.
5 (31) Beginning with taxable years ending on or after
6December 31, 1995 and ending with taxable years ending on or
7before December 31, 2004, personal property that is used in the
8performance of infrastructure repairs in this State, including
9but not limited to municipal roads and streets, access roads,
10bridges, sidewalks, waste disposal systems, water and sewer
11line extensions, water distribution and purification
12facilities, storm water drainage and retention facilities, and
13sewage treatment facilities, resulting from a State or
14federally declared disaster in Illinois or bordering Illinois
15when such repairs are initiated on facilities located in the
16declared disaster area within 6 months after the disaster.
17 (32) Beginning July 1, 1999, game or game birds sold at a
18"game breeding and hunting preserve area" as that term is used
19in the Wildlife Code. This paragraph is exempt from the
20provisions of Section 2-70.
21 (33) A motor vehicle, as that term is defined in Section
221-146 of the Illinois Vehicle Code, that is donated to a
23corporation, limited liability company, society, association,
24foundation, or institution that is determined by the Department
25to be organized and operated exclusively for educational
26purposes. For purposes of this exemption, "a corporation,

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1limited liability company, society, association, foundation,
2or institution organized and operated exclusively for
3educational purposes" means all tax-supported public schools,
4private schools that offer systematic instruction in useful
5branches of learning by methods common to public schools and
6that compare favorably in their scope and intensity with the
7course of study presented in tax-supported schools, and
8vocational or technical schools or institutes organized and
9operated exclusively to provide a course of study of not less
10than 6 weeks duration and designed to prepare individuals to
11follow a trade or to pursue a manual, technical, mechanical,
12industrial, business, or commercial occupation.
13 (34) Beginning January 1, 2000, personal property,
14including food, purchased through fundraising events for the
15benefit of a public or private elementary or secondary school,
16a group of those schools, or one or more school districts if
17the events are sponsored by an entity recognized by the school
18district that consists primarily of volunteers and includes
19parents and teachers of the school children. This paragraph
20does not apply to fundraising events (i) for the benefit of
21private home instruction or (ii) for which the fundraising
22entity purchases the personal property sold at the events from
23another individual or entity that sold the property for the
24purpose of resale by the fundraising entity and that profits
25from the sale to the fundraising entity. This paragraph is
26exempt from the provisions of Section 2-70.

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1 (35) Beginning January 1, 2000 and through December 31,
22001, new or used automatic vending machines that prepare and
3serve hot food and beverages, including coffee, soup, and other
4items, and replacement parts for these machines. Beginning
5January 1, 2002 and through June 30, 2003, machines and parts
6for machines used in commercial, coin-operated amusement and
7vending business if a use or occupation tax is paid on the
8gross receipts derived from the use of the commercial,
9coin-operated amusement and vending machines. This paragraph
10is exempt from the provisions of Section 2-70.
11 (35-5) Beginning August 23, 2001 and through June 30, 2016,
12food for human consumption that is to be consumed off the
13premises where it is sold (other than alcoholic beverages, soft
14drinks, and food that has been prepared for immediate
15consumption) and prescription and nonprescription medicines,
16drugs, medical appliances, and insulin, urine testing
17materials, syringes, and needles used by diabetics, for human
18use, when purchased for use by a person receiving medical
19assistance under Article V of the Illinois Public Aid Code who
20resides in a licensed long-term care facility, as defined in
21the Nursing Home Care Act, or a licensed facility as defined in
22the ID/DD Community Care Act, the MC/DD Act, or the Specialized
23Mental Health Rehabilitation Act of 2013.
24 (36) Beginning August 2, 2001, computers and
25communications equipment utilized for any hospital purpose and
26equipment used in the diagnosis, analysis, or treatment of

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1hospital patients sold to a lessor who leases the equipment,
2under a lease of one year or longer executed or in effect at
3the time of the purchase, to a hospital that has been issued an
4active tax exemption identification number by the Department
5under Section 1g of this Act. This paragraph is exempt from the
6provisions of Section 2-70.
7 (37) Beginning August 2, 2001, personal property sold to a
8lessor who leases the property, under a lease of one year or
9longer executed or in effect at the time of the purchase, to a
10governmental body that has been issued an active tax exemption
11identification number by the Department under Section 1g of
12this Act. This paragraph is exempt from the provisions of
13Section 2-70.
14 (38) Beginning on January 1, 2002 and through June 30,
152016, tangible personal property purchased from an Illinois
16retailer by a taxpayer engaged in centralized purchasing
17activities in Illinois who will, upon receipt of the property
18in Illinois, temporarily store the property in Illinois (i) for
19the purpose of subsequently transporting it outside this State
20for use or consumption thereafter solely outside this State or
21(ii) for the purpose of being processed, fabricated, or
22manufactured into, attached to, or incorporated into other
23tangible personal property to be transported outside this State
24and thereafter used or consumed solely outside this State. The
25Director of Revenue shall, pursuant to rules adopted in
26accordance with the Illinois Administrative Procedure Act,

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1issue a permit to any taxpayer in good standing with the
2Department who is eligible for the exemption under this
3paragraph (38). The permit issued under this paragraph (38)
4shall authorize the holder, to the extent and in the manner
5specified in the rules adopted under this Act, to purchase
6tangible personal property from a retailer exempt from the
7taxes imposed by this Act. Taxpayers shall maintain all
8necessary books and records to substantiate the use and
9consumption of all such tangible personal property outside of
10the State of Illinois.
11 (39) Beginning January 1, 2008, tangible personal property
12used in the construction or maintenance of a community water
13supply, as defined under Section 3.145 of the Environmental
14Protection Act, that is operated by a not-for-profit
15corporation that holds a valid water supply permit issued under
16Title IV of the Environmental Protection Act. This paragraph is
17exempt from the provisions of Section 2-70.
18 (40) Beginning January 1, 2010, materials, parts,
19equipment, components, and furnishings incorporated into or
20upon an aircraft as part of the modification, refurbishment,
21completion, replacement, repair, or maintenance of the
22aircraft. This exemption includes consumable supplies used in
23the modification, refurbishment, completion, replacement,
24repair, and maintenance of aircraft, but excludes any
25materials, parts, equipment, components, and consumable
26supplies used in the modification, replacement, repair, and

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1maintenance of aircraft engines or power plants, whether such
2engines or power plants are installed or uninstalled upon any
3such aircraft. "Consumable supplies" include, but are not
4limited to, adhesive, tape, sandpaper, general purpose
5lubricants, cleaning solution, latex gloves, and protective
6films. This exemption applies only to the sale of qualifying
7tangible personal property to persons who modify, refurbish,
8complete, replace, or maintain an aircraft and who (i) hold an
9Air Agency Certificate and are empowered to operate an approved
10repair station by the Federal Aviation Administration, (ii)
11have a Class IV Rating, and (iii) conduct operations in
12accordance with Part 145 of the Federal Aviation Regulations.
13The exemption does not include aircraft operated by a
14commercial air carrier providing scheduled passenger air
15service pursuant to authority issued under Part 121 or Part 129
16of the Federal Aviation Regulations. The changes made to this
17paragraph (40) by Public Act 98-534 are declarative of existing
18law.
19 (41) Tangible personal property sold to a
20public-facilities corporation, as described in Section
2111-65-10 of the Illinois Municipal Code, for purposes of
22constructing or furnishing a municipal convention hall, but
23only if the legal title to the municipal convention hall is
24transferred to the municipality without any further
25consideration by or on behalf of the municipality at the time
26of the completion of the municipal convention hall or upon the

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1retirement or redemption of any bonds or other debt instruments
2issued by the public-facilities corporation in connection with
3the development of the municipal convention hall. This
4exemption includes existing public-facilities corporations as
5provided in Section 11-65-25 of the Illinois Municipal Code.
6This paragraph is exempt from the provisions of Section 2-70.
7 (42) Beginning January 1, 2017, menstrual pads, tampons,
8and menstrual cups.
9(Source: P.A. 98-104, eff. 7-22-13; 98-422, eff. 8-16-13;
1098-456, eff. 8-16-13; 98-534, eff. 8-23-13; 98-574, eff.
111-1-14; 98-583, eff. 1-1-14; 98-756, eff. 7-16-14; 99-180, eff.
127-29-15; 99-855, eff. 8-19-16.)
13 (35 ILCS 120/2a) (from Ch. 120, par. 441a)
14 Sec. 2a. It is unlawful for any person to engage in the
15business of selling tangible personal property at retail in
16this State without a certificate of registration from the
17Department. Application for a certificate of registration
18shall be made to the Department upon forms furnished by it.
19Each such application shall be signed and verified and shall
20state: (1) the name and social security number of the
21applicant; (2) the address of his principal place of business;
22(3) the address of the principal place of business from which
23he engages in the business of selling tangible personal
24property at retail in this State and the addresses of all other
25places of business, if any (enumerating such addresses, if any,

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1in a separate list attached to and made a part of the
2application), from which he engages in the business of selling
3tangible personal property at retail in this State; (4) the
4name and address of the person or persons who will be
5responsible for filing returns and payment of taxes due under
6this Act; (5) in the case of a publicly traded corporation, the
7name and title of the Chief Financial Officer, Chief Operating
8Officer, and any other officer or employee with responsibility
9for preparing tax returns under this Act, along with the last 4
10digits of each of their social security numbers, and, in the
11case of all other corporations, the name, title, and social
12security number of each corporate officer; (6) in the case of a
13limited liability company, the name, social security number,
14and FEIN number of each manager and member; and (7) such other
15information as the Department may reasonably require. The
16application shall contain an acceptance of responsibility
17signed by the person or persons who will be responsible for
18filing returns and payment of the taxes due under this Act. If
19the applicant will sell tangible personal property at retail
20through vending machines, his application to register shall
21indicate the number of vending machines to be so operated. If
22requested by the Department at any time, that person shall
23verify the total number of vending machines he or she uses in
24his or her business of selling tangible personal property at
25retail.
26 The Department may deny a certificate of registration to

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1any applicant if a person who is named as the owner, a partner,
2a manager or member of a limited liability company, or a
3corporate officer of the applicant on the application for the
4certificate of registration is or has been named as the owner,
5a partner, a manager or member of a limited liability company,
6or a corporate officer on the application for the certificate
7of registration of another retailer that is in default for
8moneys due under this Act or any other tax or fee Act
9administered by the Department. For purposes of this paragraph
10only, in determining whether a person is in default for moneys
11due, the Department shall include only amounts established as a
12final liability within the 20 years prior to the date of the
13Department's notice of denial of a certificate of registration.
14 The Department may require an applicant for a certificate
15of registration hereunder to, at the time of filing such
16application, furnish a bond from a surety company authorized to
17do business in the State of Illinois, or an irrevocable bank
18letter of credit or a bond signed by 2 personal sureties who
19have filed, with the Department, sworn statements disclosing
20net assets equal to at least 3 times the amount of the bond to
21be required of such applicant, or a bond secured by an
22assignment of a bank account or certificate of deposit, stocks
23or bonds, conditioned upon the applicant paying to the State of
24Illinois all moneys becoming due under this Act and under any
25other State tax law or municipal or county tax ordinance or
26resolution under which the certificate of registration that is

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1issued to the applicant under this Act will permit the
2applicant to engage in business without registering separately
3under such other law, ordinance or resolution. In making a
4determination as to whether to require a bond or other
5security, the Department shall take into consideration whether
6the owner, any partner, any manager or member of a limited
7liability company, or a corporate officer of the applicant is
8or has been the owner, a partner, a manager or member of a
9limited liability company, or a corporate officer of another
10retailer that is in default for moneys due under this Act or
11any other tax or fee Act administered by the Department; and
12whether the owner, any partner, any manager or member of a
13limited liability company, or a corporate officer of the
14applicant is or has been the owner, a partner, a manager or
15member of a limited liability company, or a corporate officer
16of another retailer whose certificate of registration has been
17revoked within the previous 5 years under this Act or any other
18tax or fee Act administered by the Department. If a bond or
19other security is required, the Department shall fix the amount
20of the bond or other security, taking into consideration the
21amount of money expected to become due from the applicant under
22this Act and under any other State tax law or municipal or
23county tax ordinance or resolution under which the certificate
24of registration that is issued to the applicant under this Act
25will permit the applicant to engage in business without
26registering separately under such other law, ordinance, or

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1resolution. The amount of security required by the Department
2shall be such as, in its opinion, will protect the State of
3Illinois against failure to pay the amount which may become due
4from the applicant under this Act and under any other State tax
5law or municipal or county tax ordinance or resolution under
6which the certificate of registration that is issued to the
7applicant under this Act will permit the applicant to engage in
8business without registering separately under such other law,
9ordinance or resolution, but the amount of the security
10required by the Department shall not exceed three times the
11amount of the applicant's average monthly tax liability, or
12$50,000.00, whichever amount is lower.
13 No certificate of registration under this Act shall be
14issued by the Department until the applicant provides the
15Department with satisfactory security, if required, as herein
16provided for.
17 Upon receipt of the application for certificate of
18registration in proper form, and upon approval by the
19Department of the security furnished by the applicant, if
20required, the Department shall issue to such applicant a
21certificate of registration which shall permit the person to
22whom it is issued to engage in the business of selling tangible
23personal property at retail in this State. The certificate of
24registration shall be conspicuously displayed at the place of
25business which the person so registered states in his
26application to be the principal place of business from which he

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1engages in the business of selling tangible personal property
2at retail in this State.
3 No certificate of registration issued to a taxpayer who
4files returns required by this Act on a monthly basis shall be
5valid after the expiration of 5 years from the date of its
6issuance or last renewal. The expiration date of a
7sub-certificate of registration shall be that of the
8certificate of registration to which the sub-certificate
9relates. A certificate of registration shall automatically be
10renewed, subject to revocation as provided by this Act, for an
11additional 5 years from the date of its expiration unless
12otherwise notified by the Department as provided by this
13paragraph. Where a taxpayer to whom a certificate of
14registration is issued under this Act is in default to the
15State of Illinois for delinquent returns or for moneys due
16under this Act or any other State tax law or municipal or
17county ordinance administered or enforced by the Department,
18the Department shall, not less than 60 days before the
19expiration date of such certificate of registration, give
20notice to the taxpayer to whom the certificate was issued of
21the account period of the delinquent returns, the amount of
22tax, penalty and interest due and owing from the taxpayer, and
23that the certificate of registration shall not be automatically
24renewed upon its expiration date unless the taxpayer, on or
25before the date of expiration, has filed and paid the
26delinquent returns or paid the defaulted amount in full. A

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1taxpayer to whom such a notice is issued shall be deemed an
2applicant for renewal. The Department shall promulgate
3regulations establishing procedures for taxpayers who file
4returns on a monthly basis but desire and qualify to change to
5a quarterly or yearly filing basis and will no longer be
6subject to renewal under this Section, and for taxpayers who
7file returns on a yearly or quarterly basis but who desire or
8are required to change to a monthly filing basis and will be
9subject to renewal under this Section.
10 The Department may in its discretion approve renewal by an
11applicant who is in default if, at the time of application for
12renewal, the applicant files all of the delinquent returns or
13pays to the Department such percentage of the defaulted amount
14as may be determined by the Department and agrees in writing to
15waive all limitations upon the Department for collection of the
16remaining defaulted amount to the Department over a period not
17to exceed 5 years from the date of renewal of the certificate;
18however, no renewal application submitted by an applicant who
19is in default shall be approved if the immediately preceding
20renewal by the applicant was conditioned upon the installment
21payment agreement described in this Section. The payment
22agreement herein provided for shall be in addition to and not
23in lieu of the security that may be required by this Section of
24a taxpayer who is no longer considered a prior continuous
25compliance taxpayer. The execution of the payment agreement as
26provided in this Act shall not toll the accrual of interest at

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1the statutory rate.
2 The Department may suspend a certificate of registration if
3the Department finds that the person to whom the certificate of
4registration has been issued knowingly sold contraband
5cigarettes.
6 A certificate of registration issued under this Act more
7than 5 years before the effective date of this amendatory Act
8of 1989 shall expire and be subject to the renewal provisions
9of this Section on the next anniversary of the date of issuance
10of such certificate which occurs more than 6 months after the
11effective date of this amendatory Act of 1989. A certificate of
12registration issued less than 5 years before the effective date
13of this amendatory Act of 1989 shall expire and be subject to
14the renewal provisions of this Section on the 5th anniversary
15of the issuance of the certificate.
16 If the person so registered states that he operates other
17places of business from which he engages in the business of
18selling tangible personal property at retail in this State, the
19Department shall furnish him with a sub-certificate of
20registration for each such place of business, and the applicant
21shall display the appropriate sub-certificate of registration
22at each such place of business. All sub-certificates of
23registration shall bear the same registration number as that
24appearing upon the certificate of registration to which such
25sub-certificates relate.
26 If the applicant will sell tangible personal property at

HB0160 Engrossed- 206 -LRB100 02289 HLH 12294 b
1retail through vending machines, the Department shall furnish
2him with a sub-certificate of registration for each such
3vending machine, and the applicant shall display the
4appropriate sub-certificate of registration on each such
5vending machine by attaching the sub-certificate of
6registration to a conspicuous part of such vending machine. If
7a person who is registered to sell tangible personal property
8at retail through vending machines adds an additional vending
9machine or additional vending machines to the number of vending
10machines he or she uses in his or her business of selling
11tangible personal property at retail, he or she shall notify
12the Department, on a form prescribed by the Department, to
13request an additional sub-certificate or additional
14sub-certificates of registration, as applicable. With each
15such request, the applicant shall report the number of
16sub-certificates of registration he or she is requesting as
17well as the total number of vending machines from which he or
18she makes retail sales.
19 Where the same person engages in 2 or more businesses of
20selling tangible personal property at retail in this State,
21which businesses are substantially different in character or
22engaged in under different trade names or engaged in under
23other substantially dissimilar circumstances (so that it is
24more practicable, from an accounting, auditing or bookkeeping
25standpoint, for such businesses to be separately registered),
26the Department may require or permit such person (subject to

HB0160 Engrossed- 207 -LRB100 02289 HLH 12294 b
1the same requirements concerning the furnishing of security as
2those that are provided for hereinbefore in this Section as to
3each application for a certificate of registration) to apply
4for and obtain a separate certificate of registration for each
5such business or for any of such businesses, under a single
6certificate of registration supplemented by related
7sub-certificates of registration.
8 Any person who is registered under the "Retailers'
9Occupation Tax Act" as of March 8, 1963, and who, during the
103-year period immediately prior to March 8, 1963, or during a
11continuous 3-year period part of which passed immediately
12before and the remainder of which passes immediately after
13March 8, 1963, has been so registered continuously and who is
14determined by the Department not to have been either delinquent
15or deficient in the payment of tax liability during that period
16under this Act or under any other State tax law or municipal or
17county tax ordinance or resolution under which the certificate
18of registration that is issued to the registrant under this Act
19will permit the registrant to engage in business without
20registering separately under such other law, ordinance or
21resolution, shall be considered to be a Prior Continuous
22Compliance taxpayer. Also any taxpayer who has, as verified by
23the Department, faithfully and continuously complied with the
24condition of his bond or other security under the provisions of
25this Act for a period of 3 consecutive years shall be
26considered to be a Prior Continuous Compliance taxpayer.

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1 Every Prior Continuous Compliance taxpayer shall be exempt
2from all requirements under this Act concerning the furnishing
3of a bond or other security as a condition precedent to his
4being authorized to engage in the business of selling tangible
5personal property at retail in this State. This exemption shall
6continue for each such taxpayer until such time as he may be
7determined by the Department to be delinquent in the filing of
8any returns, or is determined by the Department (either through
9the Department's issuance of a final assessment which has
10become final under the Act, or by the taxpayer's filing of a
11return which admits tax that is not paid to be due) to be
12delinquent or deficient in the paying of any tax under this Act
13or under any other State tax law or municipal or county tax
14ordinance or resolution under which the certificate of
15registration that is issued to the registrant under this Act
16will permit the registrant to engage in business without
17registering separately under such other law, ordinance or
18resolution, at which time that taxpayer shall become subject to
19all the financial responsibility requirements of this Act and,
20as a condition of being allowed to continue to engage in the
21business of selling tangible personal property at retail, may
22be required to post bond or other acceptable security with the
23Department covering liability which such taxpayer may
24thereafter incur. Any taxpayer who fails to pay an admitted or
25established liability under this Act may also be required to
26post bond or other acceptable security with this Department

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1guaranteeing the payment of such admitted or established
2liability.
3 No certificate of registration shall be issued to any
4person who is in default to the State of Illinois for moneys
5due under this Act or under any other State tax law or
6municipal or county tax ordinance or resolution under which the
7certificate of registration that is issued to the applicant
8under this Act will permit the applicant to engage in business
9without registering separately under such other law, ordinance
10or resolution.
11 Any person aggrieved by any decision of the Department
12under this Section may, within 20 days after notice of such
13decision, protest and request a hearing, whereupon the
14Department shall give notice to such person of the time and
15place fixed for such hearing and shall hold a hearing in
16conformity with the provisions of this Act and then issue its
17final administrative decision in the matter to such person. In
18the absence of such a protest within 20 days, the Department's
19decision shall become final without any further determination
20being made or notice given.
21 With respect to security other than bonds (upon which the
22Department may sue in the event of a forfeiture), if the
23taxpayer fails to pay, when due, any amount whose payment such
24security guarantees, the Department shall, after such
25liability is admitted by the taxpayer or established by the
26Department through the issuance of a final assessment that has

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1become final under the law, convert the security which that
2taxpayer has furnished into money for the State, after first
3giving the taxpayer at least 10 days' written notice, by
4registered or certified mail, to pay the liability or forfeit
5such security to the Department. If the security consists of
6stocks or bonds or other securities which are listed on a
7public exchange, the Department shall sell such securities
8through such public exchange. If the security consists of an
9irrevocable bank letter of credit, the Department shall convert
10the security in the manner provided for in the Uniform
11Commercial Code. If the security consists of a bank certificate
12of deposit, the Department shall convert the security into
13money by demanding and collecting the amount of such bank
14certificate of deposit from the bank which issued such
15certificate. If the security consists of a type of stocks or
16other securities which are not listed on a public exchange, the
17Department shall sell such security to the highest and best
18bidder after giving at least 10 days' notice of the date, time
19and place of the intended sale by publication in the "State
20Official Newspaper". If the Department realizes more than the
21amount of such liability from the security, plus the expenses
22incurred by the Department in converting the security into
23money, the Department shall pay such excess to the taxpayer who
24furnished such security, and the balance shall be paid into the
25State Treasury.
26 The Department shall discharge any surety and shall release

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1and return any security deposited, assigned, pledged or
2otherwise provided to it by a taxpayer under this Section
3within 30 days after:
4 (1) such taxpayer becomes a Prior Continuous
5 Compliance taxpayer; or
6 (2) such taxpayer has ceased to collect receipts on
7 which he is required to remit tax to the Department, has
8 filed a final tax return, and has paid to the Department an
9 amount sufficient to discharge his remaining tax
10 liability, as determined by the Department, under this Act
11 and under every other State tax law or municipal or county
12 tax ordinance or resolution under which the certificate of
13 registration issued under this Act permits the registrant
14 to engage in business without registering separately under
15 such other law, ordinance or resolution. The Department
16 shall make a final determination of the taxpayer's
17 outstanding tax liability as expeditiously as possible
18 after his final tax return has been filed; if the
19 Department cannot make such final determination within 45
20 days after receiving the final tax return, within such
21 period it shall so notify the taxpayer, stating its reasons
22 therefor.
23(Source: P.A. 97-335, eff. 1-1-12; 98-496, eff. 1-1-14; 98-583,
24eff. 1-1-14; 98-756, eff. 7-16-14; 98-974, eff. 1-1-15.)
25
ARTICLE 25. REVENUE; EXCESS PAYMENTS

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1 Section 25-5. The Renewable Energy, Energy Efficiency, and
2Coal Resources Development Law of 1997 is amended by changing
3Section 6-5 and by adding Section 6-8 as follows:
4 (20 ILCS 687/6-5)
5 (Section scheduled to be repealed on December 31, 2020)
6 Sec. 6-5. Renewable Energy Resources and Coal Technology
7Development Assistance Charge.
8 (a) Notwithstanding the provisions of Section 16-111 of the
9Public Utilities Act but subject to subsection (e) of this
10Section, each public utility, electric cooperative, as defined
11in Section 3.4 of the Electric Supplier Act, and municipal
12utility, as referenced in Section 3-105 of the Public Utilities
13Act, that is engaged in the delivery of electricity or the
14distribution of natural gas within the State of Illinois shall,
15effective January 1, 1998, assess each of its customer accounts
16a monthly Renewable Energy Resources and Coal Technology
17Development Assistance Charge. The delivering public utility,
18municipal electric or gas utility, or electric or gas
19cooperative for a self-assessing purchaser remains subject to
20the collection of the fee imposed by this Section. The monthly
21charge shall be as follows:
22 (1) $0.05 per month on each account for residential
23 electric service as defined in Section 13 of the Energy
24 Assistance Act;

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1 (2) $0.05 per month on each account for residential gas
2 service as defined in Section 13 of the Energy Assistance
3 Act;
4 (3) $0.50 per month on each account for nonresidential
5 electric service, as defined in Section 13 of the Energy
6 Assistance Act, which had less than 10 megawatts of peak
7 demand during the previous calendar year;
8 (4) $0.50 per month on each account for nonresidential
9 gas service, as defined in Section 13 of the Energy
10 Assistance Act, which had distributed to it less than
11 4,000,000 therms of gas during the previous calendar year;
12 (5) $37.50 per month on each account for nonresidential
13 electric service, as defined in Section 13 of the Energy
14 Assistance Act, which had 10 megawatts or greater of peak
15 demand during the previous calendar year; and
16 (6) $37.50 per month on each account for nonresidential
17 gas service, as defined in Section 13 of the Energy
18 Assistance Act, which had 4,000,000 or more therms of gas
19 distributed to it during the previous calendar year.
20 (b) The Renewable Energy Resources and Coal Technology
21Development Assistance Charge assessed by electric and gas
22public utilities shall be considered a charge for public
23utility service.
24 (c) Fifty percent of the moneys collected pursuant to this
25Section shall be deposited in the Renewable Energy Resources
26Trust Fund by the Department of Revenue. The remaining 50

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1percent of the moneys collected pursuant to this Section shall
2be deposited in the Coal Technology Development Assistance Fund
3by the Department of Revenue for the exclusive purposes of (1)
4capturing or sequestering carbon emissions produced by coal
5combustion; (2) supporting research on the capture and
6sequestration of carbon emissions produced by coal combustion;
7and (3) improving coal miner safety.
8 (d) By the 20th day of the month following the month in
9which the charges imposed by this Section were collected, each
10utility and alternative retail electric supplier collecting
11charges pursuant to this Section shall remit to the Department
12of Revenue for deposit in the Renewable Energy Resources Trust
13Fund and the Coal Technology Development Assistance Fund all
14moneys received as payment of the charge provided for in this
15Section on a return prescribed and furnished by the Department
16of Revenue showing such information as the Department of
17Revenue may reasonably require.
18 If any payment provided for in this Section exceeds the
19utility or alternative retail electric supplier's liabilities
20under this Act, as shown on an original return, the utility or
21alternative retail electric supplier may credit the excess
22payment against liability subsequently to be remitted to the
23Department of Revenue under this Act.
24 (e) The charges imposed by this Section shall only apply to
25customers of municipal electric or gas utilities and electric
26or gas cooperatives if the municipal electric or gas utility or

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1electric or gas cooperative makes an affirmative decision to
2impose the charge. If a municipal electric or gas utility or an
3electric or gas cooperative makes an affirmative decision to
4impose the charge provided by this Section, the municipal
5electric or gas utility or electric or gas cooperative shall
6inform the Department of Revenue in writing of such decision
7when it begins to impose the charge. If a municipal electric or
8gas utility or electric or gas cooperative does not assess this
9charge, its customers shall not be eligible for the Renewable
10Energy Resources Program.
11 (f) The Department of Revenue may establish such rules as
12it deems necessary to implement this Section.
13(Source: P.A. 95-481, eff. 8-28-07.)
14 (20 ILCS 687/6-8 new)
15 Sec. 6-8. Application of Retailers' Occupation Tax
16provisions. All the provisions of Sections 4, 5, 5a, 5b, 5c,
175d, 5e, 5f, 5g, 5i, 5j, 6, 6a, 6b, 6c, 7, 8, 9, 10, 11, 11a, 12,
18and 13 of the Retailers' Occupation Tax Act that are not
19inconsistent with this Act apply, as far as practicable, to the
20surcharge imposed by this Act to the same extent as if those
21provisions were included in this Act. References in the
22incorporated Sections of the Retailers' Occupation Tax Act to
23retailers, to sellers, or to persons engaged in the business of
24selling tangible personal property mean persons required to
25remit the charge imposed under this Act.

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1 Section 25-10. The Cigarette Machine Operators' Occupation
2Tax Act is amended by changing Section 1-40 as follows:
3 (35 ILCS 128/1-40)
4 Sec. 1-40. Returns.
5 (a) Cigarette machine operators shall file a return and
6remit the tax imposed by Section 1-10 by the 15th day of each
7month covering the preceding calendar month. Each such return
8shall show: the quantity of cigarettes made or fabricated
9during the period covered by the return; the beginning and
10ending meter reading for each cigarette machine for the period
11covered by the return; the quantity of such cigarettes sold or
12otherwise disposed of during the period covered by the return;
13the brand family and manufacturer and quantity of tobacco
14products used to make or fabricate cigarettes by use of a
15cigarette machine; the license number of each distributor from
16whom tobacco products are purchased; the type and quantity of
17cigarette tubes purchased for use in a cigarette machine; the
18type and quantity of cigarette tubes used in a cigarette
19machine; and such other information as the Department may
20require. Such returns shall be filed on forms prescribed and
21furnished by the Department. The Department may promulgate
22rules to require that the cigarette machine operator's return
23be accompanied by appropriate computer-generated magnetic
24media supporting schedule data in the format required by the

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1Department, unless, as provided by rule, the Department grants
2an exception upon petition of a cigarette machine operator.
3 Cigarette machine operators shall send a copy of those
4returns, together with supporting schedule data, to the
5Attorney General's Office by the 15th day of each month for the
6period covering the preceding calendar month.
7 (b) Cigarette machine operators may take a credit against
8any tax due under Section 1-10 of this Act for taxes imposed
9and paid under the Tobacco Products Tax Act of 1995 on tobacco
10products sold to a customer and used in a rolling machine
11located at the cigarette machine operator's place of business.
12To be eligible for such credit, the tobacco product must meet
13the requirements of subsection (a) of Section 1-25 of this Act.
14This subsection (b) is exempt from the provisions of Section
151-155 of this Act.
16 (c) If any payment provided for in this Section exceeds the
17cigarette machine operator's liabilities under this Act, as
18shown on an original return, the cigarette machine operator may
19credit such excess payment against liability subsequently to be
20remitted to the Department under this Act, in accordance with
21reasonable rules adopted by the Department.
22(Source: P.A. 97-688, eff. 6-14-12.)
23 Section 25-15. The Cigarette Tax Act is amended by changing
24Section 2 as follows:

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1 (35 ILCS 130/2) (from Ch. 120, par. 453.2)
2 Sec. 2. Tax imposed; rate; collection, payment, and
3distribution; discount.
4 (a) A tax is imposed upon any person engaged in business as
5a retailer of cigarettes in this State at the rate of 5 1/2
6mills per cigarette sold, or otherwise disposed of in the
7course of such business in this State. In addition to any other
8tax imposed by this Act, a tax is imposed upon any person
9engaged in business as a retailer of cigarettes in this State
10at a rate of 1/2 mill per cigarette sold or otherwise disposed
11of in the course of such business in this State on and after
12January 1, 1947, and shall be paid into the Metropolitan Fair
13and Exposition Authority Reconstruction Fund or as otherwise
14provided in Section 29. On and after December 1, 1985, in
15addition to any other tax imposed by this Act, a tax is imposed
16upon any person engaged in business as a retailer of cigarettes
17in this State at a rate of 4 mills per cigarette sold or
18otherwise disposed of in the course of such business in this
19State. Of the additional tax imposed by this amendatory Act of
201985, $9,000,000 of the moneys received by the Department of
21Revenue pursuant to this Act shall be paid each month into the
22Common School Fund. On and after the effective date of this
23amendatory Act of 1989, in addition to any other tax imposed by
24this Act, a tax is imposed upon any person engaged in business
25as a retailer of cigarettes at the rate of 5 mills per
26cigarette sold or otherwise disposed of in the course of such

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1business in this State. On and after the effective date of this
2amendatory Act of 1993, in addition to any other tax imposed by
3this Act, a tax is imposed upon any person engaged in business
4as a retailer of cigarettes at the rate of 7 mills per
5cigarette sold or otherwise disposed of in the course of such
6business in this State. On and after December 15, 1997, in
7addition to any other tax imposed by this Act, a tax is imposed
8upon any person engaged in business as a retailer of cigarettes
9at the rate of 7 mills per cigarette sold or otherwise disposed
10of in the course of such business of this State. All of the
11moneys received by the Department of Revenue pursuant to this
12Act and the Cigarette Use Tax Act from the additional taxes
13imposed by this amendatory Act of 1997, shall be paid each
14month into the Common School Fund. On and after July 1, 2002,
15in addition to any other tax imposed by this Act, a tax is
16imposed upon any person engaged in business as a retailer of
17cigarettes at the rate of 20.0 mills per cigarette sold or
18otherwise disposed of in the course of such business in this
19State. Beginning on June 24, 2012, in addition to any other tax
20imposed by this Act, a tax is imposed upon any person engaged
21in business as a retailer of cigarettes at the rate of 50 mills
22per cigarette sold or otherwise disposed of in the course of
23such business in this State. All moneys received by the
24Department of Revenue under this Act and the Cigarette Use Tax
25Act from the additional taxes imposed by this amendatory Act of
26the 97th General Assembly shall be paid each month into the

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1Healthcare Provider Relief Fund. The payment of such taxes
2shall be evidenced by a stamp affixed to each original package
3of cigarettes, or an authorized substitute for such stamp
4imprinted on each original package of such cigarettes
5underneath the sealed transparent outside wrapper of such
6original package, as hereinafter provided. However, such taxes
7are not imposed upon any activity in such business in
8interstate commerce or otherwise, which activity may not under
9the Constitution and statutes of the United States be made the
10subject of taxation by this State.
11 Beginning on the effective date of this amendatory Act of
12the 92nd General Assembly and through June 30, 2006, all of the
13moneys received by the Department of Revenue pursuant to this
14Act and the Cigarette Use Tax Act, other than the moneys that
15are dedicated to the Common School Fund, shall be distributed
16each month as follows: first, there shall be paid into the
17General Revenue Fund an amount which, when added to the amount
18paid into the Common School Fund for that month, equals
19$33,300,000, except that in the month of August of 2004, this
20amount shall equal $83,300,000; then, from the moneys
21remaining, if any amounts required to be paid into the General
22Revenue Fund in previous months remain unpaid, those amounts
23shall be paid into the General Revenue Fund; then, beginning on
24April 1, 2003, from the moneys remaining, $5,000,000 per month
25shall be paid into the School Infrastructure Fund; then, if any
26amounts required to be paid into the School Infrastructure Fund

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1in previous months remain unpaid, those amounts shall be paid
2into the School Infrastructure Fund; then the moneys remaining,
3if any, shall be paid into the Long-Term Care Provider Fund. To
4the extent that more than $25,000,000 has been paid into the
5General Revenue Fund and Common School Fund per month for the
6period of July 1, 1993 through the effective date of this
7amendatory Act of 1994 from combined receipts of the Cigarette
8Tax Act and the Cigarette Use Tax Act, notwithstanding the
9distribution provided in this Section, the Department of
10Revenue is hereby directed to adjust the distribution provided
11in this Section to increase the next monthly payments to the
12Long Term Care Provider Fund by the amount paid to the General
13Revenue Fund and Common School Fund in excess of $25,000,000
14per month and to decrease the next monthly payments to the
15General Revenue Fund and Common School Fund by that same excess
16amount.
17 Beginning on July 1, 2006, all of the moneys received by
18the Department of Revenue pursuant to this Act and the
19Cigarette Use Tax Act, other than the moneys that are dedicated
20to the Common School Fund and, beginning on the effective date
21of this amendatory Act of the 97th General Assembly, other than
22the moneys from the additional taxes imposed by this amendatory
23Act of the 97th General Assembly that must be paid each month
24into the Healthcare Provider Relief Fund, shall be distributed
25each month as follows: first, there shall be paid into the
26General Revenue Fund an amount that, when added to the amount

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1paid into the Common School Fund for that month, equals
2$29,200,000; then, from the moneys remaining, if any amounts
3required to be paid into the General Revenue Fund in previous
4months remain unpaid, those amounts shall be paid into the
5General Revenue Fund; then from the moneys remaining,
6$5,000,000 per month shall be paid into the School
7Infrastructure Fund; then, if any amounts required to be paid
8into the School Infrastructure Fund in previous months remain
9unpaid, those amounts shall be paid into the School
10Infrastructure Fund; then the moneys remaining, if any, shall
11be paid into the Long-Term Care Provider Fund.
12 Moneys collected from the tax imposed on little cigars
13under Section 10-10 of the Tobacco Products Tax Act of 1995
14shall be included with the moneys collected under the Cigarette
15Tax Act and the Cigarette Use Tax Act when making distributions
16to the Common School Fund, the Healthcare Provider Relief Fund,
17the General Revenue Fund, the School Infrastructure Fund, and
18the Long-Term Care Provider Fund under this Section.
19 When any tax imposed herein terminates or has terminated,
20distributors who have bought stamps while such tax was in
21effect and who therefore paid such tax, but who can show, to
22the Department's satisfaction, that they sold the cigarettes to
23which they affixed such stamps after such tax had terminated
24and did not recover the tax or its equivalent from purchasers,
25shall be allowed by the Department to take credit for such
26absorbed tax against subsequent tax stamp purchases from the

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1Department by such distributor.
2 The impact of the tax levied by this Act is imposed upon
3the retailer and shall be prepaid or pre-collected by the
4distributor for the purpose of convenience and facility only,
5and the amount of the tax shall be added to the price of the
6cigarettes sold by such distributor. Collection of the tax
7shall be evidenced by a stamp or stamps affixed to each
8original package of cigarettes, as hereinafter provided. Any
9distributor who purchases stamps may credit any excess payments
10verified by the Department against amounts subsequently due for
11the purchase of additional stamps, until such time as no excess
12payment remains.
13 Each distributor shall collect the tax from the retailer at
14or before the time of the sale, shall affix the stamps as
15hereinafter required, and shall remit the tax collected from
16retailers to the Department, as hereinafter provided. Any
17distributor who fails to properly collect and pay the tax
18imposed by this Act shall be liable for the tax. Any
19distributor having cigarettes to which stamps have been affixed
20in his possession for sale on the effective date of this
21amendatory Act of 1989 shall not be required to pay the
22additional tax imposed by this amendatory Act of 1989 on such
23stamped cigarettes. Any distributor having cigarettes to which
24stamps have been affixed in his or her possession for sale at
2512:01 a.m. on the effective date of this amendatory Act of
261993, is required to pay the additional tax imposed by this

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1amendatory Act of 1993 on such stamped cigarettes. This
2payment, less the discount provided in subsection (b), shall be
3due when the distributor first makes a purchase of cigarette
4tax stamps after the effective date of this amendatory Act of
51993, or on the first due date of a return under this Act after
6the effective date of this amendatory Act of 1993, whichever
7occurs first. Any distributor having cigarettes to which stamps
8have been affixed in his possession for sale on December 15,
91997 shall not be required to pay the additional tax imposed by
10this amendatory Act of 1997 on such stamped cigarettes.
11 Any distributor having cigarettes to which stamps have been
12affixed in his or her possession for sale on July 1, 2002 shall
13not be required to pay the additional tax imposed by this
14amendatory Act of the 92nd General Assembly on those stamped
15cigarettes.
16 Any retailer having cigarettes in his or her possession on
17June 24, 2012 to which tax stamps have been affixed is not
18required to pay the additional tax that begins on June 24, 2012
19imposed by this amendatory Act of the 97th General Assembly on
20those stamped cigarettes. Any distributor having cigarettes in
21his or her possession on June 24, 2012 to which tax stamps have
22been affixed, and any distributor having stamps in his or her
23possession on June 24, 2012 that have not been affixed to
24packages of cigarettes before June 24, 2012, is required to pay
25the additional tax that begins on June 24, 2012 imposed by this
26amendatory Act of the 97th General Assembly to the extent the

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1calendar year 2012 average monthly volume of cigarette stamps
2in the distributor's possession exceeds the average monthly
3volume of cigarette stamps purchased by the distributor in
4calendar year 2011. This payment, less the discount provided in
5subsection (b), is due when the distributor first makes a
6purchase of cigarette stamps on or after June 24, 2012 or on
7the first due date of a return under this Act occurring on or
8after June 24, 2012, whichever occurs first. Those distributors
9may elect to pay the additional tax on packages of cigarettes
10to which stamps have been affixed and on any stamps in the
11distributor's possession that have not been affixed to packages
12of cigarettes over a period not to exceed 12 months from the
13due date of the additional tax by notifying the Department in
14writing. The first payment for distributors making such
15election is due when the distributor first makes a purchase of
16cigarette tax stamps on or after June 24, 2012 or on the first
17due date of a return under this Act occurring on or after June
1824, 2012, whichever occurs first. Distributors making such an
19election are not entitled to take the discount provided in
20subsection (b) on such payments.
21 Distributors making sales of cigarettes to secondary
22distributors shall add the amount of the tax to the price of
23the cigarettes sold by the distributors. Secondary
24distributors making sales of cigarettes to retailers shall
25include the amount of the tax in the price of the cigarettes
26sold to retailers. The amount of tax shall not be less than the

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1amount of taxes imposed by the State and all local
2jurisdictions. The amount of local taxes shall be calculated
3based on the location of the retailer's place of business shown
4on the retailer's certificate of registration or
5sub-registration issued to the retailer pursuant to Section 2a
6of the Retailers' Occupation Tax Act. The original packages of
7cigarettes sold to the retailer shall bear all the required
8stamps, or other indicia, for the taxes included in the price
9of cigarettes.
10 The amount of the Cigarette Tax imposed by this Act shall
11be separately stated, apart from the price of the goods, by
12distributors, manufacturer representatives, secondary
13distributors, and retailers, in all bills and sales invoices.
14 (b) The distributor shall be required to collect the taxes
15provided under paragraph (a) hereof, and, to cover the costs of
16such collection, shall be allowed a discount during any year
17commencing July 1st and ending the following June 30th in
18accordance with the schedule set out hereinbelow, which
19discount shall be allowed at the time of purchase of the stamps
20when purchase is required by this Act, or at the time when the
21tax is remitted to the Department without the purchase of
22stamps from the Department when that method of paying the tax
23is required or authorized by this Act. Prior to December 1,
241985, a discount equal to 1 2/3% of the amount of the tax up to
25and including the first $700,000 paid hereunder by such
26distributor to the Department during any such year; 1 1/3% of

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1the next $700,000 of tax or any part thereof, paid hereunder by
2such distributor to the Department during any such year; 1% of
3the next $700,000 of tax, or any part thereof, paid hereunder
4by such distributor to the Department during any such year, and
52/3 of 1% of the amount of any additional tax paid hereunder by
6such distributor to the Department during any such year shall
7apply. On and after December 1, 1985, a discount equal to 1.75%
8of the amount of the tax payable under this Act up to and
9including the first $3,000,000 paid hereunder by such
10distributor to the Department during any such year and 1.5% of
11the amount of any additional tax paid hereunder by such
12distributor to the Department during any such year shall apply.
13 Two or more distributors that use a common means of
14affixing revenue tax stamps or that are owned or controlled by
15the same interests shall be treated as a single distributor for
16the purpose of computing the discount.
17 (c) The taxes herein imposed are in addition to all other
18occupation or privilege taxes imposed by the State of Illinois,
19or by any political subdivision thereof, or by any municipal
20corporation.
21(Source: P.A. 97-587, eff. 8-26-11; 97-688, eff. 6-14-12;
2298-273, eff. 8-9-13.)
23 Section 25-20. The Cigarette Use Tax Act is amended by
24changing Section 3 as follows:

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1 (35 ILCS 135/3) (from Ch. 120, par. 453.33)
2 Sec. 3. Stamp payment. The tax hereby imposed shall be
3collected by a distributor maintaining a place of business in
4this State or a distributor authorized by the Department
5pursuant to Section 7 hereof to collect the tax, and the amount
6of the tax shall be added to the price of the cigarettes sold
7by such distributor. Collection of the tax shall be evidenced
8by a stamp or stamps affixed to each original package of
9cigarettes or by an authorized substitute for such stamp
10imprinted on each original package of such cigarettes
11underneath the sealed transparent outside wrapper of such
12original package, except as hereinafter provided. Each
13distributor who is required or authorized to collect the tax
14herein imposed, before delivering or causing to be delivered
15any original packages of cigarettes in this State to any
16purchaser, shall firmly affix a proper stamp or stamps to each
17such package, or (in the case of manufacturers of cigarettes in
18original packages which are contained inside a sealed
19transparent wrapper) shall imprint the required language on the
20original package of cigarettes beneath such outside wrapper as
21hereinafter provided. Such stamp or stamps need not be affixed
22to the original package of any cigarettes with respect to which
23the distributor is required to affix a like stamp or stamps by
24virtue of the Cigarette Tax Act, however, and no tax imprint
25need be placed underneath the sealed transparent wrapper of an
26original package of cigarettes with respect to which the

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1distributor is required or authorized to employ a like tax
2imprint by virtue of the Cigarette Tax Act. Any distributor who
3purchases stamps may credit any excess payments verified by the
4Department against amounts subsequently due for the purchase of
5additional stamps, until such time as no excess payment
6remains.
7 No stamp or imprint may be affixed to, or made upon, any
8package of cigarettes unless that package complies with all
9requirements of the federal Cigarette Labeling and Advertising
10Act, 15 U.S.C. 1331 and following, for the placement of labels,
11warnings, or any other information upon a package of cigarettes
12that is sold within the United States. Under the authority of
13Section 6, the Department shall revoke the license of any
14distributor that is determined to have violated this paragraph.
15A person may not affix a stamp on a package of cigarettes,
16cigarette papers, wrappers, or tubes if that individual package
17has been marked for export outside the United States with a
18label or notice in compliance with Section 290.185 of Title 27
19of the Code of Federal Regulations. It is not a defense to a
20proceeding for violation of this paragraph that the label or
21notice has been removed, mutilated, obliterated, or altered in
22any manner.
23 Only distributors licensed under this Act and
24transporters, as defined in Section 9c of the Cigarette Tax
25Act, may possess unstamped original packages of cigarettes.
26Prior to shipment to an Illinois retailer or secondary

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1distributor, a stamp shall be applied to each original package
2of cigarettes sold to the retailer or secondary distributor. A
3distributor may apply a tax stamp only to an original package
4of cigarettes purchased or obtained directly from an in-state
5maker, manufacturer, or fabricator licensed as a distributor
6under Section 4 of this Act or an out-of-state maker,
7manufacturer, or fabricator holding a permit under Section 7 of
8this Act. A licensed distributor may ship or otherwise cause to
9be delivered unstamped original packages of cigarettes in,
10into, or from this State. A licensed distributor may transport
11unstamped original packages of cigarettes to a facility,
12wherever located, owned or controlled by such distributor;
13however, a distributor may not transport unstamped original
14packages of cigarettes to a facility where retail sales of
15cigarettes take place or to a facility where a secondary
16distributor makes sales for resale. Any licensed distributor
17that ships or otherwise causes to be delivered unstamped
18original packages of cigarettes into, within, or from this
19State shall ensure that the invoice or equivalent documentation
20and the bill of lading or freight bill for the shipment
21identifies the true name and address of the consignor or
22seller, the true name and address of the consignee or
23purchaser, and the quantity by brand style of the cigarettes so
24</