Bill Text: IL HB2300 | 2019-2020 | 101st General Assembly | Introduced

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Bill Title: Amends the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, and the Retailers' Occupation Tax Act. Provides that the manufacturing and assembling machinery and equipment exemption includes production related tangible personal property. Provides that a Manufacturer's Purchase Credit may not be taken on or after July 1, 2019. Effective immediately.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced - Dead) 2019-03-29 - Rule 19(a) / Re-referred to Rules Committee [HB2300 Detail]

Download: Illinois-2019-HB2300-Introduced.html

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101ST GENERAL ASSEMBLY State of Illinois 2019 and 2020 HB2300 Introduced , by Rep. Bob Morgan SYNOPSIS AS INTRODUCED:
35 ILCS 105/3-5
35 ILCS 105/3-50 from Ch. 120, par. 439.3-50
35 ILCS 105/3-85
35 ILCS 110/2 from Ch. 120, par. 439.32
35 ILCS 110/3-70
35 ILCS 115/2 from Ch. 120, par. 439.102
35 ILCS 115/9 from Ch. 120, par. 439.109
35 ILCS 120/2-5
35 ILCS 120/2-45 from Ch. 120, par. 441-45
35 ILCS 120/3 from Ch. 120, par. 442
Amends the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, and the Retailers' Occupation Tax Act. Provides that the manufacturing and assembling machinery and equipment exemption includes production related tangible personal property. Provides that a Manufacturer's Purchase Credit may not be taken on or after July 1, 2019. Effective immediately.
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FISCAL NOTE ACT MAY APPLY
A BILL FOR
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AN ACT concerning revenue.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 10. The Use Tax Act is amended by changing Sections
3-5, 3-50, and 3-85 as follows:
(35 ILCS 105/3-5)
Sec. 3-5. Exemptions. Use of the following tangible
personal property is exempt from the tax imposed by this Act:
(1) Personal property purchased from a corporation,
society, association, foundation, institution, or
organization, other than a limited liability company, that is
organized and operated as a not-for-profit service enterprise
for the benefit of persons 65 years of age or older if the
personal property was not purchased by the enterprise for the
purpose of resale by the enterprise.
(2) Personal property purchased by a not-for-profit
Illinois county fair association for use in conducting,
operating, or promoting the county fair.
(3) Personal property purchased by a not-for-profit arts or
cultural organization that establishes, by proof required by
the Department by rule, that it has received an exemption under
Section 501(c)(3) of the Internal Revenue Code and that is
organized and operated primarily for the presentation or

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support of arts or cultural programming, activities, or
services. These organizations include, but are not limited to,
music and dramatic arts organizations such as symphony
orchestras and theatrical groups, arts and cultural service
organizations, local arts councils, visual arts organizations,
and media arts organizations. On and after July 1, 2001 (the
effective date of Public Act 92-35), however, an entity
otherwise eligible for this exemption shall not make tax-free
purchases unless it has an active identification number issued
by the Department.
(4) Personal property purchased by a governmental body, by
a corporation, society, association, foundation, or
institution organized and operated exclusively for charitable,
religious, or educational purposes, or by a not-for-profit
corporation, society, association, foundation, institution, or
organization that has no compensated officers or employees and
that is organized and operated primarily for the recreation of
persons 55 years of age or older. A limited liability company
may qualify for the exemption under this paragraph only if the
limited liability company is organized and operated
exclusively for educational purposes. On and after July 1,
1987, however, no entity otherwise eligible for this exemption
shall make tax-free purchases unless it has an active exemption
identification number issued by the Department.
(5) Until July 1, 2003, a passenger car that is a
replacement vehicle to the extent that the purchase price of

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the car is subject to the Replacement Vehicle Tax.
(6) Until July 1, 2003 and beginning again on September 1,
2004 through August 30, 2014, graphic arts machinery and
equipment, including repair and replacement parts, both new and
used, and including that manufactured on special order,
certified by the purchaser to be used primarily for graphic
arts production, and including machinery and equipment
purchased for lease. Equipment includes chemicals or chemicals
acting as catalysts but only if the chemicals or chemicals
acting as catalysts effect a direct and immediate change upon a
graphic arts product. Beginning on July 1, 2017, graphic arts
machinery and equipment is included in the manufacturing and
assembling machinery and equipment exemption under paragraph
(18).
(7) Farm chemicals.
(8) Legal tender, currency, medallions, or gold or silver
coinage issued by the State of Illinois, the government of the
United States of America, or the government of any foreign
country, and bullion.
(9) Personal property purchased from a teacher-sponsored
student organization affiliated with an elementary or
secondary school located in Illinois.
(10) A motor vehicle that is used for automobile renting,
as defined in the Automobile Renting Occupation and Use Tax
Act.
(11) Farm machinery and equipment, both new and used,

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including that manufactured on special order, certified by the
purchaser to be used primarily for production agriculture or
State or federal agricultural programs, including individual
replacement parts for the machinery and equipment, including
machinery and equipment purchased for lease, and including
implements of husbandry defined in Section 1-130 of the
Illinois Vehicle Code, farm machinery and agricultural
chemical and fertilizer spreaders, and nurse wagons required to
be registered under Section 3-809 of the Illinois Vehicle Code,
but excluding other motor vehicles required to be registered
under the Illinois Vehicle Code. Horticultural polyhouses or
hoop houses used for propagating, growing, or overwintering
plants shall be considered farm machinery and equipment under
this item (11). Agricultural chemical tender tanks and dry
boxes shall include units sold separately from a motor vehicle
required to be licensed and units sold mounted on a motor
vehicle required to be licensed if the selling price of the
tender is separately stated.
Farm machinery and equipment shall include precision
farming equipment that is installed or purchased to be
installed on farm machinery and equipment including, but not
limited to, tractors, harvesters, sprayers, planters, seeders,
or spreaders. Precision farming equipment includes, but is not
limited to, soil testing sensors, computers, monitors,
software, global positioning and mapping systems, and other
such equipment.

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Farm machinery and equipment also includes computers,
sensors, software, and related equipment used primarily in the
computer-assisted operation of production agriculture
facilities, equipment, and activities such as, but not limited
to, the collection, monitoring, and correlation of animal and
crop data for the purpose of formulating animal diets and
agricultural chemicals. This item (11) is exempt from the
provisions of Section 3-90.
(12) Until June 30, 2013, fuel and petroleum products sold
to or used by an air common carrier, certified by the carrier
to be used for consumption, shipment, or storage in the conduct
of its business as an air common carrier, for a flight destined
for or returning from a location or locations outside the
United States without regard to previous or subsequent domestic
stopovers.
Beginning July 1, 2013, fuel and petroleum products sold to
or used by an air carrier, certified by the carrier to be used
for consumption, shipment, or storage in the conduct of its
business as an air common carrier, for a flight that (i) is
engaged in foreign trade or is engaged in trade between the
United States and any of its possessions and (ii) transports at
least one individual or package for hire from the city of
origination to the city of final destination on the same
aircraft, without regard to a change in the flight number of
that aircraft.
(13) Proceeds of mandatory service charges separately

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stated on customers' bills for the purchase and consumption of
food and beverages purchased at retail from a retailer, to the
extent that the proceeds of the service charge are in fact
turned over as tips or as a substitute for tips to the
employees who participate directly in preparing, serving,
hosting or cleaning up the food or beverage function with
respect to which the service charge is imposed.
(14) Until July 1, 2003, oil field exploration, drilling,
and production equipment, including (i) rigs and parts of rigs,
rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
tubular goods, including casing and drill strings, (iii) pumps
and pump-jack units, (iv) storage tanks and flow lines, (v) any
individual replacement part for oil field exploration,
drilling, and production equipment, and (vi) machinery and
equipment purchased for lease; but excluding motor vehicles
required to be registered under the Illinois Vehicle Code.
(15) Photoprocessing machinery and equipment, including
repair and replacement parts, both new and used, including that
manufactured on special order, certified by the purchaser to be
used primarily for photoprocessing, and including
photoprocessing machinery and equipment purchased for lease.
(16) Until July 1, 2023, coal and aggregate exploration,
mining, off-highway hauling, processing, maintenance, and
reclamation equipment, including replacement parts and
equipment, and including equipment purchased for lease, but
excluding motor vehicles required to be registered under the

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Illinois Vehicle Code. The changes made to this Section by
Public Act 97-767 apply on and after July 1, 2003, but no claim
for credit or refund is allowed on or after August 16, 2013
(the effective date of Public Act 98-456) for such taxes paid
during the period beginning July 1, 2003 and ending on August
16, 2013 (the effective date of Public Act 98-456).
(17) Until July 1, 2003, distillation machinery and
equipment, sold as a unit or kit, assembled or installed by the
retailer, certified by the user to be used only for the
production of ethyl alcohol that will be used for consumption
as motor fuel or as a component of motor fuel for the personal
use of the user, and not subject to sale or resale.
(18) Manufacturing and assembling machinery and equipment
used primarily in the process of manufacturing or assembling
tangible personal property for wholesale or retail sale or
lease, whether that sale or lease is made directly by the
manufacturer or by some other person, whether the materials
used in the process are owned by the manufacturer or some other
person, or whether that sale or lease is made apart from or as
an incident to the seller's engaging in the service occupation
of producing machines, tools, dies, jigs, patterns, gauges, or
other similar items of no commercial value on special order for
a particular purchaser. The exemption provided by this
paragraph (18) does not include machinery and equipment used in
(i) the generation of electricity for wholesale or retail sale;
(ii) the generation or treatment of natural or artificial gas

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for wholesale or retail sale that is delivered to customers
through pipes, pipelines, or mains; or (iii) the treatment of
water for wholesale or retail sale that is delivered to
customers through pipes, pipelines, or mains. The provisions of
Public Act 98-583 are declaratory of existing law as to the
meaning and scope of this exemption. Beginning on July 1, 2017,
the exemption provided by this paragraph (18) includes, but is
not limited to, graphic arts machinery and equipment, as
defined in paragraph (6) of this Section. Beginning on July 1,
2019, the exemption provided by this paragraph (18) includes,
but is not limited to, production related tangible personal
property, as defined in Section 3-50.
(19) Personal property delivered to a purchaser or
purchaser's donee inside Illinois when the purchase order for
that personal property was received by a florist located
outside Illinois who has a florist located inside Illinois
deliver the personal property.
(20) Semen used for artificial insemination of livestock
for direct agricultural production.
(21) Horses, or interests in horses, registered with and
meeting the requirements of any of the Arabian Horse Club
Registry of America, Appaloosa Horse Club, American Quarter
Horse Association, United States Trotting Association, or
Jockey Club, as appropriate, used for purposes of breeding or
racing for prizes. This item (21) is exempt from the provisions
of Section 3-90, and the exemption provided for under this item

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(21) applies for all periods beginning May 30, 1995, but no
claim for credit or refund is allowed on or after January 1,
2008 for such taxes paid during the period beginning May 30,
2000 and ending on January 1, 2008.
(22) Computers and communications equipment utilized for
any hospital purpose and equipment used in the diagnosis,
analysis, or treatment of hospital patients purchased by a
lessor who leases the equipment, under a lease of one year or
longer executed or in effect at the time the lessor would
otherwise be subject to the tax imposed by this Act, to a
hospital that has been issued an active tax exemption
identification number by the Department under Section 1g of the
Retailers' Occupation Tax Act. If the equipment is leased in a
manner that does not qualify for this exemption or is used in
any other non-exempt manner, the lessor shall be liable for the
tax imposed under this Act or the Service Use Tax Act, as the
case may be, based on the fair market value of the property at
the time the non-qualifying use occurs. No lessor shall collect
or attempt to collect an amount (however designated) that
purports to reimburse that lessor for the tax imposed by this
Act or the Service Use Tax Act, as the case may be, if the tax
has not been paid by the lessor. If a lessor improperly
collects any such amount from the lessee, the lessee shall have
a legal right to claim a refund of that amount from the lessor.
If, however, that amount is not refunded to the lessee for any
reason, the lessor is liable to pay that amount to the

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Department.
(23) Personal property purchased by a lessor who leases the
property, under a lease of one year or longer executed or in
effect at the time the lessor would otherwise be subject to the
tax imposed by this Act, to a governmental body that has been
issued an active sales tax exemption identification number by
the Department under Section 1g of the Retailers' Occupation
Tax Act. If the property is leased in a manner that does not
qualify for this exemption or used in any other non-exempt
manner, the lessor shall be liable for the tax imposed under
this Act or the Service Use Tax Act, as the case may be, based
on the fair market value of the property at the time the
non-qualifying use occurs. No lessor shall collect or attempt
to collect an amount (however designated) that purports to
reimburse that lessor for the tax imposed by this Act or the
Service Use Tax Act, as the case may be, if the tax has not been
paid by the lessor. If a lessor improperly collects any such
amount from the lessee, the lessee shall have a legal right to
claim a refund of that amount from the lessor. If, however,
that amount is not refunded to the lessee for any reason, the
lessor is liable to pay that amount to the Department.
(24) Beginning with taxable years ending on or after
December 31, 1995 and ending with taxable years ending on or
before December 31, 2004, personal property that is donated for
disaster relief to be used in a State or federally declared
disaster area in Illinois or bordering Illinois by a

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manufacturer or retailer that is registered in this State to a
corporation, society, association, foundation, or institution
that has been issued a sales tax exemption identification
number by the Department that assists victims of the disaster
who reside within the declared disaster area.
(25) Beginning with taxable years ending on or after
December 31, 1995 and ending with taxable years ending on or
before December 31, 2004, personal property that is used in the
performance of infrastructure repairs in this State, including
but not limited to municipal roads and streets, access roads,
bridges, sidewalks, waste disposal systems, water and sewer
line extensions, water distribution and purification
facilities, storm water drainage and retention facilities, and
sewage treatment facilities, resulting from a State or
federally declared disaster in Illinois or bordering Illinois
when such repairs are initiated on facilities located in the
declared disaster area within 6 months after the disaster.
(26) Beginning July 1, 1999, game or game birds purchased
at a "game breeding and hunting preserve area" as that term is
used in the Wildlife Code. This paragraph is exempt from the
provisions of Section 3-90.
(27) A motor vehicle, as that term is defined in Section
1-146 of the Illinois Vehicle Code, that is donated to a
corporation, limited liability company, society, association,
foundation, or institution that is determined by the Department
to be organized and operated exclusively for educational

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

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exempt from the provisions of Section 3-90.
(29) Beginning January 1, 2000 and through December 31,
2001, new or used automatic vending machines that prepare and
serve hot food and beverages, including coffee, soup, and other
items, and replacement parts for these machines. Beginning
January 1, 2002 and through June 30, 2003, machines and parts
for machines used in commercial, coin-operated amusement and
vending business if a use or occupation tax is paid on the
gross receipts derived from the use of the commercial,
coin-operated amusement and vending machines. This paragraph
is exempt from the provisions of Section 3-90.
(30) Beginning January 1, 2001 and through June 30, 2016,
food for human consumption that is to be consumed off the
premises where it is sold (other than alcoholic beverages, soft
drinks, and food that has been prepared for immediate
consumption) and prescription and nonprescription medicines,
drugs, medical appliances, and insulin, urine testing
materials, syringes, and needles used by diabetics, for human
use, when purchased for use by a person receiving medical
assistance under Article V of the Illinois Public Aid Code who
resides in a licensed long-term care facility, as defined in
the Nursing Home Care Act, or in a licensed facility as defined
in the ID/DD Community Care Act, the MC/DD Act, or the
Specialized Mental Health Rehabilitation Act of 2013.
(31) Beginning on August 2, 2001 (the effective date of
Public Act 92-227), computers and communications equipment

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utilized for any hospital purpose and equipment used in the
diagnosis, analysis, or treatment of hospital patients
purchased by a lessor who leases the equipment, under a lease
of one year or longer executed or in effect at the time the
lessor would otherwise be subject to the tax imposed by this
Act, to a hospital that has been issued an active tax exemption
identification number by the Department under Section 1g of the
Retailers' Occupation Tax Act. If the equipment is leased in a
manner that does not qualify for this exemption or is used in
any other nonexempt manner, the lessor shall be liable for the
tax imposed under this Act or the Service Use Tax Act, as the
case may be, based on the fair market value of the property at
the time the nonqualifying use occurs. No lessor shall collect
or attempt to collect an amount (however designated) that
purports to reimburse that lessor for the tax imposed by this
Act or the Service Use Tax Act, as the case may be, if the tax
has not been paid by the lessor. If a lessor improperly
collects any such amount from the lessee, the lessee shall have
a legal right to claim a refund of that amount from the lessor.
If, however, that amount is not refunded to the lessee for any
reason, the lessor is liable to pay that amount to the
Department. This paragraph is exempt from the provisions of
Section 3-90.
(32) Beginning on August 2, 2001 (the effective date of
Public Act 92-227), personal property purchased by a lessor who
leases the property, under a lease of one year or longer

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executed or in effect at the time the lessor would otherwise be
subject to the tax imposed by this Act, to a governmental body
that has been issued an active sales tax exemption
identification number by the Department under Section 1g of the
Retailers' Occupation Tax Act. If the property is leased in a
manner that does not qualify for this exemption or used in any
other nonexempt manner, the lessor shall be liable for the tax
imposed under this Act or the Service Use Tax Act, as the case
may be, based on the fair market value of the property at the
time the nonqualifying use occurs. No lessor shall collect or
attempt to collect an amount (however designated) that purports
to reimburse that lessor for the tax imposed by this Act or the
Service Use Tax Act, as the case may be, if the tax has not been
paid by the lessor. If a lessor improperly collects any such
amount from the lessee, the lessee shall have a legal right to
claim a refund of that amount from the lessor. If, however,
that amount is not refunded to the lessee for any reason, the
lessor is liable to pay that amount to the Department. This
paragraph is exempt from the provisions of Section 3-90.
(33) On and after July 1, 2003 and through June 30, 2004,
the use in this State of motor vehicles of the second division
with a gross vehicle weight in excess of 8,000 pounds and that
are subject to the commercial distribution fee imposed under
Section 3-815.1 of the Illinois Vehicle Code. Beginning on July
1, 2004 and through June 30, 2005, the use in this State of
motor vehicles of the second division: (i) with a gross vehicle

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weight rating in excess of 8,000 pounds; (ii) that are subject
to the commercial distribution fee imposed under Section
3-815.1 of the Illinois Vehicle Code; and (iii) that are
primarily used for commercial purposes. Through June 30, 2005,
this exemption applies to repair and replacement parts added
after the initial purchase of such a motor vehicle if that
motor vehicle is used in a manner that would qualify for the
rolling stock exemption otherwise provided for in this Act. For
purposes of this paragraph, the term "used for commercial
purposes" means the transportation of persons or property in
furtherance of any commercial or industrial enterprise,
whether for-hire or not.
(34) Beginning January 1, 2008, tangible personal property
used in the construction or maintenance of a community water
supply, as defined under Section 3.145 of the Environmental
Protection Act, that is operated by a not-for-profit
corporation that holds a valid water supply permit issued under
Title IV of the Environmental Protection Act. This paragraph is
exempt from the provisions of Section 3-90.
(35) Beginning January 1, 2010, materials, parts,
equipment, components, and furnishings incorporated into or
upon an aircraft as part of the modification, refurbishment,
completion, replacement, repair, or maintenance of the
aircraft. This exemption includes consumable supplies used in
the modification, refurbishment, completion, replacement,
repair, and maintenance of aircraft, but excludes any

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materials, parts, equipment, components, and consumable
supplies used in the modification, replacement, repair, and
maintenance of aircraft engines or power plants, whether such
engines or power plants are installed or uninstalled upon any
such aircraft. "Consumable supplies" include, but are not
limited to, adhesive, tape, sandpaper, general purpose
lubricants, cleaning solution, latex gloves, and protective
films. This exemption applies only to the use of qualifying
tangible personal property by persons who modify, refurbish,
complete, repair, replace, or maintain aircraft and who (i)
hold an Air Agency Certificate and are empowered to operate an
approved repair station by the Federal Aviation
Administration, (ii) have a Class IV Rating, and (iii) conduct
operations in accordance with Part 145 of the Federal Aviation
Regulations. The exemption does not include aircraft operated
by a commercial air carrier providing scheduled passenger air
service pursuant to authority issued under Part 121 or Part 129
of the Federal Aviation Regulations. The changes made to this
paragraph (35) by Public Act 98-534 are declarative of existing
law.
(36) Tangible personal property purchased by a
public-facilities corporation, as described in Section
11-65-10 of the Illinois Municipal Code, for purposes of
constructing or furnishing a municipal convention hall, but
only if the legal title to the municipal convention hall is
transferred to the municipality without any further

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consideration by or on behalf of the municipality at the time
of the completion of the municipal convention hall or upon the
retirement or redemption of any bonds or other debt instruments
issued by the public-facilities corporation in connection with
the development of the municipal convention hall. This
exemption includes existing public-facilities corporations as
provided in Section 11-65-25 of the Illinois Municipal Code.
This paragraph is exempt from the provisions of Section 3-90.
(37) Beginning January 1, 2017, menstrual pads, tampons,
and menstrual cups.
(38) Merchandise that is subject to the Rental Purchase
Agreement Occupation and Use Tax. The purchaser must certify
that the item is purchased to be rented subject to a rental
purchase agreement, as defined in the Rental Purchase Agreement
Act, and provide proof of registration under the Rental
Purchase Agreement Occupation and Use Tax Act. This paragraph
is exempt from the provisions of Section 3-90.
(39) Tangible personal property purchased by a purchaser
who is exempt from the tax imposed by this Act by operation of
federal law. This paragraph is exempt from the provisions of
Section 3-90.
(Source: P.A. 99-180, eff. 7-29-15; 99-855, eff. 8-19-16;
100-22, eff. 7-6-17; 100-437, eff. 1-1-18; 100-594, eff.
6-29-18; 100-863, eff. 8-14-18; 100-1171, eff. 1-4-19; revised
1-8-19.)

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(35 ILCS 105/3-50) (from Ch. 120, par. 439.3-50)
Sec. 3-50. Manufacturing and assembly exemption. The
manufacturing and assembling machinery and equipment exemption
includes machinery and equipment that replaces machinery and
equipment in an existing manufacturing facility as well as
machinery and equipment that are for use in an expanded or new
manufacturing facility. The machinery and equipment exemption
also includes machinery and equipment used in the general
maintenance or repair of exempt machinery and equipment or for
in-house manufacture of exempt machinery and equipment.
Beginning on July 1, 2017, the manufacturing and assembling
machinery and equipment exemption also includes graphic arts
machinery and equipment, as defined in paragraph (6) of Section
3-5. Beginning on July 1, 2019, the manufacturing and
assembling machinery and equipment exemption also includes
production related tangible personal property, as defined in
this Section. The machinery and equipment exemption does not
include machinery and equipment used in (i) the generation of
electricity for wholesale or retail sale; (ii) the generation
or treatment of natural or artificial gas for wholesale or
retail sale that is delivered to customers through pipes,
pipelines, or mains; or (iii) the treatment of water for
wholesale or retail sale that is delivered to customers through
pipes, pipelines, or mains. The provisions of this amendatory
Act of the 98th General Assembly are declaratory of existing
law as to the meaning and scope of this exemption. For the

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purposes of this exemption, terms have the following meanings:
(1) "Manufacturing process" means the production of an
article of tangible personal property, whether the article
is a finished product or an article for use in the process
of manufacturing or assembling a different article of
tangible personal property, by a procedure commonly
regarded as manufacturing, processing, fabricating, or
refining that changes some existing material into a
material with a different form, use, or name. In relation
to a recognized integrated business composed of a series of
operations that collectively constitute manufacturing, or
individually constitute manufacturing operations, the
manufacturing process commences with the first operation
or stage of production in the series and does not end until
the completion of the final product in the last operation
or stage of production in the series. For purposes of this
exemption, photoprocessing is a manufacturing process of
tangible personal property for wholesale or retail sale.
(2) "Assembling process" means the production of an
article of tangible personal property, whether the article
is a finished product or an article for use in the process
of manufacturing or assembling a different article of
tangible personal property, by the combination of existing
materials in a manner commonly regarded as assembling that
results in an article or material of a different form, use,
or name.

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(3) "Machinery" means major mechanical machines or
major components of those machines contributing to a
manufacturing or assembling process.
(4) "Equipment" includes an independent device or tool
separate from machinery but essential to an integrated
manufacturing or assembly process; including computers
used primarily in a manufacturer's computer assisted
design, computer assisted manufacturing (CAD/CAM) system;
any subunit or assembly comprising a component of any
machinery or auxiliary, adjunct, or attachment parts of
machinery, such as tools, dies, jigs, fixtures, patterns,
and molds; and any parts that require periodic replacement
in the course of normal operation; but does not include
hand tools. Equipment includes chemicals or chemicals
acting as catalysts but only if the chemicals or chemicals
acting as catalysts effect a direct and immediate change
upon a product being manufactured or assembled for
wholesale or retail sale or lease.
(5) "Production related tangible personal property"
means all tangible personal property that is used or
consumed by the purchaser in a manufacturing facility in
which a manufacturing process described in Section 2-45 of
the Retailers' Occupation Tax Act takes place, including
and includes, without limitation, tangible personal
property that is purchased for incorporation into real
estate within a manufacturing facility and including, but

HB2300 - 22 - LRB101 07228 HLH 52266 b
not limited to, tangible personal property that is used or
consumed in activities such as research and development,
preproduction material handling, receiving, quality
control, inventory control, storage, staging, and
packaging for shipping and transportation purposes.
Tangible personal property used or consumed by the
purchaser for research and development is considered
"production related tangible personal property" regardless
of use within or without a manufacturing facility.
"Production related tangible personal property" does not
include (i) tangible personal property that is used, within
or without a manufacturing facility, in sales, purchasing,
accounting, fiscal management, marketing, personnel
recruitment or selection, or landscaping or (ii) tangible
personal property that is required to be titled or
registered with a department, agency, or unit of federal,
State, or local government.
The manufacturing and assembling machinery and equipment
exemption includes production related tangible personal
property that is purchased on or after July 1, 2007 and on or
before June 30, 2008. The exemption for production related
tangible personal property is subject to both of the following
limitations:
(1) The maximum amount of the exemption for any one
taxpayer may not exceed 5% of the purchase price of
production related tangible personal property that is

HB2300 - 23 - LRB101 07228 HLH 52266 b
purchased on or after July 1, 2007 and on or before June
30, 2008. A credit under Section 3-85 of this Act may not
be earned by the purchase of production related tangible
personal property for which an exemption is received under
this Section.
(2) The maximum aggregate amount of the exemptions for
production related tangible personal property awarded
under this Act and the Retailers' Occupation Tax Act to all
taxpayers may not exceed $10,000,000. If the claims for the
exemption exceed $10,000,000, then the Department shall
reduce the amount of the exemption to each taxpayer on a
pro rata basis.
The Department may adopt rules to implement and administer the
exemption for production related tangible personal property.
The manufacturing and assembling machinery and equipment
exemption includes the sale of materials to a purchaser who
produces exempted types of machinery, equipment, or tools and
who rents or leases that machinery, equipment, or tools to a
manufacturer of tangible personal property. This exemption
also includes the sale of materials to a purchaser who
manufactures those materials into an exempted type of
machinery, equipment, or tools that the purchaser uses himself
or herself in the manufacturing of tangible personal property.
This exemption includes the sale of exempted types of machinery
or equipment to a purchaser who is not the manufacturer, but
who rents or leases the use of the property to a manufacturer.

HB2300 - 24 - LRB101 07228 HLH 52266 b
The purchaser of the machinery and equipment who has an active
resale registration number shall furnish that number to the
seller at the time of purchase. A user of the machinery,
equipment, or tools without an active resale registration
number shall prepare a certificate of exemption for each
transaction stating facts establishing the exemption for that
transaction, and that certificate shall be available to the
Department for inspection or audit. The Department shall
prescribe the form of the certificate. Informal rulings,
opinions, or letters issued by the Department in response to an
inquiry or request for an opinion from any person regarding the
coverage and applicability of this exemption to specific
devices shall be published, maintained as a public record, and
made available for public inspection and copying. If the
informal ruling, opinion, or letter contains trade secrets or
other confidential information, where possible, the Department
shall delete that information before publication. Whenever
informal rulings, opinions, or letters contain a policy of
general applicability, the Department shall formulate and
adopt that policy as a rule in accordance with the Illinois
Administrative Procedure Act.
The manufacturing and assembling machinery and equipment
exemption is exempt from the provisions of Section 3-90.
(Source: P.A. 100-22, eff. 7-6-17.)
(35 ILCS 105/3-85)

HB2300 - 25 - LRB101 07228 HLH 52266 b
Sec. 3-85. Manufacturer's Purchase Credit. For purchases
of machinery and equipment made on and after January 1, 1995
through June 30, 2003, and on and after September 1, 2004
through August 30, 2014, a purchaser of manufacturing machinery
and equipment that qualifies for the exemption provided by
paragraph (18) of Section 3-5 of this Act earns a credit in an
amount equal to a fixed percentage of the tax which would have
been incurred under this Act on those purchases. For purchases
of graphic arts machinery and equipment made on or after July
1, 1996 and through June 30, 2003, and on and after September
1, 2004 through August 30, 2014, a purchaser of graphic arts
machinery and equipment that qualifies for the exemption
provided by paragraph (6) of Section 3-5 of this Act earns a
credit in an amount equal to a fixed percentage of the tax that
would have been incurred under this Act on those purchases. The
credit earned for purchases of manufacturing machinery and
equipment or graphic arts machinery and equipment shall be
referred to as the Manufacturer's Purchase Credit. A graphic
arts producer is a person engaged in graphic arts production as
defined in Section 2-30 of the Retailers' Occupation Tax Act.
Beginning July 1, 1996, all references in this Section to
manufacturers or manufacturing shall also be deemed to refer to
graphic arts producers or graphic arts production.
The amount of credit shall be a percentage of the tax that
would have been incurred on the purchase of manufacturing
machinery and equipment or graphic arts machinery and equipment

HB2300 - 26 - LRB101 07228 HLH 52266 b
if the exemptions provided by paragraph (6) or paragraph (18)
of Section 3-5 of this Act had not been applicable. The
percentage shall be as follows:
(1) 15% for purchases made on or before June 30, 1995.
(2) 25% for purchases made after June 30, 1995, and on
or before June 30, 1996.
(3) 40% for purchases made after June 30, 1996, and on
or before June 30, 1997.
(4) 50% for purchases made on or after July 1, 1997.
(a) Manufacturer's Purchase Credit earned prior to July 1,
2003. This subsection (a) applies to Manufacturer's Purchase
Credit earned prior to July 1, 2003. A purchaser of production
related tangible personal property desiring to use the
Manufacturer's Purchase Credit shall certify to the seller
prior to October 1, 2003 that the purchaser is satisfying all
or part of the liability under the Use Tax Act or the Service
Use Tax Act that is due on the purchase of the production
related tangible personal property by use of Manufacturer's
Purchase Credit. The Manufacturer's Purchase Credit
certification must be dated and shall include the name and
address of the purchaser, the purchaser's registration number,
if registered, the credit being applied, and a statement that
the State Use Tax or Service Use Tax liability is being
satisfied with the manufacturer's or graphic arts producer's
accumulated purchase credit. Certification may be incorporated
into the manufacturer's or graphic arts producer's purchase

HB2300 - 27 - LRB101 07228 HLH 52266 b
order. Manufacturer's Purchase Credit certification provided
by the manufacturer or graphic arts producer prior to October
1, 2003 may be used to satisfy the retailer's or serviceman's
liability under the Retailers' Occupation Tax Act or Service
Occupation Tax Act for the credit claimed, not to exceed 6.25%
of the receipts subject to tax from a qualifying purchase, but
only if the retailer or serviceman reports the Manufacturer's
Purchase Credit claimed as required by the Department. A
Manufacturer's Purchase Credit reported on any original or
amended return filed under this Act after October 20, 2003
shall be disallowed. The Manufacturer's Purchase Credit earned
by purchase of exempt manufacturing machinery and equipment or
graphic arts machinery and equipment is a non-transferable
credit. A manufacturer or graphic arts producer that enters
into a contract involving the installation of tangible personal
property into real estate within a manufacturing or graphic
arts production facility may, prior to October 1, 2003,
authorize a construction contractor to utilize credit
accumulated by the manufacturer or graphic arts producer to
purchase the tangible personal property. A manufacturer or
graphic arts producer intending to use accumulated credit to
purchase such tangible personal property shall execute a
written contract authorizing the contractor to utilize a
specified dollar amount of credit. The contractor shall
furnish, prior to October 1, 2003, the supplier with the
manufacturer's or graphic arts producer's name, registration

HB2300 - 28 - LRB101 07228 HLH 52266 b
or resale number, and a statement that a specific amount of the
Use Tax or Service Use Tax liability, not to exceed 6.25% of
the selling price, is being satisfied with the credit. The
manufacturer or graphic arts producer shall remain liable to
timely report all information required by the annual Report of
Manufacturer's Purchase Credit Used for all credit utilized by
a construction contractor.
No Manufacturer's Purchase Credit earned prior to July 1,
2003 may be used after October 1, 2003. The Manufacturer's
Purchase Credit may be used to satisfy liability under the Use
Tax Act or the Service Use Tax Act due on the purchase of
production related tangible personal property (including
purchases by a manufacturer, by a graphic arts producer, or by
a lessor who rents or leases the use of the property to a
manufacturer or graphic arts producer) that does not otherwise
qualify for the manufacturing machinery and equipment
exemption or the graphic arts machinery and equipment
exemption. "Production related tangible personal property"
means (i) all tangible personal property used or consumed by
the purchaser in a manufacturing facility in which a
manufacturing process described in Section 2-45 of the
Retailers' Occupation Tax Act takes place, including tangible
personal property purchased for incorporation into real estate
within a manufacturing facility and including, but not limited
to, tangible personal property used or consumed in activities
such as preproduction material handling, receiving, quality

HB2300 - 29 - LRB101 07228 HLH 52266 b
control, inventory control, storage, staging, and packaging
for shipping and transportation purposes; (ii) all tangible
personal property used or consumed by the purchaser in a
graphic arts facility in which graphic arts production as
described in Section 2-30 of the Retailers' Occupation Tax Act
takes place, including tangible personal property purchased
for incorporation into real estate within a graphic arts
facility and including, but not limited to, all tangible
personal property used or consumed in activities such as
graphic arts preliminary or pre-press production,
pre-production material handling, receiving, quality control,
inventory control, storage, staging, sorting, labeling,
mailing, tying, wrapping, and packaging; and (iii) all tangible
personal property used or consumed by the purchaser for
research and development. "Production related tangible
personal property" does not include (i) tangible personal
property used, within or without a manufacturing facility, in
sales, purchasing, accounting, fiscal management, marketing,
personnel recruitment or selection, or landscaping or (ii)
tangible personal property required to be titled or registered
with a department, agency, or unit of federal, state, or local
government. The Manufacturer's Purchase Credit may be used,
prior to October 1, 2003, to satisfy the tax arising either
from the purchase of machinery and equipment on or after
January 1, 1995 for which the exemption provided by paragraph
(18) of Section 3-5 of this Act was erroneously claimed, or the

HB2300 - 30 - LRB101 07228 HLH 52266 b
purchase of machinery and equipment on or after July 1, 1996
for which the exemption provided by paragraph (6) of Section
3-5 of this Act was erroneously claimed, but not in
satisfaction of penalty, if any, and interest for failure to
pay the tax when due. A purchaser of production related
tangible personal property who is required to pay Illinois Use
Tax or Service Use Tax on the purchase directly to the
Department may, prior to October 1, 2003, utilize the
Manufacturer's Purchase Credit in satisfaction of the tax
arising from that purchase, but not in satisfaction of penalty
and interest. A purchaser who uses the Manufacturer's Purchase
Credit to purchase property which is later determined not to be
production related tangible personal property may be liable for
tax, penalty, and interest on the purchase of that property as
of the date of purchase but shall be entitled to use the
disallowed Manufacturer's Purchase Credit, so long as it has
not expired and is used prior to October 1, 2003, on qualifying
purchases of production related tangible personal property not
previously subject to credit usage. The Manufacturer's
Purchase Credit earned by a manufacturer or graphic arts
producer expires the last day of the second calendar year
following the calendar year in which the credit arose. No
Manufacturer's Purchase Credit may be used after September 30,
2003 regardless of when that credit was earned.
A purchaser earning Manufacturer's Purchase Credit shall
sign and file an annual Report of Manufacturer's Purchase

HB2300 - 31 - LRB101 07228 HLH 52266 b
Credit Earned for each calendar year no later than the last day
of the sixth month following the calendar year in which a
Manufacturer's Purchase Credit is earned. A Report of
Manufacturer's Purchase Credit Earned shall be filed on forms
as prescribed or approved by the Department and shall state,
for each month of the calendar year: (i) the total purchase
price of all purchases of exempt manufacturing or graphic arts
machinery on which the credit was earned; (ii) the total State
Use Tax or Service Use Tax which would have been due on those
items; (iii) the percentage used to calculate the amount of
credit earned; (iv) the amount of credit earned; and (v) such
other information as the Department may reasonably require. A
purchaser earning Manufacturer's Purchase Credit shall
maintain records which identify, as to each purchase of
manufacturing or graphic arts machinery and equipment on which
the purchaser earned Manufacturer's Purchase Credit, the
vendor (including, if applicable, either the vendor's
registration number or Federal Employer Identification
Number), the purchase price, and the amount of Manufacturer's
Purchase Credit earned on each purchase.
A purchaser using Manufacturer's Purchase Credit shall
sign and file an annual Report of Manufacturer's Purchase
Credit Used for each calendar year no later than the last day
of the sixth month following the calendar year in which a
Manufacturer's Purchase Credit is used. A Report of
Manufacturer's Purchase Credit Used shall be filed on forms as

HB2300 - 32 - LRB101 07228 HLH 52266 b
prescribed or approved by the Department and shall state, for
each month of the calendar year: (i) the total purchase price
of production related tangible personal property purchased
from Illinois suppliers; (ii) the total purchase price of
production related tangible personal property purchased from
out-of-state suppliers; (iii) the total amount of credit used
during such month; and (iv) such other information as the
Department may reasonably require. A purchaser using
Manufacturer's Purchase Credit shall maintain records that
identify, as to each purchase of production related tangible
personal property on which the purchaser used Manufacturer's
Purchase Credit, the vendor (including, if applicable, either
the vendor's registration number or Federal Employer
Identification Number), the purchase price, and the amount of
Manufacturer's Purchase Credit used on each purchase.
No annual report shall be filed before May 1, 1996 or after
June 30, 2004. A purchaser that fails to file an annual Report
of Manufacturer's Purchase Credit Earned or an annual Report of
Manufacturer's Purchase Credit Used by the last day of the
sixth month following the end of the calendar year shall
forfeit all Manufacturer's Purchase Credit for that calendar
year unless it establishes that its failure to file was due to
reasonable cause. Manufacturer's Purchase Credit reports may
be amended to report and claim credit on qualifying purchases
not previously reported at any time before the credit would
have expired, unless both the Department and the purchaser have

HB2300 - 33 - LRB101 07228 HLH 52266 b
agreed to an extension of the statute of limitations for the
issuance of a notice of tax liability as provided in Section 4
of the Retailers' Occupation Tax Act. If the time for
assessment or refund has been extended, then amended reports
for a calendar year may be filed at any time prior to the date
to which the statute of limitations for the calendar year or
portion thereof has been extended. No Manufacturer's Purchase
Credit report filed with the Department for periods prior to
January 1, 1995 shall be approved. Manufacturer's Purchase
Credit claimed on an amended report may be used, until October
1, 2003, to satisfy tax liability under the Use Tax Act or the
Service Use Tax Act (i) on qualifying purchases of production
related tangible personal property made after the date the
amended report is filed or (ii) assessed by the Department on
qualifying purchases of production related tangible personal
property made in the case of manufacturers on or after January
1, 1995, or in the case of graphic arts producers on or after
July 1, 1996.
If the purchaser is not the manufacturer or a graphic arts
producer, but rents or leases the use of the property to a
manufacturer or graphic arts producer, the purchaser may earn,
report, and use Manufacturer's Purchase Credit in the same
manner as a manufacturer or graphic arts producer.
A purchaser shall not be entitled to any Manufacturer's
Purchase Credit for a purchase that is required to be reported
and is not timely reported as provided in this Section. A

HB2300 - 34 - LRB101 07228 HLH 52266 b
purchaser remains liable for (i) any tax that was satisfied by
use of a Manufacturer's Purchase Credit, as of the date of
purchase, if that use is not timely reported as required in
this Section and (ii) for any applicable penalties and interest
for failing to pay the tax when due. No Manufacturer's Purchase
Credit may be used after September 30, 2003 to satisfy any tax
liability imposed under this Act, including any audit
liability.
(b) Manufacturer's Purchase Credit earned on and after
September 1, 2004 and through June 30, 2019. This subsection
(b) applies to Manufacturer's Purchase Credit earned on and
after September 1, 2004 and through June 30, 2019. No
Manufacturer's Purchase Credit may be used after July 1, 2019
to satisfy any tax liability incurred on purchases of
production related tangible personal property made on or before
July 1, 2019 or to satisfy any audit liability established on
or after July 1, 2019. Manufacturer's Purchase Credit earned on
or after September 1, 2004 may only be used to satisfy the Use
Tax or Service Use Tax liability incurred on production related
tangible personal property purchased on or after September 1,
2004. A purchaser of production related tangible personal
property desiring to use the Manufacturer's Purchase Credit
shall certify to the seller that the purchaser is satisfying
all or part of the liability under the Use Tax Act or the
Service Use Tax Act that is due on the purchase of the
production related tangible personal property by use of

HB2300 - 35 - LRB101 07228 HLH 52266 b
Manufacturer's Purchase Credit. The Manufacturer's Purchase
Credit certification must be dated and shall include the name
and address of the purchaser, the purchaser's registration
number, if registered, the credit being applied, and a
statement that the State Use Tax or Service Use Tax liability
is being satisfied with the manufacturer's or graphic arts
producer's accumulated purchase credit. Certification may be
incorporated into the manufacturer's or graphic arts
producer's purchase order. Manufacturer's Purchase Credit
certification provided by the manufacturer or graphic arts
producer may be used to satisfy the retailer's or serviceman's
liability under the Retailers' Occupation Tax Act or Service
Occupation Tax Act for the credit claimed, not to exceed 6.25%
of the receipts subject to tax from a qualifying purchase, but
only if the retailer or serviceman reports the Manufacturer's
Purchase Credit claimed as required by the Department. The
Manufacturer's Purchase Credit earned by purchase of exempt
manufacturing machinery and equipment or graphic arts
machinery and equipment is a non-transferable credit. A
manufacturer or graphic arts producer that enters into a
contract involving the installation of tangible personal
property into real estate within a manufacturing or graphic
arts production facility may, on or after September 1, 2004,
authorize a construction contractor to utilize credit
accumulated by the manufacturer or graphic arts producer to
purchase the tangible personal property. A manufacturer or

HB2300 - 36 - LRB101 07228 HLH 52266 b
graphic arts producer intending to use accumulated credit to
purchase such tangible personal property shall execute a
written contract authorizing the contractor to utilize a
specified dollar amount of credit. The contractor shall furnish
the supplier with the manufacturer's or graphic arts producer's
name, registration or resale number, and a statement that a
specific amount of the Use Tax or Service Use Tax liability,
not to exceed 6.25% of the selling price, is being satisfied
with the credit. The manufacturer or graphic arts producer
shall remain liable to timely report all information required
by the annual Report of Manufacturer's Purchase Credit Used for
all credit utilized by a construction contractor.
The Manufacturer's Purchase Credit may be used to satisfy
liability under the Use Tax Act or the Service Use Tax Act due
on the purchase, made on or after September 1, 2004, of
production related tangible personal property (including
purchases by a manufacturer, by a graphic arts producer, or by
a lessor who rents or leases the use of the property to a
manufacturer or graphic arts producer) that does not otherwise
qualify for the manufacturing machinery and equipment
exemption or the graphic arts machinery and equipment
exemption. "Production related tangible personal property"
means (i) all tangible personal property used or consumed by
the purchaser in a manufacturing facility in which a
manufacturing process described in Section 2-45 of the
Retailers' Occupation Tax Act takes place, including tangible

HB2300 - 37 - LRB101 07228 HLH 52266 b
personal property purchased for incorporation into real estate
within a manufacturing facility and including, but not limited
to, tangible personal property used or consumed in activities
such as preproduction material handling, receiving, quality
control, inventory control, storage, staging, and packaging
for shipping and transportation purposes; (ii) all tangible
personal property used or consumed by the purchaser in a
graphic arts facility in which graphic arts production as
described in Section 2-30 of the Retailers' Occupation Tax Act
takes place, including tangible personal property purchased
for incorporation into real estate within a graphic arts
facility and including, but not limited to, all tangible
personal property used or consumed in activities such as
graphic arts preliminary or pre-press production,
pre-production material handling, receiving, quality control,
inventory control, storage, staging, sorting, labeling,
mailing, tying, wrapping, and packaging; and (iii) all tangible
personal property used or consumed by the purchaser for
research and development. "Production related tangible
personal property" does not include (i) tangible personal
property used, within or without a manufacturing facility, in
sales, purchasing, accounting, fiscal management, marketing,
personnel recruitment or selection, or landscaping or (ii)
tangible personal property required to be titled or registered
with a department, agency, or unit of federal, state, or local
government. The Manufacturer's Purchase Credit may be used to

HB2300 - 38 - LRB101 07228 HLH 52266 b
satisfy the tax arising either from the purchase of machinery
and equipment on or after September 1, 2004 for which the
exemption provided by paragraph (18) of Section 3-5 of this Act
was erroneously claimed, or the purchase of machinery and
equipment on or after September 1, 2004 for which the exemption
provided by paragraph (6) of Section 3-5 of this Act was
erroneously claimed, but not in satisfaction of penalty, if
any, and interest for failure to pay the tax when due. A
purchaser of production related tangible personal property
that is purchased on or after September 1, 2004 who is required
to pay Illinois Use Tax or Service Use Tax on the purchase
directly to the Department may utilize the Manufacturer's
Purchase Credit in satisfaction of the tax arising from that
purchase, but not in satisfaction of penalty and interest. A
purchaser who uses the Manufacturer's Purchase Credit to
purchase property on and after September 1, 2004 which is later
determined not to be production related tangible personal
property may be liable for tax, penalty, and interest on the
purchase of that property as of the date of purchase but shall
be entitled to use the disallowed Manufacturer's Purchase
Credit, so long as it has not expired and is used on qualifying
purchases of production related tangible personal property not
previously subject to credit usage. The Manufacturer's
Purchase Credit earned by a manufacturer or graphic arts
producer expires the last day of the second calendar year
following the calendar year in which the credit arose. A

HB2300 - 39 - LRB101 07228 HLH 52266 b
purchaser earning Manufacturer's Purchase Credit shall sign
and file an annual Report of Manufacturer's Purchase Credit
Earned for each calendar year no later than the last day of the
sixth month following the calendar year in which a
Manufacturer's Purchase Credit is earned. A Report of
Manufacturer's Purchase Credit Earned shall be filed on forms
as prescribed or approved by the Department and shall state,
for each month of the calendar year: (i) the total purchase
price of all purchases of exempt manufacturing or graphic arts
machinery on which the credit was earned; (ii) the total State
Use Tax or Service Use Tax which would have been due on those
items; (iii) the percentage used to calculate the amount of
credit earned; (iv) the amount of credit earned; and (v) such
other information as the Department may reasonably require. A
purchaser earning Manufacturer's Purchase Credit shall
maintain records which identify, as to each purchase of
manufacturing or graphic arts machinery and equipment on which
the purchaser earned Manufacturer's Purchase Credit, the
vendor (including, if applicable, either the vendor's
registration number or Federal Employer Identification
Number), the purchase price, and the amount of Manufacturer's
Purchase Credit earned on each purchase. A purchaser using
Manufacturer's Purchase Credit shall sign and file an annual
Report of Manufacturer's Purchase Credit Used for each calendar
year no later than the last day of the sixth month following
the calendar year in which a Manufacturer's Purchase Credit is

HB2300 - 40 - LRB101 07228 HLH 52266 b
used. A Report of Manufacturer's Purchase Credit Used shall be
filed on forms as prescribed or approved by the Department and
shall state, for each month of the calendar year: (i) the total
purchase price of production related tangible personal
property purchased from Illinois suppliers; (ii) the total
purchase price of production related tangible personal
property purchased from out-of-state suppliers; (iii) the
total amount of credit used during such month; and (iv) such
other information as the Department may reasonably require. A
purchaser using Manufacturer's Purchase Credit shall maintain
records that identify, as to each purchase of production
related tangible personal property on which the purchaser used
Manufacturer's Purchase Credit, the vendor (including, if
applicable, either the vendor's registration number or Federal
Employer Identification Number), the purchase price, and the
amount of Manufacturer's Purchase Credit used on each purchase.
A purchaser that fails to file an annual Report of
Manufacturer's Purchase Credit Earned or an annual Report of
Manufacturer's Purchase Credit Used by the last day of the
sixth month following the end of the calendar year shall
forfeit all Manufacturer's Purchase Credit for that calendar
year unless it establishes that its failure to file was due to
reasonable cause. Manufacturer's Purchase Credit reports may
be amended to report and claim credit on qualifying purchases
not previously reported at any time before the credit would
have expired, unless both the Department and the purchaser have

HB2300 - 41 - LRB101 07228 HLH 52266 b
agreed to an extension of the statute of limitations for the
issuance of a notice of tax liability as provided in Section 4
of the Retailers' Occupation Tax Act. If the time for
assessment or refund has been extended, then amended reports
for a calendar year may be filed at any time prior to the date
to which the statute of limitations for the calendar year or
portion thereof has been extended. Manufacturer's Purchase
Credit claimed on an amended report may be used to satisfy tax
liability under the Use Tax Act or the Service Use Tax Act (i)
on qualifying purchases of production related tangible
personal property made after the date the amended report is
filed or (ii) assessed by the Department on qualifying
production related tangible personal property purchased on or
after September 1, 2004. If the purchaser is not the
manufacturer or a graphic arts producer, but rents or leases
the use of the property to a manufacturer or graphic arts
producer, the purchaser may earn, report, and use
Manufacturer's Purchase Credit in the same manner as a
manufacturer or graphic arts producer. A purchaser shall not be
entitled to any Manufacturer's Purchase Credit for a purchase
that is required to be reported and is not timely reported as
provided in this Section. A purchaser remains liable for (i)
any tax that was satisfied by use of a Manufacturer's Purchase
Credit, as of the date of purchase, if that use is not timely
reported as required in this Section and (ii) for any
applicable penalties and interest for failing to pay the tax

HB2300 - 42 - LRB101 07228 HLH 52266 b
when due.
(Source: P.A. 96-116, eff. 7-31-09.)
Section 15. The Service Use Tax Act is amended by changing
Sections 2 and 3-70 as follows:
(35 ILCS 110/2) (from Ch. 120, par. 439.32)
Sec. 2. Definitions. In this Act:
"Use" means the exercise by any person of any right or
power over tangible personal property incident to the ownership
of that property, but does not include the sale or use for
demonstration by him of that property in any form as tangible
personal property in the regular course of business. "Use" does
not mean the interim use of tangible personal property nor the
physical incorporation of tangible personal property, as an
ingredient or constituent, into other tangible personal
property, (a) which is sold in the regular course of business
or (b) which the person incorporating such ingredient or
constituent therein has undertaken at the time of such purchase
to cause to be transported in interstate commerce to
destinations outside the State of Illinois.
"Purchased from a serviceman" means the acquisition of the
ownership of, or title to, tangible personal property through a
sale of service.
"Purchaser" means any person who, through a sale of
service, acquires the ownership of, or title to, any tangible

HB2300 - 43 - LRB101 07228 HLH 52266 b
personal property.
"Cost price" means the consideration paid by the serviceman
for a purchase valued in money, whether paid in money or
otherwise, including cash, credits and services, and shall be
determined without any deduction on account of the supplier's
cost of the property sold or on account of any other expense
incurred by the supplier. When a serviceman contracts out part
or all of the services required in his sale of service, it
shall be presumed that the cost price to the serviceman of the
property transferred to him or her by his or her subcontractor
is equal to 50% of the subcontractor's charges to the
serviceman in the absence of proof of the consideration paid by
the subcontractor for the purchase of such property.
"Selling price" means the consideration for a sale valued
in money whether received in money or otherwise, including
cash, credits and service, and shall be determined without any
deduction on account of the serviceman's cost of the property
sold, the cost of materials used, labor or service cost or any
other expense whatsoever, but does not include interest or
finance charges which appear as separate items on the bill of
sale or sales contract nor charges that are added to prices by
sellers on account of the seller's duty to collect, from the
purchaser, the tax that is imposed by this Act.
"Department" means the Department of Revenue.
"Person" means any natural individual, firm, partnership,
association, joint stock company, joint venture, public or

HB2300 - 44 - LRB101 07228 HLH 52266 b
private corporation, limited liability company, and any
receiver, executor, trustee, guardian or other representative
appointed by order of any court.
"Sale of service" means any transaction except:
(1) a retail sale of tangible personal property taxable
under the Retailers' Occupation Tax Act or under the Use
Tax Act.
(2) a sale of tangible personal property for the
purpose of resale made in compliance with Section 2c of the
Retailers' Occupation Tax Act.
(3) except as hereinafter provided, a sale or transfer
of tangible personal property as an incident to the
rendering of service for or by any governmental body, or
for or by any corporation, society, association,
foundation or institution organized and operated
exclusively for charitable, religious or educational
purposes or any not-for-profit corporation, society,
association, foundation, institution or organization which
has no compensated officers or employees and which is
organized and operated primarily for the recreation of
persons 55 years of age or older. A limited liability
company may qualify for the exemption under this paragraph
only if the limited liability company is organized and
operated exclusively for educational purposes.
(4) (blank).
(4a) a sale or transfer of tangible personal property

HB2300 - 45 - LRB101 07228 HLH 52266 b
as an incident to the rendering of service for owners,
lessors, or shippers of tangible personal property which is
utilized by interstate carriers for hire for use as rolling
stock moving in interstate commerce so long as so used by
interstate carriers for hire, and equipment operated by a
telecommunications provider, licensed as a common carrier
by the Federal Communications Commission, which is
permanently installed in or affixed to aircraft moving in
interstate commerce.
(4a-5) on and after July 1, 2003 and through June 30,
2004, a sale or transfer of a motor vehicle of the second
division with a gross vehicle weight in excess of 8,000
pounds as an incident to the rendering of service if that
motor vehicle is subject to the commercial distribution fee
imposed under Section 3-815.1 of the Illinois Vehicle Code.
Beginning on July 1, 2004 and through June 30, 2005, the
use in this State of motor vehicles of the second division:
(i) with a gross vehicle weight rating in excess of 8,000
pounds; (ii) that are subject to the commercial
distribution fee imposed under Section 3-815.1 of the
Illinois Vehicle Code; and (iii) that are primarily used
for commercial purposes. Through June 30, 2005, this
exemption applies to repair and replacement parts added
after the initial purchase of such a motor vehicle if that
motor vehicle is used in a manner that would qualify for
the rolling stock exemption otherwise provided for in this

HB2300 - 46 - LRB101 07228 HLH 52266 b
Act. For purposes of this paragraph, "used for commercial
purposes" means the transportation of persons or property
in furtherance of any commercial or industrial enterprise
whether for-hire or not.
(5) a sale or transfer of machinery and equipment used
primarily in the process of the manufacturing or
assembling, either in an existing, an expanded or a new
manufacturing facility, of tangible personal property for
wholesale or retail sale or lease, whether such sale or
lease is made directly by the manufacturer or by some other
person, whether the materials used in the process are owned
by the manufacturer or some other person, or whether such
sale or lease is made apart from or as an incident to the
seller's engaging in a service occupation and the
applicable tax is a Service Use Tax or Service Occupation
Tax, rather than Use Tax or Retailers' Occupation Tax. The
exemption provided by this paragraph (5) does not include
machinery and equipment used in (i) the generation of
electricity for wholesale or retail sale; (ii) the
generation or treatment of natural or artificial gas for
wholesale or retail sale that is delivered to customers
through pipes, pipelines, or mains; or (iii) the treatment
of water for wholesale or retail sale that is delivered to
customers through pipes, pipelines, or mains. The
provisions of Public Act 98-583 are declaratory of existing
law as to the meaning and scope of this exemption. The

HB2300 - 47 - LRB101 07228 HLH 52266 b
exemption under this paragraph (5) is exempt from the
provisions of Section 3-75.
(5a) the repairing, reconditioning or remodeling, for
a common carrier by rail, of tangible personal property
which belongs to such carrier for hire, and as to which
such carrier receives the physical possession of the
repaired, reconditioned or remodeled item of tangible
personal property in Illinois, and which such carrier
transports, or shares with another common carrier in the
transportation of such property, out of Illinois on a
standard uniform bill of lading showing the person who
repaired, reconditioned or remodeled the property to a
destination outside Illinois, for use outside Illinois.
(5b) a sale or transfer of tangible personal property
which is produced by the seller thereof on special order in
such a way as to have made the applicable tax the Service
Occupation Tax or the Service Use Tax, rather than the
Retailers' Occupation Tax or the Use Tax, for an interstate
carrier by rail which receives the physical possession of
such property in Illinois, and which transports such
property, or shares with another common carrier in the
transportation of such property, out of Illinois on a
standard uniform bill of lading showing the seller of the
property as the shipper or consignor of such property to a
destination outside Illinois, for use outside Illinois.
(6) until July 1, 2003, a sale or transfer of

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distillation machinery and equipment, sold as a unit or kit
and assembled or installed by the retailer, which machinery
and equipment is certified by the user to be used only for
the production of ethyl alcohol that will be used for
consumption as motor fuel or as a component of motor fuel
for the personal use of such user and not subject to sale
or resale.
(7) at the election of any serviceman not required to
be otherwise registered as a retailer under Section 2a of
the Retailers' Occupation Tax Act, made for each fiscal
year sales of service in which the aggregate annual cost
price of tangible personal property transferred as an
incident to the sales of service is less than 35%, or 75%
in the case of servicemen transferring prescription drugs
or servicemen engaged in graphic arts production, of the
aggregate annual total gross receipts from all sales of
service. The purchase of such tangible personal property by
the serviceman shall be subject to tax under the Retailers'
Occupation Tax Act and the Use Tax Act. However, if a
primary serviceman who has made the election described in
this paragraph subcontracts service work to a secondary
serviceman who has also made the election described in this
paragraph, the primary serviceman does not incur a Use Tax
liability if the secondary serviceman (i) has paid or will
pay Use Tax on his or her cost price of any tangible
personal property transferred to the primary serviceman

HB2300 - 49 - LRB101 07228 HLH 52266 b
and (ii) certifies that fact in writing to the primary
serviceman.
Tangible personal property transferred incident to the
completion of a maintenance agreement is exempt from the tax
imposed pursuant to this Act.
Exemption (5) also includes machinery and equipment used in
the general maintenance or repair of such exempt machinery and
equipment or for in-house manufacture of exempt machinery and
equipment. On and after July 1, 2017, exemption (5) also
includes graphic arts machinery and equipment, as defined in
paragraph (5) of Section 3-5. On and after July 1, 2019,
exemption (5) also includes production related tangible
personal property, as defined in this Section. The machinery
and equipment exemption does not include machinery and
equipment used in (i) the generation of electricity for
wholesale or retail sale; (ii) the generation or treatment of
natural or artificial gas for wholesale or retail sale that is
delivered to customers through pipes, pipelines, or mains; or
(iii) the treatment of water for wholesale or retail sale that
is delivered to customers through pipes, pipelines, or mains.
The provisions of Public Act 98-583 are declaratory of existing
law as to the meaning and scope of this exemption. For the
purposes of exemption (5), each of these terms shall have the
following meanings: (1) "manufacturing process" shall mean the
production of any article of tangible personal property,
whether such article is a finished product or an article for

HB2300 - 50 - LRB101 07228 HLH 52266 b
use in the process of manufacturing or assembling a different
article of tangible personal property, by procedures commonly
regarded as manufacturing, processing, fabricating, or
refining which changes some existing material or materials into
a material with a different form, use or name. In relation to a
recognized integrated business composed of a series of
operations which collectively constitute manufacturing, or
individually constitute manufacturing operations, the
manufacturing process shall be deemed to commence with the
first operation or stage of production in the series, and shall
not be deemed to end until the completion of the final product
in the last operation or stage of production in the series; and
further, for purposes of exemption (5), photoprocessing is
deemed to be a manufacturing process of tangible personal
property for wholesale or retail sale; (2) "assembling process"
shall mean the production of any article of tangible personal
property, whether such article is a finished product or an
article for use in the process of manufacturing or assembling a
different article of tangible personal property, by the
combination of existing materials in a manner commonly regarded
as assembling which results in a material of a different form,
use or name; (3) "machinery" shall mean major mechanical
machines or major components of such machines contributing to a
manufacturing or assembling process; and (4) "equipment" shall
include any independent device or tool separate from any
machinery but essential to an integrated manufacturing or

HB2300 - 51 - LRB101 07228 HLH 52266 b
assembly process; including computers used primarily in a
manufacturer's computer assisted design, computer assisted
manufacturing (CAD/CAM) system; or any subunit or assembly
comprising a component of any machinery or auxiliary, adjunct
or attachment parts of machinery, such as tools, dies, jigs,
fixtures, patterns and molds; or any parts which require
periodic replacement in the course of normal operation; but
shall not include hand tools; "equipment" . Equipment includes
chemicals or chemicals acting as catalysts but only if the
chemicals or chemicals acting as catalysts effect a direct and
immediate change upon a product being manufactured or assembled
for wholesale or retail sale or lease; and (5) "production
related tangible personal property" means all tangible
personal property that is used or consumed by the purchaser in
a manufacturing facility in which a manufacturing process
described in Section 2-45 of the Retailers' Occupation Tax Act
takes place, including tangible personal property that is
purchased for incorporation into real estate within a
manufacturing facility, and including, but not limited to,
tangible personal property that is used or consumed in
activities such as preproduction material handling, receiving,
quality control, inventory control, storage, staging,
packaging for shipping and transportation purposes, and all
tangible personal property used or consumed by the purchaser
for research and development; "production related tangible
personal property" does not include (i) tangible personal

HB2300 - 52 - LRB101 07228 HLH 52266 b
property that is used, within or without a manufacturing
facility, in sales, purchasing, accounting, fiscal management,
marketing, personnel recruitment or selection, or landscaping,
or (ii) tangible personal property that is required to be
titled or registered with a department, agency, or unit of
federal, State, or local government. The purchaser of such
machinery and equipment who has an active resale registration
number shall furnish such number to the seller at the time of
purchase. The user of such machinery and equipment and tools
without an active resale registration number shall prepare a
certificate of exemption for each transaction stating facts
establishing the exemption for that transaction, which
certificate shall be available to the Department for inspection
or audit. The Department shall prescribe the form of the
certificate.
Any informal rulings, opinions or letters issued by the
Department in response to an inquiry or request for any opinion
from any person regarding the coverage and applicability of
exemption (5) to specific devices shall be published,
maintained as a public record, and made available for public
inspection and copying. If the informal ruling, opinion or
letter contains trade secrets or other confidential
information, where possible the Department shall delete such
information prior to publication. Whenever such informal
rulings, opinions, or letters contain any policy of general
applicability, the Department shall formulate and adopt such

HB2300 - 53 - LRB101 07228 HLH 52266 b
policy as a rule in accordance with the provisions of the
Illinois Administrative Procedure Act.
On and after July 1, 1987, no entity otherwise eligible
under exemption (3) of this Section shall make tax-free
purchases unless it has an active exemption identification
number issued by the Department.
The purchase, employment and transfer of such tangible
personal property as newsprint and ink for the primary purpose
of conveying news (with or without other information) is not a
purchase, use or sale of service or of tangible personal
property within the meaning of this Act.
"Serviceman" means any person who is engaged in the
occupation of making sales of service.
"Sale at retail" means "sale at retail" as defined in the
Retailers' Occupation Tax Act.
"Supplier" means any person who makes sales of tangible
personal property to servicemen for the purpose of resale as an
incident to a sale of service.
"Serviceman maintaining a place of business in this State",
or any like term, means and includes any serviceman:
(1) having or maintaining within this State, directly
or by a subsidiary, an office, distribution house, sales
house, warehouse or other place of business, or any agent
or other representative operating within this State under
the authority of the serviceman or its subsidiary,
irrespective of whether such place of business or agent or

HB2300 - 54 - LRB101 07228 HLH 52266 b
other representative is located here permanently or
temporarily, or whether such serviceman or subsidiary is
licensed to do business in this State;
(1.1) having a contract with a person located in this
State under which the person, for a commission or other
consideration based on the sale of service by the
serviceman, directly or indirectly refers potential
customers to the serviceman by providing to the potential
customers a promotional code or other mechanism that allows
the serviceman to track purchases referred by such persons.
Examples of mechanisms that allow the serviceman to track
purchases referred by such persons include but are not
limited to the use of a link on the person's Internet
website, promotional codes distributed through the
person's hand-delivered or mailed material, and
promotional codes distributed by the person through radio
or other broadcast media. The provisions of this paragraph
(1.1) shall apply only if the cumulative gross receipts
from sales of service by the serviceman to customers who
are referred to the serviceman by all persons in this State
under such contracts exceed $10,000 during the preceding 4
quarterly periods ending on the last day of March, June,
September, and December; a serviceman meeting the
requirements of this paragraph (1.1) shall be presumed to
be maintaining a place of business in this State but may
rebut this presumption by submitting proof that the

HB2300 - 55 - LRB101 07228 HLH 52266 b
referrals or other activities pursued within this State by
such persons were not sufficient to meet the nexus
standards of the United States Constitution during the
preceding 4 quarterly periods;
(1.2) beginning July 1, 2011, having a contract with a
person located in this State under which:
(A) the serviceman sells the same or substantially
similar line of services as the person located in this
State and does so using an identical or substantially
similar name, trade name, or trademark as the person
located in this State; and
(B) the serviceman provides a commission or other
consideration to the person located in this State based
upon the sale of services by the serviceman.
The provisions of this paragraph (1.2) shall apply only if
the cumulative gross receipts from sales of service by the
serviceman to customers in this State under all such
contracts exceed $10,000 during the preceding 4 quarterly
periods ending on the last day of March, June, September,
and December;
(2) soliciting orders for tangible personal property
by means of a telecommunication or television shopping
system (which utilizes toll free numbers) which is intended
by the retailer to be broadcast by cable television or
other means of broadcasting, to consumers located in this
State;

HB2300 - 56 - LRB101 07228 HLH 52266 b
(3) pursuant to a contract with a broadcaster or
publisher located in this State, soliciting orders for
tangible personal property by means of advertising which is
disseminated primarily to consumers located in this State
and only secondarily to bordering jurisdictions;
(4) soliciting orders for tangible personal property
by mail if the solicitations are substantial and recurring
and if the retailer benefits from any banking, financing,
debt collection, telecommunication, or marketing
activities occurring in this State or benefits from the
location in this State of authorized installation,
servicing, or repair facilities;
(5) being owned or controlled by the same interests
which own or control any retailer engaging in business in
the same or similar line of business in this State;
(6) having a franchisee or licensee operating under its
trade name if the franchisee or licensee is required to
collect the tax under this Section;
(7) pursuant to a contract with a cable television
operator located in this State, soliciting orders for
tangible personal property by means of advertising which is
transmitted or distributed over a cable television system
in this State;
(8) engaging in activities in Illinois, which
activities in the state in which the supply business
engaging in such activities is located would constitute

HB2300 - 57 - LRB101 07228 HLH 52266 b
maintaining a place of business in that state; or
(9) beginning October 1, 2018, making sales of service
to purchasers in Illinois from outside of Illinois if:
(A) the cumulative gross receipts from sales of
service to purchasers in Illinois are $100,000 or more;
or
(B) the serviceman enters into 200 or more separate
transactions for sales of service to purchasers in
Illinois.
The serviceman shall determine on a quarterly basis,
ending on the last day of March, June, September, and
December, whether he or she meets the criteria of either
subparagraph (A) or (B) of this paragraph (9) for the
preceding 12-month period. If the serviceman meets the
criteria of either subparagraph (A) or (B) for a 12-month
period, he or she is considered a serviceman maintaining a
place of business in this State and is required to collect
and remit the tax imposed under this Act and file returns
for one year. At the end of that one-year period, the
serviceman shall determine whether the serviceman met the
criteria of either subparagraph (A) or (B) during the
preceding 12-month period. If the serviceman met the
criteria in either subparagraph (A) or (B) for the
preceding 12-month period, he or she is considered a
serviceman maintaining a place of business in this State
and is required to collect and remit the tax imposed under

HB2300 - 58 - LRB101 07228 HLH 52266 b
this Act and file returns for the subsequent year. If at
the end of a one-year period a serviceman that was required
to collect and remit the tax imposed under this Act
determines that he or she did not meet the criteria in
either subparagraph (A) or (B) during the preceding
12-month period, the serviceman subsequently shall
determine on a quarterly basis, ending on the last day of
March, June, September, and December, whether he or she
meets the criteria of either subparagraph (A) or (B) for
the preceding 12-month period.
(Source: P.A. 100-22, eff. 7-6-17; 100-321, eff. 8-24-17;
100-587, eff. 6-4-18; 100-863, eff. 8-14-18.)
(35 ILCS 110/3-70)
Sec. 3-70. Manufacturer's Purchase Credit. For purchases
of machinery and equipment made on and after January 1, 1995
and through June 30, 2003, and on and after September 1, 2004
through August 30, 2014, a purchaser of manufacturing machinery
and equipment that qualifies for the exemption provided by
Section 2 of this Act earns a credit in an amount equal to a
fixed percentage of the tax which would have been incurred
under this Act on those purchases. For purchases of graphic
arts machinery and equipment made on or after July 1, 1996
through June 30, 2003, and on and after September 1, 2004
through August 30, 2014, a purchase of graphic arts machinery
and equipment that qualifies for the exemption provided by

HB2300 - 59 - LRB101 07228 HLH 52266 b
paragraph (5) of Section 3-5 of this Act earns a credit in an
amount equal to a fixed percentage of the tax that would have
been incurred under this Act on those purchases. The credit
earned for the purchase of manufacturing machinery and
equipment and graphic arts machinery and equipment shall be
referred to as the Manufacturer's Purchase Credit. A graphic
arts producer is a person engaged in graphic arts production as
defined in Section 3-30 of the Service Occupation Tax Act.
Beginning July 1, 1996, all references in this Section to
manufacturers or manufacturing shall also refer to graphic arts
producers or graphic arts production.
The amount of credit shall be a percentage of the tax that
would have been incurred on the purchase of the manufacturing
machinery and equipment or graphic arts machinery and equipment
if the exemptions provided by Section 2 or paragraph (5) of
Section 3-5 of this Act had not been applicable.
All purchases prior to October 1, 2003 and on and after
September 1, 2004 and through July 30, 2019 of manufacturing
machinery and equipment and graphic arts machinery and
equipment that qualify for the exemptions provided by paragraph
(5) of Section 2 or paragraph (5) of Section 3-5 of this Act
qualify for the credit without regard to whether the serviceman
elected, or could have elected, under paragraph (7) of Section
2 of this Act to exclude the transaction from this Act. If the
serviceman's billing to the service customer separately states
a selling price for the exempt manufacturing machinery or

HB2300 - 60 - LRB101 07228 HLH 52266 b
equipment or the exempt graphic arts machinery and equipment,
the credit shall be calculated, as otherwise provided herein,
based on that selling price. If the serviceman's billing does
not separately state a selling price for the exempt
manufacturing machinery and equipment or the exempt graphic
arts machinery and equipment, the credit shall be calculated,
as otherwise provided herein, based on 50% of the entire
billing. If the serviceman contracts to design, develop, and
produce special order manufacturing machinery and equipment or
special order graphic arts machinery and equipment, and the
billing does not separately state a selling price for such
special order machinery and equipment, the credit shall be
calculated, as otherwise provided herein, based on 50% of the
entire billing. The provisions of this paragraph are effective
for purchases made on or after January 1, 1995.
The percentage shall be as follows:
(1) 15% for purchases made on or before June 30, 1995.
(2) 25% for purchases made after June 30, 1995, and on
or before June 30, 1996.
(3) 40% for purchases made after June 30, 1996, and on
or before June 30, 1997.
(4) 50% for purchases made on or after July 1, 1997.
(a) Manufacturer's Purchase Credit earned prior to July 1,
2003. This subsection (a) applies to Manufacturer's Purchase
Credit earned prior to July 1, 2003. A purchaser of production
related tangible personal property desiring to use the

HB2300 - 61 - LRB101 07228 HLH 52266 b
Manufacturer's Purchase Credit shall certify to the seller
prior to October 1, 2003 that the purchaser is satisfying all
or part of the liability under the Use Tax Act or the Service
Use Tax Act that is due on the purchase of the production
related tangible personal property by use of a Manufacturer's
Purchase Credit. The Manufacturer's Purchase Credit
certification must be dated and shall include the name and
address of the purchaser, the purchaser's registration number,
if registered, the credit being applied, and a statement that
the State Use Tax or Service Use Tax liability is being
satisfied with the manufacturer's or graphic arts producer's
accumulated purchase credit. Certification may be incorporated
into the manufacturer's or graphic arts producer's purchase
order. Manufacturer's Purchase Credit certification provided
by the manufacturer or graphic arts producer prior to October
1, 2003 may be used to satisfy the retailer's or serviceman's
liability under the Retailers' Occupation Tax Act or Service
Occupation Tax Act for the credit claimed, not to exceed 6.25%
of the receipts subject to tax from a qualifying purchase, but
only if the retailer or serviceman reports the Manufacturer's
Purchase Credit claimed as required by the Department. A
Manufacturer's Purchase Credit reported on any original or
amended return filed under this Act after October 20, 2003
shall be disallowed. The Manufacturer's Purchase Credit earned
by purchase of exempt manufacturing machinery and equipment or
graphic arts machinery and equipment is a non-transferable

HB2300 - 62 - LRB101 07228 HLH 52266 b
credit. A manufacturer or graphic arts producer that enters
into a contract involving the installation of tangible personal
property into real estate within a manufacturing or graphic
arts production facility, prior to October 1, 2003, may
authorize a construction contractor to utilize credit
accumulated by the manufacturer or graphic arts producer to
purchase the tangible personal property. A manufacturer or
graphic arts producer intending to use accumulated credit to
purchase such tangible personal property shall execute a
written contract authorizing the contractor to utilize a
specified dollar amount of credit. The contractor shall
furnish, prior to October 1, 2003, the supplier with the
manufacturer's or graphic arts producer's name, registration
or resale number, and a statement that a specific amount of the
Use Tax or Service Use Tax liability, not to exceed 6.25% of
the selling price, is being satisfied with the credit. The
manufacturer or graphic arts producer shall remain liable to
timely report all information required by the annual Report of
Manufacturer's Purchase Credit Used for credit utilized by a
construction contractor.
No Manufacturer's Purchase Credit earned prior to July 1,
2003 may be used after October 1, 2003. The Manufacturer's
Purchase Credit may be used to satisfy liability under the Use
Tax Act or the Service Use Tax Act due on the purchase of
production related tangible personal property (including
purchases by a manufacturer, by a graphic arts producer, or a

HB2300 - 63 - LRB101 07228 HLH 52266 b
lessor who rents or leases the use of the property to a
manufacturer or graphic arts producer) that does not otherwise
qualify for the manufacturing machinery and equipment
exemption or the graphic arts machinery and equipment
exemption. "Production related tangible personal property"
means (i) all tangible personal property used or consumed by
the purchaser in a manufacturing facility in which a
manufacturing process described in Section 2-45 of the
Retailers' Occupation Tax Act takes place, including tangible
personal property purchased for incorporation into real estate
within a manufacturing facility and including, but not limited
to, tangible personal property used or consumed in activities
such as pre-production material handling, receiving, quality
control, inventory control, storage, staging, and packaging
for shipping and transportation purposes; (ii) all tangible
personal property used or consumed by the purchaser in a
graphic arts facility in which graphic arts production as
described in Section 2-30 of the Retailers' Occupation Tax Act
takes place, including tangible personal property purchased
for incorporation into real estate within a graphic arts
facility and including, but not limited to, all tangible
personal property used or consumed in activities such as
graphic arts preliminary or pre-press production,
pre-production material handling, receiving, quality control,
inventory control, storage, staging, sorting, labeling,
mailing, tying, wrapping, and packaging; and (iii) all tangible

HB2300 - 64 - LRB101 07228 HLH 52266 b
personal property used or consumed by the purchaser for
research and development. "Production related tangible
personal property" does not include (i) tangible personal
property used, within or without a manufacturing or graphic
arts facility, in sales, purchasing, accounting, fiscal
management, marketing, personnel recruitment or selection, or
landscaping or (ii) tangible personal property required to be
titled or registered with a department, agency, or unit of
federal, state, or local government. The Manufacturer's
Purchase Credit may be used, prior to October 1, 2003, to
satisfy the tax arising either from the purchase of machinery
and equipment on or after January 1, 1995 for which the
manufacturing machinery and equipment exemption provided by
Section 2 of this Act was erroneously claimed, or the purchase
of machinery and equipment on or after July 1, 1996 for which
the exemption provided by paragraph (5) of Section 3-5 of this
Act was erroneously claimed, but not in satisfaction of
penalty, if any, and interest for failure to pay the tax when
due. A purchaser of production related tangible personal
property who is required to pay Illinois Use Tax or Service Use
Tax on the purchase directly to the Department may, prior to
October 1, 2003, utilize the Manufacturer's Purchase Credit in
satisfaction of the tax arising from that purchase, but not in
satisfaction of penalty and interest. A purchaser who uses the
Manufacturer's Purchase Credit to purchase property which is
later determined not to be production related tangible personal

HB2300 - 65 - LRB101 07228 HLH 52266 b
property may be liable for tax, penalty, and interest on the
purchase of that property as of the date of purchase but shall
be entitled to use the disallowed Manufacturer's Purchase
Credit, so long as it has not expired and is used prior to
October 1, 2003, on qualifying purchases of production related
tangible personal property not previously subject to credit
usage. The Manufacturer's Purchase Credit earned by a
manufacturer or graphic arts producer expires the last day of
the second calendar year following the calendar year in which
the credit arose. No Manufacturer's Purchase Credit may be used
after September 30, 2003 regardless of when that credit was
earned.
A purchaser earning Manufacturer's Purchase Credit shall
sign and file an annual Report of Manufacturer's Purchase
Credit Earned for each calendar year no later than the last day
of the sixth month following the calendar year in which a
Manufacturer's Purchase Credit is earned. A Report of
Manufacturer's Purchase Credit Earned shall be filed on forms
as prescribed or approved by the Department and shall state,
for each month of the calendar year: (i) the total purchase
price of all purchases of exempt manufacturing or graphic arts
machinery on which the credit was earned; (ii) the total State
Use Tax or Service Use Tax which would have been due on those
items; (iii) the percentage used to calculate the amount of
credit earned; (iv) the amount of credit earned; and (v) such
other information as the Department may reasonably require. A

HB2300 - 66 - LRB101 07228 HLH 52266 b
purchaser earning Manufacturer's Purchase Credit shall
maintain records which identify, as to each purchase of
manufacturing or graphic arts machinery and equipment on which
the purchaser earned Manufacturer's Purchase Credit, the
vendor (including, if applicable, either the vendor's
registration number or Federal Employer Identification
Number), the purchase price, and the amount of Manufacturer's
Purchase Credit earned on each purchase.
A purchaser using Manufacturer's Purchase Credit shall
sign and file an annual Report of Manufacturer's Purchase
Credit Used for each calendar year no later than the last day
of the sixth month following the calendar year in which a
Manufacturer's Purchase Credit is used. A Report of
Manufacturer's Purchase Credit Used shall be filed on forms as
prescribed or approved by the Department and shall state, for
each month of the calendar year: (i) the total purchase price
of production related tangible personal property purchased
from Illinois suppliers; (ii) the total purchase price of
production related tangible personal property purchased from
out-of-state suppliers; (iii) the total amount of credit used
during such month; and (iv) such other information as the
Department may reasonably require. A purchaser using
Manufacturer's Purchase Credit shall maintain records that
identify, as to each purchase of production related tangible
personal property on which the purchaser used Manufacturer's
Purchase Credit, the vendor (including, if applicable, either

HB2300 - 67 - LRB101 07228 HLH 52266 b
the vendor's registration number or Federal Employer
Identification Number), the purchase price, and the amount of
Manufacturer's Purchase Credit used on each purchase.
No annual report shall be filed before May 1, 1996 or after
June 30, 2004. A purchaser that fails to file an annual Report
of Manufacturer's Purchase Credit Earned or an annual Report of
Manufacturer's Purchase Credit Used by the last day of the
sixth month following the end of the calendar year shall
forfeit all Manufacturer's Purchase Credit for that calendar
year unless it establishes that its failure to file was due to
reasonable cause. Manufacturer's Purchase Credit reports may
be amended to report and claim credit on qualifying purchases
not previously reported at any time before the credit would
have expired, unless both the Department and the purchaser have
agreed to an extension of the statute of limitations for the
issuance of a notice of tax liability as provided in Section 4
of the Retailers' Occupation Tax Act. If the time for
assessment or refund has been extended, then amended reports
for a calendar year may be filed at any time prior to the date
to which the statute of limitations for the calendar year or
portion thereof has been extended. No Manufacturer's Purchase
Credit report filed with the Department for periods prior to
January 1, 1995 shall be approved. Manufacturer's Purchase
Credit claimed on an amended report may be used, prior to
October 1, 2003, to satisfy tax liability under the Use Tax Act
or the Service Use Tax Act (i) on qualifying purchases of

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production related tangible personal property made after the
date the amended report is filed or (ii) assessed by the
Department on qualifying purchases of production related
tangible personal property made in the case of manufacturers on
or after January 1, 1995, or in the case of graphic arts
producers on or after July 1, 1996.
If the purchaser is not the manufacturer or a graphic arts
producer, but rents or leases the use of the property to a
manufacturer or a graphic arts producer, the purchaser may
earn, report, and use Manufacturer's Purchase Credit in the
same manner as a manufacturer or graphic arts producer.
A purchaser shall not be entitled to any Manufacturer's
Purchase Credit for a purchase that is required to be reported
and is not timely reported as provided in this Section. A
purchaser remains liable for (i) any tax that was satisfied by
use of a Manufacturer's Purchase Credit, as of the date of
purchase, if that use is not timely reported as required in
this Section and (ii) for any applicable penalties and interest
for failing to pay the tax when due. No Manufacturer's Purchase
Credit may be used after September 30, 2003 to satisfy any tax
liability imposed under this Act, including any audit
liability.
(b) Manufacturer's Purchase Credit earned on and after
September 1, 2004 and through July 30, 2019. This subsection
(b) applies to Manufacturer's Purchase Credit earned on or
after September 1, 2004 and through July 30, 2019.

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Manufacturer's Purchase Credit earned on or after September 1,
2004 and through July 30, 2019 may only be used to satisfy the
Use Tax or Service Use Tax liability incurred on production
related tangible personal property purchased on or after
September 1, 2004 and through July 30, 2019. A purchaser of
production related tangible personal property desiring to use
the Manufacturer's Purchase Credit shall certify to the seller
that the purchaser is satisfying all or part of the liability
under the Use Tax Act or the Service Use Tax Act that is due on
the purchase of the production related tangible personal
property by use of a Manufacturer's Purchase Credit. The
Manufacturer's Purchase Credit certification must be dated and
shall include the name and address of the purchaser, the
purchaser's registration number, if registered, the credit
being applied, and a statement that the State Use Tax or
Service Use Tax liability is being satisfied with the
manufacturer's or graphic arts producer's accumulated purchase
credit. Certification may be incorporated into the
manufacturer's or graphic arts producer's purchase order.
Manufacturer's Purchase Credit certification provided by the
manufacturer or graphic arts producer may be used to satisfy
the retailer's or serviceman's liability under the Retailers'
Occupation Tax Act or Service Occupation Tax Act for the credit
claimed, not to exceed 6.25% of the receipts subject to tax
from a qualifying purchase, but only if the retailer or
serviceman reports the Manufacturer's Purchase Credit claimed

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as required by the Department. The Manufacturer's Purchase
Credit earned by purchase of exempt manufacturing machinery and
equipment or graphic arts machinery and equipment is a
non-transferable credit. A manufacturer or graphic arts
producer that enters into a contract involving the installation
of tangible personal property into real estate within a
manufacturing or graphic arts production facility may, on or
after September 1, 2004, authorize a construction contractor to
utilize credit accumulated by the manufacturer or graphic arts
producer to purchase the tangible personal property. A
manufacturer or graphic arts producer intending to use
accumulated credit to purchase such tangible personal property
shall execute a written contract authorizing the contractor to
utilize a specified dollar amount of credit. The contractor
shall furnish the supplier with the manufacturer's or graphic
arts producer's name, registration or resale number, and a
statement that a specific amount of the Use Tax or Service Use
Tax liability, not to exceed 6.25% of the selling price, is
being satisfied with the credit. The manufacturer or graphic
arts producer shall remain liable to timely report all
information required by the annual Report of Manufacturer's
Purchase Credit Used for credit utilized by a construction
contractor.
The Manufacturer's Purchase Credit may be used to satisfy
liability under the Use Tax Act or the Service Use Tax Act due
on the purchase, made on or after September 1, 2004, of

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production related tangible personal property (including
purchases by a manufacturer, by a graphic arts producer, or a
lessor who rents or leases the use of the property to a
manufacturer or graphic arts producer) that does not otherwise
qualify for the manufacturing machinery and equipment
exemption or the graphic arts machinery and equipment
exemption. "Production related tangible personal property"
means (i) all tangible personal property used or consumed by
the purchaser in a manufacturing facility in which a
manufacturing process described in Section 2-45 of the
Retailers' Occupation Tax Act takes place, including tangible
personal property purchased for incorporation into real estate
within a manufacturing facility and including, but not limited
to, tangible personal property used or consumed in activities
such as pre-production material handling, receiving, quality
control, inventory control, storage, staging, and packaging
for shipping and transportation purposes; (ii) all tangible
personal property used or consumed by the purchaser in a
graphic arts facility in which graphic arts production as
described in Section 2-30 of the Retailers' Occupation Tax Act
takes place, including tangible personal property purchased
for incorporation into real estate within a graphic arts
facility and including, but not limited to, all tangible
personal property used or consumed in activities such as
graphic arts preliminary or pre-press production,
pre-production material handling, receiving, quality control,

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inventory control, storage, staging, sorting, labeling,
mailing, tying, wrapping, and packaging; and (iii) all tangible
personal property used or consumed by the purchaser for
research and development. "Production related tangible
personal property" does not include (i) tangible personal
property used, within or without a manufacturing or graphic
arts facility, in sales, purchasing, accounting, fiscal
management, marketing, personnel recruitment or selection, or
landscaping or (ii) tangible personal property required to be
titled or registered with a department, agency, or unit of
federal, state, or local government. The Manufacturer's
Purchase Credit may be used to satisfy the tax arising either
from the purchase of machinery and equipment on or after
September 1, 2004 for which the manufacturing machinery and
equipment exemption provided by Section 2 of this Act was
erroneously claimed, or the purchase of machinery and equipment
on or after September 1, 2004 for which the exemption provided
by paragraph (5) of Section 3-5 of this Act was erroneously
claimed, but not in satisfaction of penalty, if any, and
interest for failure to pay the tax when due. A purchaser of
production related tangible personal property that is
purchased on or after September 1, 2004 who is required to pay
Illinois Use Tax or Service Use Tax on the purchase directly to
the Department may utilize the Manufacturer's Purchase Credit
in satisfaction of the tax arising from that purchase, but not
in satisfaction of penalty and interest. A purchaser who uses

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the Manufacturer's Purchase Credit to purchase property on and
after September 1, 2004 which is later determined not to be
production related tangible personal property may be liable for
tax, penalty, and interest on the purchase of that property as
of the date of purchase but shall be entitled to use the
disallowed Manufacturer's Purchase Credit, so long as it has
not expired, on qualifying purchases of production related
tangible personal property not previously subject to credit
usage. The Manufacturer's Purchase Credit earned by a
manufacturer or graphic arts producer expires the last day of
the second calendar year following the calendar year in which
the credit arose.
A purchaser earning Manufacturer's Purchase Credit shall
sign and file an annual Report of Manufacturer's Purchase
Credit Earned for each calendar year no later than the last day
of the sixth month following the calendar year in which a
Manufacturer's Purchase Credit is earned. A Report of
Manufacturer's Purchase Credit Earned shall be filed on forms
as prescribed or approved by the Department and shall state,
for each month of the calendar year: (i) the total purchase
price of all purchases of exempt manufacturing or graphic arts
machinery on which the credit was earned; (ii) the total State
Use Tax or Service Use Tax which would have been due on those
items; (iii) the percentage used to calculate the amount of
credit earned; (iv) the amount of credit earned; and (v) such
other information as the Department may reasonably require. A

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purchaser earning Manufacturer's Purchase Credit shall
maintain records which identify, as to each purchase of
manufacturing or graphic arts machinery and equipment on which
the purchaser earned Manufacturer's Purchase Credit, the
vendor (including, if applicable, either the vendor's
registration number or Federal Employer Identification
Number), the purchase price, and the amount of Manufacturer's
Purchase Credit earned on each purchase.
A purchaser using Manufacturer's Purchase Credit shall
sign and file an annual Report of Manufacturer's Purchase
Credit Used for each calendar year no later than the last day
of the sixth month following the calendar year in which a
Manufacturer's Purchase Credit is used. A Report of
Manufacturer's Purchase Credit Used shall be filed on forms as
prescribed or approved by the Department and shall state, for
each month of the calendar year: (i) the total purchase price
of production related tangible personal property purchased
from Illinois suppliers; (ii) the total purchase price of
production related tangible personal property purchased from
out-of-state suppliers; (iii) the total amount of credit used
during such month; and (iv) such other information as the
Department may reasonably require. A purchaser using
Manufacturer's Purchase Credit shall maintain records that
identify, as to each purchase of production related tangible
personal property on which the purchaser used Manufacturer's
Purchase Credit, the vendor (including, if applicable, either

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the vendor's registration number or Federal Employer
Identification Number), the purchase price, and the amount of
Manufacturer's Purchase Credit used on each purchase.
A purchaser that fails to file an annual Report of
Manufacturer's Purchase Credit Earned or an annual Report of
Manufacturer's Purchase Credit Used by the last day of the
sixth month following the end of the calendar year shall
forfeit all Manufacturer's Purchase Credit for that calendar
year unless it establishes that its failure to file was due to
reasonable cause. Manufacturer's Purchase Credit reports may
be amended to report and claim credit on qualifying purchases
not previously reported at any time before the credit would
have expired, unless both the Department and the purchaser have
agreed to an extension of the statute of limitations for the
issuance of a notice of tax liability as provided in Section 4
of the Retailers' Occupation Tax Act. If the time for
assessment or refund has been extended, then amended reports
for a calendar year may be filed at any time prior to the date
to which the statute of limitations for the calendar year or
portion thereof has been extended. Manufacturer's Purchase
Credit claimed on an amended report may be used to satisfy tax
liability under the Use Tax Act or the Service Use Tax Act (i)
on qualifying purchases of production related tangible
personal property made after the date the amended report is
filed or (ii) assessed by the Department on qualifying
production related tangible personal property purchased on or

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after September 1, 2004.
If the purchaser is not the manufacturer or a graphic arts
producer, but rents or leases the use of the property to a
manufacturer or a graphic arts producer, the purchaser may
earn, report, and use Manufacturer's Purchase Credit in the
same manner as a manufacturer or graphic arts producer. A
purchaser shall not be entitled to any Manufacturer's Purchase
Credit for a purchase that is required to be reported and is
not timely reported as provided in this Section. A purchaser
remains liable for (i) any tax that was satisfied by use of a
Manufacturer's Purchase Credit, as of the date of purchase, if
that use is not timely reported as required in this Section and
(ii) for any applicable penalties and interest for failing to
pay the tax when due.
(Source: P.A. 96-116, eff. 7-31-09.)
Section 20. The Service Occupation Tax Act is amended by
changing Sections 2 and 9 as follows:
(35 ILCS 115/2) (from Ch. 120, par. 439.102)
Sec. 2. In this Act:
"Transfer" means any transfer of the title to property or
of the ownership of property whether or not the transferor
retains title as security for the payment of amounts due him
from the transferee.
"Cost Price" means the consideration paid by the serviceman

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for a purchase valued in money, whether paid in money or
otherwise, including cash, credits and services, and shall be
determined without any deduction on account of the supplier's
cost of the property sold or on account of any other expense
incurred by the supplier. When a serviceman contracts out part
or all of the services required in his sale of service, it
shall be presumed that the cost price to the serviceman of the
property transferred to him by his or her subcontractor is
equal to 50% of the subcontractor's charges to the serviceman
in the absence of proof of the consideration paid by the
subcontractor for the purchase of such property.
"Department" means the Department of Revenue.
"Person" means any natural individual, firm, partnership,
association, joint stock company, joint venture, public or
private corporation, limited liability company, and any
receiver, executor, trustee, guardian or other representative
appointed by order of any court.
"Sale of Service" means any transaction except:
(a) A retail sale of tangible personal property taxable
under the Retailers' Occupation Tax Act or under the Use Tax
Act.
(b) A sale of tangible personal property for the purpose of
resale made in compliance with Section 2c of the Retailers'
Occupation Tax Act.
(c) Except as hereinafter provided, a sale or transfer of
tangible personal property as an incident to the rendering of

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service for or by any governmental body or for or by any
corporation, society, association, foundation or institution
organized and operated exclusively for charitable, religious
or educational purposes or any not-for-profit corporation,
society, association, foundation, institution or organization
which has no compensated officers or employees and which is
organized and operated primarily for the recreation of persons
55 years of age or older. A limited liability company may
qualify for the exemption under this paragraph only if the
limited liability company is organized and operated
exclusively for educational purposes.
(d) (Blank).
(d-1) A sale or transfer of tangible personal property as
an incident to the rendering of service for owners, lessors or
shippers of tangible personal property which is utilized by
interstate carriers for hire for use as rolling stock moving in
interstate commerce, and equipment operated by a
telecommunications provider, licensed as a common carrier by
the Federal Communications Commission, which is permanently
installed in or affixed to aircraft moving in interstate
commerce.
(d-1.1) On and after July 1, 2003 and through June 30,
2004, a sale or transfer of a motor vehicle of the second
division with a gross vehicle weight in excess of 8,000 pounds
as an incident to the rendering of service if that motor
vehicle is subject to the commercial distribution fee imposed

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under Section 3-815.1 of the Illinois Vehicle Code. Beginning
on July 1, 2004 and through June 30, 2005, the use in this
State of motor vehicles of the second division: (i) with a
gross vehicle weight rating in excess of 8,000 pounds; (ii)
that are subject to the commercial distribution fee imposed
under Section 3-815.1 of the Illinois Vehicle Code; and (iii)
that are primarily used for commercial purposes. Through June
30, 2005, this exemption applies to repair and replacement
parts added after the initial purchase of such a motor vehicle
if that motor vehicle is used in a manner that would qualify
for the rolling stock exemption otherwise provided for in this
Act. For purposes of this paragraph, "used for commercial
purposes" means the transportation of persons or property in
furtherance of any commercial or industrial enterprise whether
for-hire or not.
(d-2) The repairing, reconditioning or remodeling, for a
common carrier by rail, of tangible personal property which
belongs to such carrier for hire, and as to which such carrier
receives the physical possession of the repaired,
reconditioned or remodeled item of tangible personal property
in Illinois, and which such carrier transports, or shares with
another common carrier in the transportation of such property,
out of Illinois on a standard uniform bill of lading showing
the person who repaired, reconditioned or remodeled the
property as the shipper or consignor of such property to a
destination outside Illinois, for use outside Illinois.

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(d-3) A sale or transfer of tangible personal property
which is produced by the seller thereof on special order in
such a way as to have made the applicable tax the Service
Occupation Tax or the Service Use Tax, rather than the
Retailers' Occupation Tax or the Use Tax, for an interstate
carrier by rail which receives the physical possession of such
property in Illinois, and which transports such property, or
shares with another common carrier in the transportation of
such property, out of Illinois on a standard uniform bill of
lading showing the seller of the property as the shipper or
consignor of such property to a destination outside Illinois,
for use outside Illinois.
(d-4) Until January 1, 1997, a sale, by a registered
serviceman paying tax under this Act to the Department, of
special order printed materials delivered outside Illinois and
which are not returned to this State, if delivery is made by
the seller or agent of the seller, including an agent who
causes the product to be delivered outside Illinois by a common
carrier or the U.S. postal service.
(e) A sale or transfer of machinery and equipment used
primarily in the process of the manufacturing or assembling,
either in an existing, an expanded or a new manufacturing
facility, of tangible personal property for wholesale or retail
sale or lease, whether such sale or lease is made directly by
the manufacturer or by some other person, whether the materials
used in the process are owned by the manufacturer or some other

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person, or whether such sale or lease is made apart from or as
an incident to the seller's engaging in a service occupation
and the applicable tax is a Service Occupation Tax or Service
Use Tax, rather than Retailers' Occupation Tax or Use Tax. The
exemption provided by this paragraph (e) does not include
machinery and equipment used in (i) the generation of
electricity for wholesale or retail sale; (ii) the generation
or treatment of natural or artificial gas for wholesale or
retail sale that is delivered to customers through pipes,
pipelines, or mains; or (iii) the treatment of water for
wholesale or retail sale that is delivered to customers through
pipes, pipelines, or mains. The provisions of Public Act 98-583
are declaratory of existing law as to the meaning and scope of
this exemption. The exemption under this subsection (e) is
exempt from the provisions of Section 3-75.
(f) Until July 1, 2003, the sale or transfer of
distillation machinery and equipment, sold as a unit or kit and
assembled or installed by the retailer, which machinery and
equipment is certified by the user to be used only for the
production of ethyl alcohol that will be used for consumption
as motor fuel or as a component of motor fuel for the personal
use of such user and not subject to sale or resale.
(g) At the election of any serviceman not required to be
otherwise registered as a retailer under Section 2a of the
Retailers' Occupation Tax Act, made for each fiscal year sales
of service in which the aggregate annual cost price of tangible

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personal property transferred as an incident to the sales of
service is less than 35% (75% in the case of servicemen
transferring prescription drugs or servicemen engaged in
graphic arts production) of the aggregate annual total gross
receipts from all sales of service. The purchase of such
tangible personal property by the serviceman shall be subject
to tax under the Retailers' Occupation Tax Act and the Use Tax
Act. However, if a primary serviceman who has made the election
described in this paragraph subcontracts service work to a
secondary serviceman who has also made the election described
in this paragraph, the primary serviceman does not incur a Use
Tax liability if the secondary serviceman (i) has paid or will
pay Use Tax on his or her cost price of any tangible personal
property transferred to the primary serviceman and (ii)
certifies that fact in writing to the primary serviceman.
Tangible personal property transferred incident to the
completion of a maintenance agreement is exempt from the tax
imposed pursuant to this Act.
Exemption (e) also includes machinery and equipment used in
the general maintenance or repair of such exempt machinery and
equipment or for in-house manufacture of exempt machinery and
equipment. On and after July 1, 2017, exemption (e) also
includes graphic arts machinery and equipment, as defined in
paragraph (5) of Section 3-5. On and after July 1, 2019,
exemption (e) also includes production related tangible
personal property, as defined in this Section. The machinery

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and equipment exemption does not include machinery and
equipment used in (i) the generation of electricity for
wholesale or retail sale; (ii) the generation or treatment of
natural or artificial gas for wholesale or retail sale that is
delivered to customers through pipes, pipelines, or mains; or
(iii) the treatment of water for wholesale or retail sale that
is delivered to customers through pipes, pipelines, or mains.
The provisions of Public Act 98-583 are declaratory of existing
law as to the meaning and scope of this exemption. For the
purposes of exemption (e), each of these terms shall have the
following meanings: (1) "manufacturing process" shall mean the
production of any article of tangible personal property,
whether such article is a finished product or an article for
use in the process of manufacturing or assembling a different
article of tangible personal property, by procedures commonly
regarded as manufacturing, processing, fabricating, or
refining which changes some existing material or materials into
a material with a different form, use or name. In relation to a
recognized integrated business composed of a series of
operations which collectively constitute manufacturing, or
individually constitute manufacturing operations, the
manufacturing process shall be deemed to commence with the
first operation or stage of production in the series, and shall
not be deemed to end until the completion of the final product
in the last operation or stage of production in the series; and
further for purposes of exemption (e), photoprocessing is

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deemed to be a manufacturing process of tangible personal
property for wholesale or retail sale; (2) "assembling process"
shall mean the production of any article of tangible personal
property, whether such article is a finished product or an
article for use in the process of manufacturing or assembling a
different article of tangible personal property, by the
combination of existing materials in a manner commonly regarded
as assembling which results in a material of a different form,
use or name; (3) "machinery" shall mean major mechanical
machines or major components of such machines contributing to a
manufacturing or assembling process; and (4) "equipment" shall
include any independent device or tool separate from any
machinery but essential to an integrated manufacturing or
assembly process; including computers used primarily in a
manufacturer's computer assisted design, computer assisted
manufacturing (CAD/CAM) system; or any subunit or assembly
comprising a component of any machinery or auxiliary, adjunct
or attachment parts of machinery, such as tools, dies, jigs,
fixtures, patterns and molds; or any parts which require
periodic replacement in the course of normal operation; but
shall not include hand tools; "equipment" . Equipment includes
chemicals or chemicals acting as catalysts but only if the
chemicals or chemicals acting as catalysts effect a direct and
immediate change upon a product being manufactured or assembled
for wholesale or retail sale or lease; and (5) "production
related tangible personal property" means all tangible

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personal property that is used or consumed by the purchaser in
a manufacturing facility in which a manufacturing process
described in Section 2-45 of the Retailers' Occupation Tax Act
takes place, including tangible personal property that is
purchased for incorporation into real estate within a
manufacturing facility, and including, but not limited to,
tangible personal property that is used or consumed in
activities such as preproduction material handling, receiving,
quality control, inventory control, storage, staging,
packaging for shipping and transportation purposes, and all
tangible personal property used or consumed by the purchaser
for research and development; "production related tangible
personal property" does not include (i) tangible personal
property that is used, within or without a manufacturing
facility, in sales, purchasing, accounting, fiscal management,
marketing, personnel recruitment or selection, or landscaping,
or (ii) tangible personal property that is required to be
titled or registered with a department, agency, or unit of
federal, State, or local government. The purchaser of such
machinery and equipment who has an active resale registration
number shall furnish such number to the seller at the time of
purchase. The purchaser of such machinery and equipment and
tools without an active resale registration number shall
furnish to the seller a certificate of exemption for each
transaction stating facts establishing the exemption for that
transaction, which certificate shall be available to the

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Department for inspection or audit.
Except as provided in Section 2d of this Act, the rolling
stock exemption applies to rolling stock used by an interstate
carrier for hire, even just between points in Illinois, if such
rolling stock transports, for hire, persons whose journeys or
property whose shipments originate or terminate outside
Illinois.
Any informal rulings, opinions or letters issued by the
Department in response to an inquiry or request for any opinion
from any person regarding the coverage and applicability of
exemption (e) to specific devices shall be published,
maintained as a public record, and made available for public
inspection and copying. If the informal ruling, opinion or
letter contains trade secrets or other confidential
information, where possible the Department shall delete such
information prior to publication. Whenever such informal
rulings, opinions, or letters contain any policy of general
applicability, the Department shall formulate and adopt such
policy as a rule in accordance with the provisions of the
Illinois Administrative Procedure Act.
On and after July 1, 1987, no entity otherwise eligible
under exemption (c) of this Section shall make tax-free
purchases unless it has an active exemption identification
number issued by the Department.
"Serviceman" means any person who is engaged in the
occupation of making sales of service.

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"Sale at Retail" means "sale at retail" as defined in the
Retailers' Occupation Tax Act.
"Supplier" means any person who makes sales of tangible
personal property to servicemen for the purpose of resale as an
incident to a sale of service.
(Source: P.A. 100-22, eff. 7-6-17; 100-321, eff. 8-24-17;
100-863, eff. 8-14-18.)
(35 ILCS 115/9) (from Ch. 120, par. 439.109)
Sec. 9. Each serviceman required or authorized to collect
the tax herein imposed shall pay to the Department the amount
of such tax at the time when he is required to file his return
for the period during which such tax was collectible, less a
discount of 2.1% prior to January 1, 1990, and 1.75% on and
after January 1, 1990, or $5 per calendar year, whichever is
greater, which is allowed to reimburse the serviceman for
expenses incurred in collecting the tax, keeping records,
preparing and filing returns, remitting the tax and supplying
data to the Department on request. The discount allowed under
this Section is allowed only for returns that are filed in the
manner required by this Act. The Department may disallow the
discount for servicemen whose certificate of registration is
revoked at the time the return is filed, but only if the
Department's decision to revoke the certificate of
registration has become final.
Where such tangible personal property is sold under a

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conditional sales contract, or under any other form of sale
wherein the payment of the principal sum, or a part thereof, is
extended beyond the close of the period for which the return is
filed, the serviceman, in collecting the tax may collect, for
each tax return period, only the tax applicable to the part of
the selling price actually received during such tax return
period.
Except as provided hereinafter in this Section, on or
before the twentieth day of each calendar month, such
serviceman shall file a return for the preceding calendar month
in accordance with reasonable rules and regulations to be
promulgated by the Department of Revenue. Such return shall be
filed on a form prescribed by the Department and shall contain
such information as the Department may reasonably require. On
and after January 1, 2018, with respect to servicemen whose
annual gross receipts average $20,000 or more, all returns
required to be filed pursuant to this Act shall be filed
electronically. Servicemen who demonstrate that they do not
have access to the Internet or demonstrate hardship in filing
electronically may petition the Department to waive the
electronic filing requirement.
The Department may require returns to be filed on a
quarterly basis. If so required, a return for each calendar
quarter shall be filed on or before the twentieth day of the
calendar month following the end of such calendar quarter. The
taxpayer shall also file a return with the Department for each

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of the first two months of each calendar quarter, on or before
the twentieth day of the following calendar month, stating:
1. The name of the seller;
2. The address of the principal place of business from
which he engages in business as a serviceman in this State;
3. The total amount of taxable receipts received by him
during the preceding calendar month, including receipts
from charge and time sales, but less all deductions allowed
by law;
4. The amount of credit provided in Section 2d of this
Act;
5. The amount of tax due;
5-5. The signature of the taxpayer; and
6. Such other reasonable information as the Department
may require.
If a taxpayer fails to sign a return within 30 days after
the proper notice and demand for signature by the Department,
the return shall be considered valid and any amount shown to be
due on the return shall be deemed assessed.
Prior to October 1, 2003, and on and after September 1,
2004 and through June 30, 2019, a serviceman may accept a
Manufacturer's Purchase Credit certification from a purchaser
in satisfaction of Service Use Tax as provided in Section 3-70
of the Service Use Tax Act if the purchaser provides the
appropriate documentation as required by Section 3-70 of the
Service Use Tax Act. A Manufacturer's Purchase Credit

HB2300 - 90 - LRB101 07228 HLH 52266 b
certification, accepted prior to October 1, 2003 or on or after
September 1, 2004 and through June 30, 2019 by a serviceman as
provided in Section 3-70 of the Service Use Tax Act, may be
used by that serviceman through June 30, 2019 to satisfy
Service Occupation Tax liability in the amount claimed in the
certification, not to exceed 6.25% of the receipts subject to
tax from a qualifying purchase. A Manufacturer's Purchase
Credit reported on any original or amended return filed under
this Act after October 20, 2003 for reporting periods prior to
September 1, 2004 shall be disallowed. A Manufacturer's
Purchase Credit reported on any original or amended return
filed under this Act after June 30, 2019 shall be disallowed.
Manufacturer's Purchase Credit reported on annual returns due
on or after January 1, 2005 will be disallowed for periods
prior to September 1, 2004. A Manufacturer's Purchase Credit
reported on an annual return due on or after January 1, 2020
shall be disallowed for periods on and after July 1, 2019. No
Manufacturer's Purchase Credit may be used after September 30,
2003 through August 31, 2004 or after June 30, 2019 to satisfy
any tax liability imposed under this Act, including any audit
liability.
If the serviceman's average monthly tax liability to the
Department does not exceed $200, the Department may authorize
his returns to be filed on a quarter annual basis, with the
return for January, February and March of a given year being
due by April 20 of such year; with the return for April, May

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and June of a given year being due by July 20 of such year; with
the return for July, August and September of a given year being
due by October 20 of such year, and with the return for
October, November and December of a given year being due by
January 20 of the following year.
If the serviceman's average monthly tax liability to the
Department does not exceed $50, the Department may authorize
his returns to be filed on an annual basis, with the return for
a given year being due by January 20 of the following year.
Such quarter annual and annual returns, as to form and
substance, shall be subject to the same requirements as monthly
returns.
Notwithstanding any other provision in this Act concerning
the time within which a serviceman may file his return, in the
case of any serviceman who ceases to engage in a kind of
business which makes him responsible for filing returns under
this Act, such serviceman shall file a final return under this
Act with the Department not more than 1 month after
discontinuing such business.
Beginning October 1, 1993, a taxpayer who has an average
monthly tax liability of $150,000 or more shall make all
payments required by rules of the Department by electronic
funds transfer. Beginning October 1, 1994, a taxpayer who has
an average monthly tax liability of $100,000 or more shall make
all payments required by rules of the Department by electronic
funds transfer. Beginning October 1, 1995, a taxpayer who has

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an average monthly tax liability of $50,000 or more shall make
all payments required by rules of the Department by electronic
funds transfer. Beginning October 1, 2000, a taxpayer who has
an annual tax liability of $200,000 or more shall make all
payments required by rules of the Department by electronic
funds transfer. The term "annual tax liability" shall be the
sum of the taxpayer's liabilities under this Act, and under all
other State and local occupation and use tax laws administered
by the Department, for the immediately preceding calendar year.
The term "average monthly tax liability" means the sum of the
taxpayer's liabilities under this Act, and under all other
State and local occupation and use tax laws administered by the
Department, for the immediately preceding calendar year
divided by 12. Beginning on October 1, 2002, a taxpayer who has
a tax liability in the amount set forth in subsection (b) of
Section 2505-210 of the Department of Revenue Law shall make
all payments required by rules of the Department by electronic
funds transfer.
Before August 1 of each year beginning in 1993, the
Department shall notify all taxpayers required to make payments
by electronic funds transfer. All taxpayers required to make
payments by electronic funds transfer shall make those payments
for a minimum of one year beginning on October 1.
Any taxpayer not required to make payments by electronic
funds transfer may make payments by electronic funds transfer
with the permission of the Department.

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All taxpayers required to make payment by electronic funds
transfer and any taxpayers authorized to voluntarily make
payments by electronic funds transfer shall make those payments
in the manner authorized by the Department.
The Department shall adopt such rules as are necessary to
effectuate a program of electronic funds transfer and the
requirements of this Section.
Where a serviceman collects the tax with respect to the
selling price of tangible personal property which he sells and
the purchaser thereafter returns such tangible personal
property and the serviceman refunds the selling price thereof
to the purchaser, such serviceman shall also refund, to the
purchaser, the tax so collected from the purchaser. When filing
his return for the period in which he refunds such tax to the
purchaser, the serviceman may deduct the amount of the tax so
refunded by him to the purchaser from any other Service
Occupation Tax, Service Use Tax, Retailers' Occupation Tax or
Use Tax which such serviceman may be required to pay or remit
to the Department, as shown by such return, provided that the
amount of the tax to be deducted shall previously have been
remitted to the Department by such serviceman. If the
serviceman shall not previously have remitted the amount of
such tax to the Department, he shall be entitled to no
deduction hereunder upon refunding such tax to the purchaser.
If experience indicates such action to be practicable, the
Department may prescribe and furnish a combination or joint

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return which will enable servicemen, who are required to file
returns hereunder and also under the Retailers' Occupation Tax
Act, the Use Tax Act or the Service Use Tax Act, to furnish all
the return information required by all said Acts on the one
form.
Where the serviceman has more than one business registered
with the Department under separate registrations hereunder,
such serviceman shall file separate returns for each registered
business.
Beginning January 1, 1990, each month the Department shall
pay into the Local Government Tax Fund the revenue realized for
the preceding month from the 1% tax imposed under this Act.
Beginning January 1, 1990, each month the Department shall
pay into the County and Mass Transit District Fund 4% of the
revenue realized for the preceding month from the 6.25% general
rate.
Beginning August 1, 2000, each month the Department shall
pay into the County and Mass Transit District Fund 20% of the
net revenue realized for the preceding month from the 1.25%
rate on the selling price of motor fuel and gasohol.
Beginning January 1, 1990, each month the Department shall
pay into the Local Government Tax Fund 16% of the revenue
realized for the preceding month from the 6.25% general rate on
transfers of tangible personal property.
Beginning August 1, 2000, each month the Department shall
pay into the Local Government Tax Fund 80% of the net revenue

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realized for the preceding month from the 1.25% rate on the
selling price of motor fuel and gasohol.
Beginning October 1, 2009, each month the Department shall
pay into the Capital Projects Fund an amount that is equal to
an amount estimated by the Department to represent 80% of the
net revenue realized for the preceding month from the sale of
candy, grooming and hygiene products, and soft drinks that had
been taxed at a rate of 1% prior to September 1, 2009 but that
are now taxed at 6.25%.
Beginning July 1, 2013, each month the Department shall pay
into the Underground Storage Tank Fund from the proceeds
collected under this Act, the Use Tax Act, the Service Use Tax
Act, and the Retailers' Occupation Tax Act an amount equal to
the average monthly deficit in the Underground Storage Tank
Fund during the prior year, as certified annually by the
Illinois Environmental Protection Agency, but the total
payment into the Underground Storage Tank Fund under this Act,
the Use Tax Act, the Service Use Tax Act, and the Retailers'
Occupation Tax Act shall not exceed $18,000,000 in any State
fiscal year. As used in this paragraph, the "average monthly
deficit" shall be equal to the difference between the average
monthly claims for payment by the fund and the average monthly
revenues deposited into the fund, excluding payments made
pursuant to this paragraph.
Beginning July 1, 2015, of the remainder of the moneys
received by the Department under the Use Tax Act, the Service

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Use Tax Act, this Act, and the Retailers' Occupation Tax Act,
each month the Department shall deposit $500,000 into the State
Crime Laboratory Fund.
Of the remainder of the moneys received by the Department
pursuant to this Act, (a) 1.75% thereof shall be paid into the
Build Illinois Fund and (b) prior to July 1, 1989, 2.2% and on
and after July 1, 1989, 3.8% thereof shall be paid into the
Build Illinois Fund; provided, however, that if in any fiscal
year the sum of (1) the aggregate of 2.2% or 3.8%, as the case
may be, of the moneys received by the Department and required
to be paid into the Build Illinois Fund pursuant to Section 3
of the Retailers' Occupation Tax Act, Section 9 of the Use Tax
Act, Section 9 of the Service Use Tax Act, and Section 9 of the
Service Occupation Tax Act, such Acts being hereinafter called
the "Tax Acts" and such aggregate of 2.2% or 3.8%, as the case
may be, of moneys being hereinafter called the "Tax Act
Amount", and (2) the amount transferred to the Build Illinois
Fund from the State and Local Sales Tax Reform Fund shall be
less than the Annual Specified Amount (as defined in Section 3
of the Retailers' Occupation Tax Act), an amount equal to the
difference shall be immediately paid into the Build Illinois
Fund from other moneys received by the Department pursuant to
the Tax Acts; and further provided, that if on the last
business day of any month the sum of (1) the Tax Act Amount
required to be deposited into the Build Illinois Account in the
Build Illinois Fund during such month and (2) the amount

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transferred during such month to the Build Illinois Fund from
the State and Local Sales Tax Reform Fund shall have been less
than 1/12 of the Annual Specified Amount, an amount equal to
the difference shall be immediately paid into the Build
Illinois Fund from other moneys received by the Department
pursuant to the Tax Acts; and, further provided, that in no
event shall the payments required under the preceding proviso
result in aggregate payments into the Build Illinois Fund
pursuant to this clause (b) for any fiscal year in excess of
the greater of (i) the Tax Act Amount or (ii) the Annual
Specified Amount for such fiscal year; and, further provided,
that the amounts payable into the Build Illinois Fund under
this clause (b) shall be payable only until such time as the
aggregate amount on deposit under each trust indenture securing
Bonds issued and outstanding pursuant to the Build Illinois
Bond Act is sufficient, taking into account any future
investment income, to fully provide, in accordance with such
indenture, for the defeasance of or the payment of the
principal of, premium, if any, and interest on the Bonds
secured by such indenture and on any Bonds expected to be
issued thereafter and all fees and costs payable with respect
thereto, all as certified by the Director of the Bureau of the
Budget (now Governor's Office of Management and Budget). If on
the last business day of any month in which Bonds are
outstanding pursuant to the Build Illinois Bond Act, the
aggregate of the moneys deposited in the Build Illinois Bond

HB2300 - 98 - LRB101 07228 HLH 52266 b
Account in the Build Illinois Fund in such month shall be less
than the amount required to be transferred in such month from
the Build Illinois Bond Account to the Build Illinois Bond
Retirement and Interest Fund pursuant to Section 13 of the
Build Illinois Bond Act, an amount equal to such deficiency
shall be immediately paid from other moneys received by the
Department pursuant to the Tax Acts to the Build Illinois Fund;
provided, however, that any amounts paid to the Build Illinois
Fund in any fiscal year pursuant to this sentence shall be
deemed to constitute payments pursuant to clause (b) of the
preceding sentence and shall reduce the amount otherwise
payable for such fiscal year pursuant to clause (b) of the
preceding sentence. The moneys received by the Department
pursuant to this Act and required to be deposited into the
Build Illinois Fund are subject to the pledge, claim and charge
set forth in Section 12 of the Build Illinois Bond Act.
Subject to payment of amounts into the Build Illinois Fund
as provided in the preceding paragraph or in any amendment
thereto hereafter enacted, the following specified monthly
installment of the amount requested in the certificate of the
Chairman of the Metropolitan Pier and Exposition Authority
provided under Section 8.25f of the State Finance Act, but not
in excess of the sums designated as "Total Deposit", shall be
deposited in the aggregate from collections under Section 9 of
the Use Tax Act, Section 9 of the Service Use Tax Act, Section
9 of the Service Occupation Tax Act, and Section 3 of the

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Retailers' Occupation Tax Act into the McCormick Place
Expansion Project Fund in the specified fiscal years.
Fiscal Year Total Deposit
1993 $0
1994 53,000,000
1995 58,000,000
1996 61,000,000
1997 64,000,000
1998 68,000,000
1999 71,000,000
2000 75,000,000
2001 80,000,000
2002 93,000,000
2003 99,000,000
2004 103,000,000
2005 108,000,000
2006 113,000,000
2007 119,000,000
2008 126,000,000
2009 132,000,000
2010 139,000,000
2011 146,000,000
2012 153,000,000
2013 161,000,000
2014 170,000,000

HB2300 - 100 - LRB101 07228 HLH 52266 b
2015 179,000,000
2016 189,000,000
2017 199,000,000
2018 210,000,000
2019 221,000,000
2020 233,000,000
2021 246,000,000
2022 260,000,000
2023 275,000,000
2024 275,000,000
2025 275,000,000
2026 279,000,000
2027 292,000,000
2028 307,000,000
2029 322,000,000
2030 338,000,000
2031 350,000,000
2032 350,000,000
and
each fiscal year
thereafter that bonds
are outstanding under
Section 13.2 of the
Metropolitan Pier and
Exposition Authority Act,
but not after fiscal year 2060.

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Beginning July 20, 1993 and in each month of each fiscal
year thereafter, one-eighth of the amount requested in the
certificate of the Chairman of the Metropolitan Pier and
Exposition Authority for that fiscal year, less the amount
deposited into the McCormick Place Expansion Project Fund by
the State Treasurer in the respective month under subsection
(g) of Section 13 of the Metropolitan Pier and Exposition
Authority Act, plus cumulative deficiencies in the deposits
required under this Section for previous months and years,
shall be deposited into the McCormick Place Expansion Project
Fund, until the full amount requested for the fiscal year, but
not in excess of the amount specified above as "Total Deposit",
has been deposited.
Subject to payment of amounts into the Build Illinois Fund
and the McCormick Place Expansion Project Fund pursuant to the
preceding paragraphs or in any amendments thereto hereafter
enacted, beginning July 1, 1993 and ending on September 30,
2013, the Department shall each month pay into the Illinois Tax
Increment Fund 0.27% of 80% of the net revenue realized for the
preceding month from the 6.25% general rate on the selling
price of tangible personal property.
Subject to payment of amounts into the Build Illinois Fund
and the McCormick Place Expansion Project Fund pursuant to the
preceding paragraphs or in any amendments thereto hereafter
enacted, beginning with the receipt of the first report of
taxes paid by an eligible business and continuing for a 25-year

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period, the Department shall each month pay into the Energy
Infrastructure Fund 80% of the net revenue realized from the
6.25% general rate on the selling price of Illinois-mined coal
that was sold to an eligible business. For purposes of this
paragraph, the term "eligible business" means a new electric
generating facility certified pursuant to Section 605-332 of
the Department of Commerce and Economic Opportunity Law of the
Civil Administrative Code of Illinois.
Subject to payment of amounts into the Build Illinois Fund,
the McCormick Place Expansion Project Fund, the Illinois Tax
Increment Fund, and the Energy Infrastructure Fund pursuant to
the preceding paragraphs or in any amendments to this Section
hereafter enacted, beginning on the first day of the first
calendar month to occur on or after August 26, 2014 (the
effective date of Public Act 98-1098), each month, from the
collections made under Section 9 of the Use Tax Act, Section 9
of the Service Use Tax Act, Section 9 of the Service Occupation
Tax Act, and Section 3 of the Retailers' Occupation Tax Act,
the Department shall pay into the Tax Compliance and
Administration Fund, to be used, subject to appropriation, to
fund additional auditors and compliance personnel at the
Department of Revenue, an amount equal to 1/12 of 5% of 80% of
the cash receipts collected during the preceding fiscal year by
the Audit Bureau of the Department under the Use Tax Act, the
Service Use Tax Act, the Service Occupation Tax Act, the
Retailers' Occupation Tax Act, and associated local occupation

HB2300 - 103 - LRB101 07228 HLH 52266 b
and use taxes administered by the Department.
Subject to payments of amounts into the Build Illinois
Fund, the McCormick Place Expansion Project Fund, the Illinois
Tax Increment Fund, the Energy Infrastructure Fund, and the Tax
Compliance and Administration Fund as provided in this Section,
beginning on July 1, 2018 the Department shall pay each month
into the Downstate Public Transportation Fund the moneys
required to be so paid under Section 2-3 of the Downstate
Public Transportation Act.
Of the remainder of the moneys received by the Department
pursuant to this Act, 75% shall be paid into the General
Revenue Fund of the State Treasury and 25% shall be reserved in
a special account and used only for the transfer to the Common
School Fund as part of the monthly transfer from the General
Revenue Fund in accordance with Section 8a of the State Finance
Act.
The Department may, upon separate written notice to a
taxpayer, require the taxpayer to prepare and file with the
Department on a form prescribed by the Department within not
less than 60 days after receipt of the notice an annual
information return for the tax year specified in the notice.
Such annual return to the Department shall include a statement
of gross receipts as shown by the taxpayer's last Federal
income tax return. If the total receipts of the business as
reported in the Federal income tax return do not agree with the
gross receipts reported to the Department of Revenue for the

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same period, the taxpayer shall attach to his annual return a
schedule showing a reconciliation of the 2 amounts and the
reasons for the difference. The taxpayer's annual return to the
Department shall also disclose the cost of goods sold by the
taxpayer during the year covered by such return, opening and
closing inventories of such goods for such year, cost of goods
used from stock or taken from stock and given away by the
taxpayer during such year, pay roll information of the
taxpayer's business during such year and any additional
reasonable information which the Department deems would be
helpful in determining the accuracy of the monthly, quarterly
or annual returns filed by such taxpayer as hereinbefore
provided for in this Section.
If the annual information return required by this Section
is not filed when and as required, the taxpayer shall be liable
as follows:
(i) Until January 1, 1994, the taxpayer shall be liable
for a penalty equal to 1/6 of 1% of the tax due from such
taxpayer under this Act during the period to be covered by
the annual return for each month or fraction of a month
until such return is filed as required, the penalty to be
assessed and collected in the same manner as any other
penalty provided for in this Act.
(ii) On and after January 1, 1994, the taxpayer shall
be liable for a penalty as described in Section 3-4 of the
Uniform Penalty and Interest Act.

HB2300 - 105 - LRB101 07228 HLH 52266 b
The chief executive officer, proprietor, owner or highest
ranking manager shall sign the annual return to certify the
accuracy of the information contained therein. Any person who
willfully signs the annual return containing false or
inaccurate information shall be guilty of perjury and punished
accordingly. The annual return form prescribed by the
Department shall include a warning that the person signing the
return may be liable for perjury.
The foregoing portion of this Section concerning the filing
of an annual information return shall not apply to a serviceman
who is not required to file an income tax return with the
United States Government.
As soon as possible after the first day of each month, upon
certification of the Department of Revenue, the Comptroller
shall order transferred and the Treasurer shall transfer from
the General Revenue Fund to the Motor Fuel Tax Fund an amount
equal to 1.7% of 80% of the net revenue realized under this Act
for the second preceding month. Beginning April 1, 2000, this
transfer is no longer required and shall not be made.
Net revenue realized for a month shall be the revenue
collected by the State pursuant to this Act, less the amount
paid out during that month as refunds to taxpayers for
overpayment of liability.
For greater simplicity of administration, it shall be
permissible for manufacturers, importers and wholesalers whose
products are sold by numerous servicemen in Illinois, and who

HB2300 - 106 - LRB101 07228 HLH 52266 b
wish to do so, to assume the responsibility for accounting and
paying to the Department all tax accruing under this Act with
respect to such sales, if the servicemen who are affected do
not make written objection to the Department to this
arrangement.
(Source: P.A. 99-352, eff. 8-12-15; 99-858, eff. 8-19-16;
100-303, eff. 8-24-17; 100-363, eff. 7-1-18; 100-863, eff.
8-14-18; 100-1171, eff. 1-4-19.)
Section 25. The Retailers' Occupation Tax Act is amended by
changing Sections 2-5, 2-45, and 3 as follows:
(35 ILCS 120/2-5)
Sec. 2-5. Exemptions. Gross receipts from proceeds from the
sale of the following tangible personal property are exempt
from the tax imposed by this Act:
(1) Farm chemicals.
(2) Farm machinery and equipment, both new and used,
including that manufactured on special order, certified by
the purchaser to be used primarily for production
agriculture or State or federal agricultural programs,
including individual replacement parts for the machinery
and equipment, including machinery and equipment purchased
for lease, and including implements of husbandry defined in
Section 1-130 of the Illinois Vehicle Code, farm machinery
and agricultural chemical and fertilizer spreaders, and

HB2300 - 107 - LRB101 07228 HLH 52266 b
nurse wagons required to be registered under Section 3-809
of the Illinois Vehicle Code, but excluding other motor
vehicles required to be registered under the Illinois
Vehicle Code. Horticultural polyhouses or hoop houses used
for propagating, growing, or overwintering plants shall be
considered farm machinery and equipment under this item
(2). Agricultural chemical tender tanks and dry boxes shall
include units sold separately from a motor vehicle required
to be licensed and units sold mounted on a motor vehicle
required to be licensed, if the selling price of the tender
is separately stated.
Farm machinery and equipment shall include precision
farming equipment that is installed or purchased to be
installed on farm machinery and equipment including, but
not limited to, tractors, harvesters, sprayers, planters,
seeders, or spreaders. Precision farming equipment
includes, but is not limited to, soil testing sensors,
computers, monitors, software, global positioning and
mapping systems, and other such equipment.
Farm machinery and equipment also includes computers,
sensors, software, and related equipment used primarily in
the computer-assisted operation of production agriculture
facilities, equipment, and activities such as, but not
limited to, the collection, monitoring, and correlation of
animal and crop data for the purpose of formulating animal
diets and agricultural chemicals. This item (2) is exempt

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from the provisions of Section 2-70.
(3) Until July 1, 2003, distillation machinery and
equipment, sold as a unit or kit, assembled or installed by
the retailer, certified by the user to be used only for the
production of ethyl alcohol that will be used for
consumption as motor fuel or as a component of motor fuel
for the personal use of the user, and not subject to sale
or resale.
(4) Until July 1, 2003 and beginning again September 1,
2004 through August 30, 2014, graphic arts machinery and
equipment, including repair and replacement parts, both
new and used, and including that manufactured on special
order or purchased for lease, certified by the purchaser to
be used primarily for graphic arts production. Equipment
includes chemicals or chemicals acting as catalysts but
only if the chemicals or chemicals acting as catalysts
effect a direct and immediate change upon a graphic arts
product. Beginning on July 1, 2017, graphic arts machinery
and equipment is included in the manufacturing and
assembling machinery and equipment exemption under
paragraph (14).
(5) A motor vehicle that is used for automobile
renting, as defined in the Automobile Renting Occupation
and Use Tax Act. This paragraph is exempt from the
provisions of Section 2-70.
(6) Personal property sold by a teacher-sponsored

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student organization affiliated with an elementary or
secondary school located in Illinois.
(7) Until July 1, 2003, proceeds of that portion of the
selling price of a passenger car the sale of which is
subject to the Replacement Vehicle Tax.
(8) Personal property sold to an Illinois county fair
association for use in conducting, operating, or promoting
the county fair.
(9) Personal property sold to a not-for-profit arts or
cultural organization that establishes, by proof required
by the Department by rule, that it has received an
exemption under Section 501(c)(3) of the Internal Revenue
Code and that is organized and operated primarily for the
presentation or support of arts or cultural programming,
activities, or services. These organizations include, but
are not limited to, music and dramatic arts organizations
such as symphony orchestras and theatrical groups, arts and
cultural service organizations, local arts councils,
visual arts organizations, and media arts organizations.
On and after July 1, 2001 (the effective date of Public Act
92-35), however, an entity otherwise eligible for this
exemption shall not make tax-free purchases unless it has
an active identification number issued by the Department.
(10) Personal property sold by a corporation, society,
association, foundation, institution, or organization,
other than a limited liability company, that is organized

HB2300 - 110 - LRB101 07228 HLH 52266 b
and operated as a not-for-profit service enterprise for the
benefit of persons 65 years of age or older if the personal
property was not purchased by the enterprise for the
purpose of resale by the enterprise.
(11) Personal property sold to a governmental body, to
a corporation, society, association, foundation, or
institution organized and operated exclusively for
charitable, religious, or educational purposes, or to a
not-for-profit corporation, society, association,
foundation, institution, or organization that has no
compensated officers or employees and that is organized and
operated primarily for the recreation of persons 55 years
of age or older. A limited liability company may qualify
for the exemption under this paragraph only if the limited
liability company is organized and operated exclusively
for educational purposes. On and after July 1, 1987,
however, no entity otherwise eligible for this exemption
shall make tax-free purchases unless it has an active
identification number issued by the Department.
(12) (Blank).
(12-5) On and after July 1, 2003 and through June 30,
2004, motor vehicles of the second division with a gross
vehicle weight in excess of 8,000 pounds that are subject
to the commercial distribution fee imposed under Section
3-815.1 of the Illinois Vehicle Code. Beginning on July 1,
2004 and through June 30, 2005, the use in this State of

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motor vehicles of the second division: (i) with a gross
vehicle weight rating in excess of 8,000 pounds; (ii) that
are subject to the commercial distribution fee imposed
under Section 3-815.1 of the Illinois Vehicle Code; and
(iii) that are primarily used for commercial purposes.
Through June 30, 2005, this exemption applies to repair and
replacement parts added after the initial purchase of such
a motor vehicle if that motor vehicle is used in a manner
that would qualify for the rolling stock exemption
otherwise provided for in this Act. For purposes of this
paragraph, "used for commercial purposes" means the
transportation of persons or property in furtherance of any
commercial or industrial enterprise whether for-hire or
not.
(13) Proceeds from sales to owners, lessors, or
shippers of tangible personal property that is utilized by
interstate carriers for hire for use as rolling stock
moving in interstate commerce and equipment operated by a
telecommunications provider, licensed as a common carrier
by the Federal Communications Commission, which is
permanently installed in or affixed to aircraft moving in
interstate commerce.
(14) Machinery and equipment that will be used by the
purchaser, or a lessee of the purchaser, primarily in the
process of manufacturing or assembling tangible personal
property for wholesale or retail sale or lease, whether the

HB2300 - 112 - LRB101 07228 HLH 52266 b
sale or lease is made directly by the manufacturer or by
some other person, whether the materials used in the
process are owned by the manufacturer or some other person,
or whether the sale or lease is made apart from or as an
incident to the seller's engaging in the service occupation
of producing machines, tools, dies, jigs, patterns,
gauges, or other similar items of no commercial value on
special order for a particular purchaser. The exemption
provided by this paragraph (14) does not include machinery
and equipment used in (i) the generation of electricity for
wholesale or retail sale; (ii) the generation or treatment
of natural or artificial gas for wholesale or retail sale
that is delivered to customers through pipes, pipelines, or
mains; or (iii) the treatment of water for wholesale or
retail sale that is delivered to customers through pipes,
pipelines, or mains. The provisions of Public Act 98-583
are declaratory of existing law as to the meaning and scope
of this exemption. Beginning on July 1, 2017, the exemption
provided by this paragraph (14) includes, but is not
limited to, graphic arts machinery and equipment, as
defined in paragraph (4) of this Section. Beginning on July
1, 2019, manufacturing and assembling machinery and
equipment includes production related tangible personal
property, as defined in Section 2-45 of this Act. The
exemption provided by this paragraph (14) is exempt from
the provisions of Section 2-70.

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(15) Proceeds of mandatory service charges separately
stated on customers' bills for purchase and consumption of
food and beverages, to the extent that the proceeds of the
service charge are in fact turned over as tips or as a
substitute for tips to the employees who participate
directly in preparing, serving, hosting or cleaning up the
food or beverage function with respect to which the service
charge is imposed.
(16) Tangible personal property sold to a purchaser if
the purchaser is exempt from use tax by operation of
federal law. This paragraph is exempt from the provisions
of Section 2-70.
(17) Tangible personal property sold to a common
carrier by rail or motor that receives the physical
possession of the property in Illinois and that transports
the property, or shares with another common carrier in the
transportation of the property, out of Illinois on a
standard uniform bill of lading showing the seller of the
property as the shipper or consignor of the property to a
destination outside Illinois, for use outside Illinois.
(18) Legal tender, currency, medallions, or gold or
silver coinage issued by the State of Illinois, the
government of the United States of America, or the
government of any foreign country, and bullion.
(19) Until July 1, 2003, oil field exploration,
drilling, and production equipment, including (i) rigs and

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parts of rigs, rotary rigs, cable tool rigs, and workover
rigs, (ii) pipe and tubular goods, including casing and
drill strings, (iii) pumps and pump-jack units, (iv)
storage tanks and flow lines, (v) any individual
replacement part for oil field exploration, drilling, and
production equipment, and (vi) machinery and equipment
purchased for lease; but excluding motor vehicles required
to be registered under the Illinois Vehicle Code.
(20) Photoprocessing machinery and equipment,
including repair and replacement parts, both new and used,
including that manufactured on special order, certified by
the purchaser to be used primarily for photoprocessing, and
including photoprocessing machinery and equipment
purchased for lease.
(21) Until July 1, 2023, coal and aggregate
exploration, mining, off-highway hauling, processing,
maintenance, and reclamation equipment, including
replacement parts and equipment, and including equipment
purchased for lease, but excluding motor vehicles required
to be registered under the Illinois Vehicle Code. The
changes made to this Section by Public Act 97-767 apply on
and after July 1, 2003, but no claim for credit or refund
is allowed on or after August 16, 2013 (the effective date
of Public Act 98-456) for such taxes paid during the period
beginning July 1, 2003 and ending on August 16, 2013 (the
effective date of Public Act 98-456).

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(22) Until June 30, 2013, fuel and petroleum products
sold to or used by an air carrier, certified by the carrier
to be used for consumption, shipment, or storage in the
conduct of its business as an air common carrier, for a
flight destined for or returning from a location or
locations outside the United States without regard to
previous or subsequent domestic stopovers.
Beginning July 1, 2013, fuel and petroleum products
sold to or used by an air carrier, certified by the carrier
to be used for consumption, shipment, or storage in the
conduct of its business as an air common carrier, for a
flight that (i) is engaged in foreign trade or is engaged
in trade between the United States and any of its
possessions and (ii) transports at least one individual or
package for hire from the city of origination to the city
of final destination on the same aircraft, without regard
to a change in the flight number of that aircraft.
(23) A transaction in which the purchase order is
received by a florist who is located outside Illinois, but
who has a florist located in Illinois deliver the property
to the purchaser or the purchaser's donee in Illinois.
(24) Fuel consumed or used in the operation of ships,
barges, or vessels that are used primarily in or for the
transportation of property or the conveyance of persons for
hire on rivers bordering on this State if the fuel is
delivered by the seller to the purchaser's barge, ship, or

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vessel while it is afloat upon that bordering river.
(25) Except as provided in item (25-5) of this Section,
a motor vehicle sold in this State to a nonresident even
though the motor vehicle is delivered to the nonresident in
this State, if the motor vehicle is not to be titled in
this State, and if a drive-away permit is issued to the
motor vehicle as provided in Section 3-603 of the Illinois
Vehicle Code or if the nonresident purchaser has vehicle
registration plates to transfer to the motor vehicle upon
returning to his or her home state. The issuance of the
drive-away permit or having the out-of-state registration
plates to be transferred is prima facie evidence that the
motor vehicle will not be titled in this State.
(25-5) The exemption under item (25) does not apply if
the state in which the motor vehicle will be titled does
not allow a reciprocal exemption for a motor vehicle sold
and delivered in that state to an Illinois resident but
titled in Illinois. The tax collected under this Act on the
sale of a motor vehicle in this State to a resident of
another state that does not allow a reciprocal exemption
shall be imposed at a rate equal to the state's rate of tax
on taxable property in the state in which the purchaser is
a resident, except that the tax shall not exceed the tax
that would otherwise be imposed under this Act. At the time
of the sale, the purchaser shall execute a statement,
signed under penalty of perjury, of his or her intent to

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title the vehicle in the state in which the purchaser is a
resident within 30 days after the sale and of the fact of
the payment to the State of Illinois of tax in an amount
equivalent to the state's rate of tax on taxable property
in his or her state of residence and shall submit the
statement to the appropriate tax collection agency in his
or her state of residence. In addition, the retailer must
retain a signed copy of the statement in his or her
records. Nothing in this item shall be construed to require
the removal of the vehicle from this state following the
filing of an intent to title the vehicle in the purchaser's
state of residence if the purchaser titles the vehicle in
his or her state of residence within 30 days after the date
of sale. The tax collected under this Act in accordance
with this item (25-5) shall be proportionately distributed
as if the tax were collected at the 6.25% general rate
imposed under this Act.
(25-7) Beginning on July 1, 2007, no tax is imposed
under this Act on the sale of an aircraft, as defined in
Section 3 of the Illinois Aeronautics Act, if all of the
following conditions are met:
(1) the aircraft leaves this State within 15 days
after the later of either the issuance of the final
billing for the sale of the aircraft, or the authorized
approval for return to service, completion of the
maintenance record entry, and completion of the test

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flight and ground test for inspection, as required by
14 C.F.R. 91.407;
(2) the aircraft is not based or registered in this
State after the sale of the aircraft; and
(3) the seller retains in his or her books and
records and provides to the Department a signed and
dated certification from the purchaser, on a form
prescribed by the Department, certifying that the
requirements of this item (25-7) are met. The
certificate must also include the name and address of
the purchaser, the address of the location where the
aircraft is to be titled or registered, the address of
the primary physical location of the aircraft, and
other information that the Department may reasonably
require.
For purposes of this item (25-7):
"Based in this State" means hangared, stored, or
otherwise used, excluding post-sale customizations as
defined in this Section, for 10 or more days in each
12-month period immediately following the date of the sale
of the aircraft.
"Registered in this State" means an aircraft
registered with the Department of Transportation,
Aeronautics Division, or titled or registered with the
Federal Aviation Administration to an address located in
this State.

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This paragraph (25-7) is exempt from the provisions of
Section 2-70.
(26) Semen used for artificial insemination of
livestock for direct agricultural production.
(27) Horses, or interests in horses, registered with
and meeting the requirements of any of the Arabian Horse
Club Registry of America, Appaloosa Horse Club, American
Quarter Horse Association, United States Trotting
Association, or Jockey Club, as appropriate, used for
purposes of breeding or racing for prizes. This item (27)
is exempt from the provisions of Section 2-70, and the
exemption provided for under this item (27) applies for all
periods beginning May 30, 1995, but no claim for credit or
refund is allowed on or after January 1, 2008 (the
effective date of Public Act 95-88) for such taxes paid
during the period beginning May 30, 2000 and ending on
January 1, 2008 (the effective date of Public Act 95-88).
(28) Computers and communications equipment utilized
for any hospital purpose and equipment used in the
diagnosis, analysis, or treatment of hospital patients
sold to a lessor who leases the equipment, under a lease of
one year or longer executed or in effect at the time of the
purchase, to a hospital that has been issued an active tax
exemption identification number by the Department under
Section 1g of this Act.
(29) Personal property sold to a lessor who leases the

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property, under a lease of one year or longer executed or
in effect at the time of the purchase, to a governmental
body that has been issued an active tax exemption
identification number by the Department under Section 1g of
this Act.
(30) Beginning with taxable years ending on or after
December 31, 1995 and ending with taxable years ending on
or before December 31, 2004, personal property that is
donated for disaster relief to be used in a State or
federally declared disaster area in Illinois or bordering
Illinois by a manufacturer or retailer that is registered
in this State to a corporation, society, association,
foundation, or institution that has been issued a sales tax
exemption identification number by the Department that
assists victims of the disaster who reside within the
declared disaster area.
(31) Beginning with taxable years ending on or after
December 31, 1995 and ending with taxable years ending on
or before December 31, 2004, personal property that is used
in the performance of infrastructure repairs in this State,
including but not limited to municipal roads and streets,
access roads, bridges, sidewalks, waste disposal systems,
water and sewer line extensions, water distribution and
purification facilities, storm water drainage and
retention facilities, and sewage treatment facilities,
resulting from a State or federally declared disaster in

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Illinois or bordering Illinois when such repairs are
initiated on facilities located in the declared disaster
area within 6 months after the disaster.
(32) Beginning July 1, 1999, game or game birds sold at
a "game breeding and hunting preserve area" as that term is
used in the Wildlife Code. This paragraph is exempt from
the provisions of Section 2-70.
(33) A motor vehicle, as that term is defined in
Section 1-146 of the Illinois Vehicle Code, that is donated
to a corporation, limited liability company, society,
association, foundation, or institution that is determined
by the Department to be organized and operated exclusively
for educational purposes. For purposes of this exemption,
"a corporation, limited liability company, society,
association, foundation, or institution organized and
operated exclusively for educational purposes" means all
tax-supported public schools, private schools that offer
systematic instruction in useful branches of learning by
methods common to public schools and that compare favorably
in their scope and intensity with the course of study
presented in tax-supported schools, and vocational or
technical schools or institutes organized and operated
exclusively to provide a course of study of not less than 6
weeks duration and designed to prepare individuals to
follow a trade or to pursue a manual, technical,
mechanical, industrial, business, or commercial

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occupation.
(34) Beginning January 1, 2000, personal property,
including food, purchased through fundraising events for
the benefit of a public or private elementary or secondary
school, a group of those schools, or one or more school
districts if the events are sponsored by an entity
recognized by the school district that consists primarily
of volunteers and includes parents and teachers of the
school children. This paragraph does not apply to
fundraising events (i) for the benefit of private home
instruction or (ii) for which the fundraising entity
purchases the personal property sold at the events from
another individual or entity that sold the property for the
purpose of resale by the fundraising entity and that
profits from the sale to the fundraising entity. This
paragraph is exempt from the provisions of Section 2-70.
(35) Beginning January 1, 2000 and through December 31,
2001, new or used automatic vending machines that prepare
and serve hot food and beverages, including coffee, soup,
and other items, and replacement parts for these machines.
Beginning January 1, 2002 and through June 30, 2003,
machines and parts for machines used in commercial,
coin-operated amusement and vending business if a use or
occupation tax is paid on the gross receipts derived from
the use of the commercial, coin-operated amusement and
vending machines. This paragraph is exempt from the

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provisions of Section 2-70.
(35-5) Beginning August 23, 2001 and through June 30,
2016, food for human consumption that is to be consumed off
the premises where it is sold (other than alcoholic
beverages, soft drinks, and food that has been prepared for
immediate consumption) and prescription and
nonprescription medicines, drugs, medical appliances, and
insulin, urine testing materials, syringes, and needles
used by diabetics, for human use, when purchased for use by
a person receiving medical assistance under Article V of
the Illinois Public Aid Code who resides in a licensed
long-term care facility, as defined in the Nursing Home
Care Act, or a licensed facility as defined in the ID/DD
Community Care Act, the MC/DD Act, or the Specialized
Mental Health Rehabilitation Act of 2013.
(36) Beginning August 2, 2001, computers and
communications equipment utilized for any hospital purpose
and equipment used in the diagnosis, analysis, or treatment
of hospital patients sold to a lessor who leases the
equipment, under a lease of one year or longer executed or
in effect at the time of the purchase, to a hospital that
has been issued an active tax exemption identification
number by the Department under Section 1g of this Act. This
paragraph is exempt from the provisions of Section 2-70.
(37) Beginning August 2, 2001, personal property sold
to a lessor who leases the property, under a lease of one

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year or longer executed or in effect at the time of the
purchase, to a governmental body that has been issued an
active tax exemption identification number by the
Department under Section 1g of this Act. This paragraph is
exempt from the provisions of Section 2-70.
(38) Beginning on January 1, 2002 and through June 30,
2016, tangible personal property purchased from an
Illinois retailer by a taxpayer engaged in centralized
purchasing activities in Illinois who will, upon receipt of
the property in Illinois, temporarily store the property in
Illinois (i) for the purpose of subsequently transporting
it outside this State for use or consumption thereafter
solely outside this State or (ii) for the purpose of being
processed, fabricated, or manufactured into, attached to,
or incorporated into other tangible personal property to be
transported outside this State and thereafter used or
consumed solely outside this State. The Director of Revenue
shall, pursuant to rules adopted in accordance with the
Illinois Administrative Procedure Act, issue a permit to
any taxpayer in good standing with the Department who is
eligible for the exemption under this paragraph (38). The
permit issued under this paragraph (38) shall authorize the
holder, to the extent and in the manner specified in the
rules adopted under this Act, to purchase tangible personal
property from a retailer exempt from the taxes imposed by
this Act. Taxpayers shall maintain all necessary books and

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records to substantiate the use and consumption of all such
tangible personal property outside of the State of
Illinois.
(39) Beginning January 1, 2008, tangible personal
property used in the construction or maintenance of a
community water supply, as defined under Section 3.145 of
the Environmental Protection Act, that is operated by a
not-for-profit corporation that holds a valid water supply
permit issued under Title IV of the Environmental
Protection Act. This paragraph is exempt from the
provisions of Section 2-70.
(40) Beginning January 1, 2010, materials, parts,
equipment, components, and furnishings incorporated into
or upon an aircraft as part of the modification,
refurbishment, completion, replacement, repair, or
maintenance of the aircraft. This exemption includes
consumable supplies used in the modification,
refurbishment, completion, replacement, repair, and
maintenance of aircraft, but excludes any materials,
parts, equipment, components, and consumable supplies used
in the modification, replacement, repair, and maintenance
of aircraft engines or power plants, whether such engines
or power plants are installed or uninstalled upon any such
aircraft. "Consumable supplies" include, but are not
limited to, adhesive, tape, sandpaper, general purpose
lubricants, cleaning solution, latex gloves, and

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protective films. This exemption applies only to the sale
of qualifying tangible personal property to persons who
modify, refurbish, complete, replace, or maintain an
aircraft and who (i) hold an Air Agency Certificate and are
empowered to operate an approved repair station by the
Federal Aviation Administration, (ii) have a Class IV
Rating, and (iii) conduct operations in accordance with
Part 145 of the Federal Aviation Regulations. The exemption
does not include aircraft operated by a commercial air
carrier providing scheduled passenger air service pursuant
to authority issued under Part 121 or Part 129 of the
Federal Aviation Regulations. The changes made to this
paragraph (40) by Public Act 98-534 are declarative of
existing law.
(41) Tangible personal property sold to a
public-facilities corporation, as described in Section
11-65-10 of the Illinois Municipal Code, for purposes of
constructing or furnishing a municipal convention hall,
but only if the legal title to the municipal convention
hall is transferred to the municipality without any further
consideration by or on behalf of the municipality at the
time of the completion of the municipal convention hall or
upon the retirement or redemption of any bonds or other
debt instruments issued by the public-facilities
corporation in connection with the development of the
municipal convention hall. This exemption includes

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existing public-facilities corporations as provided in
Section 11-65-25 of the Illinois Municipal Code. This
paragraph is exempt from the provisions of Section 2-70.
(42) Beginning January 1, 2017, menstrual pads,
tampons, and menstrual cups.
(43) Merchandise that is subject to the Rental Purchase
Agreement Occupation and Use Tax. The purchaser must
certify that the item is purchased to be rented subject to
a rental purchase agreement, as defined in the Rental
Purchase Agreement Act, and provide proof of registration
under the Rental Purchase Agreement Occupation and Use Tax
Act. This paragraph is exempt from the provisions of
Section 2-70.
(Source: P.A. 99-180, eff. 7-29-15; 99-855, eff. 8-19-16;
100-22, eff. 7-6-17; 100-321, eff. 8-24-17; 100-437, eff.
1-1-18; 100-594, eff. 6-29-18; 100-863, eff. 8-14-18;
100-1171, eff. 1-4-19; revised 1-8-19.)
(35 ILCS 120/2-45) (from Ch. 120, par. 441-45)
Sec. 2-45. Manufacturing and assembly exemption. The
manufacturing and assembly machinery and equipment exemption
includes machinery and equipment that replaces machinery and
equipment in an existing manufacturing facility as well as
machinery and equipment that are for use in an expanded or new
manufacturing facility.
The machinery and equipment exemption also includes

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machinery and equipment used in the general maintenance or
repair of exempt machinery and equipment or for in-house
manufacture of exempt machinery and equipment. Beginning on
July 1, 2017, the manufacturing and assembling machinery and
equipment exemption also includes graphic arts machinery and
equipment, as defined in paragraph (4) of Section 2-5.
Beginning on July 1, 2019, the manufacturing and assembling
machinery and equipment exemption also includes production
related tangible personal property, as defined in this Section.
The machinery and equipment exemption does not include
machinery and equipment used in (i) the generation of
electricity for wholesale or retail sale; (ii) the generation
or treatment of natural or artificial gas for wholesale or
retail sale that is delivered to customers through pipes,
pipelines, or mains; or (iii) the treatment of water for
wholesale or retail sale that is delivered to customers through
pipes, pipelines, or mains. The provisions of this amendatory
Act of the 98th General Assembly are declaratory of existing
law as to the meaning and scope of this exemption. For the
purposes of this exemption, terms have the following meanings:
(1) "Manufacturing process" means the production of an
article of tangible personal property, whether the article
is a finished product or an article for use in the process
of manufacturing or assembling a different article of
tangible personal property, by a procedure commonly
regarded as manufacturing, processing, fabricating, or

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refining that changes some existing material or materials
into a material with a different form, use, or name. In
relation to a recognized integrated business composed of a
series of operations that collectively constitute
manufacturing, or individually constitute manufacturing
operations, the manufacturing process commences with the
first operation or stage of production in the series and
does not end until the completion of the final product in
the last operation or stage of production in the series.
For purposes of this exemption, photoprocessing is a
manufacturing process of tangible personal property for
wholesale or retail sale.
(2) "Assembling process" means the production of an
article of tangible personal property, whether the article
is a finished product or an article for use in the process
of manufacturing or assembling a different article of
tangible personal property, by the combination of existing
materials in a manner commonly regarded as assembling that
results in a material of a different form, use, or name.
(3) "Machinery" means major mechanical machines or
major components of those machines contributing to a
manufacturing or assembling process.
(4) "Equipment" includes an independent device or tool
separate from machinery but essential to an integrated
manufacturing or assembly process; including computers
used primarily in a manufacturer's computer assisted

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design, computer assisted manufacturing (CAD/CAM) system;
any subunit or assembly comprising a component of any
machinery or auxiliary, adjunct, or attachment parts of
machinery, such as tools, dies, jigs, fixtures, patterns,
and molds; and any parts that require periodic replacement
in the course of normal operation; but does not include
hand tools. Equipment includes chemicals or chemicals
acting as catalysts but only if the chemicals or chemicals
acting as catalysts effect a direct and immediate change
upon a product being manufactured or assembled for
wholesale or retail sale or lease.
(5) "Production related tangible personal property"
means all tangible personal property that is used or
consumed by the purchaser in a manufacturing facility in
which a manufacturing process takes place, including and
includes, without limitation, tangible personal property
that is purchased for incorporation into real estate within
a manufacturing facility and including, but not limited to,
tangible personal property that is used or consumed in
activities such as research and development, preproduction
material handling, receiving, quality control, inventory
control, storage, staging, and packaging for shipping and
transportation purposes. Tangible personal property used
or consumed by the purchaser for research and development
is considered "production related tangible personal
property" regardless of use within or without a

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manufacturing facility. "Production related tangible
personal property" does not include (i) tangible personal
property that is used, within or without a manufacturing
facility, in sales, purchasing, accounting, fiscal
management, marketing, personnel recruitment or selection,
or landscaping or (ii) tangible personal property that is
required to be titled or registered with a department,
agency, or unit of federal, State, or local government.
The manufacturing and assembling machinery and equipment
exemption includes production related tangible personal
property that is purchased on or after July 1, 2007 and on or
before June 30, 2008. The exemption for production related
tangible personal property is subject to both of the following
limitations:
(1) The maximum amount of the exemption for any one
taxpayer may not exceed 5% of the purchase price of
production related tangible personal property that is
purchased on or after July 1, 2007 and on or before June
30, 2008. A credit under Section 3-85 of this Act may not
be earned by the purchase of production related tangible
personal property for which an exemption is received under
this Section.
(2) The maximum aggregate amount of the exemptions for
production related tangible personal property awarded
under this Act and the Use Tax Act to all taxpayers may not
exceed $10,000,000. If the claims for the exemption exceed

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$10,000,000, then the Department shall reduce the amount of
the exemption to each taxpayer on a pro rata basis.
The Department may adopt rules to implement and administer the
exemption for production related tangible personal property.
The manufacturing and assembling machinery and equipment
exemption includes the sale of materials to a purchaser who
produces exempted types of machinery, equipment, or tools and
who rents or leases that machinery, equipment, or tools to a
manufacturer of tangible personal property. This exemption
also includes the sale of materials to a purchaser who
manufactures those materials into an exempted type of
machinery, equipment, or tools that the purchaser uses himself
or herself in the manufacturing of tangible personal property.
The purchaser of the machinery and equipment who has an active
resale registration number shall furnish that number to the
seller at the time of purchase. A purchaser of the machinery,
equipment, and tools without an active resale registration
number shall furnish to the seller a certificate of exemption
for each transaction stating facts establishing the exemption
for that transaction, and that certificate shall be available
to the Department for inspection or audit. Informal rulings,
opinions, or letters issued by the Department in response to an
inquiry or request for an opinion from any person regarding the
coverage and applicability of this exemption to specific
devices shall be published, maintained as a public record, and
made available for public inspection and copying. If the

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informal ruling, opinion, or letter contains trade secrets or
other confidential information, where possible, the Department
shall delete that information before publication. Whenever
informal rulings, opinions, or letters contain a policy of
general applicability, the Department shall formulate and
adopt that policy as a rule in accordance with the Illinois
Administrative Procedure Act.
The manufacturing and assembling machinery and equipment
exemption is exempt from the provisions of Section 2-70.
(Source: P.A. 100-22, eff. 7-6-17.)
(35 ILCS 120/3) (from Ch. 120, par. 442)
Sec. 3. Except as provided in this Section, on or before
the twentieth day of each calendar month, every person engaged
in the business of selling tangible personal property at retail
in this State during the preceding calendar month shall file a
return with the Department, stating:
1. The name of the seller;
2. His residence address and the address of his
principal place of business and the address of the
principal place of business (if that is a different
address) from which he engages in the business of selling
tangible personal property at retail in this State;
3. Total amount of receipts received by him during the
preceding calendar month or quarter, as the case may be,
from sales of tangible personal property, and from services

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furnished, by him during such preceding calendar month or
quarter;
4. Total amount received by him during the preceding
calendar month or quarter on charge and time sales of
tangible personal property, and from services furnished,
by him prior to the month or quarter for which the return
is filed;
5. Deductions allowed by law;
6. Gross receipts which were received by him during the
preceding calendar month or quarter and upon the basis of
which the tax is imposed;
7. The amount of credit provided in Section 2d of this
Act;
8. The amount of tax due;
9. The signature of the taxpayer; and
10. Such other reasonable information as the
Department may require.
On and after January 1, 2018, except for returns for motor
vehicles, watercraft, aircraft, and trailers that are required
to be registered with an agency of this State, with respect to
retailers whose annual gross receipts average $20,000 or more,
all returns required to be filed pursuant to this Act shall be
filed electronically. Retailers who demonstrate that they do
not have access to the Internet or demonstrate hardship in
filing electronically may petition the Department to waive the
electronic filing requirement.

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If a taxpayer fails to sign a return within 30 days after
the proper notice and demand for signature by the Department,
the return shall be considered valid and any amount shown to be
due on the return shall be deemed assessed.
Each return shall be accompanied by the statement of
prepaid tax issued pursuant to Section 2e for which credit is
claimed.
Prior to October 1, 2003, and on and after September 1,
2004 and through June 30, 2019, a retailer may accept a
Manufacturer's Purchase Credit certification from a purchaser
in satisfaction of Use Tax as provided in Section 3-85 of the
Use Tax Act if the purchaser provides the appropriate
documentation as required by Section 3-85 of the Use Tax Act. A
Manufacturer's Purchase Credit certification, accepted by a
retailer prior to October 1, 2003 and on and after September 1,
2004 and through June 30, 2019, as provided in Section 3-85 of
the Use Tax Act, may be used through June 30, 2019 by that
retailer to satisfy Retailers' Occupation Tax liability in the
amount claimed in the certification, not to exceed 6.25% of the
receipts subject to tax from a qualifying purchase. A
Manufacturer's Purchase Credit reported on any original or
amended return filed under this Act after October 20, 2003 for
reporting periods prior to September 1, 2004 shall be
disallowed. A Manufacturer's Purchaser Credit reported on any
original or amended return filed under this Act after June 30,
2019 shall be disallowed. Manufacturer's Purchaser Credit

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reported on annual returns due on or after January 1, 2005 will
be disallowed for periods prior to September 1, 2004. A
Manufacturer's Purchase Credit reported on an annual return due
on or after January 1, 2020 shall be disallowed for periods on
and after July 1, 2019. No Manufacturer's Purchase Credit may
be used after September 30, 2003 through August 31, 2004, or
after June 30, 2019, to satisfy any tax liability imposed under
this Act, including any audit liability.
The Department may require returns to be filed on a
quarterly basis. If so required, a return for each calendar
quarter shall be filed on or before the twentieth day of the
calendar month following the end of such calendar quarter. The
taxpayer shall also file a return with the Department for each
of the first two months of each calendar quarter, on or before
the twentieth day of the following calendar month, stating:
1. The name of the seller;
2. The address of the principal place of business from
which he engages in the business of selling tangible
personal property at retail in this State;
3. The total amount of taxable receipts received by him
during the preceding calendar month from sales of tangible
personal property by him during such preceding calendar
month, including receipts from charge and time sales, but
less all deductions allowed by law;
4. The amount of credit provided in Section 2d of this
Act;

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5. The amount of tax due; and
6. Such other reasonable information as the Department
may require.
Beginning on October 1, 2003, any person who is not a
licensed distributor, importing distributor, or manufacturer,
as defined in the Liquor Control Act of 1934, but is engaged in
the business of selling, at retail, alcoholic liquor shall file
a statement with the Department of Revenue, in a format and at
a time prescribed by the Department, showing the total amount
paid for alcoholic liquor purchased during the preceding month
and such other information as is reasonably required by the
Department. The Department may adopt rules to require that this
statement be filed in an electronic or telephonic format. Such
rules may provide for exceptions from the filing requirements
of this paragraph. For the purposes of this paragraph, the term
"alcoholic liquor" shall have the meaning prescribed in the
Liquor Control Act of 1934.
Beginning on October 1, 2003, every distributor, importing
distributor, and manufacturer of alcoholic liquor as defined in
the Liquor Control Act of 1934, shall file a statement with the
Department of Revenue, no later than the 10th day of the month
for the preceding month during which transactions occurred, by
electronic means, showing the total amount of gross receipts
from the sale of alcoholic liquor sold or distributed during
the preceding month to purchasers; identifying the purchaser to
whom it was sold or distributed; the purchaser's tax

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registration number; and such other information reasonably
required by the Department. A distributor, importing
distributor, or manufacturer of alcoholic liquor must
personally deliver, mail, or provide by electronic means to
each retailer listed on the monthly statement a report
containing a cumulative total of that distributor's, importing
distributor's, or manufacturer's total sales of alcoholic
liquor to that retailer no later than the 10th day of the month
for the preceding month during which the transaction occurred.
The distributor, importing distributor, or manufacturer shall
notify the retailer as to the method by which the distributor,
importing distributor, or manufacturer will provide the sales
information. If the retailer is unable to receive the sales
information by electronic means, the distributor, importing
distributor, or manufacturer shall furnish the sales
information by personal delivery or by mail. For purposes of
this paragraph, the term "electronic means" includes, but is
not limited to, the use of a secure Internet website, e-mail,
or facsimile.
If a total amount of less than $1 is payable, refundable or
creditable, such amount shall be disregarded if it is less than
50 cents and shall be increased to $1 if it is 50 cents or more.
Beginning October 1, 1993, a taxpayer who has an average
monthly tax liability of $150,000 or more shall make all
payments required by rules of the Department by electronic
funds transfer. Beginning October 1, 1994, a taxpayer who has

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an average monthly tax liability of $100,000 or more shall make
all payments required by rules of the Department by electronic
funds transfer. Beginning October 1, 1995, a taxpayer who has
an average monthly tax liability of $50,000 or more shall make
all payments required by rules of the Department by electronic
funds transfer. Beginning October 1, 2000, a taxpayer who has
an annual tax liability of $200,000 or more shall make all
payments required by rules of the Department by electronic
funds transfer. The term "annual tax liability" shall be the
sum of the taxpayer's liabilities under this Act, and under all
other State and local occupation and use tax laws administered
by the Department, for the immediately preceding calendar year.
The term "average monthly tax liability" shall be the sum of
the taxpayer's liabilities under this Act, and under all other
State and local occupation and use tax laws administered by the
Department, for the immediately preceding calendar year
divided by 12. Beginning on October 1, 2002, a taxpayer who has
a tax liability in the amount set forth in subsection (b) of
Section 2505-210 of the Department of Revenue Law shall make
all payments required by rules of the Department by electronic
funds transfer.
Before August 1 of each year beginning in 1993, the
Department shall notify all taxpayers required to make payments
by electronic funds transfer. All taxpayers required to make
payments by electronic funds transfer shall make those payments
for a minimum of one year beginning on October 1.

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Any taxpayer not required to make payments by electronic
funds transfer may make payments by electronic funds transfer
with the permission of the Department.
All taxpayers required to make payment by electronic funds
transfer and any taxpayers authorized to voluntarily make
payments by electronic funds transfer shall make those payments
in the manner authorized by the Department.
The Department shall adopt such rules as are necessary to
effectuate a program of electronic funds transfer and the
requirements of this Section.
Any amount which is required to be shown or reported on any
return or other document under this Act shall, if such amount
is not a whole-dollar amount, be increased to the nearest
whole-dollar amount in any case where the fractional part of a
dollar is 50 cents or more, and decreased to the nearest
whole-dollar amount where the fractional part of a dollar is
less than 50 cents.
If the retailer is otherwise required to file a monthly
return and if the retailer's average monthly tax liability to
the Department does not exceed $200, the Department may
authorize his returns to be filed on a quarter annual basis,
with the return for January, February and March of a given year
being due by April 20 of such year; with the return for April,
May and June of a given year being due by July 20 of such year;
with the return for July, August and September of a given year
being due by October 20 of such year, and with the return for

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October, November and December of a given year being due by
January 20 of the following year.
If the retailer is otherwise required to file a monthly or
quarterly return and if the retailer's average monthly tax
liability with the Department does not exceed $50, the
Department may authorize his returns to be filed on an annual
basis, with the return for a given year being due by January 20
of the following year.
Such quarter annual and annual returns, as to form and
substance, shall be subject to the same requirements as monthly
returns.
Notwithstanding any other provision in this Act concerning
the time within which a retailer may file his return, in the
case of any retailer who ceases to engage in a kind of business
which makes him responsible for filing returns under this Act,
such retailer shall file a final return under this Act with the
Department not more than one month after discontinuing such
business.
Where the same person has more than one business registered
with the Department under separate registrations under this
Act, such person may not file each return that is due as a
single return covering all such registered businesses, but
shall file separate returns for each such registered business.
In addition, with respect to motor vehicles, watercraft,
aircraft, and trailers that are required to be registered with
an agency of this State, except as otherwise provided in this

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Section, every retailer selling this kind of tangible personal
property shall file, with the Department, upon a form to be
prescribed and supplied by the Department, a separate return
for each such item of tangible personal property which the
retailer sells, except that if, in the same transaction, (i) a
retailer of aircraft, watercraft, motor vehicles or trailers
transfers more than one aircraft, watercraft, motor vehicle or
trailer to another aircraft, watercraft, motor vehicle
retailer or trailer retailer for the purpose of resale or (ii)
a retailer of aircraft, watercraft, motor vehicles, or trailers
transfers more than one aircraft, watercraft, motor vehicle, or
trailer to a purchaser for use as a qualifying rolling stock as
provided in Section 2-5 of this Act, then that seller may
report the transfer of all aircraft, watercraft, motor vehicles
or trailers involved in that transaction to the Department on
the same uniform invoice-transaction reporting return form.
For purposes of this Section, "watercraft" means a Class 2,
Class 3, or Class 4 watercraft as defined in Section 3-2 of the
Boat Registration and Safety Act, a personal watercraft, or any
boat equipped with an inboard motor.
In addition, with respect to motor vehicles, watercraft,
aircraft, and trailers that are required to be registered with
an agency of this State, every person who is engaged in the
business of leasing or renting such items and who, in
connection with such business, sells any such item to a
retailer for the purpose of resale is, notwithstanding any

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other provision of this Section to the contrary, authorized to
meet the return-filing requirement of this Act by reporting the
transfer of all the aircraft, watercraft, motor vehicles, or
trailers transferred for resale during a month to the
Department on the same uniform invoice-transaction reporting
return form on or before the 20th of the month following the
month in which the transfer takes place. Notwithstanding any
other provision of this Act to the contrary, all returns filed
under this paragraph must be filed by electronic means in the
manner and form as required by the Department.
Any retailer who sells only motor vehicles, watercraft,
aircraft, or trailers that are required to be registered with
an agency of this State, so that all retailers' occupation tax
liability is required to be reported, and is reported, on such
transaction reporting returns and who is not otherwise required
to file monthly or quarterly returns, need not file monthly or
quarterly returns. However, those retailers shall be required
to file returns on an annual basis.
The transaction reporting return, in the case of motor
vehicles or trailers that are required to be registered with an
agency of this State, shall be the same document as the Uniform
Invoice referred to in Section 5-402 of the Illinois Vehicle
Code and must show the name and address of the seller; the name
and address of the purchaser; the amount of the selling price
including the amount allowed by the retailer for traded-in
property, if any; the amount allowed by the retailer for the

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traded-in tangible personal property, if any, to the extent to
which Section 1 of this Act allows an exemption for the value
of traded-in property; the balance payable after deducting such
trade-in allowance from the total selling price; the amount of
tax due from the retailer with respect to such transaction; the
amount of tax collected from the purchaser by the retailer on
such transaction (or satisfactory evidence that such tax is not
due in that particular instance, if that is claimed to be the
fact); the place and date of the sale; a sufficient
identification of the property sold; such other information as
is required in Section 5-402 of the Illinois Vehicle Code, and
such other information as the Department may reasonably
require.
The transaction reporting return in the case of watercraft
or aircraft must show the name and address of the seller; the
name and address of the purchaser; the amount of the selling
price including the amount allowed by the retailer for
traded-in property, if any; the amount allowed by the retailer
for the traded-in tangible personal property, if any, to the
extent to which Section 1 of this Act allows an exemption for
the value of traded-in property; the balance payable after
deducting such trade-in allowance from the total selling price;
the amount of tax due from the retailer with respect to such
transaction; the amount of tax collected from the purchaser by
the retailer on such transaction (or satisfactory evidence that
such tax is not due in that particular instance, if that is

HB2300 - 145 - LRB101 07228 HLH 52266 b
claimed to be the fact); the place and date of the sale, a
sufficient identification of the property sold, and such other
information as the Department may reasonably require.
Such transaction reporting return shall be filed not later
than 20 days after the day of delivery of the item that is
being sold, but may be filed by the retailer at any time sooner
than that if he chooses to do so. The transaction reporting
return and tax remittance or proof of exemption from the
Illinois use tax may be transmitted to the Department by way of
the State agency with which, or State officer with whom the
tangible personal property must be titled or registered (if
titling or registration is required) if the Department and such
agency or State officer determine that this procedure will
expedite the processing of applications for title or
registration.
With each such transaction reporting return, the retailer
shall remit the proper amount of tax due (or shall submit
satisfactory evidence that the sale is not taxable if that is
the case), to the Department or its agents, whereupon the
Department shall issue, in the purchaser's name, a use tax
receipt (or a certificate of exemption if the Department is
satisfied that the particular sale is tax exempt) which such
purchaser may submit to the agency with which, or State officer
with whom, he must title or register the tangible personal
property that is involved (if titling or registration is
required) in support of such purchaser's application for an

HB2300 - 146 - LRB101 07228 HLH 52266 b
Illinois certificate or other evidence of title or registration
to such tangible personal property.
No retailer's failure or refusal to remit tax under this
Act precludes a user, who has paid the proper tax to the
retailer, from obtaining his certificate of title or other
evidence of title or registration (if titling or registration
is required) upon satisfying the Department that such user has
paid the proper tax (if tax is due) to the retailer. The
Department shall adopt appropriate rules to carry out the
mandate of this paragraph.
If the user who would otherwise pay tax to the retailer
wants the transaction reporting return filed and the payment of
the tax or proof of exemption made to the Department before the
retailer is willing to take these actions and such user has not
paid the tax to the retailer, such user may certify to the fact
of such delay by the retailer and may (upon the Department
being satisfied of the truth of such certification) transmit
the information required by the transaction reporting return
and the remittance for tax or proof of exemption directly to
the Department and obtain his tax receipt or exemption
determination, in which event the transaction reporting return
and tax remittance (if a tax payment was required) shall be
credited by the Department to the proper retailer's account
with the Department, but without the 2.1% or 1.75% discount
provided for in this Section being allowed. When the user pays
the tax directly to the Department, he shall pay the tax in the

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same amount and in the same form in which it would be remitted
if the tax had been remitted to the Department by the retailer.
Refunds made by the seller during the preceding return
period to purchasers, on account of tangible personal property
returned to the seller, shall be allowed as a deduction under
subdivision 5 of his monthly or quarterly return, as the case
may be, in case the seller had theretofore included the
receipts from the sale of such tangible personal property in a
return filed by him and had paid the tax imposed by this Act
with respect to such receipts.
Where the seller is a corporation, the return filed on
behalf of such corporation shall be signed by the president,
vice-president, secretary or treasurer or by the properly
accredited agent of such corporation.
Where the seller is a limited liability company, the return
filed on behalf of the limited liability company shall be
signed by a manager, member, or properly accredited agent of
the limited liability company.
Except as provided in this Section, the retailer filing the
return under this Section shall, at the time of filing such
return, pay to the Department the amount of tax imposed by this
Act less a discount of 2.1% prior to January 1, 1990 and 1.75%
on and after January 1, 1990, or $5 per calendar year,
whichever is greater, which is allowed to reimburse the
retailer for the expenses incurred in keeping records,
preparing and filing returns, remitting the tax and supplying

HB2300 - 148 - LRB101 07228 HLH 52266 b
data to the Department on request. Any prepayment made pursuant
to Section 2d of this Act shall be included in the amount on
which such 2.1% or 1.75% discount is computed. In the case of
retailers who report and pay the tax on a transaction by
transaction basis, as provided in this Section, such discount
shall be taken with each such tax remittance instead of when
such retailer files his periodic return. The discount allowed
under this Section is allowed only for returns that are filed
in the manner required by this Act. The Department may disallow
the discount for retailers whose certificate of registration is
revoked at the time the return is filed, but only if the
Department's decision to revoke the certificate of
registration has become final.
Before October 1, 2000, if the taxpayer's average monthly
tax liability to the Department under this Act, the Use Tax
Act, the Service Occupation Tax Act, and the Service Use Tax
Act, excluding any liability for prepaid sales tax to be
remitted in accordance with Section 2d of this Act, was $10,000
or more during the preceding 4 complete calendar quarters, he
shall file a return with the Department each month by the 20th
day of the month next following the month during which such tax
liability is incurred and shall make payments to the Department
on or before the 7th, 15th, 22nd and last day of the month
during which such liability is incurred. On and after October
1, 2000, if the taxpayer's average monthly tax liability to the
Department under this Act, the Use Tax Act, the Service

HB2300 - 149 - LRB101 07228 HLH 52266 b
Occupation Tax Act, and the Service Use Tax Act, excluding any
liability for prepaid sales tax to be remitted in accordance
with Section 2d of this Act, was $20,000 or more during the
preceding 4 complete calendar quarters, he shall file a return
with the Department each month by the 20th day of the month
next following the month during which such tax liability is
incurred and shall make payment to the Department on or before
the 7th, 15th, 22nd and last day of the month during which such
liability is incurred. If the month during which such tax
liability is incurred began prior to January 1, 1985, each
payment shall be in an amount equal to 1/4 of the taxpayer's
actual liability for the month or an amount set by the
Department not to exceed 1/4 of the average monthly liability
of the taxpayer to the Department for the preceding 4 complete
calendar quarters (excluding the month of highest liability and
the month of lowest liability in such 4 quarter period). If the
month during which such tax liability is incurred begins on or
after January 1, 1985 and prior to January 1, 1987, each
payment shall be in an amount equal to 22.5% of the taxpayer's
actual liability for the month or 27.5% of the taxpayer's
liability for the same calendar month of the preceding year. If
the month during which such tax liability is incurred begins on
or after January 1, 1987 and prior to January 1, 1988, each
payment shall be in an amount equal to 22.5% of the taxpayer's
actual liability for the month or 26.25% of the taxpayer's
liability for the same calendar month of the preceding year. If

HB2300 - 150 - LRB101 07228 HLH 52266 b
the month during which such tax liability is incurred begins on
or after January 1, 1988, and prior to January 1, 1989, or
begins on or after January 1, 1996, each payment shall be in an
amount equal to 22.5% of the taxpayer's actual liability for
the month or 25% of the taxpayer's liability for the same
calendar month of the preceding year. If the month during which
such tax liability is incurred begins on or after January 1,
1989, and prior to January 1, 1996, each payment shall be in an
amount equal to 22.5% of the taxpayer's actual liability for
the month or 25% of the taxpayer's liability for the same
calendar month of the preceding year or 100% of the taxpayer's
actual liability for the quarter monthly reporting period. The
amount of such quarter monthly payments shall be credited
against the final tax liability of the taxpayer's return for
that month. Before October 1, 2000, once applicable, the
requirement of the making of quarter monthly payments to the
Department by taxpayers having an average monthly tax liability
of $10,000 or more as determined in the manner provided above
shall continue until such taxpayer's average monthly liability
to the Department during the preceding 4 complete calendar
quarters (excluding the month of highest liability and the
month of lowest liability) is less than $9,000, or until such
taxpayer's average monthly liability to the Department as
computed for each calendar quarter of the 4 preceding complete
calendar quarter period is less than $10,000. However, if a
taxpayer can show the Department that a substantial change in

HB2300 - 151 - LRB101 07228 HLH 52266 b
the taxpayer's business has occurred which causes the taxpayer
to anticipate that his average monthly tax liability for the
reasonably foreseeable future will fall below the $10,000
threshold stated above, then such taxpayer may petition the
Department for a change in such taxpayer's reporting status. On
and after October 1, 2000, once applicable, the requirement of
the making of quarter monthly payments to the Department by
taxpayers having an average monthly tax liability of $20,000 or
more as determined in the manner provided above shall continue
until such taxpayer's average monthly liability to the
Department during the preceding 4 complete calendar quarters
(excluding the month of highest liability and the month of
lowest liability) is less than $19,000 or until such taxpayer's
average monthly liability to the Department as computed for
each calendar quarter of the 4 preceding complete calendar
quarter period is less than $20,000. However, if a taxpayer can
show the Department that a substantial change in the taxpayer's
business has occurred which causes the taxpayer to anticipate
that his average monthly tax liability for the reasonably
foreseeable future will fall below the $20,000 threshold stated
above, then such taxpayer may petition the Department for a
change in such taxpayer's reporting status. The Department
shall change such taxpayer's reporting status unless it finds
that such change is seasonal in nature and not likely to be
long term. If any such quarter monthly payment is not paid at
the time or in the amount required by this Section, then the

HB2300 - 152 - LRB101 07228 HLH 52266 b
taxpayer shall be liable for penalties and interest on the
difference between the minimum amount due as a payment and the
amount of such quarter monthly payment actually and timely
paid, except insofar as the taxpayer has previously made
payments for that month to the Department in excess of the
minimum payments previously due as provided in this Section.
The Department shall make reasonable rules and regulations to
govern the quarter monthly payment amount and quarter monthly
payment dates for taxpayers who file on other than a calendar
monthly basis.
The provisions of this paragraph apply before October 1,
2001. Without regard to whether a taxpayer is required to make
quarter monthly payments as specified above, any taxpayer who
is required by Section 2d of this Act to collect and remit
prepaid taxes and has collected prepaid taxes which average in
excess of $25,000 per month during the preceding 2 complete
calendar quarters, shall file a return with the Department as
required by Section 2f and shall make payments to the
Department on or before the 7th, 15th, 22nd and last day of the
month during which such liability is incurred. If the month
during which such tax liability is incurred began prior to
September 1, 1985 (the effective date of Public Act 84-221),
each payment shall be in an amount not less than 22.5% of the
taxpayer's actual liability under Section 2d. If the month
during which such tax liability is incurred begins on or after
January 1, 1986, each payment shall be in an amount equal to

HB2300 - 153 - LRB101 07228 HLH 52266 b
22.5% of the taxpayer's actual liability for the month or 27.5%
of the taxpayer's liability for the same calendar month of the
preceding calendar year. If the month during which such tax
liability is incurred begins on or after January 1, 1987, each
payment shall be in an amount equal to 22.5% of the taxpayer's
actual liability for the month or 26.25% of the taxpayer's
liability for the same calendar month of the preceding year.
The amount of such quarter monthly payments shall be credited
against the final tax liability of the taxpayer's return for
that month filed under this Section or Section 2f, as the case
may be. Once applicable, the requirement of the making of
quarter monthly payments to the Department pursuant to this
paragraph shall continue until such taxpayer's average monthly
prepaid tax collections during the preceding 2 complete
calendar quarters is $25,000 or less. If any such quarter
monthly payment is not paid at the time or in the amount
required, the taxpayer shall be liable for penalties and
interest on such difference, except insofar as the taxpayer has
previously made payments for that month in excess of the
minimum payments previously due.
The provisions of this paragraph apply on and after October
1, 2001. Without regard to whether a taxpayer is required to
make quarter monthly payments as specified above, any taxpayer
who is required by Section 2d of this Act to collect and remit
prepaid taxes and has collected prepaid taxes that average in
excess of $20,000 per month during the preceding 4 complete

HB2300 - 154 - LRB101 07228 HLH 52266 b
calendar quarters shall file a return with the Department as
required by Section 2f and shall make payments to the
Department on or before the 7th, 15th, 22nd and last day of the
month during which the liability is incurred. Each payment
shall be in an amount equal to 22.5% of the taxpayer's actual
liability for the month or 25% of the taxpayer's liability for
the same calendar month of the preceding year. The amount of
the quarter monthly payments shall be credited against the
final tax liability of the taxpayer's return for that month
filed under this Section or Section 2f, as the case may be.
Once applicable, the requirement of the making of quarter
monthly payments to the Department pursuant to this paragraph
shall continue until the taxpayer's average monthly prepaid tax
collections during the preceding 4 complete calendar quarters
(excluding the month of highest liability and the month of
lowest liability) is less than $19,000 or until such taxpayer's
average monthly liability to the Department as computed for
each calendar quarter of the 4 preceding complete calendar
quarters is less than $20,000. If any such quarter monthly
payment is not paid at the time or in the amount required, the
taxpayer shall be liable for penalties and interest on such
difference, except insofar as the taxpayer has previously made
payments for that month in excess of the minimum payments
previously due.
If any payment provided for in this Section exceeds the
taxpayer's liabilities under this Act, the Use Tax Act, the

HB2300 - 155 - LRB101 07228 HLH 52266 b
Service Occupation Tax Act and the Service Use Tax Act, as
shown on an original monthly return, the Department shall, if
requested by the taxpayer, issue to the taxpayer a credit
memorandum no later than 30 days after the date of payment. The
credit evidenced by such credit memorandum may be assigned by
the taxpayer to a similar taxpayer under this Act, the Use Tax
Act, the Service Occupation Tax Act or the Service Use Tax Act,
in accordance with reasonable rules and regulations to be
prescribed by the Department. If no such request is made, the
taxpayer may credit such excess payment against tax liability
subsequently to be remitted to the Department under this Act,
the Use Tax Act, the Service Occupation Tax Act or the Service
Use Tax Act, in accordance with reasonable rules and
regulations prescribed by the Department. If the Department
subsequently determined that all or any part of the credit
taken was not actually due to the taxpayer, the taxpayer's 2.1%
and 1.75% vendor's discount shall be reduced by 2.1% or 1.75%
of the difference between the credit taken and that actually
due, and that taxpayer shall be liable for penalties and
interest on such difference.
If a retailer of motor fuel is entitled to a credit under
Section 2d of this Act which exceeds the taxpayer's liability
to the Department under this Act for the month which the
taxpayer is filing a return, the Department shall issue the
taxpayer a credit memorandum for the excess.
Beginning January 1, 1990, each month the Department shall

HB2300 - 156 - LRB101 07228 HLH 52266 b
pay into the Local Government Tax Fund, a special fund in the
State treasury which is hereby created, the net revenue
realized for the preceding month from the 1% tax imposed under
this Act.
Beginning January 1, 1990, each month the Department shall
pay into the County and Mass Transit District Fund, a special
fund in the State treasury which is hereby created, 4% of the
net revenue realized for the preceding month from the 6.25%
general rate.
Beginning August 1, 2000, each month the Department shall
pay into the County and Mass Transit District Fund 20% of the
net revenue realized for the preceding month from the 1.25%
rate on the selling price of motor fuel and gasohol. Beginning
September 1, 2010, each month the Department shall pay into the
County and Mass Transit District Fund 20% of the net revenue
realized for the preceding month from the 1.25% rate on the
selling price of sales tax holiday items.
Beginning January 1, 1990, each month the Department shall
pay into the Local Government Tax Fund 16% of the net revenue
realized for the preceding month from the 6.25% general rate on
the selling price of tangible personal property.
Beginning August 1, 2000, each month the Department shall
pay into the Local Government Tax Fund 80% of the net revenue
realized for the preceding month from the 1.25% rate on the
selling price of motor fuel and gasohol. Beginning September 1,
2010, each month the Department shall pay into the Local

HB2300 - 157 - LRB101 07228 HLH 52266 b
Government Tax Fund 80% of the net revenue realized for the
preceding month from the 1.25% rate on the selling price of
sales tax holiday items.
Beginning October 1, 2009, each month the Department shall
pay into the Capital Projects Fund an amount that is equal to
an amount estimated by the Department to represent 80% of the
net revenue realized for the preceding month from the sale of
candy, grooming and hygiene products, and soft drinks that had
been taxed at a rate of 1% prior to September 1, 2009 but that
are now taxed at 6.25%.
Beginning July 1, 2011, each month the Department shall pay
into the Clean Air Act Permit Fund 80% of the net revenue
realized for the preceding month from the 6.25% general rate on
the selling price of sorbents used in Illinois in the process
of sorbent injection as used to comply with the Environmental
Protection Act or the federal Clean Air Act, but the total
payment into the Clean Air Act Permit Fund under this Act and
the Use Tax Act shall not exceed $2,000,000 in any fiscal year.
Beginning July 1, 2013, each month the Department shall pay
into the Underground Storage Tank Fund from the proceeds
collected under this Act, the Use Tax Act, the Service Use Tax
Act, and the Service Occupation Tax Act an amount equal to the
average monthly deficit in the Underground Storage Tank Fund
during the prior year, as certified annually by the Illinois
Environmental Protection Agency, but the total payment into the
Underground Storage Tank Fund under this Act, the Use Tax Act,

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the Service Use Tax Act, and the Service Occupation Tax Act
shall not exceed $18,000,000 in any State fiscal year. As used
in this paragraph, the "average monthly deficit" shall be equal
to the difference between the average monthly claims for
payment by the fund and the average monthly revenues deposited
into the fund, excluding payments made pursuant to this
paragraph.
Beginning July 1, 2015, of the remainder of the moneys
received by the Department under the Use Tax Act, the Service
Use Tax Act, the Service Occupation Tax Act, and this Act, each
month the Department shall deposit $500,000 into the State
Crime Laboratory Fund.
Of the remainder of the moneys received by the Department
pursuant to this Act, (a) 1.75% thereof shall be paid into the
Build Illinois Fund and (b) prior to July 1, 1989, 2.2% and on
and after July 1, 1989, 3.8% thereof shall be paid into the
Build Illinois Fund; provided, however, that if in any fiscal
year the sum of (1) the aggregate of 2.2% or 3.8%, as the case
may be, of the moneys received by the Department and required
to be paid into the Build Illinois Fund pursuant to this Act,
Section 9 of the Use Tax Act, Section 9 of the Service Use Tax
Act, and Section 9 of the Service Occupation Tax Act, such Acts
being hereinafter called the "Tax Acts" and such aggregate of
2.2% or 3.8%, as the case may be, of moneys being hereinafter
called the "Tax Act Amount", and (2) the amount transferred to
the Build Illinois Fund from the State and Local Sales Tax

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Reform Fund shall be less than the Annual Specified Amount (as
hereinafter defined), an amount equal to the difference shall
be immediately paid into the Build Illinois Fund from other
moneys received by the Department pursuant to the Tax Acts; the
"Annual Specified Amount" means the amounts specified below for
fiscal years 1986 through 1993:
Fiscal Year Annual Specified Amount
1986 $54,800,000
1987 $76,650,000
1988 $80,480,000
1989 $88,510,000
1990 $115,330,000
1991 $145,470,000
1992 $182,730,000
1993 $206,520,000;
and means the Certified Annual Debt Service Requirement (as
defined in Section 13 of the Build Illinois Bond Act) or the
Tax Act Amount, whichever is greater, for fiscal year 1994 and
each fiscal year thereafter; and further provided, that if on
the last business day of any month the sum of (1) the Tax Act
Amount required to be deposited into the Build Illinois Bond
Account in the Build Illinois Fund during such month and (2)
the amount transferred to the Build Illinois Fund from the
State and Local Sales Tax Reform Fund shall have been less than
1/12 of the Annual Specified Amount, an amount equal to the
difference shall be immediately paid into the Build Illinois

HB2300 - 160 - LRB101 07228 HLH 52266 b
Fund from other moneys received by the Department pursuant to
the Tax Acts; and, further provided, that in no event shall the
payments required under the preceding proviso result in
aggregate payments into the Build Illinois Fund pursuant to
this clause (b) for any fiscal year in excess of the greater of
(i) the Tax Act Amount or (ii) the Annual Specified Amount for
such fiscal year. The amounts payable into the Build Illinois
Fund under clause (b) of the first sentence in this paragraph
shall be payable only until such time as the aggregate amount
on deposit under each trust indenture securing Bonds issued and
outstanding pursuant to the Build Illinois Bond Act is
sufficient, taking into account any future investment income,
to fully provide, in accordance with such indenture, for the
defeasance of or the payment of the principal of, premium, if
any, and interest on the Bonds secured by such indenture and on
any Bonds expected to be issued thereafter and all fees and
costs payable with respect thereto, all as certified by the
Director of the Bureau of the Budget (now Governor's Office of
Management and Budget). If on the last business day of any
month in which Bonds are outstanding pursuant to the Build
Illinois Bond Act, the aggregate of moneys deposited in the
Build Illinois Bond Account in the Build Illinois Fund in such
month shall be less than the amount required to be transferred
in such month from the Build Illinois Bond Account to the Build
Illinois Bond Retirement and Interest Fund pursuant to Section
13 of the Build Illinois Bond Act, an amount equal to such

HB2300 - 161 - LRB101 07228 HLH 52266 b
deficiency shall be immediately paid from other moneys received
by the Department pursuant to the Tax Acts to the Build
Illinois Fund; provided, however, that any amounts paid to the
Build Illinois Fund in any fiscal year pursuant to this
sentence shall be deemed to constitute payments pursuant to
clause (b) of the first sentence of this paragraph and shall
reduce the amount otherwise payable for such fiscal year
pursuant to that clause (b). The moneys received by the
Department pursuant to this Act and required to be deposited
into the Build Illinois Fund are subject to the pledge, claim
and charge set forth in Section 12 of the Build Illinois Bond
Act.
Subject to payment of amounts into the Build Illinois Fund
as provided in the preceding paragraph or in any amendment
thereto hereafter enacted, the following specified monthly
installment of the amount requested in the certificate of the
Chairman of the Metropolitan Pier and Exposition Authority
provided under Section 8.25f of the State Finance Act, but not
in excess of sums designated as "Total Deposit", shall be
deposited in the aggregate from collections under Section 9 of
the Use Tax Act, Section 9 of the Service Use Tax Act, Section
9 of the Service Occupation Tax Act, and Section 3 of the
Retailers' Occupation Tax Act into the McCormick Place
Expansion Project Fund in the specified fiscal years.
Fiscal Year Total Deposit

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1993 $0
1994 53,000,000
1995 58,000,000
1996 61,000,000
1997 64,000,000
1998 68,000,000
1999 71,000,000
2000 75,000,000
2001 80,000,000
2002 93,000,000
2003 99,000,000
2004 103,000,000
2005 108,000,000
2006 113,000,000
2007 119,000,000
2008 126,000,000
2009 132,000,000
2010 139,000,000
2011 146,000,000
2012 153,000,000
2013 161,000,000
2014 170,000,000
2015 179,000,000
2016 189,000,000
2017 199,000,000
2018 210,000,000

HB2300 - 163 - LRB101 07228 HLH 52266 b
2019 221,000,000
2020 233,000,000
2021 246,000,000
2022 260,000,000
2023 275,000,000
2024 275,000,000
2025 275,000,000
2026 279,000,000
2027 292,000,000
2028 307,000,000
2029 322,000,000
2030 338,000,000
2031 350,000,000
2032 350,000,000
and
each fiscal year
thereafter that bonds
are outstanding under
Section 13.2 of the
Metropolitan Pier and
Exposition Authority Act,
but not after fiscal year 2060.
Beginning July 20, 1993 and in each month of each fiscal
year thereafter, one-eighth of the amount requested in the
certificate of the Chairman of the Metropolitan Pier and
Exposition Authority for that fiscal year, less the amount

HB2300 - 164 - LRB101 07228 HLH 52266 b
deposited into the McCormick Place Expansion Project Fund by
the State Treasurer in the respective month under subsection
(g) of Section 13 of the Metropolitan Pier and Exposition
Authority Act, plus cumulative deficiencies in the deposits
required under this Section for previous months and years,
shall be deposited into the McCormick Place Expansion Project
Fund, until the full amount requested for the fiscal year, but
not in excess of the amount specified above as "Total Deposit",
has been deposited.
Subject to payment of amounts into the Build Illinois Fund
and the McCormick Place Expansion Project Fund pursuant to the
preceding paragraphs or in any amendments thereto hereafter
enacted, beginning July 1, 1993 and ending on September 30,
2013, the Department shall each month pay into the Illinois Tax
Increment Fund 0.27% of 80% of the net revenue realized for the
preceding month from the 6.25% general rate on the selling
price of tangible personal property.
Subject to payment of amounts into the Build Illinois Fund
and the McCormick Place Expansion Project Fund pursuant to the
preceding paragraphs or in any amendments thereto hereafter
enacted, beginning with the receipt of the first report of
taxes paid by an eligible business and continuing for a 25-year
period, the Department shall each month pay into the Energy
Infrastructure Fund 80% of the net revenue realized from the
6.25% general rate on the selling price of Illinois-mined coal
that was sold to an eligible business. For purposes of this

HB2300 - 165 - LRB101 07228 HLH 52266 b
paragraph, the term "eligible business" means a new electric
generating facility certified pursuant to Section 605-332 of
the Department of Commerce and Economic Opportunity Law of the
Civil Administrative Code of Illinois.
Subject to payment of amounts into the Build Illinois Fund,
the McCormick Place Expansion Project Fund, the Illinois Tax
Increment Fund, and the Energy Infrastructure Fund pursuant to
the preceding paragraphs or in any amendments to this Section
hereafter enacted, beginning on the first day of the first
calendar month to occur on or after August 26, 2014 (the
effective date of Public Act 98-1098), each month, from the
collections made under Section 9 of the Use Tax Act, Section 9
of the Service Use Tax Act, Section 9 of the Service Occupation
Tax Act, and Section 3 of the Retailers' Occupation Tax Act,
the Department shall pay into the Tax Compliance and
Administration Fund, to be used, subject to appropriation, to
fund additional auditors and compliance personnel at the
Department of Revenue, an amount equal to 1/12 of 5% of 80% of
the cash receipts collected during the preceding fiscal year by
the Audit Bureau of the Department under the Use Tax Act, the
Service Use Tax Act, the Service Occupation Tax Act, the
Retailers' Occupation Tax Act, and associated local occupation
and use taxes administered by the Department.
Subject to payments of amounts into the Build Illinois
Fund, the McCormick Place Expansion Project Fund, the Illinois
Tax Increment Fund, the Energy Infrastructure Fund, and the Tax

HB2300 - 166 - LRB101 07228 HLH 52266 b
Compliance and Administration Fund as provided in this Section,
beginning on July 1, 2018 the Department shall pay each month
into the Downstate Public Transportation Fund the moneys
required to be so paid under Section 2-3 of the Downstate
Public Transportation Act.
Of the remainder of the moneys received by the Department
pursuant to this Act, 75% thereof shall be paid into the State
Treasury and 25% shall be reserved in a special account and
used only for the transfer to the Common School Fund as part of
the monthly transfer from the General Revenue Fund in
accordance with Section 8a of the State Finance Act.
The Department may, upon separate written notice to a
taxpayer, require the taxpayer to prepare and file with the
Department on a form prescribed by the Department within not
less than 60 days after receipt of the notice an annual
information return for the tax year specified in the notice.
Such annual return to the Department shall include a statement
of gross receipts as shown by the retailer's last Federal
income tax return. If the total receipts of the business as
reported in the Federal income tax return do not agree with the
gross receipts reported to the Department of Revenue for the
same period, the retailer shall attach to his annual return a
schedule showing a reconciliation of the 2 amounts and the
reasons for the difference. The retailer's annual return to the
Department shall also disclose the cost of goods sold by the
retailer during the year covered by such return, opening and

HB2300 - 167 - LRB101 07228 HLH 52266 b
closing inventories of such goods for such year, costs of goods
used from stock or taken from stock and given away by the
retailer during such year, payroll information of the
retailer's business during such year and any additional
reasonable information which the Department deems would be
helpful in determining the accuracy of the monthly, quarterly
or annual returns filed by such retailer as provided for in
this Section.
If the annual information return required by this Section
is not filed when and as required, the taxpayer shall be liable
as follows:
(i) Until January 1, 1994, the taxpayer shall be liable
for a penalty equal to 1/6 of 1% of the tax due from such
taxpayer under this Act during the period to be covered by
the annual return for each month or fraction of a month
until such return is filed as required, the penalty to be
assessed and collected in the same manner as any other
penalty provided for in this Act.
(ii) On and after January 1, 1994, the taxpayer shall
be liable for a penalty as described in Section 3-4 of the
Uniform Penalty and Interest Act.
The chief executive officer, proprietor, owner or highest
ranking manager shall sign the annual return to certify the
accuracy of the information contained therein. Any person who
willfully signs the annual return containing false or
inaccurate information shall be guilty of perjury and punished

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accordingly. The annual return form prescribed by the
Department shall include a warning that the person signing the
return may be liable for perjury.
The provisions of this Section concerning the filing of an
annual information return do not apply to a retailer who is not
required to file an income tax return with the United States
Government.
As soon as possible after the first day of each month, upon
certification of the Department of Revenue, the Comptroller
shall order transferred and the Treasurer shall transfer from
the General Revenue Fund to the Motor Fuel Tax Fund an amount
equal to 1.7% of 80% of the net revenue realized under this Act
for the second preceding month. Beginning April 1, 2000, this
transfer is no longer required and shall not be made.
Net revenue realized for a month shall be the revenue
collected by the State pursuant to this Act, less the amount
paid out during that month as refunds to taxpayers for
overpayment of liability.
For greater simplicity of administration, manufacturers,
importers and wholesalers whose products are sold at retail in
Illinois by numerous retailers, and who wish to do so, may
assume the responsibility for accounting and paying to the
Department all tax accruing under this Act with respect to such
sales, if the retailers who are affected do not make written
objection to the Department to this arrangement.
Any person who promotes, organizes, provides retail

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selling space for concessionaires or other types of sellers at
the Illinois State Fair, DuQuoin State Fair, county fairs,
local fairs, art shows, flea markets and similar exhibitions or
events, including any transient merchant as defined by Section
2 of the Transient Merchant Act of 1987, is required to file a
report with the Department providing the name of the merchant's
business, the name of the person or persons engaged in
merchant's business, the permanent address and Illinois
Retailers Occupation Tax Registration Number of the merchant,
the dates and location of the event and other reasonable
information that the Department may require. The report must be
filed not later than the 20th day of the month next following
the month during which the event with retail sales was held.
Any person who fails to file a report required by this Section
commits a business offense and is subject to a fine not to
exceed $250.
Any person engaged in the business of selling tangible
personal property at retail as a concessionaire or other type
of seller at the Illinois State Fair, county fairs, art shows,
flea markets and similar exhibitions or events, or any
transient merchants, as defined by Section 2 of the Transient
Merchant Act of 1987, may be required to make a daily report of
the amount of such sales to the Department and to make a daily
payment of the full amount of tax due. The Department shall
impose this requirement when it finds that there is a
significant risk of loss of revenue to the State at such an

HB2300 - 170 - LRB101 07228 HLH 52266 b
exhibition or event. Such a finding shall be based on evidence
that a substantial number of concessionaires or other sellers
who are not residents of Illinois will be engaging in the
business of selling tangible personal property at retail at the
exhibition or event, or other evidence of a significant risk of
loss of revenue to the State. The Department shall notify
concessionaires and other sellers affected by the imposition of
this requirement. In the absence of notification by the
Department, the concessionaires and other sellers shall file
their returns as otherwise required in this Section.
(Source: P.A. 99-352, eff. 8-12-15; 99-858, eff. 8-19-16;
99-933, eff. 1-27-17; 100-303, eff. 8-24-17; 100-363, eff.
7-1-18; 100-863, eff. 8-14-18; 100-1171, eff. 1-4-19.)
Section 99. Effective date. This Act takes effect upon
becoming law.