Bill Text: IL HB3907 | 2019-2020 | 101st General Assembly | Introduced

---

Bill Title: Amends the Use Tax Act and the Retailers' Occupation Tax Act. Provides that the term "selling price" does not include the value of or credit given for traded-in tangible personal property (currently, beginning on January 1, 2020, with respect to motor vehicles, "selling price" does include the trade-in value). Effective immediately.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2019-10-17 - Referred to Rules Committee [HB3907 Detail]

Download: Illinois-2019-HB3907-Introduced.html

---

101ST GENERAL ASSEMBLY State of Illinois 2019 and 2020 HB3907 Introduced , by Rep. Allen Skillicorn SYNOPSIS AS INTRODUCED:
35 ILCS 105/2 from Ch. 120, par. 439.2
35 ILCS 120/1 from Ch. 120, par. 440
Amends the Use Tax Act and the Retailers' Occupation Tax Act. Provides that the term "selling price" does not include the value of or credit given for traded-in tangible personal property (currently, beginning on January 1, 2020, with respect to motor vehicles, "selling price" does include the trade-in value). Effective immediately.
LRB101 12944 HLH 61780 b
FISCAL NOTE ACT MAY APPLY
A BILL FOR
HB3907 LRB101 12944 HLH 61780 b
AN ACT concerning revenue.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Use Tax Act is amended by changing Section 2
as follows:
(35 ILCS 105/2) (from Ch. 120, par. 439.2)
Sec. 2. Definitions.
"Use" means the exercise by any person of any right or
power over tangible personal property incident to the ownership
of that property, except that it does not include the sale of
such property in any form as tangible personal property in the
regular course of business to the extent that such property is
not first subjected to a use for which it was purchased, and
does not include the use of such property by its owner for
demonstration purposes: Provided that the property purchased
is deemed to be purchased for the purpose of resale, despite
first being used, to the extent to which it is resold as an
ingredient of an intentionally produced product or by-product
of manufacturing. "Use" does not mean the demonstration use or
interim use of tangible personal property by a retailer before
he sells that tangible personal property. For watercraft or
aircraft, if the period of demonstration use or interim use by
the retailer exceeds 18 months, the retailer shall pay on the

HB3907 - 2 - LRB101 12944 HLH 61780 b
retailers' original cost price the tax imposed by this Act, and
no credit for that tax is permitted if the watercraft or
aircraft is subsequently sold by the retailer. "Use" does not
mean the physical incorporation of tangible personal property,
to the extent not first subjected to a use for which it was
purchased, 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: Provided that the
property purchased is deemed to be purchased for the purpose of
resale, despite first being used, to the extent to which it is
resold as an ingredient of an intentionally produced product or
by-product of manufacturing.
"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.
"Purchase at retail" means the acquisition of the ownership
of or title to tangible personal property through a sale at
retail.
"Purchaser" means anyone who, through a sale at retail,
acquires the ownership of tangible personal property for a
valuable consideration.
"Sale at retail" means any transfer of the ownership of or

HB3907 - 3 - LRB101 12944 HLH 61780 b
title to tangible personal property to a purchaser, for the
purpose of use, and not for the purpose of resale in any form
as tangible personal property to the extent not first subjected
to a use for which it was purchased, for a valuable
consideration: Provided that the property purchased is deemed
to be purchased for the purpose of resale, despite first being
used, to the extent to which it is resold as an ingredient of
an intentionally produced product or by-product of
manufacturing. For this purpose, slag produced as an incident
to manufacturing pig iron or steel and sold is considered to be
an intentionally produced by-product of manufacturing. "Sale
at retail" includes any such transfer made for resale unless
made in compliance with Section 2c of the Retailers' Occupation
Tax Act, as incorporated by reference into Section 12 of this
Act. Transactions whereby the possession of the property is
transferred but the seller retains the title as security for
payment of the selling price are sales.
"Sale at retail" shall also be construed to include any
Illinois florist's sales transaction in which the purchase
order is received in Illinois by a florist and the sale is for
use or consumption, but the Illinois florist has a florist in
another state deliver the property to the purchaser or the
purchaser's donee in such other state.
Nonreusable tangible personal property that is used by
persons engaged in the business of operating a restaurant,
cafeteria, or drive-in is a sale for resale when it is

HB3907 - 4 - LRB101 12944 HLH 61780 b
transferred to customers in the ordinary course of business as
part of the sale of food or beverages and is used to deliver,
package, or consume food or beverages, regardless of where
consumption of the food or beverages occurs. Examples of those
items include, but are not limited to nonreusable, paper and
plastic cups, plates, baskets, boxes, sleeves, buckets or other
containers, utensils, straws, placemats, napkins, doggie bags,
and wrapping or packaging materials that are transferred to
customers as part of the sale of food or beverages in the
ordinary course of business.
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 tangible personal property.
"Selling price" means the consideration for a sale valued
in money whether received in money or otherwise, including
cash, credits, property other than as hereinafter provided, and
services, but, prior to January 1, 2020, not including the
value of or credit given for traded-in tangible personal
property where the item that is traded-in is of like kind and
character as that which is being sold; beginning January 1,
2020, "selling price" includes the portion of the value of or
credit given for traded-in motor vehicles of the First Division
as defined in Section 1-146 of the Illinois Vehicle Code of
like kind and character as that which is being sold that
exceeds $10,000. "Selling price" shall be determined without

HB3907 - 5 - LRB101 12944 HLH 61780 b
any deduction on account of the 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 tax liability under the "Retailers'
Occupation Tax Act", or on account of the seller's duty to
collect, from the purchaser, the tax that is imposed by this
Act, or, except as otherwise provided with respect to any
cigarette tax imposed by a home rule unit, on account of the
seller's tax liability under any local occupation tax
administered by the Department, or, except as otherwise
provided with respect to any cigarette tax imposed by a home
rule unit on account of the seller's duty to collect, from the
purchasers, the tax that is imposed under any local use tax
administered by the Department. Effective December 1, 1985,
"selling price" shall include charges that are added to prices
by sellers on account of the seller's tax liability under the
Cigarette Tax Act, on account of the seller's duty to collect,
from the purchaser, the tax imposed under the Cigarette Use Tax
Act, and on account of the seller's duty to collect, from the
purchaser, any cigarette tax imposed by a home rule unit.
Notwithstanding any law to the contrary, for any motor
vehicle, as defined in Section 1-146 of the Vehicle Code, that
is sold on or after January 1, 2015 for the purpose of leasing
the vehicle for a defined period that is longer than one year

HB3907 - 6 - LRB101 12944 HLH 61780 b
and (1) is a motor vehicle of the second division that: (A) is
a self-contained motor vehicle designed or permanently
converted to provide living quarters for recreational,
camping, or travel use, with direct walk through access to the
living quarters from the driver's seat; (B) is of the van
configuration designed for the transportation of not less than
7 nor more than 16 passengers; or (C) has a gross vehicle
weight rating of 8,000 pounds or less or (2) is a motor vehicle
of the first division, "selling price" or "amount of sale"
means the consideration received by the lessor pursuant to the
lease contract, including amounts due at lease signing and all
monthly or other regular payments charged over the term of the
lease. Also included in the selling price is any amount
received by the lessor from the lessee for the leased vehicle
that is not calculated at the time the lease is executed,
including, but not limited to, excess mileage charges and
charges for excess wear and tear. For sales that occur in
Illinois, with respect to any amount received by the lessor
from the lessee for the leased vehicle that is not calculated
at the time the lease is executed, the lessor who purchased the
motor vehicle does not incur the tax imposed by the Use Tax Act
on those amounts, and the retailer who makes the retail sale of
the motor vehicle to the lessor is not required to collect the
tax imposed by this Act or to pay the tax imposed by the
Retailers' Occupation Tax Act on those amounts. However, the
lessor who purchased the motor vehicle assumes the liability

HB3907 - 7 - LRB101 12944 HLH 61780 b
for reporting and paying the tax on those amounts directly to
the Department in the same form (Illinois Retailers' Occupation
Tax, and local retailers' occupation taxes, if applicable) in
which the retailer would have reported and paid such tax if the
retailer had accounted for the tax to the Department. For
amounts received by the lessor from the lessee that are not
calculated at the time the lease is executed, the lessor must
file the return and pay the tax to the Department by the due
date otherwise required by this Act for returns other than
transaction returns. If the retailer is entitled under this Act
to a discount for collecting and remitting the tax imposed
under this Act to the Department with respect to the sale of
the motor vehicle to the lessor, then the right to the discount
provided in this Act shall be transferred to the lessor with
respect to the tax paid by the lessor for any amount received
by the lessor from the lessee for the leased vehicle that is
not calculated at the time the lease is executed; provided that
the discount is only allowed if the return is timely filed and
for amounts timely paid. The "selling price" of a motor vehicle
that is sold on or after January 1, 2015 for the purpose of
leasing for a defined period of longer than one year shall not
be reduced by the value of or credit given for traded-in
tangible personal property owned by the lessor, nor shall it be
reduced by the value of or credit given for traded-in tangible
personal property owned by the lessee, regardless of whether
the trade-in value thereof is assigned by the lessee to the

HB3907 - 8 - LRB101 12944 HLH 61780 b
lessor. In the case of a motor vehicle that is sold for the
purpose of leasing for a defined period of longer than one
year, the sale occurs at the time of the delivery of the
vehicle, regardless of the due date of any lease payments. A
lessor who incurs a Retailers' Occupation Tax liability on the
sale of a motor vehicle coming off lease may not take a credit
against that liability for the Use Tax the lessor paid upon the
purchase of the motor vehicle (or for any tax the lessor paid
with respect to any amount received by the lessor from the
lessee for the leased vehicle that was not calculated at the
time the lease was executed) if the selling price of the motor
vehicle at the time of purchase was calculated using the
definition of "selling price" as defined in this paragraph.
Notwithstanding any other provision of this Act to the
contrary, lessors shall file all returns and make all payments
required under this paragraph to the Department by electronic
means in the manner and form as required by the Department.
This paragraph does not apply to leases of motor vehicles for
which, at the time the lease is entered into, the term of the
lease is not a defined period, including leases with a defined
initial period with the option to continue the lease on a
month-to-month or other basis beyond the initial defined
period.
The phrase "like kind and character" shall be liberally
construed (including but not limited to any form of motor
vehicle for any form of motor vehicle, or any kind of farm or

HB3907 - 9 - LRB101 12944 HLH 61780 b
agricultural implement for any other kind of farm or
agricultural implement), while not including a kind of item
which, if sold at retail by that retailer, would be exempt from
retailers' occupation tax and use tax as an isolated or
occasional sale.
"Department" means the Department of Revenue.
"Person" means any natural individual, firm, partnership,
association, joint stock company, joint adventure, public or
private corporation, limited liability company, or a receiver,
executor, trustee, guardian or other representative appointed
by order of any court.
"Retailer" means and includes every person engaged in the
business of making sales at retail as defined in this Section.
A person who holds himself or herself out as being engaged
(or who habitually engages) in selling tangible personal
property at retail is a retailer hereunder with respect to such
sales (and not primarily in a service occupation)
notwithstanding the fact that such person designs and produces
such tangible personal property on special order for the
purchaser and in such a way as to render the property of value
only to such purchaser, if such tangible personal property so
produced on special order serves substantially the same
function as stock or standard items of tangible personal
property that are sold at retail.
A person whose activities are organized and conducted
primarily as a not-for-profit service enterprise, and who

HB3907 - 10 - LRB101 12944 HLH 61780 b
engages in selling tangible personal property at retail
(whether to the public or merely to members and their guests)
is a retailer with respect to such transactions, excepting only
a person organized and operated exclusively for charitable,
religious or educational purposes either (1), to the extent of
sales by such person to its members, students, patients or
inmates of tangible personal property to be used primarily for
the purposes of such person, or (2), to the extent of sales by
such person of tangible personal property which is not sold or
offered for sale by persons organized for profit. The selling
of school books and school supplies by schools at retail to
students is not "primarily for the purposes of" the school
which does such selling. This paragraph does not apply to nor
subject to taxation occasional dinners, social or similar
activities of a person organized and operated exclusively for
charitable, religious or educational purposes, whether or not
such activities are open to the public.
A person who is the recipient of a grant or contract under
Title VII of the Older Americans Act of 1965 (P.L. 92-258) and
serves meals to participants in the federal Nutrition Program
for the Elderly in return for contributions established in
amount by the individual participant pursuant to a schedule of
suggested fees as provided for in the federal Act is not a
retailer under this Act with respect to such transactions.
Persons who engage in the business of transferring tangible
personal property upon the redemption of trading stamps are

HB3907 - 11 - LRB101 12944 HLH 61780 b
retailers hereunder when engaged in such business.
The isolated or occasional sale of tangible personal
property at retail by a person who does not hold himself out as
being engaged (or who does not habitually engage) in selling
such tangible personal property at retail or a sale through a
bulk vending machine does not make such person a retailer
hereunder. However, any person who is engaged in a business
which is not subject to the tax imposed by the "Retailers'
Occupation Tax Act" because of involving the sale of or a
contract to sell real estate or a construction contract to
improve real estate, but who, in the course of conducting such
business, transfers tangible personal property to users or
consumers in the finished form in which it was purchased, and
which does not become real estate, under any provision of a
construction contract or real estate sale or real estate sales
agreement entered into with some other person arising out of or
because of such nontaxable business, is a retailer to the
extent of the value of the tangible personal property so
transferred. If, in such transaction, a separate charge is made
for the tangible personal property so transferred, the value of
such property, for the purposes of this Act, is the amount so
separately charged, but not less than the cost of such property
to the transferor; if no separate charge is made, the value of
such property, for the purposes of this Act, is the cost to the
transferor of such tangible personal property.
"Retailer maintaining a place of business in this State",

HB3907 - 12 - LRB101 12944 HLH 61780 b
or any like term, means and includes any of the following
retailers:
(1) A retailer 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 retailer or its subsidiary,
irrespective of whether such place of business or agent or
other representative is located here permanently or
temporarily, or whether such retailer or subsidiary is
licensed to do business in this State. However, the
ownership of property that is located at the premises of a
printer with which the retailer has contracted for printing
and that consists of the final printed product, property
that becomes a part of the final printed product, or copy
from which the printed product is produced shall not result
in the retailer being deemed to have or maintain an office,
distribution house, sales house, warehouse, or other place
of business within this State.
(1.1) (Blank).
(1.2) (Blank).
(2) (Blank).
(3) (Blank).
(4) (Blank).
(5) (Blank).
(6) (Blank).

HB3907 - 13 - LRB101 12944 HLH 61780 b
(7) (Blank).
(8) (Blank).
(9) Beginning October 1, 2018 through June 30, 2020, a
retailer making sales of tangible personal property to
purchasers in Illinois from outside of Illinois if:
(A) the cumulative gross receipts from sales of
tangible personal property to purchasers in Illinois
are $100,000 or more; or
(B) the retailer enters into 200 or more separate
transactions for the sale of tangible personal
property to purchasers in Illinois.
The retailer 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 retailer meets the
criteria of either subparagraph (A) or (B) for a 12-month
period, he or she is considered a retailer 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
retailer shall determine whether the retailer met the
criteria of either subparagraph (A) or (B) during the
preceding 12-month period. If the retailer met the criteria
in either subparagraph (A) or (B) for the preceding
12-month period, he or she is considered a retailer

HB3907 - 14 - LRB101 12944 HLH 61780 b
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 the subsequent year. If at the end
of a one-year period a retailer 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 retailer shall subsequently 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.
Beginning January 1, 2020, neither the gross receipts
from nor the number of separate transactions for sales of
tangible personal property to purchasers in Illinois that a
retailer makes through a marketplace facilitator and for
which the retailer has received a certification from the
marketplace facilitator pursuant to Section 2d of this Act
shall be included for purposes of determining whether he or
she has met the thresholds of this paragraph (9).
(10) Beginning January 1, 2020, a marketplace
facilitator, as defined in Section 2d of this Act.
"Bulk vending machine" means a vending machine, containing
unsorted confections, nuts, toys, or other items designed
primarily to be used or played with by children which, when a
coin or coins of a denomination not larger than $0.50 are

HB3907 - 15 - LRB101 12944 HLH 61780 b
inserted, are dispensed in equal portions, at random and
without selection by the customer.
(Source: P.A. 100-587, eff. 6-4-18; 101-9, eff. 6-5-19; 101-31,
eff. 1-1-20; revised 7-11-19.)
Section 10. The Retailers' Occupation Tax Act is amended by
changing Section 1 as follows:
(35 ILCS 120/1) (from Ch. 120, par. 440)
Sec. 1. Definitions. "Sale at retail" means any transfer of
the ownership of or title to tangible personal property to a
purchaser, for the purpose of use or consumption, and not for
the purpose of resale in any form as tangible personal property
to the extent not first subjected to a use for which it was
purchased, for a valuable consideration: Provided that the
property purchased is deemed to be purchased for the purpose of
resale, despite first being used, to the extent to which it is
resold as an ingredient of an intentionally produced product or
byproduct of manufacturing. For this purpose, slag produced as
an incident to manufacturing pig iron or steel and sold is
considered to be an intentionally produced byproduct of
manufacturing. Transactions whereby the possession of the
property is transferred but the seller retains the title as
security for payment of the selling price shall be deemed to be
sales.
"Sale at retail" shall be construed to include any transfer

HB3907 - 16 - LRB101 12944 HLH 61780 b
of the ownership of or title to tangible personal property to a
purchaser, for use or consumption by any other person to whom
such purchaser may transfer the tangible personal property
without a valuable consideration, and to include any transfer,
whether made for or without a valuable consideration, for
resale in any form as tangible personal property unless made in
compliance with Section 2c of this Act.
Sales of tangible personal property, which property, to the
extent not first subjected to a use for which it was purchased,
as an ingredient or constituent, goes into and forms a part of
tangible personal property subsequently the subject of a "Sale
at retail", are not sales at retail as defined in this Act:
Provided that the property purchased is deemed to be purchased
for the purpose of resale, despite first being used, to the
extent to which it is resold as an ingredient of an
intentionally produced product or byproduct of manufacturing.
"Sale at retail" shall be construed to include any Illinois
florist's sales transaction in which the purchase order is
received in Illinois by a florist and the sale is for use or
consumption, but the Illinois florist has a florist in another
state deliver the property to the purchaser or the purchaser's
donee in such other state.
Nonreusable tangible personal property that is used by
persons engaged in the business of operating a restaurant,
cafeteria, or drive-in is a sale for resale when it is
transferred to customers in the ordinary course of business as

HB3907 - 17 - LRB101 12944 HLH 61780 b
part of the sale of food or beverages and is used to deliver,
package, or consume food or beverages, regardless of where
consumption of the food or beverages occurs. Examples of those
items include, but are not limited to nonreusable, paper and
plastic cups, plates, baskets, boxes, sleeves, buckets or other
containers, utensils, straws, placemats, napkins, doggie bags,
and wrapping or packaging materials that are transferred to
customers as part of the sale of food or beverages in the
ordinary course of business.
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 tangible personal property.
A person whose activities are organized and conducted
primarily as a not-for-profit service enterprise, and who
engages in selling tangible personal property at retail
(whether to the public or merely to members and their guests)
is engaged in the business of selling tangible personal
property at retail with respect to such transactions, excepting
only a person organized and operated exclusively for
charitable, religious or educational purposes either (1), to
the extent of sales by such person to its members, students,
patients or inmates of tangible personal property to be used
primarily for the purposes of such person, or (2), to the
extent of sales by such person of tangible personal property
which is not sold or offered for sale by persons organized for

HB3907 - 18 - LRB101 12944 HLH 61780 b
profit. The selling of school books and school supplies by
schools at retail to students is not "primarily for the
purposes of" the school which does such selling. The provisions
of this paragraph shall not apply to nor subject to taxation
occasional dinners, socials or similar activities of a person
organized and operated exclusively for charitable, religious
or educational purposes, whether or not such activities are
open to the public.
A person who is the recipient of a grant or contract under
Title VII of the Older Americans Act of 1965 (P.L. 92-258) and
serves meals to participants in the federal Nutrition Program
for the Elderly in return for contributions established in
amount by the individual participant pursuant to a schedule of
suggested fees as provided for in the federal Act is not
engaged in the business of selling tangible personal property
at retail with respect to such transactions.
"Purchaser" means anyone who, through a sale at retail,
acquires the ownership of or title to tangible personal
property for a valuable consideration.
"Reseller of motor fuel" means any person engaged in the
business of selling or delivering or transferring title of
motor fuel to another person other than for use or consumption.
No person shall act as a reseller of motor fuel within this
State without first being registered as a reseller pursuant to
Section 2c or a retailer pursuant to Section 2a.
"Selling price" or the "amount of sale" means the

HB3907 - 19 - LRB101 12944 HLH 61780 b
consideration for a sale valued in money whether received in
money or otherwise, including cash, credits, property, other
than as hereinafter provided, and services, but, prior to
January 1, 2020, not including the value of or credit given for
traded-in tangible personal property where the item that is
traded-in is of like kind and character as that which is being
sold; beginning January 1, 2020, "selling price" includes the
portion of the value of or credit given for traded-in motor
vehicles of the First Division as defined in Section 1-146 of
the Illinois Vehicle Code of like kind and character as that
which is being sold that exceeds $10,000. "Selling price" shall
be determined without any deduction on account of the cost of
the property sold, the cost of materials used, labor or service
cost or any other expense whatsoever, but does not include
charges that are added to prices by sellers on account of the
seller's tax liability under this Act, or on account of the
seller's duty to collect, from the purchaser, the tax that is
imposed by the Use Tax Act, or, except as otherwise provided
with respect to any cigarette tax imposed by a home rule unit,
on account of the seller's tax liability under any local
occupation tax administered by the Department, or, except as
otherwise provided with respect to any cigarette tax imposed by
a home rule unit on account of the seller's duty to collect,
from the purchasers, the tax that is imposed under any local
use tax administered by the Department. Effective December 1,
1985, "selling price" shall include charges that are added to

HB3907 - 20 - LRB101 12944 HLH 61780 b
prices by sellers on account of the seller's tax liability
under the Cigarette Tax Act, on account of the sellers' duty to
collect, from the purchaser, the tax imposed under the
Cigarette Use Tax Act, and on account of the seller's duty to
collect, from the purchaser, any cigarette tax imposed by a
home rule unit.
Notwithstanding any law to the contrary, for any motor
vehicle, as defined in Section 1-146 of the Vehicle Code, that
is sold on or after January 1, 2015 for the purpose of leasing
the vehicle for a defined period that is longer than one year
and (1) is a motor vehicle of the second division that: (A) is
a self-contained motor vehicle designed or permanently
converted to provide living quarters for recreational,
camping, or travel use, with direct walk through access to the
living quarters from the driver's seat; (B) is of the van
configuration designed for the transportation of not less than
7 nor more than 16 passengers; or (C) has a gross vehicle
weight rating of 8,000 pounds or less or (2) is a motor vehicle
of the first division, "selling price" or "amount of sale"
means the consideration received by the lessor pursuant to the
lease contract, including amounts due at lease signing and all
monthly or other regular payments charged over the term of the
lease. Also included in the selling price is any amount
received by the lessor from the lessee for the leased vehicle
that is not calculated at the time the lease is executed,
including, but not limited to, excess mileage charges and

HB3907 - 21 - LRB101 12944 HLH 61780 b
charges for excess wear and tear. For sales that occur in
Illinois, with respect to any amount received by the lessor
from the lessee for the leased vehicle that is not calculated
at the time the lease is executed, the lessor who purchased the
motor vehicle does not incur the tax imposed by the Use Tax Act
on those amounts, and the retailer who makes the retail sale of
the motor vehicle to the lessor is not required to collect the
tax imposed by the Use Tax Act or to pay the tax imposed by this
Act on those amounts. However, the lessor who purchased the
motor vehicle assumes the liability for reporting and paying
the tax on those amounts directly to the Department in the same
form (Illinois Retailers' Occupation Tax, and local retailers'
occupation taxes, if applicable) in which the retailer would
have reported and paid such tax if the retailer had accounted
for the tax to the Department. For amounts received by the
lessor from the lessee that are not calculated at the time the
lease is executed, the lessor must file the return and pay the
tax to the Department by the due date otherwise required by
this Act for returns other than transaction returns. If the
retailer is entitled under this Act to a discount for
collecting and remitting the tax imposed under this Act to the
Department with respect to the sale of the motor vehicle to the
lessor, then the right to the discount provided in this Act
shall be transferred to the lessor with respect to the tax paid
by the lessor for any amount received by the lessor from the
lessee for the leased vehicle that is not calculated at the

HB3907 - 22 - LRB101 12944 HLH 61780 b
time the lease is executed; provided that the discount is only
allowed if the return is timely filed and for amounts timely
paid. The "selling price" of a motor vehicle that is sold on or
after January 1, 2015 for the purpose of leasing for a defined
period of longer than one year shall not be reduced by the
value of or credit given for traded-in tangible personal
property owned by the lessor, nor shall it be reduced by the
value of or credit given for traded-in tangible personal
property owned by the lessee, regardless of whether the
trade-in value thereof is assigned by the lessee to the lessor.
In the case of a motor vehicle that is sold for the purpose of
leasing for a defined period of longer than one year, the sale
occurs at the time of the delivery of the vehicle, regardless
of the due date of any lease payments. A lessor who incurs a
Retailers' Occupation Tax liability on the sale of a motor
vehicle coming off lease may not take a credit against that
liability for the Use Tax the lessor paid upon the purchase of
the motor vehicle (or for any tax the lessor paid with respect
to any amount received by the lessor from the lessee for the
leased vehicle that was not calculated at the time the lease
was executed) if the selling price of the motor vehicle at the
time of purchase was calculated using the definition of
"selling price" as defined in this paragraph. Notwithstanding
any other provision of this Act to the contrary, lessors shall
file all returns and make all payments required under this
paragraph to the Department by electronic means in the manner

HB3907 - 23 - LRB101 12944 HLH 61780 b
and form as required by the Department. This paragraph does not
apply to leases of motor vehicles for which, at the time the
lease is entered into, the term of the lease is not a defined
period, including leases with a defined initial period with the
option to continue the lease on a month-to-month or other basis
beyond the initial defined period.
The phrase "like kind and character" shall be liberally
construed (including but not limited to any form of motor
vehicle for any form of motor vehicle, or any kind of farm or
agricultural implement for any other kind of farm or
agricultural implement), while not including a kind of item
which, if sold at retail by that retailer, would be exempt from
retailers' occupation tax and use tax as an isolated or
occasional sale.
"Gross receipts" from the sales of tangible personal
property at retail means the total selling price or the amount
of such sales, as hereinbefore defined. In the case of charge
and time sales, the amount thereof shall be included only as
and when payments are received by the seller. Receipts or other
consideration derived by a seller from the sale, transfer or
assignment of accounts receivable to a wholly owned subsidiary
will not be deemed payments prior to the time the purchaser
makes payment on such accounts.
"Department" means the Department of Revenue.
"Person" means any natural individual, firm, partnership,
association, joint stock company, joint adventure, public or

HB3907 - 24 - LRB101 12944 HLH 61780 b
private corporation, limited liability company, or a receiver,
executor, trustee, guardian or other representative appointed
by order of any court.
The isolated or occasional sale of tangible personal
property at retail by a person who does not hold himself out as
being engaged (or who does not habitually engage) in selling
such tangible personal property at retail, or a sale through a
bulk vending machine, does not constitute engaging in a
business of selling such tangible personal property at retail
within the meaning of this Act; provided that any person who is
engaged in a business which is not subject to the tax imposed
by this Act because of involving the sale of or a contract to
sell real estate or a construction contract to improve real
estate or a construction contract to engineer, install, and
maintain an integrated system of products, but who, in the
course of conducting such business, transfers tangible
personal property to users or consumers in the finished form in
which it was purchased, and which does not become real estate
or was not engineered and installed, under any provision of a
construction contract or real estate sale or real estate sales
agreement entered into with some other person arising out of or
because of such nontaxable business, is engaged in the business
of selling tangible personal property at retail to the extent
of the value of the tangible personal property so transferred.
If, in such a transaction, a separate charge is made for the
tangible personal property so transferred, the value of such

HB3907 - 25 - LRB101 12944 HLH 61780 b
property, for the purpose of this Act, shall be the amount so
separately charged, but not less than the cost of such property
to the transferor; if no separate charge is made, the value of
such property, for the purposes of this Act, is the cost to the
transferor of such tangible personal property. Construction
contracts for the improvement of real estate consisting of
engineering, installation, and maintenance of voice, data,
video, security, and all telecommunication systems do not
constitute engaging in a business of selling tangible personal
property at retail within the meaning of this Act if they are
sold at one specified contract price.
A person who holds himself or herself out as being engaged
(or who habitually engages) in selling tangible personal
property at retail is a person engaged in the business of
selling tangible personal property at retail hereunder with
respect to such sales (and not primarily in a service
occupation) notwithstanding the fact that such person designs
and produces such tangible personal property on special order
for the purchaser and in such a way as to render the property
of value only to such purchaser, if such tangible personal
property so produced on special order serves substantially the
same function as stock or standard items of tangible personal
property that are sold at retail.
Persons who engage in the business of transferring tangible
personal property upon the redemption of trading stamps are
engaged in the business of selling such property at retail and

HB3907 - 26 - LRB101 12944 HLH 61780 b
shall be liable for and shall pay the tax imposed by this Act
on the basis of the retail value of the property transferred
upon redemption of such stamps.
"Bulk vending machine" means a vending machine, containing
unsorted confections, nuts, toys, or other items designed
primarily to be used or played with by children which, when a
coin or coins of a denomination not larger than $0.50 are
inserted, are dispensed in equal portions, at random and
without selection by the customer.
"Remote retailer" means a retailer located outside of this
State that does not maintain 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 retailer or its subsidiary, irrespective of whether such
place of business or agent is located here permanently or
temporarily or whether such retailer or subsidiary is licensed
to do business in this State.
(Source: P.A. 101-31, eff. 6-28-19.)
Section 99. Effective date. This Act takes effect upon
becoming law.