Bill Text: IL HB4491 | 2017-2018 | 100th General Assembly | Introduced

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Bill Title: Amends the Use Tax Act and the Service Use Tax Act. Reinstates the Manufacturer's Purchase Credit on and after January 1, 2018. Provides that the credit is exempt from the Acts' automatic sunset provisions. Effective immediately.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Failed) 2019-01-08 - Session Sine Die [HB4491 Detail]

Download: Illinois-2017-HB4491-Introduced.html

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100TH GENERAL ASSEMBLY State of Illinois 2017 and 2018 HB4491 Introduced , by Rep. John M. Cabello SYNOPSIS AS INTRODUCED:
35 ILCS 105/3-85
35 ILCS 110/3-70
Amends the Use Tax Act and the Service Use Tax Act. Reinstates the Manufacturer's Purchase Credit on and after January 1, 2018. Provides that the credit is exempt from the Acts' automatic sunset provisions. Effective immediately.
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FISCAL NOTE ACT MAY APPLY
A BILL FOR
HB4491 LRB100 16182 HLH 31303 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
3-85 as follows:
(35 ILCS 105/3-85)
Sec. 3-85. Manufacturer's Purchase Credit. For purchases
of machinery and equipment made on and after January 1, 1995
through June 30, 2003, and on and after September 1, 2004
through August 30, 2014, and on and after January 1, 2018, 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

HB4491 - 2 - LRB100 16182 HLH 31303 b
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
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

HB4491 - 3 - LRB100 16182 HLH 31303 b
Use Tax Act that is due on the purchase of the production
related tangible personal property by use of Manufacturer's
Purchase Credit. The Manufacturer's Purchase Credit
certification must be dated and shall include the name and
address of the purchaser, the purchaser's registration number,
if registered, the credit being applied, and a statement that
the State Use Tax or Service Use Tax liability is being
satisfied with the manufacturer's or graphic arts producer's
accumulated purchase credit. Certification may be incorporated
into the manufacturer's or graphic arts producer's purchase
order. Manufacturer's Purchase Credit certification provided
by the manufacturer or graphic arts producer prior to October
1, 2003 may be used to satisfy the retailer's or serviceman's
liability under the Retailers' Occupation Tax Act or Service
Occupation Tax Act for the credit claimed, not to exceed 6.25%
of the receipts subject to tax from a qualifying purchase, but
only if the retailer or serviceman reports the Manufacturer's
Purchase Credit claimed as required by the Department. A
Manufacturer's Purchase Credit reported on any original or
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

HB4491 - 4 - LRB100 16182 HLH 31303 b
arts production facility may, prior to October 1, 2003,
authorize a construction contractor to utilize credit
accumulated by the manufacturer or graphic arts producer to
purchase the tangible personal property. A manufacturer or
graphic arts producer intending to use accumulated credit to
purchase such tangible personal property shall execute a
written contract authorizing the contractor to utilize a
specified dollar amount of credit. The contractor shall
furnish, prior to October 1, 2003, the supplier with the
manufacturer's or graphic arts producer's name, registration
or resale number, and a statement that a specific amount of the
Use Tax or Service Use Tax liability, not to exceed 6.25% of
the selling price, is being satisfied with the credit. The
manufacturer or graphic arts producer shall remain liable to
timely report all information required by the annual Report of
Manufacturer's Purchase Credit Used for all credit utilized by
a construction contractor.
No Manufacturer's Purchase Credit earned prior to July 1,
2003 may be used after October 1, 2003. The Manufacturer's
Purchase Credit may be used to satisfy liability under the Use
Tax Act or the Service Use Tax Act due on the purchase of
production related tangible personal property (including
purchases by a manufacturer, by a graphic arts producer, or by
a lessor who rents or leases the use of the property to a
manufacturer or graphic arts producer) that does not otherwise
qualify for the manufacturing machinery and equipment

HB4491 - 5 - LRB100 16182 HLH 31303 b
exemption or the graphic arts machinery and equipment
exemption. "Production related tangible personal property"
means (i) all tangible personal property used or consumed by
the purchaser in a manufacturing facility in which a
manufacturing process described in Section 2-45 of the
Retailers' Occupation Tax Act takes place, including tangible
personal property purchased for incorporation into real estate
within a manufacturing facility and including, but not limited
to, tangible personal property used or consumed in activities
such as preproduction material handling, receiving, quality
control, inventory control, storage, staging, and packaging
for shipping and transportation purposes; (ii) all tangible
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

HB4491 - 6 - LRB100 16182 HLH 31303 b
property used, within or without a manufacturing facility, in
sales, purchasing, accounting, fiscal management, marketing,
personnel recruitment or selection, or landscaping or (ii)
tangible personal property required to be titled or registered
with a department, agency, or unit of federal, state, or local
government. The Manufacturer's Purchase Credit may be used,
prior to October 1, 2003, to satisfy the tax arising either
from the purchase of machinery and equipment on or after
January 1, 1995 for which the exemption provided by paragraph
(18) of Section 3-5 of this Act was erroneously claimed, or the
purchase of machinery and equipment on or after July 1, 1996
for which the exemption provided by paragraph (6) of Section
3-5 of this Act was erroneously claimed, but not in
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

HB4491 - 7 - LRB100 16182 HLH 31303 b
not expired and is used prior to October 1, 2003, on qualifying
purchases of production related tangible personal property not
previously subject to credit usage. The Manufacturer's
Purchase Credit earned by a manufacturer or graphic arts
producer expires the last day of the second calendar year
following the calendar year in which the credit arose. No
Manufacturer's Purchase Credit may be used after September 30,
2003 regardless of when that credit was earned.
A purchaser earning Manufacturer's Purchase Credit shall
sign and file an annual Report of Manufacturer's Purchase
Credit Earned for each calendar year no later than the last day
of the sixth month following the calendar year in which a
Manufacturer's Purchase Credit is earned. A Report of
Manufacturer's Purchase Credit Earned shall be filed on forms
as prescribed or approved by the Department and shall state,
for each month of the calendar year: (i) the total purchase
price of all purchases of exempt manufacturing or graphic arts
machinery on which the credit was earned; (ii) the total State
Use Tax or Service Use Tax which would have been due on those
items; (iii) the percentage used to calculate the amount of
credit earned; (iv) the amount of credit earned; and (v) such
other information as the Department may reasonably require. A
purchaser earning Manufacturer's Purchase Credit shall
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

HB4491 - 8 - LRB100 16182 HLH 31303 b
vendor (including, if applicable, either the vendor's
registration number or Federal Employer Identification
Number), the purchase price, and the amount of Manufacturer's
Purchase Credit earned on each purchase.
A purchaser using Manufacturer's Purchase Credit shall
sign and file an annual Report of Manufacturer's Purchase
Credit Used for each calendar year no later than the last day
of the sixth month following the calendar year in which a
Manufacturer's Purchase Credit is used. A Report of
Manufacturer's Purchase Credit Used shall be filed on forms as
prescribed or approved by the Department and shall state, for
each month of the calendar year: (i) the total purchase price
of production related tangible personal property purchased
from Illinois suppliers; (ii) the total purchase price of
production related tangible personal property purchased from
out-of-state suppliers; (iii) the total amount of credit used
during such month; and (iv) such other information as the
Department may reasonably require. A purchaser using
Manufacturer's Purchase Credit shall maintain records that
identify, as to each purchase of production related tangible
personal property on which the purchaser used Manufacturer's
Purchase Credit, the vendor (including, if applicable, either
the vendor's registration number or Federal Employer
Identification Number), the purchase price, and the amount of
Manufacturer's Purchase Credit used on each purchase.
No annual report shall be filed before May 1, 1996 or after

HB4491 - 9 - LRB100 16182 HLH 31303 b
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, 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

HB4491 - 10 - LRB100 16182 HLH 31303 b
1, 1995, or in the case of graphic arts producers on or after
July 1, 1996.
If the purchaser is not the manufacturer or a graphic arts
producer, but rents or leases the use of the property to a
manufacturer or graphic arts producer, the purchaser may earn,
report, and use Manufacturer's Purchase Credit in the same
manner as a manufacturer or graphic arts producer.
A purchaser shall not be entitled to any Manufacturer's
Purchase Credit for a purchase that is required to be reported
and is not timely reported as provided in this Section. A
purchaser remains liable for (i) any tax that was satisfied by
use of a Manufacturer's Purchase Credit, as of the date of
purchase, if that use is not timely reported as required in
this Section and (ii) for any applicable penalties and interest
for failing to pay the tax when due. No Manufacturer's Purchase
Credit may be used after September 30, 2003 to satisfy any tax
liability imposed under this Act, including any audit
liability.
(b) Manufacturer's Purchase Credit earned on and after
September 1, 2004. This subsection (b) applies to
Manufacturer's Purchase Credit earned on and after September 1,
2004. Manufacturer's Purchase Credit earned on or after
September 1, 2004 may only be used to satisfy the Use Tax or
Service Use Tax liability incurred on production related
tangible personal property purchased on or after September 1,
2004. A purchaser of production related tangible personal

HB4491 - 11 - LRB100 16182 HLH 31303 b
property desiring to use the Manufacturer's Purchase Credit
shall certify to the seller that the purchaser is satisfying
all or part of the liability under the Use Tax Act or the
Service Use Tax Act that is due on the purchase of the
production related tangible personal property by use of
Manufacturer's Purchase Credit. The Manufacturer's Purchase
Credit certification must be dated and shall include the name
and address of the purchaser, the purchaser's registration
number, if registered, the credit being applied, and a
statement that the State Use Tax or Service Use Tax liability
is being satisfied with the manufacturer's or graphic arts
producer's accumulated purchase credit. Certification may be
incorporated into the manufacturer's or graphic arts
producer's purchase order. Manufacturer's Purchase Credit
certification provided by the manufacturer or graphic arts
producer may be used to satisfy the retailer's or serviceman's
liability under the Retailers' Occupation Tax Act or Service
Occupation Tax Act for the credit claimed, not to exceed 6.25%
of the receipts subject to tax from a qualifying purchase, but
only if the retailer or serviceman reports the Manufacturer's
Purchase Credit claimed as required by the Department. The
Manufacturer's Purchase Credit earned by purchase of exempt
manufacturing machinery and equipment or graphic arts
machinery and equipment is a non-transferable credit. A
manufacturer or graphic arts producer that enters into a
contract involving the installation of tangible personal

HB4491 - 12 - LRB100 16182 HLH 31303 b
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
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

HB4491 - 13 - LRB100 16182 HLH 31303 b
exemption. "Production related tangible personal property"
means (i) all tangible personal property used or consumed by
the purchaser in a manufacturing facility in which a
manufacturing process described in Section 2-45 of the
Retailers' Occupation Tax Act takes place, including tangible
personal property purchased for incorporation into real estate
within a manufacturing facility and including, but not limited
to, tangible personal property used or consumed in activities
such as preproduction material handling, receiving, quality
control, inventory control, storage, staging, and packaging
for shipping and transportation purposes; (ii) all tangible
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

HB4491 - 14 - LRB100 16182 HLH 31303 b
sales, purchasing, accounting, fiscal management, marketing,
personnel recruitment or selection, or landscaping or (ii)
tangible personal property required to be titled or registered
with a department, agency, or unit of federal, state, or local
government. The Manufacturer's Purchase Credit may be used to
satisfy the tax arising either from the purchase of machinery
and equipment on or after September 1, 2004 for which the
exemption provided by paragraph (18) of Section 3-5 of this Act
was erroneously claimed, or the purchase of machinery and
equipment on or after September 1, 2004 for which the exemption
provided by paragraph (6) of Section 3-5 of this Act was
erroneously claimed, but not in satisfaction of penalty, if
any, and interest for failure to pay the tax when due. A
purchaser of production related tangible personal property
that is purchased on or after September 1, 2004 who is required
to pay Illinois Use Tax or Service Use Tax on the purchase
directly to the Department may utilize the Manufacturer's
Purchase Credit in satisfaction of the tax arising from that
purchase, but not in satisfaction of penalty and interest. A
purchaser who uses the Manufacturer's Purchase Credit to
purchase property on and after September 1, 2004 which is later
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

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purchases of production related tangible personal property not
previously subject to credit usage. The Manufacturer's
Purchase Credit earned by a manufacturer or graphic arts
producer expires the last day of the second calendar year
following the calendar year in which the credit arose. A
purchaser earning Manufacturer's Purchase Credit shall sign
and file an annual Report of Manufacturer's Purchase Credit
Earned for each calendar year no later than the last day of the
sixth month following the calendar year in which a
Manufacturer's Purchase Credit is earned. A Report of
Manufacturer's Purchase Credit Earned shall be filed on forms
as prescribed or approved by the Department and shall state,
for each month of the calendar year: (i) the total purchase
price of all purchases of exempt manufacturing or graphic arts
machinery on which the credit was earned; (ii) the total State
Use Tax or Service Use Tax which would have been due on those
items; (iii) the percentage used to calculate the amount of
credit earned; (iv) the amount of credit earned; and (v) such
other information as the Department may reasonably require. A
purchaser earning Manufacturer's Purchase Credit shall
maintain records which identify, as to each purchase of
manufacturing or graphic arts machinery and equipment on which
the purchaser earned Manufacturer's Purchase Credit, the
vendor (including, if applicable, either the vendor's
registration number or Federal Employer Identification
Number), the purchase price, and the amount of Manufacturer's

HB4491 - 16 - LRB100 16182 HLH 31303 b
Purchase Credit earned on each purchase. A purchaser using
Manufacturer's Purchase Credit shall sign and file an annual
Report of Manufacturer's Purchase Credit Used for each calendar
year no later than the last day of the sixth month following
the calendar year in which a Manufacturer's Purchase Credit is
used. A Report of Manufacturer's Purchase Credit Used shall be
filed on forms as prescribed or approved by the Department and
shall state, for each month of the calendar year: (i) the total
purchase price of production related tangible personal
property purchased from Illinois suppliers; (ii) the total
purchase price of production related tangible personal
property purchased from out-of-state suppliers; (iii) the
total amount of credit used during such month; and (iv) such
other information as the Department may reasonably require. A
purchaser using Manufacturer's Purchase Credit shall maintain
records that identify, as to each purchase of production
related tangible personal property on which the purchaser used
Manufacturer's Purchase Credit, the vendor (including, if
applicable, either the vendor's registration number or Federal
Employer Identification Number), the purchase price, and the
amount of Manufacturer's Purchase Credit used on each purchase.
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

HB4491 - 17 - LRB100 16182 HLH 31303 b
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
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

HB4491 - 18 - LRB100 16182 HLH 31303 b
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.
This Section is exempt from the provisions of Section 3-90.
(Source: P.A. 96-116, eff. 7-31-09.)
Section 10. The Service Use Tax Act is amended by changing
Section 3-70 as follows:
(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, and on and after January 1, 2018, 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 paragraph (5) of Section 3-5 of

HB4491 - 19 - LRB100 16182 HLH 31303 b
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 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
equipment or the exempt graphic arts machinery and equipment,

HB4491 - 20 - LRB100 16182 HLH 31303 b
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
Manufacturer's Purchase Credit shall certify to the seller

HB4491 - 21 - LRB100 16182 HLH 31303 b
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
credit. A manufacturer or graphic arts producer that enters

HB4491 - 22 - LRB100 16182 HLH 31303 b
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
lessor who rents or leases the use of the property to a

HB4491 - 23 - LRB100 16182 HLH 31303 b
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
personal property used or consumed by the purchaser for

HB4491 - 24 - LRB100 16182 HLH 31303 b
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
property may be liable for tax, penalty, and interest on the

HB4491 - 25 - LRB100 16182 HLH 31303 b
purchase of that property as of the date of purchase but shall
be entitled to use the disallowed Manufacturer's Purchase
Credit, so long as it has not expired and is used prior to
October 1, 2003, on qualifying purchases of production related
tangible personal property not previously subject to credit
usage. The Manufacturer's Purchase Credit earned by a
manufacturer or graphic arts producer expires the last day of
the second calendar year following the calendar year in which
the credit arose. No Manufacturer's Purchase Credit may be used
after September 30, 2003 regardless of when that credit was
earned.
A purchaser earning Manufacturer's Purchase Credit shall
sign and file an annual Report of Manufacturer's Purchase
Credit Earned for each calendar year no later than the last day
of the sixth month following the calendar year in which a
Manufacturer's Purchase Credit is earned. A Report of
Manufacturer's Purchase Credit Earned shall be filed on forms
as prescribed or approved by the Department and shall state,
for each month of the calendar year: (i) the total purchase
price of all purchases of exempt manufacturing or graphic arts
machinery on which the credit was earned; (ii) the total State
Use Tax or Service Use Tax which would have been due on those
items; (iii) the percentage used to calculate the amount of
credit earned; (iv) the amount of credit earned; and (v) such
other information as the Department may reasonably require. A
purchaser earning Manufacturer's Purchase Credit shall

HB4491 - 26 - LRB100 16182 HLH 31303 b
maintain records which identify, as to each purchase of
manufacturing or graphic arts machinery and equipment on which
the purchaser earned Manufacturer's Purchase Credit, the
vendor (including, if applicable, either the vendor's
registration number or Federal Employer Identification
Number), the purchase price, and the amount of Manufacturer's
Purchase Credit earned on each purchase.
A purchaser using Manufacturer's Purchase Credit shall
sign and file an annual Report of Manufacturer's Purchase
Credit Used for each calendar year no later than the last day
of the sixth month following the calendar year in which a
Manufacturer's Purchase Credit is used. A Report of
Manufacturer's Purchase Credit Used shall be filed on forms as
prescribed or approved by the Department and shall state, for
each month of the calendar year: (i) the total purchase price
of production related tangible personal property purchased
from Illinois suppliers; (ii) the total purchase price of
production related tangible personal property purchased from
out-of-state suppliers; (iii) the total amount of credit used
during such month; and (iv) such other information as the
Department may reasonably require. A purchaser using
Manufacturer's Purchase Credit shall maintain records that
identify, as to each purchase of production related tangible
personal property on which the purchaser used Manufacturer's
Purchase Credit, the vendor (including, if applicable, either
the vendor's registration number or Federal Employer

HB4491 - 27 - LRB100 16182 HLH 31303 b
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
production related tangible personal property made after the

HB4491 - 28 - LRB100 16182 HLH 31303 b
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. This subsection (b) applies to
Manufacturer's Purchase Credit earned on or after September 1,
2004. Manufacturer's Purchase Credit earned on or after
September 1, 2004 may only be used to satisfy the Use Tax or

HB4491 - 29 - LRB100 16182 HLH 31303 b
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 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 as required by the Department. The
Manufacturer's Purchase Credit earned by purchase of exempt
manufacturing machinery and equipment or graphic arts

HB4491 - 30 - LRB100 16182 HLH 31303 b
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
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

HB4491 - 31 - LRB100 16182 HLH 31303 b
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
personal property used or consumed by the purchaser for

HB4491 - 32 - LRB100 16182 HLH 31303 b
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
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

HB4491 - 33 - LRB100 16182 HLH 31303 b
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
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

HB4491 - 34 - LRB100 16182 HLH 31303 b
the purchaser earned Manufacturer's Purchase Credit, the
vendor (including, if applicable, either the vendor's
registration number or Federal Employer Identification
Number), the purchase price, and the amount of Manufacturer's
Purchase Credit earned on each purchase.
A purchaser using Manufacturer's Purchase Credit shall
sign and file an annual Report of Manufacturer's Purchase
Credit Used for each calendar year no later than the last day
of the sixth month following the calendar year in which a
Manufacturer's Purchase Credit is used. A Report of
Manufacturer's Purchase Credit Used shall be filed on forms as
prescribed or approved by the Department and shall state, for
each month of the calendar year: (i) the total purchase price
of production related tangible personal property purchased
from Illinois suppliers; (ii) the total purchase price of
production related tangible personal property purchased from
out-of-state suppliers; (iii) the total amount of credit used
during such month; and (iv) such other information as the
Department may reasonably require. A purchaser using
Manufacturer's Purchase Credit shall maintain records that
identify, as to each purchase of production related tangible
personal property on which the purchaser used Manufacturer's
Purchase Credit, the vendor (including, if applicable, either
the vendor's registration number or Federal Employer
Identification Number), the purchase price, and the amount of
Manufacturer's Purchase Credit used on each purchase.

HB4491 - 35 - LRB100 16182 HLH 31303 b
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
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

HB4491 - 36 - LRB100 16182 HLH 31303 b
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.
This Section is exempt from the provisions of Section 3-75.
(Source: P.A. 96-116, eff. 7-31-09.)
Section 99. Effective date. This Act takes effect upon
becoming law.