Bill Text: IL SB1327 | 2017-2018 | 100th General Assembly | Introduced


Bill Title: Amends the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, and the Retailers' Occupation Tax Act. Provides that the exemption for graphic arts machinery and equipment applies for all periods on and after September 1, 2004. Provides that the exemption includes production related tangible personal property beginning on July 1, 2014. Provides that, beginning on July 1, 2014, the manufacturing and assembly exemption also includes production related tangible personal property. Makes changes to the definition of "production related tangible personal property". Provides that the graphic arts exemption and the manufacturing and assembly exemption are each exempt from the Acts' automatic sunset provisions. Effective immediately.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced) 2017-04-07 - Rule 2-10 Committee Deadline Established As May 5, 2017 [SB1327 Detail]

Download: Illinois-2017-SB1327-Introduced.html


100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
SB1327

Introduced 2/9/2017, by Sen. Kyle McCarter

SYNOPSIS AS INTRODUCED:
35 ILCS 105/3-5
35 ILCS 105/3-30 from Ch. 120, par. 439.3-30
35 ILCS 105/3-50 from Ch. 120, par. 439.3-50
35 ILCS 110/2 from Ch. 120, par. 439.32
35 ILCS 110/3-5
35 ILCS 110/3-30 from Ch. 120, par. 439.33-30
35 ILCS 115/2 from Ch. 120, par. 439.102
35 ILCS 115/3-5
35 ILCS 115/3-30 from Ch. 120, par. 439.103-30
35 ILCS 120/2-5
35 ILCS 120/2-30 from Ch. 120, par. 441-30
35 ILCS 120/2-45 from Ch. 120, par. 441-45

Amends the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, and the Retailers' Occupation Tax Act. Provides that the exemption for graphic arts machinery and equipment applies for all periods on and after September 1, 2004. Provides that the exemption includes production related tangible personal property beginning on July 1, 2014. Provides that, beginning on July 1, 2014, the manufacturing and assembly exemption also includes production related tangible personal property. Makes changes to the definition of "production related tangible personal property". Provides that the graphic arts exemption and the manufacturing and assembly exemption are each exempt from the Acts' automatic sunset provisions. Effective immediately.
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FISCAL NOTE ACT MAY APPLY

A BILL FOR

SB1327LRB100 05630 HLH 15644 b
1 AN ACT concerning revenue.
2 Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4 Section 5. The Use Tax Act is amended by changing Sections
53-5, 3-30, and 3-50 as follows:
6 (35 ILCS 105/3-5)
7 Sec. 3-5. Exemptions. Use of the following tangible
8personal property is exempt from the tax imposed by this Act:
9 (1) Personal property purchased from a corporation,
10society, association, foundation, institution, or
11organization, other than a limited liability company, that is
12organized and operated as a not-for-profit service enterprise
13for the benefit of persons 65 years of age or older if the
14personal property was not purchased by the enterprise for the
15purpose of resale by the enterprise.
16 (2) Personal property purchased by a not-for-profit
17Illinois county fair association for use in conducting,
18operating, or promoting the county fair.
19 (3) Personal property purchased by a not-for-profit arts or
20cultural organization that establishes, by proof required by
21the Department by rule, that it has received an exemption under
22Section 501(c)(3) of the Internal Revenue Code and that is
23organized and operated primarily for the presentation or

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1support of arts or cultural programming, activities, or
2services. These organizations include, but are not limited to,
3music and dramatic arts organizations such as symphony
4orchestras and theatrical groups, arts and cultural service
5organizations, local arts councils, visual arts organizations,
6and media arts organizations. On and after the effective date
7of this amendatory Act of the 92nd General Assembly, however,
8an entity otherwise eligible for this exemption shall not make
9tax-free purchases unless it has an active identification
10number issued by the Department.
11 (4) Personal property purchased by a governmental body, by
12a corporation, society, association, foundation, or
13institution organized and operated exclusively for charitable,
14religious, or educational purposes, or by a not-for-profit
15corporation, society, association, foundation, institution, or
16organization that has no compensated officers or employees and
17that is organized and operated primarily for the recreation of
18persons 55 years of age or older. A limited liability company
19may qualify for the exemption under this paragraph only if the
20limited liability company is organized and operated
21exclusively for educational purposes. On and after July 1,
221987, however, no entity otherwise eligible for this exemption
23shall make tax-free purchases unless it has an active exemption
24identification number issued by the Department.
25 (5) Until July 1, 2003, a passenger car that is a
26replacement vehicle to the extent that the purchase price of

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1the car is subject to the Replacement Vehicle Tax.
2 (6) Until July 1, 2003 and beginning again on September 1,
32004 through August 30, 2014, graphic arts machinery and
4equipment, including repair and replacement parts, both new and
5used, and including that manufactured on special order,
6certified by the purchaser to be used primarily for graphic
7arts production, and including machinery and equipment
8purchased for lease. Equipment includes chemicals or chemicals
9acting as catalysts but only if the chemicals or chemicals
10acting as catalysts effect a direct and immediate change upon a
11graphic arts product. The exemption under this paragraph (6)
12also includes production related tangible personal property,
13as defined in Section 3-30, purchased on or after July 1, 2014.
14The exemption under this paragraph (6) is exempt from the
15provisions of Section 3-90.
16 (7) Farm chemicals.
17 (8) Legal tender, currency, medallions, or gold or silver
18coinage issued by the State of Illinois, the government of the
19United States of America, or the government of any foreign
20country, and bullion.
21 (9) Personal property purchased from a teacher-sponsored
22student organization affiliated with an elementary or
23secondary school located in Illinois.
24 (10) A motor vehicle that is used for automobile renting,
25as defined in the Automobile Renting Occupation and Use Tax
26Act.

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1 (11) Farm machinery and equipment, both new and used,
2including that manufactured on special order, certified by the
3purchaser to be used primarily for production agriculture or
4State or federal agricultural programs, including individual
5replacement parts for the machinery and equipment, including
6machinery and equipment purchased for lease, and including
7implements of husbandry defined in Section 1-130 of the
8Illinois Vehicle Code, farm machinery and agricultural
9chemical and fertilizer spreaders, and nurse wagons required to
10be registered under Section 3-809 of the Illinois Vehicle Code,
11but excluding other motor vehicles required to be registered
12under the Illinois Vehicle Code. Horticultural polyhouses or
13hoop houses used for propagating, growing, or overwintering
14plants shall be considered farm machinery and equipment under
15this item (11). Agricultural chemical tender tanks and dry
16boxes shall include units sold separately from a motor vehicle
17required to be licensed and units sold mounted on a motor
18vehicle required to be licensed if the selling price of the
19tender is separately stated.
20 Farm machinery and equipment shall include precision
21farming equipment that is installed or purchased to be
22installed on farm machinery and equipment including, but not
23limited to, tractors, harvesters, sprayers, planters, seeders,
24or spreaders. Precision farming equipment includes, but is not
25limited to, soil testing sensors, computers, monitors,
26software, global positioning and mapping systems, and other

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1such equipment.
2 Farm machinery and equipment also includes computers,
3sensors, software, and related equipment used primarily in the
4computer-assisted operation of production agriculture
5facilities, equipment, and activities such as, but not limited
6to, the collection, monitoring, and correlation of animal and
7crop data for the purpose of formulating animal diets and
8agricultural chemicals. This item (11) is exempt from the
9provisions of Section 3-90.
10 (12) Until June 30, 2013, fuel and petroleum products sold
11to or used by an air common carrier, certified by the carrier
12to be used for consumption, shipment, or storage in the conduct
13of its business as an air common carrier, for a flight destined
14for or returning from a location or locations outside the
15United States without regard to previous or subsequent domestic
16stopovers.
17 Beginning July 1, 2013, fuel and petroleum products sold to
18or used by an air carrier, certified by the carrier to be used
19for consumption, shipment, or storage in the conduct of its
20business as an air common carrier, for a flight that (i) is
21engaged in foreign trade or is engaged in trade between the
22United States and any of its possessions and (ii) transports at
23least one individual or package for hire from the city of
24origination to the city of final destination on the same
25aircraft, without regard to a change in the flight number of
26that aircraft.

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1 (13) Proceeds of mandatory service charges separately
2stated on customers' bills for the purchase and consumption of
3food and beverages purchased at retail from a retailer, to the
4extent that the proceeds of the service charge are in fact
5turned over as tips or as a substitute for tips to the
6employees who participate directly in preparing, serving,
7hosting or cleaning up the food or beverage function with
8respect to which the service charge is imposed.
9 (14) Until July 1, 2003, oil field exploration, drilling,
10and production equipment, including (i) rigs and parts of rigs,
11rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
12tubular goods, including casing and drill strings, (iii) pumps
13and pump-jack units, (iv) storage tanks and flow lines, (v) any
14individual replacement part for oil field exploration,
15drilling, and production equipment, and (vi) machinery and
16equipment purchased for lease; but excluding motor vehicles
17required to be registered under the Illinois Vehicle Code.
18 (15) Photoprocessing machinery and equipment, including
19repair and replacement parts, both new and used, including that
20manufactured on special order, certified by the purchaser to be
21used primarily for photoprocessing, and including
22photoprocessing machinery and equipment purchased for lease.
23 (16) Coal and aggregate exploration, mining, off-highway
24hauling, processing, maintenance, and reclamation equipment,
25including replacement parts and equipment, and including
26equipment purchased for lease, but excluding motor vehicles

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1required to be registered under the Illinois Vehicle Code. The
2changes made to this Section by Public Act 97-767 apply on and
3after July 1, 2003, but no claim for credit or refund is
4allowed on or after August 16, 2013 (the effective date of
5Public Act 98-456) for such taxes paid during the period
6beginning July 1, 2003 and ending on August 16, 2013 (the
7effective date of Public Act 98-456).
8 (17) Until July 1, 2003, distillation machinery and
9equipment, sold as a unit or kit, assembled or installed by the
10retailer, certified by the user to be used only for the
11production of ethyl alcohol that will be used for consumption
12as motor fuel or as a component of motor fuel for the personal
13use of the user, and not subject to sale or resale.
14 (18) Manufacturing and assembling machinery and equipment
15used primarily in the process of manufacturing or assembling
16tangible personal property for wholesale or retail sale or
17lease, whether that sale or lease is made directly by the
18manufacturer or by some other person, whether the materials
19used in the process are owned by the manufacturer or some other
20person, or whether that sale or lease is made apart from or as
21an incident to the seller's engaging in the service occupation
22of producing machines, tools, dies, jigs, patterns, gauges, or
23other similar items of no commercial value on special order for
24a particular purchaser. The exemption provided by this
25paragraph (18) also includes production related tangible
26personal property, as defined in Section 3-50, purchased on or

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1after July 1, 2014. The exemption provided by this paragraph
2(18) does not include machinery and equipment used in (i) the
3generation of electricity for wholesale or retail sale; (ii)
4the generation or treatment of natural or artificial gas for
5wholesale or retail sale that is delivered to customers through
6pipes, pipelines, or mains; or (iii) the treatment of water for
7wholesale or retail sale that is delivered to customers through
8pipes, pipelines, or mains. The provisions of Public Act 98-583
9are declaratory of existing law as to the meaning and scope of
10this exemption. The exemption under this paragraph (6) is
11exempt from the provisions of Section 3-90.
12 (19) Personal property delivered to a purchaser or
13purchaser's donee inside Illinois when the purchase order for
14that personal property was received by a florist located
15outside Illinois who has a florist located inside Illinois
16deliver the personal property.
17 (20) Semen used for artificial insemination of livestock
18for direct agricultural production.
19 (21) Horses, or interests in horses, registered with and
20meeting the requirements of any of the Arabian Horse Club
21Registry of America, Appaloosa Horse Club, American Quarter
22Horse Association, United States Trotting Association, or
23Jockey Club, as appropriate, used for purposes of breeding or
24racing for prizes. This item (21) is exempt from the provisions
25of Section 3-90, and the exemption provided for under this item
26(21) applies for all periods beginning May 30, 1995, but no

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1claim for credit or refund is allowed on or after January 1,
22008 for such taxes paid during the period beginning May 30,
32000 and ending on January 1, 2008.
4 (22) Computers and communications equipment utilized for
5any hospital purpose and equipment used in the diagnosis,
6analysis, or treatment of hospital patients purchased by a
7lessor who leases the equipment, under a lease of one year or
8longer executed or in effect at the time the lessor would
9otherwise be subject to the tax imposed by this Act, to a
10hospital that has been issued an active tax exemption
11identification number by the Department under Section 1g of the
12Retailers' Occupation Tax Act. If the equipment is leased in a
13manner that does not qualify for this exemption or is used in
14any other non-exempt manner, the lessor shall be liable for the
15tax imposed under this Act or the Service Use Tax Act, as the
16case may be, based on the fair market value of the property at
17the time the non-qualifying use occurs. No lessor shall collect
18or attempt to collect an amount (however designated) that
19purports to reimburse that lessor for the tax imposed by this
20Act or the Service Use Tax Act, as the case may be, if the tax
21has not been paid by the lessor. If a lessor improperly
22collects any such amount from the lessee, the lessee shall have
23a legal right to claim a refund of that amount from the lessor.
24If, however, that amount is not refunded to the lessee for any
25reason, the lessor is liable to pay that amount to the
26Department.

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

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1corporation, society, association, foundation, or institution
2that has been issued a sales tax exemption identification
3number by the Department that assists victims of the disaster
4who reside within the declared disaster area.
5 (25) Beginning with taxable years ending on or after
6December 31, 1995 and ending with taxable years ending on or
7before December 31, 2004, personal property that is used in the
8performance of infrastructure repairs in this State, including
9but not limited to municipal roads and streets, access roads,
10bridges, sidewalks, waste disposal systems, water and sewer
11line extensions, water distribution and purification
12facilities, storm water drainage and retention facilities, and
13sewage treatment facilities, resulting from a State or
14federally declared disaster in Illinois or bordering Illinois
15when such repairs are initiated on facilities located in the
16declared disaster area within 6 months after the disaster.
17 (26) Beginning July 1, 1999, game or game birds purchased
18at a "game breeding and hunting preserve area" as that term is
19used in the Wildlife Code. This paragraph is exempt from the
20provisions of Section 3-90.
21 (27) A motor vehicle, as that term is defined in Section
221-146 of the Illinois Vehicle Code, that is donated to a
23corporation, limited liability company, society, association,
24foundation, or institution that is determined by the Department
25to be organized and operated exclusively for educational
26purposes. For purposes of this exemption, "a corporation,

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1limited liability company, society, association, foundation,
2or institution organized and operated exclusively for
3educational purposes" means all tax-supported public schools,
4private schools that offer systematic instruction in useful
5branches of learning by methods common to public schools and
6that compare favorably in their scope and intensity with the
7course of study presented in tax-supported schools, and
8vocational or technical schools or institutes organized and
9operated exclusively to provide a course of study of not less
10than 6 weeks duration and designed to prepare individuals to
11follow a trade or to pursue a manual, technical, mechanical,
12industrial, business, or commercial occupation.
13 (28) Beginning January 1, 2000, personal property,
14including food, purchased through fundraising events for the
15benefit of a public or private elementary or secondary school,
16a group of those schools, or one or more school districts if
17the events are sponsored by an entity recognized by the school
18district that consists primarily of volunteers and includes
19parents and teachers of the school children. This paragraph
20does not apply to fundraising events (i) for the benefit of
21private home instruction or (ii) for which the fundraising
22entity purchases the personal property sold at the events from
23another individual or entity that sold the property for the
24purpose of resale by the fundraising entity and that profits
25from the sale to the fundraising entity. This paragraph is
26exempt from the provisions of Section 3-90.

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1 (29) Beginning January 1, 2000 and through December 31,
22001, new or used automatic vending machines that prepare and
3serve hot food and beverages, including coffee, soup, and other
4items, and replacement parts for these machines. Beginning
5January 1, 2002 and through June 30, 2003, machines and parts
6for machines used in commercial, coin-operated amusement and
7vending business if a use or occupation tax is paid on the
8gross receipts derived from the use of the commercial,
9coin-operated amusement and vending machines. This paragraph
10is exempt from the provisions of Section 3-90.
11 (30) Beginning January 1, 2001 and through June 30, 2016,
12food for human consumption that is to be consumed off the
13premises where it is sold (other than alcoholic beverages, soft
14drinks, and food that has been prepared for immediate
15consumption) and prescription and nonprescription medicines,
16drugs, medical appliances, and insulin, urine testing
17materials, syringes, and needles used by diabetics, for human
18use, when purchased for use by a person receiving medical
19assistance under Article V of the Illinois Public Aid Code who
20resides in a licensed long-term care facility, as defined in
21the Nursing Home Care Act, or in a licensed facility as defined
22in the ID/DD Community Care Act, the MC/DD Act, or the
23Specialized Mental Health Rehabilitation Act of 2013.
24 (31) Beginning on the effective date of this amendatory Act
25of the 92nd General Assembly, computers and communications
26equipment utilized for any hospital purpose and equipment used

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

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1otherwise be subject to the tax imposed by this Act, to a
2governmental body that has been issued an active sales tax
3exemption identification number by the Department under
4Section 1g of the Retailers' Occupation Tax Act. If the
5property is leased in a manner that does not qualify for this
6exemption or used in any other nonexempt manner, the lessor
7shall be liable for the tax imposed under this Act or the
8Service Use Tax Act, as the case may be, based on the fair
9market value of the property at the time the nonqualifying use
10occurs. No lessor shall collect or attempt to collect an amount
11(however designated) that purports to reimburse that lessor for
12the tax imposed by this Act or the Service Use Tax Act, as the
13case may be, if the tax has not been paid by the lessor. If a
14lessor improperly collects any such amount from the lessee, the
15lessee shall have a legal right to claim a refund of that
16amount from the lessor. If, however, that amount is not
17refunded to the lessee for any reason, the lessor is liable to
18pay that amount to the Department. This paragraph is exempt
19from the provisions of Section 3-90.
20 (33) On and after July 1, 2003 and through June 30, 2004,
21the use in this State of motor vehicles of the second division
22with a gross vehicle weight in excess of 8,000 pounds and that
23are subject to the commercial distribution fee imposed under
24Section 3-815.1 of the Illinois Vehicle Code. Beginning on July
251, 2004 and through June 30, 2005, the use in this State of
26motor vehicles of the second division: (i) with a gross vehicle

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1weight rating in excess of 8,000 pounds; (ii) that are subject
2to the commercial distribution fee imposed under Section
33-815.1 of the Illinois Vehicle Code; and (iii) that are
4primarily used for commercial purposes. Through June 30, 2005,
5this exemption applies to repair and replacement parts added
6after the initial purchase of such a motor vehicle if that
7motor vehicle is used in a manner that would qualify for the
8rolling stock exemption otherwise provided for in this Act. For
9purposes of this paragraph, the term "used for commercial
10purposes" means the transportation of persons or property in
11furtherance of any commercial or industrial enterprise,
12whether for-hire or not.
13 (34) Beginning January 1, 2008, tangible personal property
14used in the construction or maintenance of a community water
15supply, as defined under Section 3.145 of the Environmental
16Protection Act, that is operated by a not-for-profit
17corporation that holds a valid water supply permit issued under
18Title IV of the Environmental Protection Act. This paragraph is
19exempt from the provisions of Section 3-90.
20 (35) Beginning January 1, 2010, materials, parts,
21equipment, components, and furnishings incorporated into or
22upon an aircraft as part of the modification, refurbishment,
23completion, replacement, repair, or maintenance of the
24aircraft. This exemption includes consumable supplies used in
25the modification, refurbishment, completion, replacement,
26repair, and maintenance of aircraft, but excludes any

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1materials, parts, equipment, components, and consumable
2supplies used in the modification, replacement, repair, and
3maintenance of aircraft engines or power plants, whether such
4engines or power plants are installed or uninstalled upon any
5such aircraft. "Consumable supplies" include, but are not
6limited to, adhesive, tape, sandpaper, general purpose
7lubricants, cleaning solution, latex gloves, and protective
8films. This exemption applies only to the use of qualifying
9tangible personal property by persons who modify, refurbish,
10complete, repair, replace, or maintain aircraft and who (i)
11hold an Air Agency Certificate and are empowered to operate an
12approved repair station by the Federal Aviation
13Administration, (ii) have a Class IV Rating, and (iii) conduct
14operations in accordance with Part 145 of the Federal Aviation
15Regulations. The exemption does not include aircraft operated
16by a commercial air carrier providing scheduled passenger air
17service pursuant to authority issued under Part 121 or Part 129
18of the Federal Aviation Regulations. The changes made to this
19paragraph (35) by Public Act 98-534 are declarative of existing
20law.
21 (36) Tangible personal property purchased by a
22public-facilities corporation, as described in Section
2311-65-10 of the Illinois Municipal Code, for purposes of
24constructing or furnishing a municipal convention hall, but
25only if the legal title to the municipal convention hall is
26transferred to the municipality without any further

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1consideration by or on behalf of the municipality at the time
2of the completion of the municipal convention hall or upon the
3retirement or redemption of any bonds or other debt instruments
4issued by the public-facilities corporation in connection with
5the development of the municipal convention hall. This
6exemption includes existing public-facilities corporations as
7provided in Section 11-65-25 of the Illinois Municipal Code.
8This paragraph is exempt from the provisions of Section 3-90.
9 (37) Beginning January 1, 2017, menstrual pads, tampons,
10and menstrual cups.
11(Source: P.A. 98-104, eff. 7-22-13; 98-422, eff. 8-16-13;
1298-456, eff. 8-16-13; 98-534, eff. 8-23-13; 98-574, eff.
131-1-14; 98-583, eff. 1-1-14; 98-756, eff. 7-16-14; 99-180, eff.
147-29-15; 99-855, eff. 8-19-16.)
15 (35 ILCS 105/3-30) (from Ch. 120, par. 439.3-30)
16 Sec. 3-30. Graphic arts production. For the purposes of
17this Act, "graphic arts production" means the production of
18tangible personal property for wholesale or retail sale or
19lease by means of printing, including ink jet printing, by one
20or more of the processes described in Groups 323110 through
21323122 of Subsector 323, Groups 511110 through 511199 of
22Subsector 511, and Group 512230 of Subsector 512 of the North
23American Industry Classification System published by the U.S.
24Office of Management and Budget, 1997 edition. Graphic arts
25production does not include (i) the transfer of images onto

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1paper or other tangible personal property by means of
2photocopying or (ii) final printed products in electronic or
3audio form, including the production of software or
4audio-books. For purposes of this Section, persons engaged
5primarily in the business of printing or publishing newspapers
6or magazines that qualify as newsprint and ink, by one or more
7of the processes described in Groups 511110 through 511199 of
8subsector 511 of the North American Industry Classification
9System published by the U.S. Office of Management and Budget,
101997 edition, are deemed to be engaged in graphic arts
11production.
12 For the purposes of the exemption provided in paragraph (6)
13of Section 3-5 of this Act, "production related tangible
14personal property" means all tangible personal property that is
15used or consumed by the purchaser in a graphic arts facility in
16which graphic arts production takes place and includes, without
17limitation, tangible personal property that is purchased for
18incorporation into real estate within a graphic arts production
19facility, supplies and consumables used in a graphic arts
20production facility including fuels, coolants, solvents, oils,
21lubricants, and adhesives, hand tools, protective apparel, and
22fire and safety equipment used or consumed within a
23manufacturing facility, and tangible personal property that is
24used or consumed in activities such as research and
25development, preproduction material handling, receiving,
26quality control, inventory control, storage, staging, and

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1packaging for shipping and transportation purposes.
2"Production related tangible personal property" does not
3include (i) tangible personal property that is used, within or
4without a graphic arts production facility, in sales,
5purchasing, accounting, fiscal management, marketing,
6personnel recruitment or selection, or landscaping or (ii)
7tangible personal property that is required to be titled or
8registered with a department, agency, or unit of federal,
9State, or local government.
10(Source: P.A. 96-116, eff. 7-31-09.)
11 (35 ILCS 105/3-50) (from Ch. 120, par. 439.3-50)
12 Sec. 3-50. Manufacturing and assembly exemption. The
13manufacturing and assembling machinery and equipment exemption
14includes machinery and equipment that replaces machinery and
15equipment in an existing manufacturing facility as well as
16machinery and equipment that are for use in an expanded or new
17manufacturing facility. The machinery and equipment exemption
18also includes machinery and equipment used in the general
19maintenance or repair of exempt machinery and equipment or for
20in-house manufacture of exempt machinery and equipment. The
21machinery and equipment exemption does not include machinery
22and equipment used in (i) the generation of electricity for
23wholesale or retail sale; (ii) the generation or treatment of
24natural or artificial gas for wholesale or retail sale that is
25delivered to customers through pipes, pipelines, or mains; or

SB1327- 21 -LRB100 05630 HLH 15644 b
1(iii) the treatment of water for wholesale or retail sale that
2is delivered to customers through pipes, pipelines, or mains.
3The provisions of this amendatory Act of the 98th General
4Assembly are declaratory of existing law as to the meaning and
5scope of this exemption. For the purposes of this exemption,
6terms have the following meanings:
7 (1) "Manufacturing process" means the production of an
8 article of tangible personal property, whether the article
9 is a finished product or an article for use in the process
10 of manufacturing or assembling a different article of
11 tangible personal property, by a procedure commonly
12 regarded as manufacturing, processing, fabricating, or
13 refining that changes some existing material into a
14 material with a different form, use, or name. In relation
15 to a recognized integrated business composed of a series of
16 operations that collectively constitute manufacturing, or
17 individually constitute manufacturing operations, the
18 manufacturing process commences with the first operation
19 or stage of production in the series and does not end until
20 the completion of the final product in the last operation
21 or stage of production in the series. For purposes of this
22 exemption, photoprocessing is a manufacturing process of
23 tangible personal property for wholesale or retail sale.
24 (2) "Assembling process" means the production of an
25 article of tangible personal property, whether the article
26 is a finished product or an article for use in the process

SB1327- 22 -LRB100 05630 HLH 15644 b
1 of manufacturing or assembling a different article of
2 tangible personal property, by the combination of existing
3 materials in a manner commonly regarded as assembling that
4 results in an article or material of a different form, use,
5 or name.
6 (3) "Machinery" means major mechanical machines or
7 major components of those machines contributing to a
8 manufacturing or assembling process.
9 (4) "Equipment" includes an independent device or tool
10 separate from machinery but essential to an integrated
11 manufacturing or assembly process; including computers
12 used primarily in a manufacturer's computer assisted
13 design, computer assisted manufacturing (CAD/CAM) system;
14 any subunit or assembly comprising a component of any
15 machinery or auxiliary, adjunct, or attachment parts of
16 machinery, such as tools, dies, jigs, fixtures, patterns,
17 and molds; and any parts that require periodic replacement
18 in the course of normal operation; but does not include
19 hand tools. Equipment includes chemicals or chemicals
20 acting as catalysts but only if the chemicals or chemicals
21 acting as catalysts effect a direct and immediate change
22 upon a product being manufactured or assembled for
23 wholesale or retail sale or lease.
24 (5) "Production related tangible personal property"
25 means all tangible personal property that is used or
26 consumed by the purchaser in a manufacturing facility in

SB1327- 23 -LRB100 05630 HLH 15644 b
1 which a manufacturing process takes place and includes,
2 without limitation, tangible personal property that is
3 purchased for incorporation into real estate within a
4 manufacturing facility, supplies and consumables used in a
5 manufacturing facility, including fuels, coolants,
6 solvents, oils, lubricants, and adhesives, hand tools,
7 protective apparel, and fire and safety equipment used or
8 consumed within a manufacturing facility, and tangible
9 personal property that is used or consumed in activities
10 such as research and development, preproduction material
11 handling, receiving, quality control, inventory control,
12 storage, staging, and packaging for shipping and
13 transportation purposes. "Production related tangible
14 personal property" does not include (i) tangible personal
15 property that is used, within or without a manufacturing
16 facility, in sales, purchasing, accounting, fiscal
17 management, marketing, personnel recruitment or selection,
18 or landscaping or (ii) tangible personal property that is
19 required to be titled or registered with a department,
20 agency, or unit of federal, State, or local government.
21 The manufacturing and assembling machinery and equipment
22exemption includes production related tangible personal
23property that is purchased on or after July 1, 2007 and on or
24before June 30, 2008 and on and after July 1, 2014. The
25exemption for production related tangible personal property
26purchased on or after July 1, 2007 and on or before June 30,

SB1327- 24 -LRB100 05630 HLH 15644 b
12008 is subject to both of the following limitations:
2 (1) The maximum amount of the exemption for any one
3 taxpayer may not exceed 5% of the purchase price of
4 production related tangible personal property that is
5 purchased on or after July 1, 2007 and on or before June
6 30, 2008. A credit under Section 3-85 of this Act may not
7 be earned by the purchase of production related tangible
8 personal property for which an exemption is received under
9 this Section.
10 (2) The maximum aggregate amount of the exemptions for
11 production related tangible personal property purchased on
12 or after July 1, 2007 and on or before June 30, 2008
13 awarded under this Act and the Retailers' Occupation Tax
14 Act to all taxpayers may not exceed $10,000,000. If the
15 claims for the exemption exceed $10,000,000, then the
16 Department shall reduce the amount of the exemption to each
17 taxpayer on a pro rata basis.
18The Department shall may adopt rules to implement and
19administer the exemption for production related tangible
20personal property.
21 The manufacturing and assembling machinery and equipment
22exemption includes the sale of materials to a purchaser who
23produces exempted types of machinery, equipment, or tools and
24who rents or leases that machinery, equipment, or tools to a
25manufacturer of tangible personal property. This exemption
26also includes the sale of materials to a purchaser who

SB1327- 25 -LRB100 05630 HLH 15644 b
1manufactures those materials into an exempted type of
2machinery, equipment, or tools that the purchaser uses himself
3or herself in the manufacturing of tangible personal property.
4This exemption includes the sale of exempted types of machinery
5or equipment to a purchaser who is not the manufacturer, but
6who rents or leases the use of the property to a manufacturer.
7The purchaser of the machinery and equipment who has an active
8resale registration number shall furnish that number to the
9seller at the time of purchase. A user of the machinery,
10equipment, or tools without an active resale registration
11number shall prepare a certificate of exemption for each
12transaction stating facts establishing the exemption for that
13transaction, and that certificate shall be available to the
14Department for inspection or audit. The Department shall
15prescribe the form of the certificate. Informal rulings,
16opinions, or letters issued by the Department in response to an
17inquiry or request for an opinion from any person regarding the
18coverage and applicability of this exemption to specific
19devices shall be published, maintained as a public record, and
20made available for public inspection and copying. If the
21informal ruling, opinion, or letter contains trade secrets or
22other confidential information, where possible, the Department
23shall delete that information before publication. Whenever
24informal rulings, opinions, or letters contain a policy of
25general applicability, the Department shall formulate and
26adopt that policy as a rule in accordance with the Illinois

SB1327- 26 -LRB100 05630 HLH 15644 b
1Administrative Procedure Act.
2(Source: P.A. 98-583, eff. 1-1-14.)
3 Section 10. The Service Use Tax Act is amended by changing
4Sections 2, 3-5, and 3-30 as follows:
5 (35 ILCS 110/2) (from Ch. 120, par. 439.32)
6 Sec. 2. Definitions.
7 "Use" means the exercise by any person of any right or
8power over tangible personal property incident to the ownership
9of that property, but does not include the sale or use for
10demonstration by him of that property in any form as tangible
11personal property in the regular course of business. "Use" does
12not mean the interim use of tangible personal property nor the
13physical incorporation of tangible personal property, as an
14ingredient or constituent, into other tangible personal
15property, (a) which is sold in the regular course of business
16or (b) which the person incorporating such ingredient or
17constituent therein has undertaken at the time of such purchase
18to cause to be transported in interstate commerce to
19destinations outside the State of Illinois.
20 "Purchased from a serviceman" means the acquisition of the
21ownership of, or title to, tangible personal property through a
22sale of service.
23 "Purchaser" means any person who, through a sale of
24service, acquires the ownership of, or title to, any tangible

SB1327- 27 -LRB100 05630 HLH 15644 b
1personal property.
2 "Cost price" means the consideration paid by the serviceman
3for a purchase valued in money, whether paid in money or
4otherwise, including cash, credits and services, and shall be
5determined without any deduction on account of the supplier's
6cost of the property sold or on account of any other expense
7incurred by the supplier. When a serviceman contracts out part
8or all of the services required in his sale of service, it
9shall be presumed that the cost price to the serviceman of the
10property transferred to him or her by his or her subcontractor
11is equal to 50% of the subcontractor's charges to the
12serviceman in the absence of proof of the consideration paid by
13the subcontractor for the purchase of such property.
14 "Selling price" means the consideration for a sale valued
15in money whether received in money or otherwise, including
16cash, credits and service, and shall be determined without any
17deduction on account of the serviceman's cost of the property
18sold, the cost of materials used, labor or service cost or any
19other expense whatsoever, but does not include interest or
20finance charges which appear as separate items on the bill of
21sale or sales contract nor charges that are added to prices by
22sellers on account of the seller's duty to collect, from the
23purchaser, the tax that is imposed by this Act.
24 "Department" means the Department of Revenue.
25 "Person" means any natural individual, firm, partnership,
26association, joint stock company, joint venture, public or

SB1327- 28 -LRB100 05630 HLH 15644 b
1private corporation, limited liability company, and any
2receiver, executor, trustee, guardian or other representative
3appointed by order of any court.
4 "Sale of service" means any transaction except:
5 (1) a retail sale of tangible personal property taxable
6 under the Retailers' Occupation Tax Act or under the Use
7 Tax Act.
8 (2) a sale of tangible personal property for the
9 purpose of resale made in compliance with Section 2c of the
10 Retailers' Occupation Tax Act.
11 (3) except as hereinafter provided, a sale or transfer
12 of tangible personal property as an incident to the
13 rendering of service for or by any governmental body, or
14 for or by any corporation, society, association,
15 foundation or institution organized and operated
16 exclusively for charitable, religious or educational
17 purposes or any not-for-profit corporation, society,
18 association, foundation, institution or organization which
19 has no compensated officers or employees and which is
20 organized and operated primarily for the recreation of
21 persons 55 years of age or older. A limited liability
22 company may qualify for the exemption under this paragraph
23 only if the limited liability company is organized and
24 operated exclusively for educational purposes.
25 (4) a sale or transfer of tangible personal property as
26 an incident to the rendering of service for interstate

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1 carriers for hire for use as rolling stock moving in
2 interstate commerce or by lessors under a lease of one year
3 or longer, executed or in effect at the time of purchase of
4 personal property, to interstate carriers for hire for use
5 as rolling stock moving in interstate commerce so long as
6 so used by such interstate carriers for hire, and equipment
7 operated by a telecommunications provider, licensed as a
8 common carrier by the Federal Communications Commission,
9 which is permanently installed in or affixed to aircraft
10 moving in interstate commerce.
11 (4a) a sale or transfer of tangible personal property
12 as an incident to the rendering of service for owners,
13 lessors, or shippers of tangible personal property which is
14 utilized by interstate carriers for hire for use as rolling
15 stock moving in interstate commerce so long as so used by
16 interstate carriers for hire, and equipment operated by a
17 telecommunications provider, licensed as a common carrier
18 by the Federal Communications Commission, which is
19 permanently installed in or affixed to aircraft moving in
20 interstate commerce.
21 (4a-5) on and after July 1, 2003 and through June 30,
22 2004, a sale or transfer of a motor vehicle of the second
23 division with a gross vehicle weight in excess of 8,000
24 pounds as an incident to the rendering of service if that
25 motor vehicle is subject to the commercial distribution fee
26 imposed under Section 3-815.1 of the Illinois Vehicle Code.

SB1327- 30 -LRB100 05630 HLH 15644 b
1 Beginning on July 1, 2004 and through June 30, 2005, the
2 use in this State of motor vehicles of the second division:
3 (i) with a gross vehicle weight rating in excess of 8,000
4 pounds; (ii) that are subject to the commercial
5 distribution fee imposed under Section 3-815.1 of the
6 Illinois Vehicle Code; and (iii) that are primarily used
7 for commercial purposes. Through June 30, 2005, this
8 exemption applies to repair and replacement parts added
9 after the initial purchase of such a motor vehicle if that
10 motor vehicle is used in a manner that would qualify for
11 the rolling stock exemption otherwise provided for in this
12 Act. For purposes of this paragraph, "used for commercial
13 purposes" means the transportation of persons or property
14 in furtherance of any commercial or industrial enterprise
15 whether for-hire or not.
16 (5) a sale or transfer of machinery and equipment used
17 primarily in the process of the manufacturing or
18 assembling, either in an existing, an expanded or a new
19 manufacturing facility, of tangible personal property for
20 wholesale or retail sale or lease, whether such sale or
21 lease is made directly by the manufacturer or by some other
22 person, whether the materials used in the process are owned
23 by the manufacturer or some other person, or whether such
24 sale or lease is made apart from or as an incident to the
25 seller's engaging in a service occupation and the
26 applicable tax is a Service Use Tax or Service Occupation

SB1327- 31 -LRB100 05630 HLH 15644 b
1 Tax, rather than Use Tax or Retailers' Occupation Tax. The
2 exemption provided by this paragraph (5) does not include
3 machinery and equipment used in (i) the generation of
4 electricity for wholesale or retail sale; (ii) the
5 generation or treatment of natural or artificial gas for
6 wholesale or retail sale that is delivered to customers
7 through pipes, pipelines, or mains; or (iii) the treatment
8 of water for wholesale or retail sale that is delivered to
9 customers through pipes, pipelines, or mains. The
10 provisions of this amendatory Act of the 98th General
11 Assembly are declaratory of existing law as to the meaning
12 and scope of this exemption. The exemption under this
13 paragraph (5) is exempt from the provisions of Section
14 3-75.
15 (5a) the repairing, reconditioning or remodeling, for
16 a common carrier by rail, of tangible personal property
17 which belongs to such carrier for hire, and as to which
18 such carrier receives the physical possession of the
19 repaired, reconditioned or remodeled item of tangible
20 personal property in Illinois, and which such carrier
21 transports, or shares with another common carrier in the
22 transportation of such property, out of Illinois on a
23 standard uniform bill of lading showing the person who
24 repaired, reconditioned or remodeled the property to a
25 destination outside Illinois, for use outside Illinois.
26 (5b) a sale or transfer of tangible personal property

SB1327- 32 -LRB100 05630 HLH 15644 b
1 which is produced by the seller thereof on special order in
2 such a way as to have made the applicable tax the Service
3 Occupation Tax or the Service Use Tax, rather than the
4 Retailers' Occupation Tax or the Use Tax, for an interstate
5 carrier by rail which receives the physical possession of
6 such property in Illinois, and which transports such
7 property, or shares with another common carrier in the
8 transportation of such property, out of Illinois on a
9 standard uniform bill of lading showing the seller of the
10 property as the shipper or consignor of such property to a
11 destination outside Illinois, for use outside Illinois.
12 (6) until July 1, 2003, a sale or transfer of
13 distillation machinery and equipment, sold as a unit or kit
14 and assembled or installed by the retailer, which machinery
15 and equipment is certified by the user to be used only for
16 the production of ethyl alcohol that will be used for
17 consumption as motor fuel or as a component of motor fuel
18 for the personal use of such user and not subject to sale
19 or resale.
20 (7) at the election of any serviceman not required to
21 be otherwise registered as a retailer under Section 2a of
22 the Retailers' Occupation Tax Act, made for each fiscal
23 year sales of service in which the aggregate annual cost
24 price of tangible personal property transferred as an
25 incident to the sales of service is less than 35%, or 75%
26 in the case of servicemen transferring prescription drugs

SB1327- 33 -LRB100 05630 HLH 15644 b
1 or servicemen engaged in graphic arts production, of the
2 aggregate annual total gross receipts from all sales of
3 service. The purchase of such tangible personal property by
4 the serviceman shall be subject to tax under the Retailers'
5 Occupation Tax Act and the Use Tax Act. However, if a
6 primary serviceman who has made the election described in
7 this paragraph subcontracts service work to a secondary
8 serviceman who has also made the election described in this
9 paragraph, the primary serviceman does not incur a Use Tax
10 liability if the secondary serviceman (i) has paid or will
11 pay Use Tax on his or her cost price of any tangible
12 personal property transferred to the primary serviceman
13 and (ii) certifies that fact in writing to the primary
14 serviceman.
15 Tangible personal property transferred incident to the
16completion of a maintenance agreement is exempt from the tax
17imposed pursuant to this Act.
18 Exemption (5) also includes machinery and equipment used in
19the general maintenance or repair of such exempt machinery and
20equipment or for in-house manufacture of exempt machinery and
21equipment. Beginning on July 1, 2014, exemption (5) also
22includes production related tangible personal property, as
23defined in Section 3-50 of the Use Tax Act. The machinery and
24equipment exemption does not include machinery and equipment
25used in (i) the generation of electricity for wholesale or
26retail sale; (ii) the generation or treatment of natural or

SB1327- 34 -LRB100 05630 HLH 15644 b
1artificial gas for wholesale or retail sale that is delivered
2to customers through pipes, pipelines, or mains; or (iii) the
3treatment of water for wholesale or retail sale that is
4delivered to customers through pipes, pipelines, or mains. The
5provisions of this amendatory Act of the 98th General Assembly
6are declaratory of existing law as to the meaning and scope of
7this exemption. For the purposes of exemption (5), each of
8these terms shall have the following meanings: (1)
9"manufacturing process" shall mean the production of any
10article of tangible personal property, whether such article is
11a finished product or an article for use in the process of
12manufacturing or assembling a different article of tangible
13personal property, by procedures commonly regarded as
14manufacturing, processing, fabricating, or refining which
15changes some existing material or materials into a material
16with a different form, use or name. In relation to a recognized
17integrated business composed of a series of operations which
18collectively constitute manufacturing, or individually
19constitute manufacturing operations, the manufacturing process
20shall be deemed to commence with the first operation or stage
21of production in the series, and shall not be deemed to end
22until the completion of the final product in the last operation
23or stage of production in the series; and further, for purposes
24of exemption (5), photoprocessing is deemed to be a
25manufacturing process of tangible personal property for
26wholesale or retail sale; (2) "assembling process" shall mean

SB1327- 35 -LRB100 05630 HLH 15644 b
1the production of any article of tangible personal property,
2whether such article is a finished product or an article for
3use in the process of manufacturing or assembling a different
4article of tangible personal property, by the combination of
5existing materials in a manner commonly regarded as assembling
6which results in a material of a different form, use or name;
7(3) "machinery" shall mean major mechanical machines or major
8components of such machines contributing to a manufacturing or
9assembling process; and (4) "equipment" shall include any
10independent device or tool separate from any machinery but
11essential to an integrated manufacturing or assembly process;
12including computers used primarily in a manufacturer's
13computer assisted design, computer assisted manufacturing
14(CAD/CAM) system; or any subunit or assembly comprising a
15component of any machinery or auxiliary, adjunct or attachment
16parts of machinery, such as tools, dies, jigs, fixtures,
17patterns and molds; or any parts which require periodic
18replacement in the course of normal operation; but shall not
19include hand tools. Equipment includes chemicals or chemicals
20acting as catalysts but only if the chemicals or chemicals
21acting as catalysts effect a direct and immediate change upon a
22product being manufactured or assembled for wholesale or retail
23sale or lease. The purchaser of such machinery and equipment
24who has an active resale registration number shall furnish such
25number to the seller at the time of purchase. The user of such
26machinery and equipment and tools without an active resale

SB1327- 36 -LRB100 05630 HLH 15644 b
1registration number shall prepare a certificate of exemption
2for each transaction stating facts establishing the exemption
3for that transaction, which certificate shall be available to
4the Department for inspection or audit. The Department shall
5prescribe the form of the certificate.
6 Any informal rulings, opinions or letters issued by the
7Department in response to an inquiry or request for any opinion
8from any person regarding the coverage and applicability of
9exemption (5) to specific devices shall be published,
10maintained as a public record, and made available for public
11inspection and copying. If the informal ruling, opinion or
12letter contains trade secrets or other confidential
13information, where possible the Department shall delete such
14information prior to publication. Whenever such informal
15rulings, opinions, or letters contain any policy of general
16applicability, the Department shall formulate and adopt such
17policy as a rule in accordance with the provisions of the
18Illinois Administrative Procedure Act.
19 On and after July 1, 1987, no entity otherwise eligible
20under exemption (3) of this Section shall make tax free
21purchases unless it has an active exemption identification
22number issued by the Department.
23 The purchase, employment and transfer of such tangible
24personal property as newsprint and ink for the primary purpose
25of conveying news (with or without other information) is not a
26purchase, use or sale of service or of tangible personal

SB1327- 37 -LRB100 05630 HLH 15644 b
1property within the meaning of this Act.
2 "Serviceman" means any person who is engaged in the
3occupation of making sales of service.
4 "Sale at retail" means "sale at retail" as defined in the
5Retailers' Occupation Tax Act.
6 "Supplier" means any person who makes sales of tangible
7personal property to servicemen for the purpose of resale as an
8incident to a sale of service.
9 "Serviceman maintaining a place of business in this State",
10or any like term, means and includes any serviceman:
11 1. having or maintaining within this State, directly or
12 by a subsidiary, an office, distribution house, sales
13 house, warehouse or other place of business, or any agent
14 or other representative operating within this State under
15 the authority of the serviceman or its subsidiary,
16 irrespective of whether such place of business or agent or
17 other representative is located here permanently or
18 temporarily, or whether such serviceman or subsidiary is
19 licensed to do business in this State;
20 1.1. having a contract with a person located in this
21 State under which the person, for a commission or other
22 consideration based on the sale of service by the
23 serviceman, directly or indirectly refers potential
24 customers to the serviceman by providing to the potential
25 customers a promotional code or other mechanism that allows
26 the serviceman to track purchases referred by such persons.

SB1327- 38 -LRB100 05630 HLH 15644 b
1 Examples of mechanisms that allow the serviceman to track
2 purchases referred by such persons include but are not
3 limited to the use of a link on the person's Internet
4 website, promotional codes distributed through the
5 person's hand-delivered or mailed material, and
6 promotional codes distributed by the person through radio
7 or other broadcast media. The provisions of this paragraph
8 1.1 shall apply only if the cumulative gross receipts from
9 sales of service by the serviceman to customers who are
10 referred to the serviceman by all persons in this State
11 under such contracts exceed $10,000 during the preceding 4
12 quarterly periods ending on the last day of March, June,
13 September, and December; a serviceman meeting the
14 requirements of this paragraph 1.1 shall be presumed to be
15 maintaining a place of business in this State but may rebut
16 this presumption by submitting proof that the referrals or
17 other activities pursued within this State by such persons
18 were not sufficient to meet the nexus standards of the
19 United States Constitution during the preceding 4
20 quarterly periods;
21 1.2. beginning July 1, 2011, having a contract with a
22 person located in this State under which:
23 A. the serviceman sells the same or substantially
24 similar line of services as the person located in this
25 State and does so using an identical or substantially
26 similar name, trade name, or trademark as the person

SB1327- 39 -LRB100 05630 HLH 15644 b
1 located in this State; and
2 B. the serviceman provides a commission or other
3 consideration to the person located in this State based
4 upon the sale of services by the serviceman.
5 The provisions of this paragraph 1.2 shall apply only if
6 the cumulative gross receipts from sales of service by the
7 serviceman to customers in this State under all such
8 contracts exceed $10,000 during the preceding 4 quarterly
9 periods ending on the last day of March, June, September,
10 and December;
11 2. soliciting orders for tangible personal property by
12 means of a telecommunication or television shopping system
13 (which utilizes toll free numbers) which is intended by the
14 retailer to be broadcast by cable television or other means
15 of broadcasting, to consumers located in this State;
16 3. pursuant to a contract with a broadcaster or
17 publisher located in this State, soliciting orders for
18 tangible personal property by means of advertising which is
19 disseminated primarily to consumers located in this State
20 and only secondarily to bordering jurisdictions;
21 4. soliciting orders for tangible personal property by
22 mail if the solicitations are substantial and recurring and
23 if the retailer benefits from any banking, financing, debt
24 collection, telecommunication, or marketing activities
25 occurring in this State or benefits from the location in
26 this State of authorized installation, servicing, or

SB1327- 40 -LRB100 05630 HLH 15644 b
1 repair facilities;
2 5. being owned or controlled by the same interests
3 which own or control any retailer engaging in business in
4 the same or similar line of business in this State;
5 6. having a franchisee or licensee operating under its
6 trade name if the franchisee or licensee is required to
7 collect the tax under this Section;
8 7. pursuant to a contract with a cable television
9 operator located in this State, soliciting orders for
10 tangible personal property by means of advertising which is
11 transmitted or distributed over a cable television system
12 in this State; or
13 8. engaging in activities in Illinois, which
14 activities in the state in which the supply business
15 engaging in such activities is located would constitute
16 maintaining a place of business in that state.
17(Source: P.A. 98-583, eff. 1-1-14; 98-1089, eff. 1-1-15.)
18 (35 ILCS 110/3-5)
19 Sec. 3-5. Exemptions. Use of the following tangible
20personal property is exempt from the tax imposed by this Act:
21 (1) Personal property purchased from a corporation,
22society, association, foundation, institution, or
23organization, other than a limited liability company, that is
24organized and operated as a not-for-profit service enterprise
25for the benefit of persons 65 years of age or older if the

SB1327- 41 -LRB100 05630 HLH 15644 b
1personal property was not purchased by the enterprise for the
2purpose of resale by the enterprise.
3 (2) Personal property purchased by a non-profit Illinois
4county fair association for use in conducting, operating, or
5promoting the county fair.
6 (3) Personal property purchased by a not-for-profit arts or
7cultural organization that establishes, by proof required by
8the Department by rule, that it has received an exemption under
9Section 501(c)(3) of the Internal Revenue Code and that is
10organized and operated primarily for the presentation or
11support of arts or cultural programming, activities, or
12services. These organizations include, but are not limited to,
13music and dramatic arts organizations such as symphony
14orchestras and theatrical groups, arts and cultural service
15organizations, local arts councils, visual arts organizations,
16and media arts organizations. On and after the effective date
17of this amendatory Act of the 92nd General Assembly, however,
18an entity otherwise eligible for this exemption shall not make
19tax-free purchases unless it has an active identification
20number issued by the Department.
21 (4) Legal tender, currency, medallions, or gold or silver
22coinage issued by the State of Illinois, the government of the
23United States of America, or the government of any foreign
24country, and bullion.
25 (5) Until July 1, 2003 and beginning again on September 1,
262004 through August 30, 2014, graphic arts machinery and

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1equipment, including repair and replacement parts, both new and
2used, and including that manufactured on special order or
3purchased for lease, certified by the purchaser to be used
4primarily for graphic arts production. Equipment includes
5chemicals or chemicals acting as catalysts but only if the
6chemicals or chemicals acting as catalysts effect a direct and
7immediate change upon a graphic arts product. The exemption
8provided by this paragraph (5) also includes production related
9tangible personal property, as defined in Section 3-30,
10purchased on or after July 1, 2014. The exemption provided by
11this paragraph (5) is exempt from the provisions of Section
123-75.
13 (6) Personal property purchased from a teacher-sponsored
14student organization affiliated with an elementary or
15secondary school located in Illinois.
16 (7) Farm machinery and equipment, both new and used,
17including that manufactured on special order, certified by the
18purchaser to be used primarily for production agriculture or
19State or federal agricultural programs, including individual
20replacement parts for the machinery and equipment, including
21machinery and equipment purchased for lease, and including
22implements of husbandry defined in Section 1-130 of the
23Illinois Vehicle Code, farm machinery and agricultural
24chemical and fertilizer spreaders, and nurse wagons required to
25be registered under Section 3-809 of the Illinois Vehicle Code,
26but excluding other motor vehicles required to be registered

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1under the Illinois Vehicle Code. Horticultural polyhouses or
2hoop houses used for propagating, growing, or overwintering
3plants shall be considered farm machinery and equipment under
4this item (7). Agricultural chemical tender tanks and dry boxes
5shall include units sold separately from a motor vehicle
6required to be licensed and units sold mounted on a motor
7vehicle required to be licensed if the selling price of the
8tender is separately stated.
9 Farm machinery and equipment shall include precision
10farming equipment that is installed or purchased to be
11installed on farm machinery and equipment including, but not
12limited to, tractors, harvesters, sprayers, planters, seeders,
13or spreaders. Precision farming equipment includes, but is not
14limited to, soil testing sensors, computers, monitors,
15software, global positioning and mapping systems, and other
16such equipment.
17 Farm machinery and equipment also includes computers,
18sensors, software, and related equipment used primarily in the
19computer-assisted operation of production agriculture
20facilities, equipment, and activities such as, but not limited
21to, the collection, monitoring, and correlation of animal and
22crop data for the purpose of formulating animal diets and
23agricultural chemicals. This item (7) is exempt from the
24provisions of Section 3-75.
25 (8) Until June 30, 2013, fuel and petroleum products sold
26to or used by an air common carrier, certified by the carrier

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1to be used for consumption, shipment, or storage in the conduct
2of its business as an air common carrier, for a flight destined
3for or returning from a location or locations outside the
4United States without regard to previous or subsequent domestic
5stopovers.
6 Beginning July 1, 2013, fuel and petroleum products sold to
7or used by an air carrier, certified by the carrier to be used
8for consumption, shipment, or storage in the conduct of its
9business as an air common carrier, for a flight that (i) is
10engaged in foreign trade or is engaged in trade between the
11United States and any of its possessions and (ii) transports at
12least one individual or package for hire from the city of
13origination to the city of final destination on the same
14aircraft, without regard to a change in the flight number of
15that aircraft.
16 (9) Proceeds of mandatory service charges separately
17stated on customers' bills for the purchase and consumption of
18food and beverages acquired as an incident to the purchase of a
19service from a serviceman, to the extent that the proceeds of
20the service charge are in fact turned over as tips or as a
21substitute for tips to the employees who participate directly
22in preparing, serving, hosting or cleaning up the food or
23beverage function with respect to which the service charge is
24imposed.
25 (10) Until July 1, 2003, oil field exploration, drilling,
26and production equipment, including (i) rigs and parts of rigs,

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

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1 (14) Horses, or interests in horses, registered with and
2meeting the requirements of any of the Arabian Horse Club
3Registry of America, Appaloosa Horse Club, American Quarter
4Horse Association, United States Trotting Association, or
5Jockey Club, as appropriate, used for purposes of breeding or
6racing for prizes. This item (14) is exempt from the provisions
7of Section 3-75, and the exemption provided for under this item
8(14) applies for all periods beginning May 30, 1995, but no
9claim for credit or refund is allowed on or after the effective
10date of this amendatory Act of the 95th General Assembly for
11such taxes paid during the period beginning May 30, 2000 and
12ending on the effective date of this amendatory Act of the 95th
13General Assembly.
14 (15) Computers and communications equipment utilized for
15any hospital purpose and equipment used in the diagnosis,
16analysis, or treatment of hospital patients purchased by a
17lessor who leases the equipment, under a lease of one year or
18longer executed or in effect at the time the lessor would
19otherwise be subject to the tax imposed by this Act, to a
20hospital that has been issued an active tax exemption
21identification number by the Department under Section 1g of the
22Retailers' Occupation Tax Act. If the equipment is leased in a
23manner that does not qualify for this exemption or is used in
24any other non-exempt manner, the lessor shall be liable for the
25tax imposed under this Act or the Use Tax Act, as the case may
26be, based on the fair market value of the property at the time

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

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1refund of that amount from the lessor. If, however, that amount
2is not refunded to the lessee for any reason, the lessor is
3liable to pay that amount to the Department.
4 (17) Beginning with taxable years ending on or after
5December 31, 1995 and ending with taxable years ending on or
6before December 31, 2004, personal property that is donated for
7disaster relief to be used in a State or federally declared
8disaster area in Illinois or bordering Illinois by a
9manufacturer or retailer that is registered in this State to a
10corporation, society, association, foundation, or institution
11that has been issued a sales tax exemption identification
12number by the Department that assists victims of the disaster
13who reside within the declared disaster area.
14 (18) Beginning with taxable years ending on or after
15December 31, 1995 and ending with taxable years ending on or
16before December 31, 2004, personal property that is used in the
17performance of infrastructure repairs in this State, including
18but not limited to municipal roads and streets, access roads,
19bridges, sidewalks, waste disposal systems, water and sewer
20line extensions, water distribution and purification
21facilities, storm water drainage and retention facilities, and
22sewage treatment facilities, resulting from a State or
23federally declared disaster in Illinois or bordering Illinois
24when such repairs are initiated on facilities located in the
25declared disaster area within 6 months after the disaster.
26 (19) Beginning July 1, 1999, game or game birds purchased

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1at a "game breeding and hunting preserve area" as that term is
2used in the Wildlife Code. This paragraph is exempt from the
3provisions of Section 3-75.
4 (20) A motor vehicle, as that term is defined in Section
51-146 of the Illinois Vehicle Code, that is donated to a
6corporation, limited liability company, society, association,
7foundation, or institution that is determined by the Department
8to be organized and operated exclusively for educational
9purposes. For purposes of this exemption, "a corporation,
10limited liability company, society, association, foundation,
11or institution organized and operated exclusively for
12educational purposes" means all tax-supported public schools,
13private schools that offer systematic instruction in useful
14branches of learning by methods common to public schools and
15that compare favorably in their scope and intensity with the
16course of study presented in tax-supported schools, and
17vocational or technical schools or institutes organized and
18operated exclusively to provide a course of study of not less
19than 6 weeks duration and designed to prepare individuals to
20follow a trade or to pursue a manual, technical, mechanical,
21industrial, business, or commercial occupation.
22 (21) Beginning January 1, 2000, personal property,
23including food, purchased through fundraising events for the
24benefit of a public or private elementary or secondary school,
25a group of those schools, or one or more school districts if
26the events are sponsored by an entity recognized by the school

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1district that consists primarily of volunteers and includes
2parents and teachers of the school children. This paragraph
3does not apply to fundraising events (i) for the benefit of
4private home instruction or (ii) for which the fundraising
5entity purchases the personal property sold at the events from
6another individual or entity that sold the property for the
7purpose of resale by the fundraising entity and that profits
8from the sale to the fundraising entity. This paragraph is
9exempt from the provisions of Section 3-75.
10 (22) Beginning January 1, 2000 and through December 31,
112001, new or used automatic vending machines that prepare and
12serve hot food and beverages, including coffee, soup, and other
13items, and replacement parts for these machines. Beginning
14January 1, 2002 and through June 30, 2003, machines and parts
15for machines used in commercial, coin-operated amusement and
16vending business if a use or occupation tax is paid on the
17gross receipts derived from the use of the commercial,
18coin-operated amusement and vending machines. This paragraph
19is exempt from the provisions of Section 3-75.
20 (23) Beginning August 23, 2001 and through June 30, 2016,
21food for human consumption that is to be consumed off the
22premises where it is sold (other than alcoholic beverages, soft
23drinks, and food that has been prepared for immediate
24consumption) and prescription and nonprescription medicines,
25drugs, medical appliances, and insulin, urine testing
26materials, syringes, and needles used by diabetics, for human

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1use, when purchased for use by a person receiving medical
2assistance under Article V of the Illinois Public Aid Code who
3resides in a licensed long-term care facility, as defined in
4the Nursing Home Care Act, or in a licensed facility as defined
5in the ID/DD Community Care Act, the MC/DD Act, or the
6Specialized Mental Health Rehabilitation Act of 2013.
7 (24) Beginning on the effective date of this amendatory Act
8of the 92nd General Assembly, computers and communications
9equipment utilized for any hospital purpose and equipment used
10in the diagnosis, analysis, or treatment of hospital patients
11purchased by a lessor who leases the equipment, under a lease
12of one year or longer executed or in effect at the time the
13lessor would otherwise be subject to the tax imposed by this
14Act, to a hospital that has been issued an active tax exemption
15identification number by the Department under Section 1g of the
16Retailers' Occupation Tax Act. If the equipment is leased in a
17manner that does not qualify for this exemption or is used in
18any other nonexempt manner, the lessor shall be liable for the
19tax imposed under this Act or the Use Tax Act, as the case may
20be, based on the fair market value of the property at the time
21the nonqualifying use occurs. No lessor shall collect or
22attempt to collect an amount (however designated) that purports
23to reimburse that lessor for the tax imposed by this Act or the
24Use Tax Act, as the case may be, if the tax has not been paid by
25the lessor. If a lessor improperly collects any such amount
26from the lessee, the lessee shall have a legal right to claim a

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

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1 (26) Beginning January 1, 2008, tangible personal property
2used in the construction or maintenance of a community water
3supply, as defined under Section 3.145 of the Environmental
4Protection Act, that is operated by a not-for-profit
5corporation that holds a valid water supply permit issued under
6Title IV of the Environmental Protection Act. This paragraph is
7exempt from the provisions of Section 3-75.
8 (27) Beginning January 1, 2010, materials, parts,
9equipment, components, and furnishings incorporated into or
10upon an aircraft as part of the modification, refurbishment,
11completion, replacement, repair, or maintenance of the
12aircraft. This exemption includes consumable supplies used in
13the modification, refurbishment, completion, replacement,
14repair, and maintenance of aircraft, but excludes any
15materials, parts, equipment, components, and consumable
16supplies used in the modification, replacement, repair, and
17maintenance of aircraft engines or power plants, whether such
18engines or power plants are installed or uninstalled upon any
19such aircraft. "Consumable supplies" include, but are not
20limited to, adhesive, tape, sandpaper, general purpose
21lubricants, cleaning solution, latex gloves, and protective
22films. This exemption applies only to the use of qualifying
23tangible personal property transferred incident to the
24modification, refurbishment, completion, replacement, repair,
25or maintenance of aircraft by persons who (i) hold an Air
26Agency Certificate and are empowered to operate an approved

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1repair station by the Federal Aviation Administration, (ii)
2have a Class IV Rating, and (iii) conduct operations in
3accordance with Part 145 of the Federal Aviation Regulations.
4The exemption does not include aircraft operated by a
5commercial air carrier providing scheduled passenger air
6service pursuant to authority issued under Part 121 or Part 129
7of the Federal Aviation Regulations. The changes made to this
8paragraph (27) by Public Act 98-534 are declarative of existing
9law.
10 (28) Tangible personal property purchased by a
11public-facilities corporation, as described in Section
1211-65-10 of the Illinois Municipal Code, for purposes of
13constructing or furnishing a municipal convention hall, but
14only if the legal title to the municipal convention hall is
15transferred to the municipality without any further
16consideration by or on behalf of the municipality at the time
17of the completion of the municipal convention hall or upon the
18retirement or redemption of any bonds or other debt instruments
19issued by the public-facilities corporation in connection with
20the development of the municipal convention hall. This
21exemption includes existing public-facilities corporations as
22provided in Section 11-65-25 of the Illinois Municipal Code.
23This paragraph is exempt from the provisions of Section 3-75.
24 (29) Beginning January 1, 2017, menstrual pads, tampons,
25and menstrual cups.
26(Source: P.A. 98-104, eff. 7-22-13; 98-422, eff. 8-16-13;

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198-456, eff. 8-16-13; 98-534, eff. 8-23-13; 98-756, eff.
27-16-14; 99-180, eff. 7-29-15; 99-855, eff. 8-19-16.)
3 (35 ILCS 110/3-30) (from Ch. 120, par. 439.33-30)
4 Sec. 3-30. Graphic arts production. For the purposes of
5this Act, "graphic arts production" means the production of
6tangible personal property for wholesale or retail sale or
7lease by means of printing, including ink jet printing, by one
8or more of the processes described in Groups 323110 through
9323122 of Subsector 323, Groups 511110 through 511199 of
10Subsector 511, and Group 512230 of Subsector 512 of the North
11American Industry Classification System published by the U.S.
12Office of Management and Budget, 1997 edition. Graphic arts
13production does not include (i) the transfer of images onto
14paper or other tangible personal property by means of
15photocopying or (ii) final printed products in electronic or
16audio form, including the production of software or
17audio-books. For purposes of this Section, persons engaged
18primarily in the business of printing or publishing newspapers
19or magazines that qualify as newsprint and ink, by one or more
20of the processes described in Groups 511110 through 511199 of
21subsector 511 of the North American Industry Classification
22System published by the U.S. Office of Management and Budget,
231997 edition, are deemed to be engaged in graphic arts
24production.
25 For the purposes of the exemption provided in paragraph (5)

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1of Section 3-5 of this Act, "production related tangible
2personal property" means all tangible personal property that is
3used or consumed by the purchaser in a graphic arts facility in
4which graphic arts production takes place and includes, without
5limitation, tangible personal property that is purchased for
6incorporation into real estate within a graphic arts production
7facility, supplies and consumables used in a graphic arts
8production facility including fuels, coolants, solvents, oils,
9lubricants, and adhesives, hand tools, protective apparel, and
10fire and safety equipment used or consumed within a
11manufacturing facility, and tangible personal property that is
12used or consumed in activities such as research and
13development, preproduction material handling, receiving,
14quality control, inventory control, storage, staging, and
15packaging for shipping and transportation purposes.
16"Production related tangible personal property" does not
17include (i) tangible personal property that is used, within or
18without a graphic arts production facility, in sales,
19purchasing, accounting, fiscal management, marketing,
20personnel recruitment or selection, or landscaping or (ii)
21tangible personal property that is required to be titled or
22registered with a department, agency, or unit of federal,
23State, or local government.
24(Source: P.A. 96-116, eff. 7-31-09.)
25 Section 15. The Service Occupation Tax Act is amended by

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1changing Sections 2, 3-5, and 3-30 as follows:
2 (35 ILCS 115/2) (from Ch. 120, par. 439.102)
3 Sec. 2. "Transfer" means any transfer of the title to
4property or of the ownership of property whether or not the
5transferor retains title as security for the payment of amounts
6due him from the transferee.
7 "Cost Price" means the consideration paid by the serviceman
8for a purchase valued in money, whether paid in money or
9otherwise, including cash, credits and services, and shall be
10determined without any deduction on account of the supplier's
11cost of the property sold or on account of any other expense
12incurred by the supplier. When a serviceman contracts out part
13or all of the services required in his sale of service, it
14shall be presumed that the cost price to the serviceman of the
15property transferred to him by his or her subcontractor is
16equal to 50% of the subcontractor's charges to the serviceman
17in the absence of proof of the consideration paid by the
18subcontractor for the purchase of such property.
19 "Department" means the Department of Revenue.
20 "Person" means any natural individual, firm, partnership,
21association, joint stock company, joint venture, public or
22private corporation, limited liability company, and any
23receiver, executor, trustee, guardian or other representative
24appointed by order of any court.
25 "Sale of Service" means any transaction except:

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1 (a) A retail sale of tangible personal property taxable
2under the Retailers' Occupation Tax Act or under the Use Tax
3Act.
4 (b) A sale of tangible personal property for the purpose of
5resale made in compliance with Section 2c of the Retailers'
6Occupation Tax Act.
7 (c) Except as hereinafter provided, a sale or transfer of
8tangible personal property as an incident to the rendering of
9service for or by any governmental body or for or by any
10corporation, society, association, foundation or institution
11organized and operated exclusively for charitable, religious
12or educational purposes or any not-for-profit corporation,
13society, association, foundation, institution or organization
14which has no compensated officers or employees and which is
15organized and operated primarily for the recreation of persons
1655 years of age or older. A limited liability company may
17qualify for the exemption under this paragraph only if the
18limited liability company is organized and operated
19exclusively for educational purposes.
20 (d) A sale or transfer of tangible personal property as an
21incident to the rendering of service for interstate carriers
22for hire for use as rolling stock moving in interstate commerce
23or lessors under leases of one year or longer, executed or in
24effect at the time of purchase, to interstate carriers for hire
25for use as rolling stock moving in interstate commerce, and
26equipment operated by a telecommunications provider, licensed

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1as a common carrier by the Federal Communications Commission,
2which is permanently installed in or affixed to aircraft moving
3in interstate commerce.
4 (d-1) A sale or transfer of tangible personal property as
5an incident to the rendering of service for owners, lessors or
6shippers of tangible personal property which is utilized by
7interstate carriers for hire for use as rolling stock moving in
8interstate commerce, and equipment operated by a
9telecommunications provider, licensed as a common carrier by
10the Federal Communications Commission, which is permanently
11installed in or affixed to aircraft moving in interstate
12commerce.
13 (d-1.1) On and after July 1, 2003 and through June 30,
142004, a sale or transfer of a motor vehicle of the second
15division with a gross vehicle weight in excess of 8,000 pounds
16as an incident to the rendering of service if that motor
17vehicle is subject to the commercial distribution fee imposed
18under Section 3-815.1 of the Illinois Vehicle Code. Beginning
19on July 1, 2004 and through June 30, 2005, the use in this
20State of motor vehicles of the second division: (i) with a
21gross vehicle weight rating in excess of 8,000 pounds; (ii)
22that are subject to the commercial distribution fee imposed
23under Section 3-815.1 of the Illinois Vehicle Code; and (iii)
24that are primarily used for commercial purposes. Through June
2530, 2005, this exemption applies to repair and replacement
26parts added after the initial purchase of such a motor vehicle

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1if that motor vehicle is used in a manner that would qualify
2for the rolling stock exemption otherwise provided for in this
3Act. For purposes of this paragraph, "used for commercial
4purposes" means the transportation of persons or property in
5furtherance of any commercial or industrial enterprise whether
6for-hire or not.
7 (d-2) The repairing, reconditioning or remodeling, for a
8common carrier by rail, of tangible personal property which
9belongs to such carrier for hire, and as to which such carrier
10receives the physical possession of the repaired,
11reconditioned or remodeled item of tangible personal property
12in Illinois, and which such carrier transports, or shares with
13another common carrier in the transportation of such property,
14out of Illinois on a standard uniform bill of lading showing
15the person who repaired, reconditioned or remodeled the
16property as the shipper or consignor of such property to a
17destination outside Illinois, for use outside Illinois.
18 (d-3) A sale or transfer of tangible personal property
19which is produced by the seller thereof on special order in
20such a way as to have made the applicable tax the Service
21Occupation Tax or the Service Use Tax, rather than the
22Retailers' Occupation Tax or the Use Tax, for an interstate
23carrier by rail which receives the physical possession of such
24property in Illinois, and which transports such property, or
25shares with another common carrier in the transportation of
26such property, out of Illinois on a standard uniform bill of

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1lading showing the seller of the property as the shipper or
2consignor of such property to a destination outside Illinois,
3for use outside Illinois.
4 (d-4) Until January 1, 1997, a sale, by a registered
5serviceman paying tax under this Act to the Department, of
6special order printed materials delivered outside Illinois and
7which are not returned to this State, if delivery is made by
8the seller or agent of the seller, including an agent who
9causes the product to be delivered outside Illinois by a common
10carrier or the U.S. postal service.
11 (e) A sale or transfer of machinery and equipment used
12primarily in the process of the manufacturing or assembling,
13either in an existing, an expanded or a new manufacturing
14facility, of tangible personal property for wholesale or retail
15sale or lease, whether such sale or lease is made directly by
16the manufacturer or by some other person, whether the materials
17used in the process are owned by the manufacturer or some other
18person, or whether such sale or lease is made apart from or as
19an incident to the seller's engaging in a service occupation
20and the applicable tax is a Service Occupation Tax or Service
21Use Tax, rather than Retailers' Occupation Tax or Use Tax. The
22exemption provided by this paragraph (e) does not include
23machinery and equipment used in (i) the generation of
24electricity for wholesale or retail sale; (ii) the generation
25or treatment of natural or artificial gas for wholesale or
26retail sale that is delivered to customers through pipes,

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1pipelines, or mains; or (iii) the treatment of water for
2wholesale or retail sale that is delivered to customers through
3pipes, pipelines, or mains. The provisions of this amendatory
4Act of the 98th General Assembly are declaratory of existing
5law as to the meaning and scope of this exemption. The
6exemption under this subsection (e) is exempt from the
7provisions of Section 3-55.
8 (f) Until July 1, 2003, the sale or transfer of
9distillation machinery and equipment, sold as a unit or kit and
10assembled or installed by the retailer, which machinery and
11equipment is certified by the user to be used only for the
12production of ethyl alcohol that will be used for consumption
13as motor fuel or as a component of motor fuel for the personal
14use of such user and not subject to sale or resale.
15 (g) At the election of any serviceman not required to be
16otherwise registered as a retailer under Section 2a of the
17Retailers' Occupation Tax Act, made for each fiscal year sales
18of service in which the aggregate annual cost price of tangible
19personal property transferred as an incident to the sales of
20service is less than 35% (75% in the case of servicemen
21transferring prescription drugs or servicemen engaged in
22graphic arts production) of the aggregate annual total gross
23receipts from all sales of service. The purchase of such
24tangible personal property by the serviceman shall be subject
25to tax under the Retailers' Occupation Tax Act and the Use Tax
26Act. However, if a primary serviceman who has made the election

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1described in this paragraph subcontracts service work to a
2secondary serviceman who has also made the election described
3in this paragraph, the primary serviceman does not incur a Use
4Tax liability if the secondary serviceman (i) has paid or will
5pay Use Tax on his or her cost price of any tangible personal
6property transferred to the primary serviceman and (ii)
7certifies that fact in writing to the primary serviceman.
8 Tangible personal property transferred incident to the
9completion of a maintenance agreement is exempt from the tax
10imposed pursuant to this Act.
11 Exemption (e) also includes machinery and equipment used in
12the general maintenance or repair of such exempt machinery and
13equipment or for in-house manufacture of exempt machinery and
14equipment. Beginning on July 1, 2014, exemption (e) also
15includes production related tangible personal property, as
16defined in Section 2-45 of the Retailers' Occupation Tax Act.
17The machinery and equipment exemption does not include
18machinery and equipment used in (i) the generation of
19electricity for wholesale or retail sale; (ii) the generation
20or treatment of natural or artificial gas for wholesale or
21retail sale that is delivered to customers through pipes,
22pipelines, or mains; or (iii) the treatment of water for
23wholesale or retail sale that is delivered to customers through
24pipes, pipelines, or mains. The provisions of this amendatory
25Act of the 98th General Assembly are declaratory of existing
26law as to the meaning and scope of this exemption. For the

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1purposes of exemption (e), each of these terms shall have the
2following meanings: (1) "manufacturing process" shall mean the
3production of any article of tangible personal property,
4whether such article is a finished product or an article for
5use in the process of manufacturing or assembling a different
6article of tangible personal property, by procedures commonly
7regarded as manufacturing, processing, fabricating, or
8refining which changes some existing material or materials into
9a material with a different form, use or name. In relation to a
10recognized integrated business composed of a series of
11operations which collectively constitute manufacturing, or
12individually constitute manufacturing operations, the
13manufacturing process shall be deemed to commence with the
14first operation or stage of production in the series, and shall
15not be deemed to end until the completion of the final product
16in the last operation or stage of production in the series; and
17further for purposes of exemption (e), photoprocessing is
18deemed to be a manufacturing process of tangible personal
19property for wholesale or retail sale; (2) "assembling process"
20shall mean the production of any article of tangible personal
21property, whether such article is a finished product or an
22article for use in the process of manufacturing or assembling a
23different article of tangible personal property, by the
24combination of existing materials in a manner commonly regarded
25as assembling which results in a material of a different form,
26use or name; (3) "machinery" shall mean major mechanical

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1machines or major components of such machines contributing to a
2manufacturing or assembling process; and (4) "equipment" shall
3include any independent device or tool separate from any
4machinery but essential to an integrated manufacturing or
5assembly process; including computers used primarily in a
6manufacturer's computer assisted design, computer assisted
7manufacturing (CAD/CAM) system; or any subunit or assembly
8comprising a component of any machinery or auxiliary, adjunct
9or attachment parts of machinery, such as tools, dies, jigs,
10fixtures, patterns and molds; or any parts which require
11periodic replacement in the course of normal operation; but
12shall not include hand tools. Equipment includes chemicals or
13chemicals acting as catalysts but only if the chemicals or
14chemicals acting as catalysts effect a direct and immediate
15change upon a product being manufactured or assembled for
16wholesale or retail sale or lease. The purchaser of such
17machinery and equipment who has an active resale registration
18number shall furnish such number to the seller at the time of
19purchase. The purchaser of such machinery and equipment and
20tools without an active resale registration number shall
21furnish to the seller a certificate of exemption for each
22transaction stating facts establishing the exemption for that
23transaction, which certificate shall be available to the
24Department for inspection or audit.
25 Except as provided in Section 2d of this Act, the rolling
26stock exemption applies to rolling stock used by an interstate

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1carrier for hire, even just between points in Illinois, if such
2rolling stock transports, for hire, persons whose journeys or
3property whose shipments originate or terminate outside
4Illinois.
5 Any informal rulings, opinions or letters issued by the
6Department in response to an inquiry or request for any opinion
7from any person regarding the coverage and applicability of
8exemption (e) to specific devices shall be published,
9maintained as a public record, and made available for public
10inspection and copying. If the informal ruling, opinion or
11letter contains trade secrets or other confidential
12information, where possible the Department shall delete such
13information prior to publication. Whenever such informal
14rulings, opinions, or letters contain any policy of general
15applicability, the Department shall formulate and adopt such
16policy as a rule in accordance with the provisions of the
17Illinois Administrative Procedure Act.
18 On and after July 1, 1987, no entity otherwise eligible
19under exemption (c) of this Section shall make tax free
20purchases unless it has an active exemption identification
21number issued by the Department.
22 "Serviceman" means any person who is engaged in the
23occupation of making sales of service.
24 "Sale at Retail" means "sale at retail" as defined in the
25Retailers' Occupation Tax Act.
26 "Supplier" means any person who makes sales of tangible

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1personal property to servicemen for the purpose of resale as an
2incident to a sale of service.
3(Source: P.A. 98-583, eff. 1-1-14.)
4 (35 ILCS 115/3-5)
5 Sec. 3-5. Exemptions. The following tangible personal
6property is exempt from the tax imposed by this Act:
7 (1) Personal property sold by a corporation, society,
8association, foundation, institution, or organization, other
9than a limited liability company, that is organized and
10operated as a not-for-profit service enterprise for the benefit
11of persons 65 years of age or older if the personal property
12was not purchased by the enterprise for the purpose of resale
13by the enterprise.
14 (2) Personal property purchased by a not-for-profit
15Illinois county fair association for use in conducting,
16operating, or promoting the county fair.
17 (3) Personal property purchased by any not-for-profit arts
18or cultural organization that establishes, by proof required by
19the Department by rule, that it has received an exemption under
20Section 501(c)(3) of the Internal Revenue Code and that is
21organized and operated primarily for the presentation or
22support of arts or cultural programming, activities, or
23services. These organizations include, but are not limited to,
24music and dramatic arts organizations such as symphony
25orchestras and theatrical groups, arts and cultural service

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1organizations, local arts councils, visual arts organizations,
2and media arts organizations. On and after the effective date
3of this amendatory Act of the 92nd General Assembly, however,
4an entity otherwise eligible for this exemption shall not make
5tax-free purchases unless it has an active identification
6number issued by the Department.
7 (4) Legal tender, currency, medallions, or gold or silver
8coinage issued by the State of Illinois, the government of the
9United States of America, or the government of any foreign
10country, and bullion.
11 (5) Until July 1, 2003 and beginning again on September 1,
122004 through August 30, 2014, graphic arts machinery and
13equipment, including repair and replacement parts, both new and
14used, and including that manufactured on special order or
15purchased for lease, certified by the purchaser to be used
16primarily for graphic arts production. Equipment includes
17chemicals or chemicals acting as catalysts but only if the
18chemicals or chemicals acting as catalysts effect a direct and
19immediate change upon a graphic arts product. The exemption
20provided by this paragraph (5) also includes production related
21tangible personal property, as defined in Section 3-30,
22purchased on or after July 1, 2014. The exemption under this
23paragraph (5) is exempt from the provisions of Section 3-55.
24 (6) Personal property sold by a teacher-sponsored student
25organization affiliated with an elementary or secondary school
26located in Illinois.

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1 (7) Farm machinery and equipment, both new and used,
2including that manufactured on special order, certified by the
3purchaser to be used primarily for production agriculture or
4State or federal agricultural programs, including individual
5replacement parts for the machinery and equipment, including
6machinery and equipment purchased for lease, and including
7implements of husbandry defined in Section 1-130 of the
8Illinois Vehicle Code, farm machinery and agricultural
9chemical and fertilizer spreaders, and nurse wagons required to
10be registered under Section 3-809 of the Illinois Vehicle Code,
11but excluding other motor vehicles required to be registered
12under the Illinois Vehicle Code. Horticultural polyhouses or
13hoop houses used for propagating, growing, or overwintering
14plants shall be considered farm machinery and equipment under
15this item (7). Agricultural chemical tender tanks and dry boxes
16shall include units sold separately from a motor vehicle
17required to be licensed and units sold mounted on a motor
18vehicle required to be licensed if the selling price of the
19tender is separately stated.
20 Farm machinery and equipment shall include precision
21farming equipment that is installed or purchased to be
22installed on farm machinery and equipment including, but not
23limited to, tractors, harvesters, sprayers, planters, seeders,
24or spreaders. Precision farming equipment includes, but is not
25limited to, soil testing sensors, computers, monitors,
26software, global positioning and mapping systems, and other

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1such equipment.
2 Farm machinery and equipment also includes computers,
3sensors, software, and related equipment used primarily in the
4computer-assisted operation of production agriculture
5facilities, equipment, and activities such as, but not limited
6to, the collection, monitoring, and correlation of animal and
7crop data for the purpose of formulating animal diets and
8agricultural chemicals. This item (7) is exempt from the
9provisions of Section 3-55.
10 (8) Until June 30, 2013, fuel and petroleum products sold
11to or used by an air common carrier, certified by the carrier
12to be used for consumption, shipment, or storage in the conduct
13of its business as an air common carrier, for a flight destined
14for or returning from a location or locations outside the
15United States without regard to previous or subsequent domestic
16stopovers.
17 Beginning July 1, 2013, fuel and petroleum products sold to
18or used by an air carrier, certified by the carrier to be used
19for consumption, shipment, or storage in the conduct of its
20business as an air common carrier, for a flight that (i) is
21engaged in foreign trade or is engaged in trade between the
22United States and any of its possessions and (ii) transports at
23least one individual or package for hire from the city of
24origination to the city of final destination on the same
25aircraft, without regard to a change in the flight number of
26that aircraft.

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1 (9) Proceeds of mandatory service charges separately
2stated on customers' bills for the purchase and consumption of
3food and beverages, to the extent that the proceeds of the
4service charge are in fact turned over as tips or as a
5substitute for tips to the employees who participate directly
6in preparing, serving, hosting or cleaning up the food or
7beverage function with respect to which the service charge is
8imposed.
9 (10) Until July 1, 2003, oil field exploration, drilling,
10and production equipment, including (i) rigs and parts of rigs,
11rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
12tubular goods, including casing and drill strings, (iii) pumps
13and pump-jack units, (iv) storage tanks and flow lines, (v) any
14individual replacement part for oil field exploration,
15drilling, and production equipment, and (vi) machinery and
16equipment purchased for lease; but excluding motor vehicles
17required to be registered under the Illinois Vehicle Code.
18 (11) Photoprocessing machinery and equipment, including
19repair and replacement parts, both new and used, including that
20manufactured on special order, certified by the purchaser to be
21used primarily for photoprocessing, and including
22photoprocessing machinery and equipment purchased for lease.
23 (12) Coal and aggregate exploration, mining, off-highway
24hauling, processing, maintenance, and reclamation equipment,
25including replacement parts and equipment, and including
26equipment purchased for lease, but excluding motor vehicles

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1required to be registered under the Illinois Vehicle Code. The
2changes made to this Section by Public Act 97-767 apply on and
3after July 1, 2003, but no claim for credit or refund is
4allowed on or after August 16, 2013 (the effective date of
5Public Act 98-456) for such taxes paid during the period
6beginning July 1, 2003 and ending on August 16, 2013 (the
7effective date of Public Act 98-456).
8 (13) Beginning January 1, 1992 and through June 30, 2016,
9food for human consumption that is to be consumed off the
10premises where it is sold (other than alcoholic beverages, soft
11drinks and food that has been prepared for immediate
12consumption) and prescription and non-prescription medicines,
13drugs, medical appliances, and insulin, urine testing
14materials, syringes, and needles used by diabetics, for human
15use, when purchased for use by a person receiving medical
16assistance under Article V of the Illinois Public Aid Code who
17resides in a licensed long-term care facility, as defined in
18the Nursing Home Care Act, or in a licensed facility as defined
19in the ID/DD Community Care Act, the MC/DD Act, or the
20Specialized Mental Health Rehabilitation Act of 2013.
21 (14) Semen used for artificial insemination of livestock
22for direct agricultural production.
23 (15) Horses, or interests in horses, registered with and
24meeting the requirements of any of the Arabian Horse Club
25Registry of America, Appaloosa Horse Club, American Quarter
26Horse Association, United States Trotting Association, or

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1Jockey Club, as appropriate, used for purposes of breeding or
2racing for prizes. This item (15) is exempt from the provisions
3of Section 3-55, and the exemption provided for under this item
4(15) applies for all periods beginning May 30, 1995, but no
5claim for credit or refund is allowed on or after January 1,
62008 (the effective date of Public Act 95-88) for such taxes
7paid during the period beginning May 30, 2000 and ending on
8January 1, 2008 (the effective date of Public Act 95-88).
9 (16) Computers and communications equipment utilized for
10any hospital purpose and equipment used in the diagnosis,
11analysis, or treatment of hospital patients sold to a lessor
12who leases the equipment, under a lease of one year or longer
13executed or in effect at the time of the purchase, to a
14hospital that has been issued an active tax exemption
15identification number by the Department under Section 1g of the
16Retailers' Occupation Tax Act.
17 (17) Personal property sold to a lessor who leases the
18property, under a lease of one year or longer executed or in
19effect at the time of the purchase, to a governmental body that
20has been issued an active tax exemption identification number
21by the Department under Section 1g of the Retailers' Occupation
22Tax Act.
23 (18) Beginning with taxable years ending on or after
24December 31, 1995 and ending with taxable years ending on or
25before December 31, 2004, personal property that is donated for
26disaster relief to be used in a State or federally declared

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1disaster area in Illinois or bordering Illinois by a
2manufacturer or retailer that is registered in this State to a
3corporation, society, association, foundation, or institution
4that has been issued a sales tax exemption identification
5number by the Department that assists victims of the disaster
6who reside within the declared disaster area.
7 (19) Beginning with taxable years ending on or after
8December 31, 1995 and ending with taxable years ending on or
9before December 31, 2004, personal property that is used in the
10performance of infrastructure repairs in this State, including
11but not limited to municipal roads and streets, access roads,
12bridges, sidewalks, waste disposal systems, water and sewer
13line extensions, water distribution and purification
14facilities, storm water drainage and retention facilities, and
15sewage treatment facilities, resulting from a State or
16federally declared disaster in Illinois or bordering Illinois
17when such repairs are initiated on facilities located in the
18declared disaster area within 6 months after the disaster.
19 (20) Beginning July 1, 1999, game or game birds sold at a
20"game breeding and hunting preserve area" as that term is used
21in the Wildlife Code. This paragraph is exempt from the
22provisions of Section 3-55.
23 (21) A motor vehicle, as that term is defined in Section
241-146 of the Illinois Vehicle Code, that is donated to a
25corporation, limited liability company, society, association,
26foundation, or institution that is determined by the Department

SB1327- 75 -LRB100 05630 HLH 15644 b
1to be organized and operated exclusively for educational
2purposes. For purposes of this exemption, "a corporation,
3limited liability company, society, association, foundation,
4or institution organized and operated exclusively for
5educational purposes" means all tax-supported public schools,
6private schools that offer systematic instruction in useful
7branches of learning by methods common to public schools and
8that compare favorably in their scope and intensity with the
9course of study presented in tax-supported schools, and
10vocational or technical schools or institutes organized and
11operated exclusively to provide a course of study of not less
12than 6 weeks duration and designed to prepare individuals to
13follow a trade or to pursue a manual, technical, mechanical,
14industrial, business, or commercial occupation.
15 (22) Beginning January 1, 2000, personal property,
16including food, purchased through fundraising events for the
17benefit of a public or private elementary or secondary school,
18a group of those schools, or one or more school districts if
19the events are sponsored by an entity recognized by the school
20district that consists primarily of volunteers and includes
21parents and teachers of the school children. This paragraph
22does not apply to fundraising events (i) for the benefit of
23private home instruction or (ii) for which the fundraising
24entity purchases the personal property sold at the events from
25another individual or entity that sold the property for the
26purpose of resale by the fundraising entity and that profits

SB1327- 76 -LRB100 05630 HLH 15644 b
1from the sale to the fundraising entity. This paragraph is
2exempt from the provisions of Section 3-55.
3 (23) Beginning January 1, 2000 and through December 31,
42001, new or used automatic vending machines that prepare and
5serve hot food and beverages, including coffee, soup, and other
6items, and replacement parts for these machines. Beginning
7January 1, 2002 and through June 30, 2003, machines and parts
8for machines used in commercial, coin-operated amusement and
9vending business if a use or occupation tax is paid on the
10gross receipts derived from the use of the commercial,
11coin-operated amusement and vending machines. This paragraph
12is exempt from the provisions of Section 3-55.
13 (24) Beginning on the effective date of this amendatory Act
14of the 92nd General Assembly, computers and communications
15equipment utilized for any hospital purpose and equipment used
16in the diagnosis, analysis, or treatment of hospital patients
17sold to a lessor who leases the equipment, under a lease of one
18year or longer executed or in effect at the time of the
19purchase, to a hospital that has been issued an active tax
20exemption identification number by the Department under
21Section 1g of the Retailers' Occupation Tax Act. This paragraph
22is exempt from the provisions of Section 3-55.
23 (25) Beginning on the effective date of this amendatory Act
24of the 92nd General Assembly, personal property sold to a
25lessor who leases the property, under a lease of one year or
26longer executed or in effect at the time of the purchase, to a

SB1327- 77 -LRB100 05630 HLH 15644 b
1governmental body that has been issued an active tax exemption
2identification number by the Department under Section 1g of the
3Retailers' Occupation Tax Act. This paragraph is exempt from
4the provisions of Section 3-55.
5 (26) Beginning on January 1, 2002 and through June 30,
62016, tangible personal property purchased from an Illinois
7retailer by a taxpayer engaged in centralized purchasing
8activities in Illinois who will, upon receipt of the property
9in Illinois, temporarily store the property in Illinois (i) for
10the purpose of subsequently transporting it outside this State
11for use or consumption thereafter solely outside this State or
12(ii) for the purpose of being processed, fabricated, or
13manufactured into, attached to, or incorporated into other
14tangible personal property to be transported outside this State
15and thereafter used or consumed solely outside this State. The
16Director of Revenue shall, pursuant to rules adopted in
17accordance with the Illinois Administrative Procedure Act,
18issue a permit to any taxpayer in good standing with the
19Department who is eligible for the exemption under this
20paragraph (26). The permit issued under this paragraph (26)
21shall authorize the holder, to the extent and in the manner
22specified in the rules adopted under this Act, to purchase
23tangible personal property from a retailer exempt from the
24taxes imposed by this Act. Taxpayers shall maintain all
25necessary books and records to substantiate the use and
26consumption of all such tangible personal property outside of

SB1327- 78 -LRB100 05630 HLH 15644 b
1the State of Illinois.
2 (27) Beginning January 1, 2008, tangible personal property
3used in the construction or maintenance of a community water
4supply, as defined under Section 3.145 of the Environmental
5Protection Act, that is operated by a not-for-profit
6corporation that holds a valid water supply permit issued under
7Title IV of the Environmental Protection Act. This paragraph is
8exempt from the provisions of Section 3-55.
9 (28) Tangible personal property sold to a
10public-facilities corporation, as described in Section
1111-65-10 of the Illinois Municipal Code, for purposes of
12constructing or furnishing a municipal convention hall, but
13only if the legal title to the municipal convention hall is
14transferred to the municipality without any further
15consideration by or on behalf of the municipality at the time
16of the completion of the municipal convention hall or upon the
17retirement or redemption of any bonds or other debt instruments
18issued by the public-facilities corporation in connection with
19the development of the municipal convention hall. This
20exemption includes existing public-facilities corporations as
21provided in Section 11-65-25 of the Illinois Municipal Code.
22This paragraph is exempt from the provisions of Section 3-55.
23 (29) Beginning January 1, 2010, materials, parts,
24equipment, components, and furnishings incorporated into or
25upon an aircraft as part of the modification, refurbishment,
26completion, replacement, repair, or maintenance of the

SB1327- 79 -LRB100 05630 HLH 15644 b
1aircraft. This exemption includes consumable supplies used in
2the modification, refurbishment, completion, replacement,
3repair, and maintenance of aircraft, but excludes any
4materials, parts, equipment, components, and consumable
5supplies used in the modification, replacement, repair, and
6maintenance of aircraft engines or power plants, whether such
7engines or power plants are installed or uninstalled upon any
8such aircraft. "Consumable supplies" include, but are not
9limited to, adhesive, tape, sandpaper, general purpose
10lubricants, cleaning solution, latex gloves, and protective
11films. This exemption applies only to the transfer of
12qualifying tangible personal property incident to the
13modification, refurbishment, completion, replacement, repair,
14or maintenance of an aircraft by persons who (i) hold an Air
15Agency Certificate and are empowered to operate an approved
16repair station by the Federal Aviation Administration, (ii)
17have a Class IV Rating, and (iii) conduct operations in
18accordance with Part 145 of the Federal Aviation Regulations.
19The exemption does not include aircraft operated by a
20commercial air carrier providing scheduled passenger air
21service pursuant to authority issued under Part 121 or Part 129
22of the Federal Aviation Regulations. The changes made to this
23paragraph (29) by Public Act 98-534 are declarative of existing
24law.
25 (30) Beginning January 1, 2017, menstrual pads, tampons,
26and menstrual cups.

SB1327- 80 -LRB100 05630 HLH 15644 b
1(Source: P.A. 98-104, eff. 7-22-13; 98-422, eff. 8-16-13;
298-456, eff. 8-16-13; 98-534, eff. 8-23-13; 98-756, eff.
37-16-14; 99-180, eff. 7-29-15; 99-855, eff. 8-19-16.)
4 (35 ILCS 115/3-30) (from Ch. 120, par. 439.103-30)
5 Sec. 3-30. Graphic arts production. For purposes of this
6Act, "graphic arts production" means the production of tangible
7personal property for wholesale or retail sale or lease by
8means of printing, including ink jet printing, by one or more
9of the processes described in Groups 323110 through 323122 of
10Subsector 323, Groups 511110 through 511199 of Subsector 511,
11and Group 512230 of Subsector 512 of the North American
12Industry Classification System published by the U.S. Office of
13Management and Budget, 1997 edition. Graphic arts production
14does not include (i) the transfer of images onto paper or other
15tangible personal property by means of photocopying or (ii)
16final printed products in electronic or audio form, including
17the production of software or audio-books. For the purpose of
18this Section, persons engaged primarily in the business of
19printing or publishing newspapers or magazines that qualify as
20newsprint and ink, by one or more of the processes described in
21Groups 511110 through 511199 of subsector 511 of the North
22American Industry Classification System published by the U.S.
23Office of Management and Budget, 1997 edition, are deemed to be
24engaged in graphic arts production.
25 For the purposes of the exemption provided in paragraph (5)

SB1327- 81 -LRB100 05630 HLH 15644 b
1of Section 3-5 of this Act, "production related tangible
2personal property" means all tangible personal property that is
3used or consumed by the purchaser in a graphic arts facility in
4which graphic arts production takes place and includes, without
5limitation, tangible personal property that is purchased for
6incorporation into real estate within a graphic arts production
7facility, supplies and consumables used in a graphic arts
8production facility including fuels, coolants, solvents, oils,
9lubricants, and adhesives, hand tools, protective apparel, and
10fire and safety equipment used or consumed within a
11manufacturing facility, and tangible personal property that is
12used or consumed in activities such as research and
13development, preproduction material handling, receiving,
14quality control, inventory control, storage, staging, and
15packaging for shipping and transportation purposes.
16"Production related tangible personal property" does not
17include (i) tangible personal property that is used, within or
18without a graphic arts production facility, in sales,
19purchasing, accounting, fiscal management, marketing,
20personnel recruitment or selection, or landscaping or (ii)
21tangible personal property that is required to be titled or
22registered with a department, agency, or unit of federal,
23State, or local government.
24(Source: P.A. 96-116, eff. 7-31-09.)
25 Section 20. The Retailers' Occupation Tax Act is amended by

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1changing Sections 2-5, 2-30, and 2-45 as follows:
2 (35 ILCS 120/2-5)
3 Sec. 2-5. Exemptions. Gross receipts from proceeds from the
4sale of the following tangible personal property are exempt
5from the tax imposed by this Act:
6 (1) Farm chemicals.
7 (2) Farm machinery and equipment, both new and used,
8including that manufactured on special order, certified by the
9purchaser to be used primarily for production agriculture or
10State or federal agricultural programs, including individual
11replacement parts for the machinery and equipment, including
12machinery and equipment purchased for lease, and including
13implements of husbandry defined in Section 1-130 of the
14Illinois Vehicle Code, farm machinery and agricultural
15chemical and fertilizer spreaders, and nurse wagons required to
16be registered under Section 3-809 of the Illinois Vehicle Code,
17but excluding other motor vehicles required to be registered
18under the Illinois Vehicle Code. Horticultural polyhouses or
19hoop houses used for propagating, growing, or overwintering
20plants shall be considered farm machinery and equipment under
21this item (2). Agricultural chemical tender tanks and dry boxes
22shall include units sold separately from a motor vehicle
23required to be licensed and units sold mounted on a motor
24vehicle required to be licensed, if the selling price of the
25tender is separately stated.

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1 Farm machinery and equipment shall include precision
2farming equipment that is installed or purchased to be
3installed on farm machinery and equipment including, but not
4limited to, tractors, harvesters, sprayers, planters, seeders,
5or spreaders. Precision farming equipment includes, but is not
6limited to, soil testing sensors, computers, monitors,
7software, global positioning and mapping systems, and other
8such equipment.
9 Farm machinery and equipment also includes computers,
10sensors, software, and related equipment used primarily in the
11computer-assisted operation of production agriculture
12facilities, equipment, and activities such as, but not limited
13to, the collection, monitoring, and correlation of animal and
14crop data for the purpose of formulating animal diets and
15agricultural chemicals. This item (2) is exempt from the
16provisions of Section 2-70.
17 (3) Until July 1, 2003, distillation machinery and
18equipment, sold as a unit or kit, assembled or installed by the
19retailer, certified by the user to be used only for the
20production of ethyl alcohol that will be used for consumption
21as motor fuel or as a component of motor fuel for the personal
22use of the user, and not subject to sale or resale.
23 (4) Until July 1, 2003 and beginning again September 1,
242004 through August 30, 2014, graphic arts machinery and
25equipment, including repair and replacement parts, both new and
26used, and including that manufactured on special order or

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1purchased for lease, certified by the purchaser to be used
2primarily for graphic arts production. Equipment includes
3chemicals or chemicals acting as catalysts but only if the
4chemicals or chemicals acting as catalysts effect a direct and
5immediate change upon a graphic arts product. The exemption
6provided by this paragraph (4) also includes production related
7tangible personal property, as defined in Section 2-30,
8purchased on or after July 1, 2014. The exemption under this
9paragraph (4) is exempt from the provisions of Section 2-70.
10 (5) A motor vehicle that is used for automobile renting, as
11defined in the Automobile Renting Occupation and Use Tax Act.
12This paragraph is exempt from the provisions of Section 2-70.
13 (6) Personal property sold by a teacher-sponsored student
14organization affiliated with an elementary or secondary school
15located in Illinois.
16 (7) Until July 1, 2003, proceeds of that portion of the
17selling price of a passenger car the sale of which is subject
18to the Replacement Vehicle Tax.
19 (8) Personal property sold to an Illinois county fair
20association for use in conducting, operating, or promoting the
21county fair.
22 (9) Personal property sold to a not-for-profit arts or
23cultural organization that establishes, by proof required by
24the Department by rule, that it has received an exemption under
25Section 501(c)(3) of the Internal Revenue Code and that is
26organized and operated primarily for the presentation or

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1support of arts or cultural programming, activities, or
2services. These organizations include, but are not limited to,
3music and dramatic arts organizations such as symphony
4orchestras and theatrical groups, arts and cultural service
5organizations, local arts councils, visual arts organizations,
6and media arts organizations. On and after the effective date
7of this amendatory Act of the 92nd General Assembly, however,
8an entity otherwise eligible for this exemption shall not make
9tax-free purchases unless it has an active identification
10number issued by the Department.
11 (10) Personal property sold by a corporation, society,
12association, foundation, institution, or organization, other
13than a limited liability company, that is organized and
14operated as a not-for-profit service enterprise for the benefit
15of persons 65 years of age or older if the personal property
16was not purchased by the enterprise for the purpose of resale
17by the enterprise.
18 (11) Personal property sold to a governmental body, to a
19corporation, society, association, foundation, or institution
20organized and operated exclusively for charitable, religious,
21or educational purposes, or to a not-for-profit corporation,
22society, association, foundation, institution, or organization
23that has no compensated officers or employees and that is
24organized and operated primarily for the recreation of persons
2555 years of age or older. A limited liability company may
26qualify for the exemption under this paragraph only if the

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1limited liability company is organized and operated
2exclusively for educational purposes. On and after July 1,
31987, however, no entity otherwise eligible for this exemption
4shall make tax-free purchases unless it has an active
5identification number issued by the Department.
6 (12) Tangible personal property sold to interstate
7carriers for hire for use as rolling stock moving in interstate
8commerce or to lessors under leases of one year or longer
9executed or in effect at the time of purchase by interstate
10carriers for hire for use as rolling stock moving in interstate
11commerce and equipment operated by a telecommunications
12provider, licensed as a common carrier by the Federal
13Communications Commission, which is permanently installed in
14or affixed to aircraft moving in interstate commerce.
15 (12-5) On and after July 1, 2003 and through June 30, 2004,
16motor vehicles of the second division with a gross vehicle
17weight in excess of 8,000 pounds that are subject to the
18commercial distribution fee imposed under Section 3-815.1 of
19the Illinois Vehicle Code. Beginning on July 1, 2004 and
20through June 30, 2005, the use in this State of motor vehicles
21of the second division: (i) with a gross vehicle weight rating
22in excess of 8,000 pounds; (ii) that are subject to the
23commercial distribution fee imposed under Section 3-815.1 of
24the Illinois Vehicle Code; and (iii) that are primarily used
25for commercial purposes. Through June 30, 2005, this exemption
26applies to repair and replacement parts added after the initial

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1purchase of such a motor vehicle if that motor vehicle is used
2in a manner that would qualify for the rolling stock exemption
3otherwise provided for in this Act. For purposes of this
4paragraph, "used for commercial purposes" means the
5transportation of persons or property in furtherance of any
6commercial or industrial enterprise whether for-hire or not.
7 (13) Proceeds from sales to owners, lessors, or shippers of
8tangible personal property that is utilized by interstate
9carriers for hire for use as rolling stock moving in interstate
10commerce and equipment operated by a telecommunications
11provider, licensed as a common carrier by the Federal
12Communications Commission, which is permanently installed in
13or affixed to aircraft moving in interstate commerce.
14 (14) Machinery and equipment that will be used by the
15purchaser, or a lessee of the purchaser, primarily in the
16process of manufacturing or assembling tangible personal
17property for wholesale or retail sale or lease, whether the
18sale or lease is made directly by the manufacturer or by some
19other person, whether the materials used in the process are
20owned by the manufacturer or some other person, or whether the
21sale or lease is made apart from or as an incident to the
22seller's engaging in the service occupation of producing
23machines, tools, dies, jigs, patterns, gauges, or other similar
24items of no commercial value on special order for a particular
25purchaser. The exemption provided by this paragraph (14) also
26includes production related tangible personal property, as

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1defined in Section 2-45, purchased on or after July 1, 2014.
2The exemption provided by this paragraph (14) does not include
3machinery and equipment used in (i) the generation of
4electricity for wholesale or retail sale; (ii) the generation
5or treatment of natural or artificial gas for wholesale or
6retail sale that is delivered to customers through pipes,
7pipelines, or mains; or (iii) the treatment of water for
8wholesale or retail sale that is delivered to customers through
9pipes, pipelines, or mains. The provisions of Public Act 98-583
10are declaratory of existing law as to the meaning and scope of
11this exemption. The exemption provided by this paragraph (14)
12is exempt from the provisions of Section 2-70.
13 (15) Proceeds of mandatory service charges separately
14stated on customers' bills for purchase and consumption of food
15and beverages, to the extent that the proceeds of the service
16charge are in fact turned over as tips or as a substitute for
17tips to the employees who participate directly in preparing,
18serving, hosting or cleaning up the food or beverage function
19with respect to which the service charge is imposed.
20 (16) Petroleum products sold to a purchaser if the seller
21is prohibited by federal law from charging tax to the
22purchaser.
23 (17) Tangible personal property sold to a common carrier by
24rail or motor that receives the physical possession of the
25property in Illinois and that transports the property, or
26shares with another common carrier in the transportation of the

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1property, out of Illinois on a standard uniform bill of lading
2showing the seller of the property as the shipper or consignor
3of the property to a destination outside Illinois, for use
4outside Illinois.
5 (18) Legal tender, currency, medallions, or gold or silver
6coinage issued by the State of Illinois, the government of the
7United States of America, or the government of any foreign
8country, and bullion.
9 (19) Until July 1 2003, oil field exploration, drilling,
10and production equipment, including (i) rigs and parts of rigs,
11rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
12tubular goods, including casing and drill strings, (iii) pumps
13and pump-jack units, (iv) storage tanks and flow lines, (v) any
14individual replacement part for oil field exploration,
15drilling, and production equipment, and (vi) machinery and
16equipment purchased for lease; but excluding motor vehicles
17required to be registered under the Illinois Vehicle Code.
18 (20) Photoprocessing machinery and equipment, including
19repair and replacement parts, both new and used, including that
20manufactured on special order, certified by the purchaser to be
21used primarily for photoprocessing, and including
22photoprocessing machinery and equipment purchased for lease.
23 (21) Coal and aggregate exploration, mining, off-highway
24hauling, processing, maintenance, and reclamation equipment,
25including replacement parts and equipment, and including
26equipment purchased for lease, but excluding motor vehicles

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1required to be registered under the Illinois Vehicle Code. The
2changes made to this Section by Public Act 97-767 apply on and
3after July 1, 2003, but no claim for credit or refund is
4allowed on or after August 16, 2013 (the effective date of
5Public Act 98-456) for such taxes paid during the period
6beginning July 1, 2003 and ending on August 16, 2013 (the
7effective date of Public Act 98-456).
8 (22) Until June 30, 2013, fuel and petroleum products sold
9to or used by an air carrier, certified by the carrier to be
10used for consumption, shipment, or storage in the conduct of
11its business as an air common carrier, for a flight destined
12for or returning from a location or locations outside the
13United States without regard to previous or subsequent domestic
14stopovers.
15 Beginning July 1, 2013, fuel and petroleum products sold to
16or used by an air carrier, certified by the carrier to be used
17for consumption, shipment, or storage in the conduct of its
18business as an air common carrier, for a flight that (i) is
19engaged in foreign trade or is engaged in trade between the
20United States and any of its possessions and (ii) transports at
21least one individual or package for hire from the city of
22origination to the city of final destination on the same
23aircraft, without regard to a change in the flight number of
24that aircraft.
25 (23) A transaction in which the purchase order is received
26by a florist who is located outside Illinois, but who has a

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1florist located in Illinois deliver the property to the
2purchaser or the purchaser's donee in Illinois.
3 (24) Fuel consumed or used in the operation of ships,
4barges, or vessels that are used primarily in or for the
5transportation of property or the conveyance of persons for
6hire on rivers bordering on this State if the fuel is delivered
7by the seller to the purchaser's barge, ship, or vessel while
8it is afloat upon that bordering river.
9 (25) Except as provided in item (25-5) of this Section, a
10motor vehicle sold in this State to a nonresident even though
11the motor vehicle is delivered to the nonresident in this
12State, if the motor vehicle is not to be titled in this State,
13and if a drive-away permit is issued to the motor vehicle as
14provided in Section 3-603 of the Illinois Vehicle Code or if
15the nonresident purchaser has vehicle registration plates to
16transfer to the motor vehicle upon returning to his or her home
17state. The issuance of the drive-away permit or having the
18out-of-state registration plates to be transferred is prima
19facie evidence that the motor vehicle will not be titled in
20this State.
21 (25-5) The exemption under item (25) does not apply if the
22state in which the motor vehicle will be titled does not allow
23a reciprocal exemption for a motor vehicle sold and delivered
24in that state to an Illinois resident but titled in Illinois.
25The tax collected under this Act on the sale of a motor vehicle
26in this State to a resident of another state that does not

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1allow a reciprocal exemption shall be imposed at a rate equal
2to the state's rate of tax on taxable property in the state in
3which the purchaser is a resident, except that the tax shall
4not exceed the tax that would otherwise be imposed under this
5Act. At the time of the sale, the purchaser shall execute a
6statement, signed under penalty of perjury, of his or her
7intent to title the vehicle in the state in which the purchaser
8is a resident within 30 days after the sale and of the fact of
9the payment to the State of Illinois of tax in an amount
10equivalent to the state's rate of tax on taxable property in
11his or her state of residence and shall submit the statement to
12the appropriate tax collection agency in his or her state of
13residence. In addition, the retailer must retain a signed copy
14of the statement in his or her records. Nothing in this item
15shall be construed to require the removal of the vehicle from
16this state following the filing of an intent to title the
17vehicle in the purchaser's state of residence if the purchaser
18titles the vehicle in his or her state of residence within 30
19days after the date of sale. The tax collected under this Act
20in accordance with this item (25-5) shall be proportionately
21distributed as if the tax were collected at the 6.25% general
22rate imposed under this Act.
23 (25-7) Beginning on July 1, 2007, no tax is imposed under
24this Act on the sale of an aircraft, as defined in Section 3 of
25the Illinois Aeronautics Act, if all of the following
26conditions are met:

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1 (1) the aircraft leaves this State within 15 days after
2 the later of either the issuance of the final billing for
3 the sale of the aircraft, or the authorized approval for
4 return to service, completion of the maintenance record
5 entry, and completion of the test flight and ground test
6 for inspection, as required by 14 C.F.R. 91.407;
7 (2) the aircraft is not based or registered in this
8 State after the sale of the aircraft; and
9 (3) the seller retains in his or her books and records
10 and provides to the Department a signed and dated
11 certification from the purchaser, on a form prescribed by
12 the Department, certifying that the requirements of this
13 item (25-7) are met. The certificate must also include the
14 name and address of the purchaser, the address of the
15 location where the aircraft is to be titled or registered,
16 the address of the primary physical location of the
17 aircraft, and other information that the Department may
18 reasonably require.
19 For purposes of this item (25-7):
20 "Based in this State" means hangared, stored, or otherwise
21used, excluding post-sale customizations as defined in this
22Section, for 10 or more days in each 12-month period
23immediately following the date of the sale of the aircraft.
24 "Registered in this State" means an aircraft registered
25with the Department of Transportation, Aeronautics Division,
26or titled or registered with the Federal Aviation

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1Administration to an address located in this State.
2 This paragraph (25-7) is exempt from the provisions of
3Section 2-70.
4 (26) Semen used for artificial insemination of livestock
5for direct agricultural production.
6 (27) Horses, or interests in horses, registered with and
7meeting the requirements of any of the Arabian Horse Club
8Registry of America, Appaloosa Horse Club, American Quarter
9Horse Association, United States Trotting Association, or
10Jockey Club, as appropriate, used for purposes of breeding or
11racing for prizes. This item (27) is exempt from the provisions
12of Section 2-70, and the exemption provided for under this item
13(27) applies for all periods beginning May 30, 1995, but no
14claim for credit or refund is allowed on or after January 1,
152008 (the effective date of Public Act 95-88) for such taxes
16paid during the period beginning May 30, 2000 and ending on
17January 1, 2008 (the effective date of Public Act 95-88).
18 (28) Computers and communications equipment utilized for
19any hospital purpose and equipment used in the diagnosis,
20analysis, or treatment of hospital patients sold to a lessor
21who leases the equipment, under a lease of one year or longer
22executed or in effect at the time of the purchase, to a
23hospital that has been issued an active tax exemption
24identification number by the Department under Section 1g of
25this Act.
26 (29) Personal property sold to a lessor who leases the

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1property, under a lease of one year or longer executed or in
2effect at the time of the purchase, to a governmental body that
3has been issued an active tax exemption identification number
4by the Department under Section 1g of this Act.
5 (30) Beginning with taxable years ending on or after
6December 31, 1995 and ending with taxable years ending on or
7before December 31, 2004, personal property that is donated for
8disaster relief to be used in a State or federally declared
9disaster area in Illinois or bordering Illinois by a
10manufacturer or retailer that is registered in this State to a
11corporation, society, association, foundation, or institution
12that has been issued a sales tax exemption identification
13number by the Department that assists victims of the disaster
14who reside within the declared disaster area.
15 (31) Beginning with taxable years ending on or after
16December 31, 1995 and ending with taxable years ending on or
17before December 31, 2004, personal property that is used in the
18performance of infrastructure repairs in this State, including
19but not limited to municipal roads and streets, access roads,
20bridges, sidewalks, waste disposal systems, water and sewer
21line extensions, water distribution and purification
22facilities, storm water drainage and retention facilities, and
23sewage treatment facilities, resulting from a State or
24federally declared disaster in Illinois or bordering Illinois
25when such repairs are initiated on facilities located in the
26declared disaster area within 6 months after the disaster.

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1 (32) Beginning July 1, 1999, game or game birds sold at a
2"game breeding and hunting preserve area" as that term is used
3in the Wildlife Code. This paragraph is exempt from the
4provisions of Section 2-70.
5 (33) A motor vehicle, as that term is defined in Section
61-146 of the Illinois Vehicle Code, that is donated to a
7corporation, limited liability company, society, association,
8foundation, or institution that is determined by the Department
9to be organized and operated exclusively for educational
10purposes. For purposes of this exemption, "a corporation,
11limited liability company, society, association, foundation,
12or institution organized and operated exclusively for
13educational purposes" means all tax-supported public schools,
14private schools that offer systematic instruction in useful
15branches of learning by methods common to public schools and
16that compare favorably in their scope and intensity with the
17course of study presented in tax-supported schools, and
18vocational or technical schools or institutes organized and
19operated exclusively to provide a course of study of not less
20than 6 weeks duration and designed to prepare individuals to
21follow a trade or to pursue a manual, technical, mechanical,
22industrial, business, or commercial occupation.
23 (34) Beginning January 1, 2000, personal property,
24including food, purchased through fundraising events for the
25benefit of a public or private elementary or secondary school,
26a group of those schools, or one or more school districts if

SB1327- 97 -LRB100 05630 HLH 15644 b
1the events are sponsored by an entity recognized by the school
2district that consists primarily of volunteers and includes
3parents and teachers of the school children. This paragraph
4does not apply to fundraising events (i) for the benefit of
5private home instruction or (ii) for which the fundraising
6entity purchases the personal property sold at the events from
7another individual or entity that sold the property for the
8purpose of resale by the fundraising entity and that profits
9from the sale to the fundraising entity. This paragraph is
10exempt from the provisions of Section 2-70.
11 (35) Beginning January 1, 2000 and through December 31,
122001, new or used automatic vending machines that prepare and
13serve hot food and beverages, including coffee, soup, and other
14items, and replacement parts for these machines. Beginning
15January 1, 2002 and through June 30, 2003, machines and parts
16for machines used in commercial, coin-operated amusement and
17vending business if a use or occupation tax is paid on the
18gross receipts derived from the use of the commercial,
19coin-operated amusement and vending machines. This paragraph
20is exempt from the provisions of Section 2-70.
21 (35-5) Beginning August 23, 2001 and through June 30, 2016,
22food for human consumption that is to be consumed off the
23premises where it is sold (other than alcoholic beverages, soft
24drinks, and food that has been prepared for immediate
25consumption) and prescription and nonprescription medicines,
26drugs, medical appliances, and insulin, urine testing

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1materials, syringes, and needles used by diabetics, for human
2use, when purchased for use by a person receiving medical
3assistance under Article V of the Illinois Public Aid Code who
4resides in a licensed long-term care facility, as defined in
5the Nursing Home Care Act, or a licensed facility as defined in
6the ID/DD Community Care Act, the MC/DD Act, or the Specialized
7Mental Health Rehabilitation Act of 2013.
8 (36) Beginning August 2, 2001, computers and
9communications equipment utilized for any hospital purpose and
10equipment used in the diagnosis, analysis, or treatment of
11hospital patients sold to a lessor who leases the equipment,
12under a lease of one year or longer executed or in effect at
13the time of the purchase, to a hospital that has been issued an
14active tax exemption identification number by the Department
15under Section 1g of this Act. This paragraph is exempt from the
16provisions of Section 2-70.
17 (37) Beginning August 2, 2001, personal property sold to a
18lessor who leases the property, under a lease of one year or
19longer executed or in effect at the time of the purchase, to a
20governmental body that has been issued an active tax exemption
21identification number by the Department under Section 1g of
22this Act. This paragraph is exempt from the provisions of
23Section 2-70.
24 (38) Beginning on January 1, 2002 and through June 30,
252016, tangible personal property purchased from an Illinois
26retailer by a taxpayer engaged in centralized purchasing

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1activities in Illinois who will, upon receipt of the property
2in Illinois, temporarily store the property in Illinois (i) for
3the purpose of subsequently transporting it outside this State
4for use or consumption thereafter solely outside this State or
5(ii) for the purpose of being processed, fabricated, or
6manufactured into, attached to, or incorporated into other
7tangible personal property to be transported outside this State
8and thereafter used or consumed solely outside this State. The
9Director of Revenue shall, pursuant to rules adopted in
10accordance with the Illinois Administrative Procedure Act,
11issue a permit to any taxpayer in good standing with the
12Department who is eligible for the exemption under this
13paragraph (38). The permit issued under this paragraph (38)
14shall authorize the holder, to the extent and in the manner
15specified in the rules adopted under this Act, to purchase
16tangible personal property from a retailer exempt from the
17taxes imposed by this Act. Taxpayers shall maintain all
18necessary books and records to substantiate the use and
19consumption of all such tangible personal property outside of
20the State of Illinois.
21 (39) Beginning January 1, 2008, tangible personal property
22used in the construction or maintenance of a community water
23supply, as defined under Section 3.145 of the Environmental
24Protection Act, that is operated by a not-for-profit
25corporation that holds a valid water supply permit issued under
26Title IV of the Environmental Protection Act. This paragraph is

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1exempt from the provisions of Section 2-70.
2 (40) Beginning January 1, 2010, materials, parts,
3equipment, components, and furnishings incorporated into or
4upon an aircraft as part of the modification, refurbishment,
5completion, replacement, repair, or maintenance of the
6aircraft. This exemption includes consumable supplies used in
7the modification, refurbishment, completion, replacement,
8repair, and maintenance of aircraft, but excludes any
9materials, parts, equipment, components, and consumable
10supplies used in the modification, replacement, repair, and
11maintenance of aircraft engines or power plants, whether such
12engines or power plants are installed or uninstalled upon any
13such aircraft. "Consumable supplies" include, but are not
14limited to, adhesive, tape, sandpaper, general purpose
15lubricants, cleaning solution, latex gloves, and protective
16films. This exemption applies only to the sale of qualifying
17tangible personal property to persons who modify, refurbish,
18complete, replace, or maintain an aircraft and who (i) hold an
19Air Agency Certificate and are empowered to operate an approved
20repair station by the Federal Aviation Administration, (ii)
21have a Class IV Rating, and (iii) conduct operations in
22accordance with Part 145 of the Federal Aviation Regulations.
23The exemption does not include aircraft operated by a
24commercial air carrier providing scheduled passenger air
25service pursuant to authority issued under Part 121 or Part 129
26of the Federal Aviation Regulations. The changes made to this

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1paragraph (40) by Public Act 98-534 are declarative of existing
2law.
3 (41) Tangible personal property sold to a
4public-facilities corporation, as described in Section
511-65-10 of the Illinois Municipal Code, for purposes of
6constructing or furnishing a municipal convention hall, but
7only if the legal title to the municipal convention hall is
8transferred to the municipality without any further
9consideration by or on behalf of the municipality at the time
10of the completion of the municipal convention hall or upon the
11retirement or redemption of any bonds or other debt instruments
12issued by the public-facilities corporation in connection with
13the development of the municipal convention hall. This
14exemption includes existing public-facilities corporations as
15provided in Section 11-65-25 of the Illinois Municipal Code.
16This paragraph is exempt from the provisions of Section 2-70.
17 (42) Beginning January 1, 2017, menstrual pads, tampons,
18and menstrual cups.
19(Source: P.A. 98-104, eff. 7-22-13; 98-422, eff. 8-16-13;
2098-456, eff. 8-16-13; 98-534, eff. 8-23-13; 98-574, eff.
211-1-14; 98-583, eff. 1-1-14; 98-756, eff. 7-16-14; 99-180, eff.
227-29-15; 99-855, eff. 8-19-16.)
23 (35 ILCS 120/2-30) (from Ch. 120, par. 441-30)
24 Sec. 2-30. Graphic arts production. For purposes of this
25Act, "graphic arts production" means the production of tangible

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1personal property for wholesale or retail sale or lease by
2means of printing, including ink jet printing, by one or more
3of the processes described in Groups 323110 through 323122 of
4Subsector 323, Groups 511110 through 511199 of Subsector 511,
5and Group 512230 of Subsector 512 of the North American
6Industry Classification System published by the U.S. Office of
7Management and Budget, 1997 edition. Graphic arts production
8does not include (i) the transfer of images onto paper or other
9tangible personal property by means of photocopying or (ii)
10final printed products in electronic or audio form, including
11the production of software or audio-books. For purposes of this
12Section, persons engaged primarily in the business of printing
13or publishing newspapers or magazines that qualify as newsprint
14and ink, by one or more of the processes described in Groups
15511110 through 511199 of subsector 511 of the North American
16Industry Classification System published by the U.S. Office of
17Management and Budget, 1997 edition, are deemed to be engaged
18in graphic arts production.
19 For the purposes of the exemption provided in paragraph (4)
20of Section 2-5 of this Act, "production related tangible
21personal property" means all tangible personal property that is
22used or consumed by the purchaser in a graphic arts facility in
23which graphic arts production takes place and includes, without
24limitation, tangible personal property that is purchased for
25incorporation into real estate within a graphic arts production
26facility, supplies and consumables used in a graphic arts

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1production facility including fuels, coolants, solvents, oils,
2lubricants, and adhesives, hand tools, protective apparel, and
3fire and safety equipment used or consumed within a
4manufacturing facility, and tangible personal property that is
5used or consumed in activities such as research and
6development, preproduction material handling, receiving,
7quality control, inventory control, storage, staging, and
8packaging for shipping and transportation purposes.
9"Production related tangible personal property" does not
10include (i) tangible personal property that is used, within or
11without a graphic arts production facility, in sales,
12purchasing, accounting, fiscal management, marketing,
13personnel recruitment or selection, or landscaping or (ii)
14tangible personal property that is required to be titled or
15registered with a department, agency, or unit of federal,
16State, or local government.
17(Source: P.A. 96-116, eff. 7-31-09.)
18 (35 ILCS 120/2-45) (from Ch. 120, par. 441-45)
19 Sec. 2-45. Manufacturing and assembly exemption. The
20manufacturing and assembly machinery and equipment exemption
21includes machinery and equipment that replaces machinery and
22equipment in an existing manufacturing facility as well as
23machinery and equipment that are for use in an expanded or new
24manufacturing facility.
25 The machinery and equipment exemption also includes

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1machinery and equipment used in the general maintenance or
2repair of exempt machinery and equipment or for in-house
3manufacture of exempt machinery and equipment. The machinery
4and equipment exemption does not include machinery and
5equipment used in (i) the generation of electricity for
6wholesale or retail sale; (ii) the generation or treatment of
7natural or artificial gas for wholesale or retail sale that is
8delivered to customers through pipes, pipelines, or mains; or
9(iii) the treatment of water for wholesale or retail sale that
10is delivered to customers through pipes, pipelines, or mains.
11The provisions of this amendatory Act of the 98th General
12Assembly are declaratory of existing law as to the meaning and
13scope of this exemption. For the purposes of this exemption,
14terms have the following meanings:
15 (1) "Manufacturing process" means the production of an
16 article of tangible personal property, whether the article
17 is a finished product or an article for use in the process
18 of manufacturing or assembling a different article of
19 tangible personal property, by a procedure commonly
20 regarded as manufacturing, processing, fabricating, or
21 refining that changes some existing material or materials
22 into a material with a different form, use, or name. In
23 relation to a recognized integrated business composed of a
24 series of operations that collectively constitute
25 manufacturing, or individually constitute manufacturing
26 operations, the manufacturing process commences with the

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1 first operation or stage of production in the series and
2 does not end until the completion of the final product in
3 the last operation or stage of production in the series.
4 For purposes of this exemption, photoprocessing is a
5 manufacturing process of tangible personal property for
6 wholesale or retail sale.
7 (2) "Assembling process" means the production of an
8 article of tangible personal property, whether the article
9 is a finished product or an article for use in the process
10 of manufacturing or assembling a different article of
11 tangible personal property, by the combination of existing
12 materials in a manner commonly regarded as assembling that
13 results in a material of a different form, use, or name.
14 (3) "Machinery" means major mechanical machines or
15 major components of those machines contributing to a
16 manufacturing or assembling process.
17 (4) "Equipment" includes an independent device or tool
18 separate from machinery but essential to an integrated
19 manufacturing or assembly process; including computers
20 used primarily in a manufacturer's computer assisted
21 design, computer assisted manufacturing (CAD/CAM) system;
22 any subunit or assembly comprising a component of any
23 machinery or auxiliary, adjunct, or attachment parts of
24 machinery, such as tools, dies, jigs, fixtures, patterns,
25 and molds; and any parts that require periodic replacement
26 in the course of normal operation; but does not include

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1 hand tools. Equipment includes chemicals or chemicals
2 acting as catalysts but only if the chemicals or chemicals
3 acting as catalysts effect a direct and immediate change
4 upon a product being manufactured or assembled for
5 wholesale or retail sale or lease.
6 (5) "Production related tangible personal property"
7 means all tangible personal property that is used or
8 consumed by the purchaser in a manufacturing facility in
9 which a manufacturing process takes place and includes,
10 without limitation, tangible personal property that is
11 purchased for incorporation into real estate within a
12 manufacturing facility, supplies and consumables used in a
13 manufacturing facility including fuels, coolants,
14 solvents, oils, lubricants, and adhesives, hand tools,
15 protective apparel, and fire and safety equipment used or
16 consumed within a manufacturing facility, and tangible
17 personal property that is used or consumed in activities
18 such as research and development, preproduction material
19 handling, receiving, quality control, inventory control,
20 storage, staging, and packaging for shipping and
21 transportation purposes. "Production related tangible
22 personal property" does not include (i) tangible personal
23 property that is used, within or without a manufacturing
24 facility, in sales, purchasing, accounting, fiscal
25 management, marketing, personnel recruitment or selection,
26 or landscaping or (ii) tangible personal property that is

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1 required to be titled or registered with a department,
2 agency, or unit of federal, State, or local government.
3 The manufacturing and assembling machinery and equipment
4exemption includes production related tangible personal
5property that is purchased on or after July 1, 2007 and on or
6before June 30, 2008 and on and after July 1, 2014. The
7exemption for production related tangible personal property
8purchased on or after July 1, 2007 and on or before June 30,
92008 is subject to both of the following limitations:
10 (1) The maximum amount of the exemption for any one
11 taxpayer may not exceed 5% of the purchase price of
12 production related tangible personal property that is
13 purchased on or after July 1, 2007 and on or before June
14 30, 2008. A credit under Section 3-85 of this Act may not
15 be earned by the purchase of production related tangible
16 personal property for which an exemption is received under
17 this Section.
18 (2) The maximum aggregate amount of the exemptions for
19 production related tangible personal property purchased on
20 or after July 1, 2007 and on or before June 30, 2008
21 awarded under this Act and the Use Tax Act to all taxpayers
22 may not exceed $10,000,000. If the claims for the exemption
23 exceed $10,000,000, then the Department shall reduce the
24 amount of the exemption to each taxpayer on a pro rata
25 basis.
26The Department shall may adopt rules to implement and

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1administer the exemption for production related tangible
2personal property.
3 The manufacturing and assembling machinery and equipment
4exemption includes the sale of materials to a purchaser who
5produces exempted types of machinery, equipment, or tools and
6who rents or leases that machinery, equipment, or tools to a
7manufacturer of tangible personal property. This exemption
8also includes the sale of materials to a purchaser who
9manufactures those materials into an exempted type of
10machinery, equipment, or tools that the purchaser uses himself
11or herself in the manufacturing of tangible personal property.
12The purchaser of the machinery and equipment who has an active
13resale registration number shall furnish that number to the
14seller at the time of purchase. A purchaser of the machinery,
15equipment, and tools without an active resale registration
16number shall furnish to the seller a certificate of exemption
17for each transaction stating facts establishing the exemption
18for that transaction, and that certificate shall be available
19to the Department for inspection or audit. Informal rulings,
20opinions, or letters issued by the Department in response to an
21inquiry or request for an opinion from any person regarding the
22coverage and applicability of this exemption to specific
23devices shall be published, maintained as a public record, and
24made available for public inspection and copying. If the
25informal ruling, opinion, or letter contains trade secrets or
26other confidential information, where possible, the Department

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1shall delete that information before publication. Whenever
2informal rulings, opinions, or letters contain a policy of
3general applicability, the Department shall formulate and
4adopt that policy as a rule in accordance with the Illinois
5Administrative Procedure Act.
6(Source: P.A. 98-583, eff. 1-1-14.)
7 Section 99. Effective date. This Act takes effect upon
8becoming law.
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