Bill Text: IL SB1871 | 2017-2018 | 100th General Assembly | Enrolled


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 term "use as rolling stock moving in interstate commerce" means that a person claiming the exemption must: (1) use the vehicles or trailers to transport persons or property for hire; (2) hold, at the time of purchase, an appropriate credential that authorizes a motor carrier to engage in interstate commerce for-hire; and (3) if the person claiming the exemption is a subsidiary of another company, maintain separate books and records, including separate charts of accounts, and assure that all transactions between the transportation company and the parent are commercially reasonable arms-length transactions. Retains the current definition for aircraft and watercraft. Effective immediately.

Spectrum: Slight Partisan Bill (Republican 13-7)

Status: (Enrolled) 2017-05-31 - Passed Both Houses [SB1871 Detail]

Download: Illinois-2017-SB1871-Enrolled.html



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1 AN ACT concerning revenue.
2 Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4 Section 5. The Use Tax Act is amended by changing Sections
53-55, 3-61, and 10 as follows:
6 (35 ILCS 105/3-55) (from Ch. 120, par. 439.3-55)
7 Sec. 3-55. Multistate exemption. To prevent actual or
8likely multistate taxation, the tax imposed by this Act does
9not apply to the use of tangible personal property in this
10State under the following circumstances:
11 (a) The use, in this State, of tangible personal property
12acquired outside this State by a nonresident individual and
13brought into this State by the individual for his or her own
14use while temporarily within this State or while passing
15through this State.
16 (b) (Blank). The use, in this State, of tangible personal
17property by an interstate carrier for hire as rolling stock
18moving in interstate commerce or by lessors under a lease of
19one year or longer executed or in effect at the time of
20purchase of tangible personal property by interstate carriers
21for-hire for use as rolling stock moving in interstate commerce
22as long as so used by the interstate carriers for-hire, and
23equipment 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 (c) The use, in this State, by owners, lessors, or shippers
5of tangible personal property that is utilized by interstate
6carriers for hire for use as rolling stock moving in interstate
7commerce as long as so used by the interstate carriers for
8hire, and equipment operated by a telecommunications provider,
9licensed as a common carrier by the Federal Communications
10Commission, which is permanently installed in or affixed to
11aircraft moving in interstate commerce.
12 (d) The use, in this State, of tangible personal property
13that is acquired outside this State and caused to be brought
14into this State by a person who has already paid a tax in
15another State in respect to the sale, purchase, or use of that
16property, to the extent of the amount of the tax properly due
17and paid in the other State.
18 (e) The temporary storage, in this State, of tangible
19personal property that is acquired outside this State and that,
20after being brought into this State and stored here
21temporarily, is used solely outside this State or is physically
22attached to or incorporated into other tangible personal
23property that is used solely outside this State, or is altered
24by converting, fabricating, manufacturing, printing,
25processing, or shaping, and, as altered, is used solely outside
26this State.

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1 (f) The temporary storage in this State of building
2materials and fixtures that are acquired either in this State
3or outside this State by an Illinois registered combination
4retailer and construction contractor, and that the purchaser
5thereafter uses outside this State by incorporating that
6property into real estate located outside this State.
7 (g) The use or purchase of tangible personal property by a
8common carrier by rail or motor that receives the physical
9possession of the property in Illinois, and that transports the
10property, or shares with another common carrier in the
11transportation of the property, out of Illinois on a standard
12uniform bill of lading showing the seller of the property as
13the shipper or consignor of the property to a destination
14outside Illinois, for use outside Illinois.
15 (h) Except as provided in subsection (h-1), the use, in
16this State, of a motor vehicle that was sold in this State to a
17nonresident, even though the motor vehicle is delivered to the
18nonresident in this State, if the motor vehicle is not to be
19titled in this State, and if a drive-away permit is issued to
20the motor vehicle as provided in Section 3-603 of the Illinois
21Vehicle Code or if the nonresident purchaser has vehicle
22registration plates to transfer to the motor vehicle upon
23returning to his or her home state. The issuance of the
24drive-away permit or having the out-of-state registration
25plates to be transferred shall be prima facie evidence that the
26motor vehicle will not be titled in this State.

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1 (h-1) The exemption under subsection (h) does not apply if
2the state in which the motor vehicle will be titled does not
3allow a reciprocal exemption for the use in that state of a
4motor vehicle sold and delivered in that state to an Illinois
5resident but titled in Illinois. The tax collected under this
6Act on the sale of a motor vehicle in this State to a resident
7of another state that does not allow a reciprocal exemption
8shall be imposed at a rate equal to the state's rate of tax on
9taxable property in the state in which the purchaser is a
10resident, except that the tax shall not exceed the tax that
11would otherwise be imposed under this Act. At the time of the
12sale, the purchaser shall execute a statement, signed under
13penalty of perjury, of his or her intent to title the vehicle
14in the state in which the purchaser is a resident within 30
15days after the sale and of the fact of the payment to the State
16of Illinois of tax in an amount equivalent to the state's rate
17of tax on taxable property in his or her state of residence and
18shall submit the statement to the appropriate tax collection
19agency in his or her state of residence. In addition, the
20retailer must retain a signed copy of the statement in his or
21her records. Nothing in this subsection shall be construed to
22require the removal of the vehicle from this state following
23the filing of an intent to title the vehicle in the purchaser's
24state of residence if the purchaser titles the vehicle in his
25or her state of residence within 30 days after the date of
26sale. The tax collected under this Act in accordance with this

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1subsection (h-1) shall be proportionately distributed as if the
2tax were collected at the 6.25% general rate imposed under this
3Act.
4 (h-2) The following exemptions apply with respect to
5certain aircraft:
6 (1) Beginning on July 1, 2007, no tax is imposed under
7 this Act on the purchase of an aircraft, as defined in
8 Section 3 of the Illinois Aeronautics Act, if all of the
9 following conditions are met:
10 (A) the aircraft leaves this State within 15 days
11 after the later of either the issuance of the final
12 billing for the purchase of the aircraft or the
13 authorized approval for return to service, completion
14 of the maintenance record entry, and completion of the
15 test flight and ground test for inspection, as required
16 by 14 C.F.R. 91.407;
17 (B) the aircraft is not based or registered in this
18 State after the purchase of the aircraft; and
19 (C) the purchaser provides the Department with a
20 signed and dated certification, on a form prescribed by
21 the Department, certifying that the requirements of
22 this item (1) are met. The certificate must also
23 include the name and address of the purchaser, the
24 address of the location where the aircraft is to be
25 titled or registered, the address of the primary
26 physical location of the aircraft, and other

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1 information that the Department may reasonably
2 require.
3 (2) Beginning on July 1, 2007, no tax is imposed under
4 this Act on the use of an aircraft, as defined in Section 3
5 of the Illinois Aeronautics Act, that is temporarily
6 located in this State for the purpose of a prepurchase
7 evaluation if all of the following conditions are met:
8 (A) the aircraft is not based or registered in this
9 State after the prepurchase evaluation; and
10 (B) the purchaser provides the Department with a
11 signed and dated certification, on a form prescribed by
12 the Department, certifying that the requirements of
13 this item (2) are met. The certificate must also
14 include the name and address of the purchaser, the
15 address of the location where the aircraft is to be
16 titled or registered, the address of the primary
17 physical location of the aircraft, and other
18 information that the Department may reasonably
19 require.
20 (3) Beginning on July 1, 2007, no tax is imposed under
21 this Act on the use of an aircraft, as defined in Section 3
22 of the Illinois Aeronautics Act, that is temporarily
23 located in this State for the purpose of a post-sale
24 customization if all of the following conditions are met:
25 (A) the aircraft leaves this State within 15 days
26 after the authorized approval for return to service,

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1 completion of the maintenance record entry, and
2 completion of the test flight and ground test for
3 inspection, as required by 14 C.F.R. 91.407;
4 (B) the aircraft is not based or registered in this
5 State either before or after the post-sale
6 customization; and
7 (C) the purchaser provides the Department with a
8 signed and dated certification, on a form prescribed by
9 the Department, certifying that the requirements of
10 this item (3) are met. The certificate must also
11 include the name and address of the purchaser, the
12 address of the location where the aircraft is to be
13 titled or registered, the address of the primary
14 physical location of the aircraft, and other
15 information that the Department may reasonably
16 require.
17 If tax becomes due under this subsection (h-2) because of
18the purchaser's use of the aircraft in this State, the
19purchaser shall file a return with the Department and pay the
20tax on the fair market value of the aircraft. This return and
21payment of the tax must be made no later than 30 days after the
22aircraft is used in a taxable manner in this State. The tax is
23based on the fair market value of the aircraft on the date that
24it is first used in a taxable manner in this State.
25 For purposes of this subsection (h-2):
26 "Based in this State" means hangared, stored, or otherwise

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1used, excluding post-sale customizations as defined in this
2Section, for 10 or more days in each 12-month period
3immediately following the date of the sale of the aircraft.
4 "Post-sale customization" means any improvement,
5maintenance, or repair that is performed on an aircraft
6following a transfer of ownership of the aircraft.
7 "Prepurchase evaluation" means an examination of an
8aircraft to provide a potential purchaser with information
9relevant to the potential purchase.
10 "Registered in this State" means an aircraft registered
11with the Department of Transportation, Aeronautics Division,
12or titled or registered with the Federal Aviation
13Administration to an address located in this State.
14 This subsection (h-2) is exempt from the provisions of
15Section 3-90.
16 (i) Beginning July 1, 1999, the use, in this State, of fuel
17acquired outside this State and brought into this State in the
18fuel supply tanks of locomotives engaged in freight hauling and
19passenger service for interstate commerce. This subsection is
20exempt from the provisions of Section 3-90.
21 (j) Beginning on January 1, 2002 and through June 30, 2016,
22the use of tangible personal property purchased from an
23Illinois retailer by a taxpayer engaged in centralized
24purchasing activities in Illinois who will, upon receipt of the
25property in Illinois, temporarily store the property in
26Illinois (i) for the purpose of subsequently transporting it

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1outside this State for use or consumption thereafter solely
2outside this State or (ii) for the purpose of being processed,
3fabricated, or manufactured into, attached to, or incorporated
4into other tangible personal property to be transported outside
5this State and thereafter used or consumed solely outside this
6State. The Director of Revenue shall, pursuant to rules adopted
7in accordance with the Illinois Administrative Procedure Act,
8issue a permit to any taxpayer in good standing with the
9Department who is eligible for the exemption under this
10subsection (j). The permit issued under this subsection (j)
11shall authorize the holder, to the extent and in the manner
12specified in the rules adopted under this Act, to purchase
13tangible personal property from a retailer exempt from the
14taxes imposed by this Act. Taxpayers shall maintain all
15necessary books and records to substantiate the use and
16consumption of all such tangible personal property outside of
17the State of Illinois.
18(Source: P.A. 97-73, eff. 6-30-11.)
19 (35 ILCS 105/3-61)
20 Sec. 3-61. Motor vehicles; trailers; use as rolling stock
21definition.
22 (a) (Blank). Through June 30, 2003, "use as rolling stock
23moving in interstate commerce" in subsections (b) and (c) of
24Section 3-55 means for motor vehicles, as defined in Section
251-146 of the Illinois Vehicle Code, and trailers, as defined in

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1Section 1-209 of the Illinois Vehicle Code, when on 15 or more
2occasions in a 12-month period the motor vehicle and trailer
3has carried persons or property for hire in interstate
4commerce, even just between points in Illinois, if the motor
5vehicle and trailer transports persons whose journeys or
6property whose shipments originate or terminate outside
7Illinois. This definition applies to all property purchased for
8the purpose of being attached to those motor vehicles or
9trailers as a part thereof.
10 (b) (Blank). On and after July 1, 2003 and through June 30,
112004, "use as rolling stock moving in interstate commerce" in
12paragraphs (b) and (c) of Section 3-55 occurs for motor
13vehicles, as defined in Section 1-146 of the Illinois Vehicle
14Code, when during a 12-month period the rolling stock has
15carried persons or property for hire in interstate commerce for
1651% of its total trips and transports persons whose journeys or
17property whose shipments originate or terminate outside
18Illinois. Trips that are only between points in Illinois shall
19not be counted as interstate trips when calculating whether the
20tangible personal property qualifies for the exemption but such
21trips shall be included in total trips taken.
22 (c) This subsection (c) applies to motor vehicles, other
23than limousines, purchased through June 30, 2017. For motor
24vehicles, other than limousines, purchased on or after July 1,
252017, subsection (d-5) applies. This subsection (c) applies to
26limousines purchased before, on, or after July 1, 2017. "Use

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1Beginning July 1, 2004, "use as rolling stock moving in
2interstate commerce" in paragraph paragraphs (b) and (c) of
3Section 3-55 occurs for motor vehicles, as defined in Section
41-146 of the Illinois Vehicle Code, when during a 12-month
5period the rolling stock has carried persons or property for
6hire in interstate commerce for greater than 50% of its total
7trips for that period or for greater than 50% of its total
8miles for that period. The person claiming the exemption shall
9make an election at the time of purchase to use either the
10trips or mileage method. Persons who purchased motor vehicles
11prior to July 1, 2004 shall make an election to use either the
12trips or mileage method and document that election in their
13books and records. If no election is made under this subsection
14to use the trips or mileage method, the person shall be deemed
15to have chosen the mileage method.
16 For purposes of determining qualifying trips or miles,
17motor vehicles that carry persons or property for hire, even
18just between points in Illinois, will be considered used for
19hire in interstate commerce if the motor vehicle transports
20persons whose journeys or property whose shipments originate or
21terminate outside Illinois. The exemption for motor vehicles
22used as rolling stock moving in interstate commerce may be
23claimed only for the following vehicles: (i) motor vehicles
24whose gross vehicle weight rating exceeds 16,000 pounds; and
25(ii) limousines, as defined in Section 1-139.1 of the Illinois
26Vehicle Code. Through June 30, 2017, this This definition

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1applies to all property purchased for the purpose of being
2attached to those motor vehicles as a part thereof. On and
3after July 1, 2017, this definition applies to property
4purchased for the purpose of being attached to limousines as a
5part thereof.
6 (d) For purchases made through June 30, 2017 Beginning July
71, 2004, "use as rolling stock moving in interstate commerce"
8in paragraph paragraphs (b) and (c) of Section 3-55 occurs for
9trailers, as defined in Section 1-209 of the Illinois Vehicle
10Code, semitrailers as defined in Section 1-187 of the Illinois
11Vehicle Code, and pole trailers as defined in Section 1-161 of
12the Illinois Vehicle Code, when during a 12-month period the
13rolling stock has carried persons or property for hire in
14interstate commerce for greater than 50% of its total trips for
15that period or for greater than 50% of its total miles for that
16period. The person claiming the exemption for a trailer or
17trailers that will not be dedicated to a motor vehicle or group
18of motor vehicles shall make an election at the time of
19purchase to use either the trips or mileage method. Persons who
20purchased trailers prior to July 1, 2004 that are not dedicated
21to a motor vehicle or group of motor vehicles shall make an
22election to use either the trips or mileage method and document
23that election in their books and records. If no election is
24made under this subsection to use the trips or mileage method,
25the person shall be deemed to have chosen the mileage method.
26 For purposes of determining qualifying trips or miles,

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1trailers, semitrailers, or pole trailers that carry property
2for hire, even just between points in Illinois, will be
3considered used for hire in interstate commerce if the
4trailers, semitrailers, or pole trailers transport property
5whose shipments originate or terminate outside Illinois. This
6definition applies to all property purchased for the purpose of
7being attached to those trailers, semitrailers, or pole
8trailers as a part thereof. In lieu of a person providing
9documentation regarding the qualifying use of each individual
10trailer, semitrailer, or pole trailer, that person may document
11such qualifying use by providing documentation of the
12following:
13 (1) If a trailer, semitrailer, or pole trailer is
14 dedicated to a motor vehicle that qualifies as rolling
15 stock moving in interstate commerce under subsection (c) of
16 this Section, then that trailer, semitrailer, or pole
17 trailer qualifies as rolling stock moving in interstate
18 commerce under this subsection.
19 (2) If a trailer, semitrailer, or pole trailer is
20 dedicated to a group of motor vehicles that all qualify as
21 rolling stock moving in interstate commerce under
22 subsection (c) of this Section, then that trailer,
23 semitrailer, or pole trailer qualifies as rolling stock
24 moving in interstate commerce under this subsection.
25 (3) If one or more trailers, semitrailers, or pole
26 trailers are dedicated to a group of motor vehicles and not

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1 all of those motor vehicles in that group qualify as
2 rolling stock moving in interstate commerce under
3 subsection (c) of this Section, then the percentage of
4 those trailers, semitrailers, or pole trailers that
5 qualifies as rolling stock moving in interstate commerce
6 under this subsection is equal to the percentage of those
7 motor vehicles in that group that qualify as rolling stock
8 moving in interstate commerce under subsection (c) of this
9 Section to which those trailers, semitrailers, or pole
10 trailers are dedicated. However, to determine the
11 qualification for the exemption provided under this item
12 (3), the mathematical application of the qualifying
13 percentage to one or more trailers, semitrailers, or pole
14 trailers under this subpart shall not be allowed as to any
15 fraction of a trailer, semitrailer, or pole trailer.
16 (d-5) For motor vehicles and trailers purchased on or after
17July 1, 2017, "use as rolling stock moving in interstate
18commerce" means that:
19 (1) the motor vehicle or trailer is used to transport
20 persons or property for hire;
21 (2) for purposes of the exemption under subsection (c)
22 of Section 3-55, the purchaser who is an owner, lessor, or
23 shipper claiming the exemption certifies that the motor
24 vehicle or trailer will be utilized, from the time of
25 purchase and continuing through the statute of limitations
26 for issuing a notice of tax liability under this Act, by an

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1 interstate carrier or carriers for hire who hold, and are
2 required by Federal Motor Carrier Safety Administration
3 regulations to hold, an active USDOT Number with the
4 Carrier Operation listed as "Interstate" and the Operation
5 Classification listed as "authorized for hire", "exempt
6 for hire", or both "authorized for hire" and "exempt for
7 hire"; except that this paragraph (2) does not apply to a
8 motor vehicle or trailer used at an airport to support the
9 operation of an aircraft moving in interstate commerce, as
10 long as (i) in the case of a motor vehicle, the motor
11 vehicle meets paragraphs (1) and (3) of this subsection
12 (d-5) or (ii) in the case of a trailer, the trailer meets
13 paragraph (1) of this subsection (d-5); and
14 (3) for motor vehicles, the gross vehicle weight rating
15 exceeds 16,000 pounds.
16 The definition of "use as rolling stock moving in
17interstate commerce" in this subsection (d-5) applies to all
18property purchased on or after July 1, 2017 for the purpose of
19being attached to a motor vehicle or trailer as a part thereof,
20regardless of whether the motor vehicle or trailer was
21purchased before, on, or after July 1, 2017.
22 If an item ceases to meet requirements (1) through (3)
23under this subsection (d-5), then the tax is imposed on the
24selling price, allowing for a reasonable depreciation for the
25period during which the item qualified for the exemption.
26 For purposes of this subsection (d-5):

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1 "Motor vehicle" excludes limousines, but otherwise
2 means that term as defined in Section 1-146 of the Illinois
3 Vehicle Code.
4 "Trailer" means (i) "trailer", as defined in Section
5 1-209 of the Illinois Vehicle Code, (ii) "semitrailer", as
6 defined in Section 1-187 of the Illinois Vehicle Code, and
7 (iii) "pole trailer", as defined in Section 1-161 of the
8 Illinois Vehicle Code.
9 (e) For aircraft and watercraft purchased on or after
10January 1, 2014, "use as rolling stock moving in interstate
11commerce" in paragraph paragraphs (b) and (c) of Section 3-55
12occurs when, during a 12-month period, the rolling stock has
13carried persons or property for hire in interstate commerce for
14greater than 50% of its total trips for that period or for
15greater than 50% of its total miles for that period. The person
16claiming the exemption shall make an election at the time of
17purchase to use either the trips or mileage method and document
18that election in their books and records. If no election is
19made under this subsection to use the trips or mileage method,
20the person shall be deemed to have chosen the mileage method.
21For aircraft, flight hours may be used in lieu of recording
22miles in determining whether the aircraft meets the mileage
23test in this subsection. For watercraft, nautical miles or trip
24hours may be used in lieu of recording miles in determining
25whether the watercraft meets the mileage test in this
26subsection.

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1 Notwithstanding any other provision of law to the contrary,
2property purchased on or after January 1, 2014 for the purpose
3of being attached to aircraft or watercraft as a part thereof
4qualifies as rolling stock moving in interstate commerce only
5if the aircraft or watercraft to which it will be attached
6qualifies as rolling stock moving in interstate commerce under
7the test set forth in this subsection (e), regardless of when
8the aircraft or watercraft was purchased. Persons who purchased
9aircraft or watercraft prior to January 1, 2014 shall make an
10election to use either the trips or mileage method and document
11that election in their books and records for the purpose of
12determining whether property purchased on or after January 1,
132014 for the purpose of being attached to aircraft or
14watercraft as a part thereof qualifies as rolling stock moving
15in interstate commerce under this subsection (e).
16 (f) The election to use either the trips or mileage method
17made under the provisions of subsections (c), (d), or (e) of
18this Section will remain in effect for the duration of the
19purchaser's ownership of that item.
20(Source: P.A. 98-584, eff. 8-27-13.)
21 (35 ILCS 105/10) (from Ch. 120, par. 439.10)
22 Sec. 10. Except as to motor vehicles, aircraft, watercraft,
23and trailers, and except as to cigarettes as defined in the
24Cigarette Use Tax Act, when tangible personal property is
25purchased from a retailer for use in this State by a purchaser

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1who did not pay the tax imposed by this Act to the retailer,
2and who does not file returns with the Department as a retailer
3under Section 9 of this Act, such purchaser (by the last day of
4the month following the calendar month in which such purchaser
5makes any payment upon the selling price of such property)
6shall, except as otherwise provided in this Section, file a
7return with the Department and pay the tax upon that portion of
8the selling price so paid by the purchaser during the preceding
9calendar month. When tangible personal property, including but
10not limited to motor vehicles and aircraft, is purchased by a
11lessor, under a lease for one year or longer, executed or in
12effect at the time of purchase to an interstate carrier for
13hire, who did not pay the tax imposed by this Act to the
14retailer, such lessor (by the last day of the month following
15the calendar month in which such property reverts to the use of
16such lessor) shall file a return with the Department and pay
17the tax upon the fair market value of such property on the date
18of such reversion. However, in determining the fair market
19value at the time of reversion, the fair market value of such
20property shall not exceed the original purchase price of the
21property that was paid by the lessor at the time of purchase.
22Such return shall be filed on a form prescribed by the
23Department and shall contain such information as the Department
24may reasonably require. Such return and payment from the
25purchaser shall be submitted to the Department sooner than the
26last day of the month after the month in which the purchase is

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1made to the extent that that may be necessary in order to
2secure the title to a motor vehicle or the certificate of
3registration for an aircraft. However, except as to motor
4vehicles and aircraft, and except as to cigarettes as defined
5in the Cigarette Use Tax Act, if the purchaser's annual use tax
6liability does not exceed $600, the purchaser may file the
7return on an annual basis on or before April 15th of the year
8following the year use tax liability was incurred. Individual
9purchasers with an annual use tax liability that does not
10exceed $600 may, in lieu of the filing and payment requirements
11in this Section, file and pay in compliance with Section 502.1
12of the Illinois Income Tax Act.
13 If cigarettes, as defined in the Cigarette Use Tax Act, are
14purchased from a retailer for use in this State by a purchaser
15who did not pay the tax imposed by this Act to the retailer,
16and who does not file returns with the Department as a retailer
17under Section 9 of this Act, such purchaser must, within 30
18days after acquiring the cigarettes, file a return with the
19Department and pay the tax upon that portion of the selling
20price so paid by the purchaser for the cigarettes.
21 In addition with respect to motor vehicles, aircraft,
22watercraft, and trailers, a purchaser of such tangible personal
23property for use in this State, who purchases such tangible
24personal property from an out-of-state retailer, shall file
25with the Department, upon a form to be prescribed and supplied
26by the Department, a return for each such item of tangible

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1personal property purchased, except that if, in the same
2transaction, (i) a purchaser of motor vehicles, aircraft,
3watercraft, or trailers who is a retailer of motor vehicles,
4aircraft, watercraft, or trailers purchases more than one motor
5vehicle, aircraft, watercraft, or trailer for the purpose of
6resale or (ii) a purchaser of motor vehicles, aircraft,
7watercraft, or trailers purchases more than one motor vehicle,
8aircraft, watercraft, or trailer for use as qualifying rolling
9stock as provided in Section 3-55 of this Act, then the
10purchaser may report the purchase of all motor vehicles,
11aircraft, watercraft, or trailers involved in that transaction
12to the Department on a single return prescribed by the
13Department. Such return in the case of motor vehicles and
14aircraft must show the name and address of the seller, the
15name, address of purchaser, the amount of the selling price
16including the amount allowed by the retailer for traded in
17property, if any; the amount allowed by the retailer for the
18traded-in tangible personal property, if any, to the extent to
19which Section 2 of this Act allows an exemption for the value
20of traded-in property; the balance payable after deducting such
21trade-in allowance from the total selling price; the amount of
22tax due from the purchaser with respect to such transaction;
23the amount of tax collected from the purchaser by the retailer
24on such transaction (or satisfactory evidence that such tax is
25not due in that particular instance if that is claimed to be
26the fact); the place and date of the sale, a sufficient

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1identification of the property sold, and such other information
2as the Department may reasonably require.
3 Such return shall be filed not later than 30 days after
4such motor vehicle or aircraft is brought into this State for
5use.
6 For purposes of this Section, "watercraft" means a Class 2,
7Class 3, or Class 4 watercraft as defined in Section 3-2 of the
8Boat Registration and Safety Act, a personal watercraft, or any
9boat equipped with an inboard motor.
10 The return and tax remittance or proof of exemption from
11the tax that is imposed by this Act may be transmitted to the
12Department by way of the State agency with which, or State
13officer with whom, the tangible personal property must be
14titled or registered (if titling or registration is required)
15if the Department and such agency or State officer determine
16that this procedure will expedite the processing of
17applications for title or registration.
18 With each such return, the purchaser shall remit the proper
19amount of tax due (or shall submit satisfactory evidence that
20the sale is not taxable if that is the case), to the Department
21or its agents, whereupon the Department shall issue, in the
22purchaser's name, a tax receipt (or a certificate of exemption
23if the Department is satisfied that the particular sale is tax
24exempt) which such purchaser may submit to the agency with
25which, or State officer with whom, he must title or register
26the tangible personal property that is involved (if titling or

SB1871 Enrolled- 22 -LRB100 08399 HLH 21680 b
1registration is required) in support of such purchaser's
2application for an Illinois certificate or other evidence of
3title or registration to such tangible personal property.
4 When a purchaser pays a tax imposed by this Act directly to
5the Department, the Department (upon request therefor from such
6purchaser) shall issue an appropriate receipt to such purchaser
7showing that he has paid such tax to the Department. Such
8receipt shall be sufficient to relieve the purchaser from
9further liability for the tax to which such receipt may refer.
10 A user who is liable to pay use tax directly to the
11Department only occasionally and not on a frequently recurring
12basis, and who is not required to file returns with the
13Department as a retailer under Section 9 of this Act, or under
14the "Retailers' Occupation Tax Act", or as a registrant with
15the Department under the "Service Occupation Tax Act" or the
16"Service Use Tax Act", need not register with the Department.
17However, if such a user has a frequently recurring direct use
18tax liability to pay to the Department, such user shall be
19required to register with the Department on forms prescribed by
20the Department and to obtain and display a certificate of
21registration from the Department. In that event, all of the
22provisions of Section 9 of this Act concerning the filing of
23regular monthly, quarterly or annual tax returns and all of the
24provisions of Section 2a of the "Retailers' Occupation Tax Act"
25concerning the requirements for registrants to post bond or
26other security with the Department, as the provisions of such

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1sections now exist or may hereafter be amended, shall apply to
2such users to the same extent as if such provisions were
3included herein.
4(Source: P.A. 96-520, eff. 8-14-09; 96-1000, eff. 7-2-10;
596-1388, eff. 7-29-10.)
6 Section 10. The Service Use Tax Act is amended by changing
7Sections 2 and 3-51 as follows:
8 (35 ILCS 110/2) (from Ch. 120, par. 439.32)
9 Sec. 2. Definitions.
10 "Use" means the exercise by any person of any right or
11power over tangible personal property incident to the ownership
12of that property, but does not include the sale or use for
13demonstration by him of that property in any form as tangible
14personal property in the regular course of business. "Use" does
15not mean the interim use of tangible personal property nor the
16physical incorporation of tangible personal property, as an
17ingredient or constituent, into other tangible personal
18property, (a) which is sold in the regular course of business
19or (b) which the person incorporating such ingredient or
20constituent therein has undertaken at the time of such purchase
21to cause to be transported in interstate commerce to
22destinations outside the State of Illinois.
23 "Purchased from a serviceman" means the acquisition of the
24ownership of, or title to, tangible personal property through a

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

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

SB1871 Enrolled- 26 -LRB100 08399 HLH 21680 b
1 operated exclusively for educational purposes.
2 (4) (blank). a sale or transfer of tangible personal
3 property as an incident to the rendering of service for
4 interstate carriers for hire for use as rolling stock
5 moving in interstate commerce or by lessors under a lease
6 of one year or longer, executed or in effect at the time of
7 purchase of personal property, to interstate carriers for
8 hire for use as rolling stock moving in interstate commerce
9 so long as so used by such interstate carriers for hire,
10 and equipment operated by a telecommunications provider,
11 licensed as a common carrier by the Federal Communications
12 Commission, which is permanently installed in or affixed to
13 aircraft moving in interstate commerce.
14 (4a) a sale or transfer of tangible personal property
15 as an incident to the rendering of service for owners,
16 lessors, or shippers of tangible personal property which is
17 utilized by interstate carriers for hire for use as rolling
18 stock moving in interstate commerce so long as so used by
19 interstate carriers for hire, and equipment operated by a
20 telecommunications provider, licensed as a common carrier
21 by the Federal Communications Commission, which is
22 permanently installed in or affixed to aircraft moving in
23 interstate commerce.
24 (4a-5) on and after July 1, 2003 and through June 30,
25 2004, a sale or transfer of a motor vehicle of the second
26 division with a gross vehicle weight in excess of 8,000

SB1871 Enrolled- 27 -LRB100 08399 HLH 21680 b
1 pounds as an incident to the rendering of service if that
2 motor vehicle is subject to the commercial distribution fee
3 imposed under Section 3-815.1 of the Illinois Vehicle Code.
4 Beginning on July 1, 2004 and through June 30, 2005, the
5 use in this State of motor vehicles of the second division:
6 (i) with a gross vehicle weight rating in excess of 8,000
7 pounds; (ii) that are subject to the commercial
8 distribution fee imposed under Section 3-815.1 of the
9 Illinois Vehicle Code; and (iii) that are primarily used
10 for commercial purposes. Through June 30, 2005, this
11 exemption applies to repair and replacement parts added
12 after the initial purchase of such a motor vehicle if that
13 motor vehicle is used in a manner that would qualify for
14 the rolling stock exemption otherwise provided for in this
15 Act. For purposes of this paragraph, "used for commercial
16 purposes" means the transportation of persons or property
17 in furtherance of any commercial or industrial enterprise
18 whether for-hire or not.
19 (5) a sale or transfer of machinery and equipment used
20 primarily in the process of the manufacturing or
21 assembling, either in an existing, an expanded or a new
22 manufacturing facility, of tangible personal property for
23 wholesale or retail sale or lease, whether such sale or
24 lease is made directly by the manufacturer or by some other
25 person, whether the materials used in the process are owned
26 by the manufacturer or some other person, or whether such

SB1871 Enrolled- 28 -LRB100 08399 HLH 21680 b
1 sale or lease is made apart from or as an incident to the
2 seller's engaging in a service occupation and the
3 applicable tax is a Service Use Tax or Service Occupation
4 Tax, rather than Use Tax or Retailers' Occupation Tax. The
5 exemption provided by this paragraph (5) does not include
6 machinery and equipment used in (i) the generation of
7 electricity for wholesale or retail sale; (ii) the
8 generation or treatment of natural or artificial gas for
9 wholesale or retail sale that is delivered to customers
10 through pipes, pipelines, or mains; or (iii) the treatment
11 of water for wholesale or retail sale that is delivered to
12 customers through pipes, pipelines, or mains. The
13 provisions of this amendatory Act of the 98th General
14 Assembly are declaratory of existing law as to the meaning
15 and scope of this exemption.
16 (5a) the repairing, reconditioning or remodeling, for
17 a common carrier by rail, of tangible personal property
18 which belongs to such carrier for hire, and as to which
19 such carrier receives the physical possession of the
20 repaired, reconditioned or remodeled item of tangible
21 personal property in Illinois, and which such carrier
22 transports, or shares with another common carrier in the
23 transportation of such property, out of Illinois on a
24 standard uniform bill of lading showing the person who
25 repaired, reconditioned or remodeled the property to a
26 destination outside Illinois, for use outside Illinois.

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

SB1871 Enrolled- 30 -LRB100 08399 HLH 21680 b
1 in the case of servicemen transferring prescription drugs
2 or servicemen engaged in graphic arts production, of the
3 aggregate annual total gross receipts from all sales of
4 service. The purchase of such tangible personal property by
5 the serviceman shall be subject to tax under the Retailers'
6 Occupation Tax Act and the Use Tax Act. However, if a
7 primary serviceman who has made the election described in
8 this paragraph subcontracts service work to a secondary
9 serviceman who has also made the election described in this
10 paragraph, the primary serviceman does not incur a Use Tax
11 liability if the secondary serviceman (i) has paid or will
12 pay Use Tax on his or her cost price of any tangible
13 personal property transferred to the primary serviceman
14 and (ii) certifies that fact in writing to the primary
15 serviceman.
16 Tangible personal property transferred incident to the
17completion of a maintenance agreement is exempt from the tax
18imposed pursuant to this Act.
19 Exemption (5) also includes machinery and equipment used in
20the general maintenance or repair of such exempt machinery and
21equipment or for in-house manufacture of exempt machinery and
22equipment. The machinery and equipment exemption does not
23include machinery and equipment used in (i) the generation of
24electricity for wholesale or retail sale; (ii) the generation
25or treatment of natural or artificial gas for wholesale or
26retail sale that is delivered to customers through pipes,

SB1871 Enrolled- 31 -LRB100 08399 HLH 21680 b
1pipelines, or mains; or (iii) the treatment of water for
2wholesale or retail sale that is delivered to customers through
3pipes, pipelines, or mains. The provisions of this amendatory
4Act of the 98th General Assembly are declaratory of existing
5law as to the meaning and scope of this exemption. For the
6purposes of exemption (5), each of these terms shall have the
7following meanings: (1) "manufacturing process" shall mean the
8production of any article of tangible personal property,
9whether such article is a finished product or an article for
10use in the process of manufacturing or assembling a different
11article of tangible personal property, by procedures commonly
12regarded as manufacturing, processing, fabricating, or
13refining which changes some existing material or materials into
14a material with a different form, use or name. In relation to a
15recognized integrated business composed of a series of
16operations which collectively constitute manufacturing, or
17individually constitute manufacturing operations, the
18manufacturing process shall be deemed to commence with the
19first operation or stage of production in the series, and shall
20not be deemed to end until the completion of the final product
21in the last operation or stage of production in the series; and
22further, for purposes of exemption (5), photoprocessing is
23deemed to be a manufacturing process of tangible personal
24property for wholesale or retail sale; (2) "assembling process"
25shall mean the production of any article of tangible personal
26property, whether such article is a finished product or an

SB1871 Enrolled- 32 -LRB100 08399 HLH 21680 b
1article for use in the process of manufacturing or assembling a
2different article of tangible personal property, by the
3combination of existing materials in a manner commonly regarded
4as assembling which results in a material of a different form,
5use or name; (3) "machinery" shall mean major mechanical
6machines or major components of such machines contributing to a
7manufacturing or assembling process; and (4) "equipment" shall
8include any independent device or tool separate from any
9machinery but essential to an integrated manufacturing or
10assembly process; including computers used primarily in a
11manufacturer's computer assisted design, computer assisted
12manufacturing (CAD/CAM) system; or any subunit or assembly
13comprising a component of any machinery or auxiliary, adjunct
14or attachment parts of machinery, such as tools, dies, jigs,
15fixtures, patterns and molds; or any parts which require
16periodic replacement in the course of normal operation; but
17shall not include hand tools. Equipment includes chemicals or
18chemicals acting as catalysts but only if the chemicals or
19chemicals acting as catalysts effect a direct and immediate
20change upon a product being manufactured or assembled for
21wholesale or retail sale or lease. The purchaser of such
22machinery and equipment who has an active resale registration
23number shall furnish such number to the seller at the time of
24purchase. The user of such machinery and equipment and tools
25without an active resale registration number shall prepare a
26certificate of exemption for each transaction stating facts

SB1871 Enrolled- 33 -LRB100 08399 HLH 21680 b
1establishing the exemption for that transaction, which
2certificate shall be available to the Department for inspection
3or audit. The Department shall prescribe the form of the
4certificate.
5 Any informal rulings, opinions or letters issued by the
6Department in response to an inquiry or request for any opinion
7from any person regarding the coverage and applicability of
8exemption (5) to specific devices shall be published,
9maintained as a public record, and made available for public
10inspection and copying. If the informal ruling, opinion or
11letter contains trade secrets or other confidential
12information, where possible the Department shall delete such
13information prior to publication. Whenever such informal
14rulings, opinions, or letters contain any policy of general
15applicability, the Department shall formulate and adopt such
16policy as a rule in accordance with the provisions of the
17Illinois Administrative Procedure Act.
18 On and after July 1, 1987, no entity otherwise eligible
19under exemption (3) of this Section shall make tax free
20purchases unless it has an active exemption identification
21number issued by the Department.
22 The purchase, employment and transfer of such tangible
23personal property as newsprint and ink for the primary purpose
24of conveying news (with or without other information) is not a
25purchase, use or sale of service or of tangible personal
26property within the meaning of this Act.

SB1871 Enrolled- 34 -LRB100 08399 HLH 21680 b
1 "Serviceman" means any person who is engaged in the
2occupation of making sales of service.
3 "Sale at retail" means "sale at retail" as defined in the
4Retailers' Occupation Tax Act.
5 "Supplier" means any person who makes sales of tangible
6personal property to servicemen for the purpose of resale as an
7incident to a sale of service.
8 "Serviceman maintaining a place of business in this State",
9or any like term, means and includes any serviceman:
10 1. having or maintaining within this State, directly or
11 by a subsidiary, an office, distribution house, sales
12 house, warehouse or other place of business, or any agent
13 or other representative operating within this State under
14 the authority of the serviceman or its subsidiary,
15 irrespective of whether such place of business or agent or
16 other representative is located here permanently or
17 temporarily, or whether such serviceman or subsidiary is
18 licensed to do business in this State;
19 1.1. having a contract with a person located in this
20 State under which the person, for a commission or other
21 consideration based on the sale of service by the
22 serviceman, directly or indirectly refers potential
23 customers to the serviceman by providing to the potential
24 customers a promotional code or other mechanism that allows
25 the serviceman to track purchases referred by such persons.
26 Examples of mechanisms that allow the serviceman to track

SB1871 Enrolled- 35 -LRB100 08399 HLH 21680 b
1 purchases referred by such persons include but are not
2 limited to the use of a link on the person's Internet
3 website, promotional codes distributed through the
4 person's hand-delivered or mailed material, and
5 promotional codes distributed by the person through radio
6 or other broadcast media. The provisions of this paragraph
7 1.1 shall apply only if the cumulative gross receipts from
8 sales of service by the serviceman to customers who are
9 referred to the serviceman by all persons in this State
10 under such contracts exceed $10,000 during the preceding 4
11 quarterly periods ending on the last day of March, June,
12 September, and December; a serviceman meeting the
13 requirements of this paragraph 1.1 shall be presumed to be
14 maintaining a place of business in this State but may rebut
15 this presumption by submitting proof that the referrals or
16 other activities pursued within this State by such persons
17 were not sufficient to meet the nexus standards of the
18 United States Constitution during the preceding 4
19 quarterly periods;
20 1.2. beginning July 1, 2011, having a contract with a
21 person located in this State under which:
22 A. the serviceman sells the same or substantially
23 similar line of services as the person located in this
24 State and does so using an identical or substantially
25 similar name, trade name, or trademark as the person
26 located in this State; and

SB1871 Enrolled- 36 -LRB100 08399 HLH 21680 b
1 B. the serviceman provides a commission or other
2 consideration to the person located in this State based
3 upon the sale of services by the serviceman.
4 The provisions of this paragraph 1.2 shall apply only if
5 the cumulative gross receipts from sales of service by the
6 serviceman to customers in this State under all such
7 contracts exceed $10,000 during the preceding 4 quarterly
8 periods ending on the last day of March, June, September,
9 and December;
10 2. soliciting orders for tangible personal property by
11 means of a telecommunication or television shopping system
12 (which utilizes toll free numbers) which is intended by the
13 retailer to be broadcast by cable television or other means
14 of broadcasting, to consumers located in this State;
15 3. pursuant to a contract with a broadcaster or
16 publisher located in this State, soliciting orders for
17 tangible personal property by means of advertising which is
18 disseminated primarily to consumers located in this State
19 and only secondarily to bordering jurisdictions;
20 4. soliciting orders for tangible personal property by
21 mail if the solicitations are substantial and recurring and
22 if the retailer benefits from any banking, financing, debt
23 collection, telecommunication, or marketing activities
24 occurring in this State or benefits from the location in
25 this State of authorized installation, servicing, or
26 repair facilities;

SB1871 Enrolled- 37 -LRB100 08399 HLH 21680 b
1 5. being owned or controlled by the same interests
2 which own or control any retailer engaging in business in
3 the same or similar line of business in this State;
4 6. having a franchisee or licensee operating under its
5 trade name if the franchisee or licensee is required to
6 collect the tax under this Section;
7 7. pursuant to a contract with a cable television
8 operator located in this State, soliciting orders for
9 tangible personal property by means of advertising which is
10 transmitted or distributed over a cable television system
11 in this State; or
12 8. engaging in activities in Illinois, which
13 activities in the state in which the supply business
14 engaging in such activities is located would constitute
15 maintaining a place of business in that state.
16(Source: P.A. 98-583, eff. 1-1-14; 98-1089, eff. 1-1-15.)
17 (35 ILCS 110/3-51)
18 Sec. 3-51. Motor vehicles; trailers; use as rolling stock
19definition.
20 (a) (Blank). Through June 30, 2003, "use as rolling stock
21moving in interstate commerce" in subsection (b) of Section
223-45 means for motor vehicles, as defined in Section 1-46 of
23the Illinois Vehicle Code, and trailers, as defined in Section
241-209 of the Illinois Vehicle Code, when on 15 or more
25occasions in a 12-month period the motor vehicle and trailer

SB1871 Enrolled- 38 -LRB100 08399 HLH 21680 b
1has carried persons or property for hire in interstate
2commerce, even just between points in Illinois, if the motor
3vehicle and trailer transports persons whose journeys or
4property whose shipments originate or terminate outside
5Illinois. This definition applies to all property purchased for
6the purpose of being attached to those motor vehicles or
7trailers as a part thereof.
8 (b) (Blank). On and after July 1, 2003 and through June 30,
92004, "use as rolling stock moving in interstate commerce" in
10paragraphs (4) and (4a) of the definition of "sale of service"
11in Section 2 and subsection (b) of Section 3-45 occurs for
12motor vehicles, as defined in Section 1-146 of the Illinois
13Vehicle Code, when during a 12-month period the rolling stock
14has carried persons or property for hire in interstate commerce
15for 51% of its total trips and transports persons whose
16journeys or property whose shipments originate or terminate
17outside Illinois. Trips that are only between points in
18Illinois shall not be counted as interstate trips when
19calculating whether the tangible personal property qualifies
20for the exemption but such trips shall be included in total
21trips taken.
22 (c) This subsection (c) applies to motor vehicles, other
23than limousines, purchased through June 30, 2017. For motor
24vehicles, other than limousines, purchased on or after July 1,
252017, subsection (d-5) applies. This subsection (c) applies to
26limousines purchased before, on, or after July 1, 2017. "Use

SB1871 Enrolled- 39 -LRB100 08399 HLH 21680 b
1Beginning July 1, 2004, "use as rolling stock moving in
2interstate commerce" in paragraph paragraphs (4) and (4a) of
3the definition of "sale of service" in Section 2 and subsection
4(b) of Section 3-45 occurs for motor vehicles, as defined in
5Section 1-146 of the Illinois Vehicle Code, when during a
612-month period the rolling stock has carried persons or
7property for hire in interstate commerce for greater than 50%
8of its total trips for that period or for greater than 50% of
9its total miles for that period. The person claiming the
10exemption shall make an election at the time of purchase to use
11either the trips or mileage method. Persons who purchased motor
12vehicles prior to July 1, 2004 shall make an election to use
13either the trips or mileage method and document that election
14in their books and records. If no election is made under this
15subsection to use the trips or mileage method, the person shall
16be deemed to have chosen the mileage method.
17 For purposes of determining qualifying trips or miles,
18motor vehicles that carry persons or property for hire, even
19just between points in Illinois, will be considered used for
20hire in interstate commerce if the motor vehicle transports
21persons whose journeys or property whose shipments originate or
22terminate outside Illinois. The exemption for motor vehicles
23used as rolling stock moving in interstate commerce may be
24claimed only for the following vehicles: (i) motor vehicles
25whose gross vehicle weight rating exceeds 16,000 pounds; and
26(ii) limousines, as defined in Section 1-139.1 of the Illinois

SB1871 Enrolled- 40 -LRB100 08399 HLH 21680 b
1Vehicle Code. Through June 30, 2017, this This definition
2applies to all property purchased for the purpose of being
3attached to those motor vehicles as a part thereof. On and
4after July 1, 2017, this definition applies to property
5purchased for the purpose of being attached to limousines as a
6part thereof.
7 (d) For purchases made through June 30, 2017 Beginning July
81, 2004, "use as rolling stock moving in interstate commerce"
9in paragraph paragraphs (4) and (4a) of the definition of "sale
10of service" in Section 2 and subsection (b) of Section 3-45
11occurs for trailers, as defined in Section 1-209 of the
12Illinois Vehicle Code, semitrailers as defined in Section 1-187
13of the Illinois Vehicle Code, and pole trailers as defined in
14Section 1-161 of the Illinois Vehicle Code, when during a
1512-month period the rolling stock has carried persons or
16property for hire in interstate commerce for greater than 50%
17of its total trips for that period or for greater than 50% of
18its total miles for that period. The person claiming the
19exemption for a trailer or trailers that will not be dedicated
20to a motor vehicle or group of motor vehicles shall make an
21election at the time of purchase to use either the trips or
22mileage method. Persons who purchased trailers prior to July 1,
232004 that are not dedicated to a motor vehicle or group of
24motor vehicles shall make an election to use either the trips
25or mileage method and document that election in their books and
26records. If no election is made under this subsection to use

SB1871 Enrolled- 41 -LRB100 08399 HLH 21680 b
1the trips or mileage method, the person shall be deemed to have
2chosen the mileage method.
3 For purposes of determining qualifying trips or miles,
4trailers, semitrailers, or pole trailers that carry property
5for hire, even just between points in Illinois, will be
6considered used for hire in interstate commerce if the
7trailers, semitrailers, or pole trailers transport property
8whose shipments originate or terminate outside Illinois. This
9definition applies to all property purchased for the purpose of
10being attached to those trailers, semitrailers, or pole
11trailers as a part thereof. In lieu of a person providing
12documentation regarding the qualifying use of each individual
13trailer, semitrailer, or pole trailer, that person may document
14such qualifying use by providing documentation of the
15following:
16 (1) If a trailer, semitrailer, or pole trailer is
17 dedicated to a motor vehicle that qualifies as rolling
18 stock moving in interstate commerce under subsection (c) of
19 this Section, then that trailer, semitrailer, or pole
20 trailer qualifies as rolling stock moving in interstate
21 commerce under this subsection.
22 (2) If a trailer, semitrailer, or pole trailer is
23 dedicated to a group of motor vehicles that all qualify as
24 rolling stock moving in interstate commerce under
25 subsection (c) of this Section, then that trailer,
26 semitrailer, or pole trailer qualifies as rolling stock

SB1871 Enrolled- 42 -LRB100 08399 HLH 21680 b
1 moving in interstate commerce under this subsection.
2 (3) If one or more trailers, semitrailers, or pole
3 trailers are dedicated to a group of motor vehicles and not
4 all of those motor vehicles in that group qualify as
5 rolling stock moving in interstate commerce under
6 subsection (c) of this Section, then the percentage of
7 those trailers, semitrailers, or pole trailers that
8 qualifies as rolling stock moving in interstate commerce
9 under this subsection is equal to the percentage of those
10 motor vehicles in that group that qualify as rolling stock
11 moving in interstate commerce under subsection (c) of this
12 Section to which those trailers, semitrailers, or pole
13 trailers are dedicated. However, to determine the
14 qualification for the exemption provided under this item
15 (3), the mathematical application of the qualifying
16 percentage to one or more trailers, semitrailers, or pole
17 trailers under this subpart shall not be allowed as to any
18 fraction of a trailer, semitrailer, or pole trailer.
19 (d-5) For motor vehicles and trailers purchased on or after
20July 1, 2017, "use as rolling stock moving in interstate
21commerce" means that:
22 (1) the motor vehicle or trailer is used to transport
23 persons or property for hire;
24 (2) for purposes of the exemption under paragraph (4a)
25 of the definition of "sale of service" in Section 2, the
26 purchaser who is an owner, lessor, or shipper claiming the

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1 exemption certifies that the motor vehicle or trailer will
2 be utilized, from the time of purchase and continuing
3 through the statute of limitations for issuing a notice of
4 tax liability under this Act, by an interstate carrier or
5 carriers for hire who hold, and are required by Federal
6 Motor Carrier Safety Administration regulations to hold,
7 an active USDOT Number with the Carrier Operation listed as
8 "Interstate" and the Operation Classification listed as
9 "authorized for hire", "exempt for hire", or both
10 "authorized for hire" and "exempt for hire"; except that
11 this paragraph (2) does not apply to a motor vehicle or
12 trailer used at an airport to support the operation of an
13 aircraft moving in interstate commerce, as long as (i) in
14 the case of a motor vehicle, the motor vehicle meets
15 paragraphs (1) and (3) of this subsection (d-5) or (ii) in
16 the case of a trailer, the trailer meets paragraph (1) of
17 this subsection (d-5); and
18 (3) for motor vehicles, the gross vehicle weight rating
19 exceeds 16,000 pounds.
20 The definition of "use as rolling stock moving in
21interstate commerce" in this subsection (d-5) applies to all
22property purchased on or after July 1, 2017 for the purpose of
23being attached to a motor vehicle or trailer as a part thereof,
24regardless of whether the motor vehicle or trailer was
25purchased before, on, or after July 1, 2017.
26 If an item ceases to meet requirements (1) through (3)

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1under this subsection (d-5), then the tax is imposed on the
2selling price, allowing for a reasonable depreciation for the
3period during which the item qualified for the exemption.
4 For purposes of this subsection (d-5):
5 "Motor vehicle" excludes limousines, but otherwise
6 means that term as defined in Section 1-146 of the Illinois
7 Vehicle Code.
8 "Trailer" means (i) "trailer", as defined in Section
9 1-209 of the Illinois Vehicle Code, (ii) "semitrailer", as
10 defined in Section 1-187 of the Illinois Vehicle Code, and
11 (iii) "pole trailer", as defined in Section 1-161 of the
12 Illinois Vehicle Code.
13 (e) For aircraft and watercraft purchased on or after
14January 1, 2014, "use as rolling stock moving in interstate
15commerce" in (i) paragraph paragraphs (4) and (4a) of the
16definition of "sale of service" in Section 2 and (ii)
17subsection (b) of Section 3-45 occurs when, during a 12-month
18period, the rolling stock has carried persons or property for
19hire in interstate commerce for greater than 50% of its total
20trips for that period or for greater than 50% of its total
21miles for that period. The person claiming the exemption shall
22make an election at the time of purchase to use either the
23trips or mileage method and document that election in their
24books and records. If no election is made under this subsection
25to use the trips or mileage method, the person shall be deemed
26to have chosen the mileage method. For aircraft, flight hours

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1may be used in lieu of recording miles in determining whether
2the aircraft meets the mileage test in this subsection. For
3watercraft, nautical miles or trip hours may be used in lieu of
4recording miles in determining whether the watercraft meets the
5mileage test in this subsection.
6 Notwithstanding any other provision of law to the contrary,
7property purchased on or after January 1, 2014 for the purpose
8of being attached to aircraft or watercraft as a part thereof
9qualifies as rolling stock moving in interstate commerce only
10if the aircraft or watercraft to which it will be attached
11qualifies as rolling stock moving in interstate commerce under
12the test set forth in this subsection (e), regardless of when
13the aircraft or watercraft was purchased. Persons who purchased
14aircraft or watercraft prior to January 1, 2014 shall make an
15election to use either the trips or mileage method and document
16that election in their books and records for the purpose of
17determining whether property purchased on or after January 1,
182014 for the purpose of being attached to aircraft or
19watercraft as a part thereof qualifies as rolling stock moving
20in interstate commerce under this subsection (e).
21 (f) The election to use either the trips or mileage method
22made under the provisions of subsections (c), (d), or (e) of
23this Section will remain in effect for the duration of the
24purchaser's ownership of that item.
25(Source: P.A. 98-584, eff. 8-27-13.)

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

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1 "Sale of Service" means any transaction except:
2 (a) A retail sale of tangible personal property taxable
3under the Retailers' Occupation Tax Act or under the Use Tax
4Act.
5 (b) A sale of tangible personal property for the purpose of
6resale made in compliance with Section 2c of the Retailers'
7Occupation Tax Act.
8 (c) Except as hereinafter provided, a sale or transfer of
9tangible personal property as an incident to the rendering of
10service for or by any governmental body or for or by any
11corporation, society, association, foundation or institution
12organized and operated exclusively for charitable, religious
13or educational purposes or any not-for-profit corporation,
14society, association, foundation, institution or organization
15which has no compensated officers or employees and which is
16organized and operated primarily for the recreation of persons
1755 years of age or older. A limited liability company may
18qualify for the exemption under this paragraph only if the
19limited liability company is organized and operated
20exclusively for educational purposes.
21 (d) (Blank). A sale or transfer of tangible personal
22property as an incident to the rendering of service for
23interstate carriers for hire for use as rolling stock moving in
24interstate commerce or lessors under leases of one year or
25longer, executed or in effect at the time of purchase, to
26interstate carriers for hire for use as rolling stock moving in

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1interstate commerce, and equipment operated by a
2telecommunications provider, licensed as a common carrier by
3the Federal Communications Commission, which is permanently
4installed in or affixed to aircraft moving in interstate
5commerce.
6 (d-1) A sale or transfer of tangible personal property as
7an incident to the rendering of service for owners, lessors or
8shippers of tangible personal property which is utilized by
9interstate carriers for hire for use as rolling stock moving in
10interstate commerce, and equipment operated by a
11telecommunications provider, licensed as a common carrier by
12the Federal Communications Commission, which is permanently
13installed in or affixed to aircraft moving in interstate
14commerce.
15 (d-1.1) On and after July 1, 2003 and through June 30,
162004, a sale or transfer of a motor vehicle of the second
17division with a gross vehicle weight in excess of 8,000 pounds
18as an incident to the rendering of service if that motor
19vehicle is subject to the commercial distribution fee imposed
20under Section 3-815.1 of the Illinois Vehicle Code. Beginning
21on July 1, 2004 and through June 30, 2005, the use in this
22State of motor vehicles of the second division: (i) with a
23gross vehicle weight rating in excess of 8,000 pounds; (ii)
24that are subject to the commercial distribution fee imposed
25under Section 3-815.1 of the Illinois Vehicle Code; and (iii)
26that are primarily used for commercial purposes. Through June

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130, 2005, this exemption applies to repair and replacement
2parts added after the initial purchase of such a motor vehicle
3if that motor vehicle is used in a manner that would qualify
4for the rolling stock exemption otherwise provided for in this
5Act. For purposes of this paragraph, "used for commercial
6purposes" means the transportation of persons or property in
7furtherance of any commercial or industrial enterprise whether
8for-hire or not.
9 (d-2) The repairing, reconditioning or remodeling, for a
10common carrier by rail, of tangible personal property which
11belongs to such carrier for hire, and as to which such carrier
12receives the physical possession of the repaired,
13reconditioned or remodeled item of tangible personal property
14in Illinois, and which such carrier transports, or shares with
15another common carrier in the transportation of such property,
16out of Illinois on a standard uniform bill of lading showing
17the person who repaired, reconditioned or remodeled the
18property as the shipper or consignor of such property to a
19destination outside Illinois, for use outside Illinois.
20 (d-3) A sale or transfer of tangible personal property
21which is produced by the seller thereof on special order in
22such a way as to have made the applicable tax the Service
23Occupation Tax or the Service Use Tax, rather than the
24Retailers' Occupation Tax or the Use Tax, for an interstate
25carrier by rail which receives the physical possession of such
26property in Illinois, and which transports such property, or

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

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1or treatment of natural or artificial gas for wholesale or
2retail sale that is delivered to customers through pipes,
3pipelines, or mains; or (iii) the treatment of water for
4wholesale or retail sale that is delivered to customers through
5pipes, pipelines, or mains. The provisions of this amendatory
6Act of the 98th General Assembly are declaratory of existing
7law as to the meaning and scope of this exemption.
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. The machinery and equipment exemption does not
15include machinery and equipment used in (i) the generation of
16electricity for wholesale or retail sale; (ii) the generation
17or treatment of natural or artificial gas for wholesale or
18retail sale that is delivered to customers through pipes,
19pipelines, or mains; or (iii) the treatment of water for
20wholesale or retail sale that is delivered to customers through
21pipes, pipelines, or mains. The provisions of this amendatory
22Act of the 98th General Assembly are declaratory of existing
23law as to the meaning and scope of this exemption. For the
24purposes of exemption (e), each of these terms shall have the
25following meanings: (1) "manufacturing process" shall mean the
26production of any article of tangible personal property,

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

SB1871 Enrolled- 54 -LRB100 08399 HLH 21680 b
1machinery but essential to an integrated manufacturing or
2assembly process; including computers used primarily in a
3manufacturer's computer assisted design, computer assisted
4manufacturing (CAD/CAM) system; or any subunit or assembly
5comprising a component of any machinery or auxiliary, adjunct
6or attachment parts of machinery, such as tools, dies, jigs,
7fixtures, patterns and molds; or any parts which require
8periodic replacement in the course of normal operation; but
9shall not include hand tools. Equipment includes chemicals or
10chemicals acting as catalysts but only if the chemicals or
11chemicals acting as catalysts effect a direct and immediate
12change upon a product being manufactured or assembled for
13wholesale or retail sale or lease. The purchaser of such
14machinery and equipment who has an active resale registration
15number shall furnish such number to the seller at the time of
16purchase. The purchaser of such machinery and equipment and
17tools without an active resale registration number shall
18furnish to the seller a certificate of exemption for each
19transaction stating facts establishing the exemption for that
20transaction, which certificate shall be available to the
21Department for inspection or audit.
22 Except as provided in Section 2d of this Act, the rolling
23stock exemption applies to rolling stock used by an interstate
24carrier for hire, even just between points in Illinois, if such
25rolling stock transports, for hire, persons whose journeys or
26property whose shipments originate or terminate outside

SB1871 Enrolled- 55 -LRB100 08399 HLH 21680 b
1Illinois.
2 Any informal rulings, opinions or letters issued by the
3Department in response to an inquiry or request for any opinion
4from any person regarding the coverage and applicability of
5exemption (e) to specific devices shall be published,
6maintained as a public record, and made available for public
7inspection and copying. If the informal ruling, opinion or
8letter contains trade secrets or other confidential
9information, where possible the Department shall delete such
10information prior to publication. Whenever such informal
11rulings, opinions, or letters contain any policy of general
12applicability, the Department shall formulate and adopt such
13policy as a rule in accordance with the provisions of the
14Illinois Administrative Procedure Act.
15 On and after July 1, 1987, no entity otherwise eligible
16under exemption (c) of this Section shall make tax free
17purchases unless it has an active exemption identification
18number issued by the Department.
19 "Serviceman" means any person who is engaged in the
20occupation of making sales of service.
21 "Sale at Retail" means "sale at retail" as defined in the
22Retailers' Occupation Tax Act.
23 "Supplier" means any person who makes sales of tangible
24personal property to servicemen for the purpose of resale as an
25incident to a sale of service.
26(Source: P.A. 98-583, eff. 1-1-14.)

SB1871 Enrolled- 56 -LRB100 08399 HLH 21680 b
1 (35 ILCS 115/2d)
2 Sec. 2d. Motor vehicles; trailers; use as rolling stock
3definition.
4 (a) (Blank). Through June 30, 2003, "use as rolling stock
5moving in interstate commerce" in subsections (d) and (d-1) of
6the definition of "sale of service" in Section 2 means for
7motor vehicles, as defined in Section 1-146 of the Illinois
8Vehicle Code, and trailers, as defined in Section 1-209 of the
9Illinois Vehicle Code, when on 15 or more occasions in a
1012-month period the motor vehicle and trailer has carried
11persons or property for hire in interstate commerce, even just
12between points in Illinois, if the motor vehicle and trailer
13transports persons whose journeys or property whose shipments
14originate or terminate outside Illinois. This definition
15applies to all property purchased for the purpose of being
16attached to those motor vehicles or trailers as a part thereof.
17 (b) (Blank). On and after July 1, 2003 and through June 30,
182004, "use as rolling stock moving in interstate commerce" in
19paragraphs (d) and (d-1) of the definition of "sale of service"
20in Section 2 occurs for motor vehicles, as defined in Section
211-146 of the Illinois Vehicle Code, when during a 12-month
22period the rolling stock has carried persons or property for
23hire in interstate commerce for 51% of its total trips and
24transports persons whose journeys or property whose shipments
25originate or terminate outside Illinois. Trips that are only

SB1871 Enrolled- 57 -LRB100 08399 HLH 21680 b
1between points in Illinois will not be counted as interstate
2trips when calculating whether the tangible personal property
3qualifies for the exemption but such trips will be included in
4total trips taken.
5 (c) This subsection (c) applies to motor vehicles, other
6than limousines, purchased through June 30, 2017. For motor
7vehicles, other than limousines, purchased on or after July 1,
82017, subsection (d-5) applies. This subsection (c) applies to
9limousines purchased before, on, or after July 1, 2017. "Use
10Beginning July 1, 2004, "use as rolling stock moving in
11interstate commerce" in paragraph paragraphs (d) and (d-1) of
12the definition of "sale of service" in Section 2 occurs for
13motor vehicles, as defined in Section 1-146 of the Illinois
14Vehicle Code, when during a 12-month period the rolling stock
15has carried persons or property for hire in interstate commerce
16for greater than 50% of its total trips for that period or for
17greater than 50% of its total miles for that period. The person
18claiming the exemption shall make an election at the time of
19purchase to use either the trips or mileage method. Persons who
20purchased motor vehicles prior to July 1, 2004 shall make an
21election to use either the trips or mileage method and document
22that election in their books and records. If no election is
23made under this subsection to use the trips or mileage method,
24the person shall be deemed to have chosen the mileage method.
25 For purposes of determining qualifying trips or miles,
26motor vehicles that carry persons or property for hire, even

SB1871 Enrolled- 58 -LRB100 08399 HLH 21680 b
1just between points in Illinois, will be considered used for
2hire in interstate commerce if the motor vehicle transports
3persons whose journeys or property whose shipments originate or
4terminate outside Illinois. The exemption for motor vehicles
5used as rolling stock moving in interstate commerce may be
6claimed only for the following vehicles: (i) motor vehicles
7whose gross vehicle weight rating exceeds 16,000 pounds; and
8(ii) limousines, as defined in Section 1-139.1 of the Illinois
9Vehicle Code. Through June 30, 2017, this This definition
10applies to all property purchased for the purpose of being
11attached to those motor vehicles as a part thereof. On and
12after July 1, 2017, this definition applies to property
13purchased for the purpose of being attached to limousines as a
14part thereof.
15 (d) For purchases made through June 30, 2017 Beginning July
161, 2004, "use as rolling stock moving in interstate commerce"
17in paragraph paragraphs (d) and (d-1) of the definition of
18"sale of service" in Section 2 occurs for trailers, as defined
19in Section 1-209 of the Illinois Vehicle Code, semitrailers as
20defined in Section 1-187 of the Illinois Vehicle Code, and pole
21trailers as defined in Section 1-161 of the Illinois Vehicle
22Code, when during a 12-month period the rolling stock has
23carried persons or property for hire in interstate commerce for
24greater than 50% of its total trips for that period or for
25greater than 50% of its total miles for that period. The person
26claiming the exemption for a trailer or trailers that will not

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1be dedicated to a motor vehicle or group of motor vehicles
2shall make an election at the time of purchase to use either
3the trips or mileage method. Persons who purchased trailers
4prior to July 1, 2004 that are not dedicated to a motor vehicle
5or group of motor vehicles shall make an election to use either
6the trips or mileage method and document that election in their
7books and records. If no election is made under this subsection
8to use the trips or mileage method, the person shall be deemed
9to have chosen the mileage method.
10 For purposes of determining qualifying trips or miles,
11trailers, semitrailers, or pole trailers that carry property
12for hire, even just between points in Illinois, will be
13considered used for hire in interstate commerce if the
14trailers, semitrailers, or pole trailers transport property
15whose shipments originate or terminate outside Illinois. This
16definition applies to all property purchased for the purpose of
17being attached to those trailers, semitrailers, or pole
18trailers as a part thereof. In lieu of a person providing
19documentation regarding the qualifying use of each individual
20trailer, semitrailer, or pole trailer, that person may document
21such qualifying use by providing documentation of the
22following:
23 (1) If a trailer, semitrailer, or pole trailer is
24 dedicated to a motor vehicle that qualifies as rolling
25 stock moving in interstate commerce under subsection (c) of
26 this Section, then that trailer, semitrailer, or pole

SB1871 Enrolled- 60 -LRB100 08399 HLH 21680 b
1 trailer qualifies as rolling stock moving in interstate
2 commerce under this subsection.
3 (2) If a trailer, semitrailer, or pole trailer is
4 dedicated to a group of motor vehicles that all qualify as
5 rolling stock moving in interstate commerce under
6 subsection (c) of this Section, then that trailer,
7 semitrailer, or pole trailer qualifies as rolling stock
8 moving in interstate commerce under this subsection.
9 (3) If one or more trailers, semitrailers, or pole
10 trailers are dedicated to a group of motor vehicles and not
11 all of those motor vehicles in that group qualify as
12 rolling stock moving in interstate commerce under
13 subsection (c) of this Section, then the percentage of
14 those trailers, semitrailers, or pole trailers that
15 qualifies as rolling stock moving in interstate commerce
16 under this subsection is equal to the percentage of those
17 motor vehicles in that group that qualify as rolling stock
18 moving in interstate commerce under subsection (c) of this
19 Section to which those trailers, semitrailers, or pole
20 trailers are dedicated. However, to determine the
21 qualification for the exemption provided under this item
22 (3), the mathematical application of the qualifying
23 percentage to one or more trailers, semitrailers, or pole
24 trailers under this subpart shall not be allowed as to any
25 fraction of a trailer, semitrailer, or pole trailer.
26 (d-5) For motor vehicles and trailers purchased on or after

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1July 1, 2017, "use as rolling stock moving in interstate
2commerce" means that:
3 (1) the motor vehicle or trailer is used to transport
4 persons or property for hire;
5 (2) for purposes of the exemption under paragraph (d-1)
6 of the definition of "sale of service" in Section 2, the
7 purchaser who is an owner, lessor, or shipper claiming the
8 exemption certifies that the motor vehicle or trailer will
9 be utilized, from the time of purchase and continuing
10 through the statute of limitations for issuing a notice of
11 tax liability under this Act, by an interstate carrier or
12 carriers for hire who hold, and are required by Federal
13 Motor Carrier Safety Administration regulations to hold,
14 an active USDOT Number with the Carrier Operation listed as
15 "Interstate" and the Operation Classification listed as
16 "authorized for hire", "exempt for hire", or both
17 "authorized for hire" and "exempt for hire"; except that
18 this paragraph (2) does not apply to a motor vehicle or
19 trailer used at an airport to support the operation of an
20 aircraft moving in interstate commerce, as long as (i) in
21 the case of a motor vehicle, the motor vehicle meets
22 paragraphs (1) and (3) of this subsection (d-5) or (ii) in
23 the case of a trailer, the trailer meets paragraph (1) of
24 this subsection (d-5); and
25 (3) for motor vehicles, the gross vehicle weight rating
26 exceeds 16,000 pounds.

SB1871 Enrolled- 62 -LRB100 08399 HLH 21680 b
1 The definition of "use as rolling stock moving in
2interstate commerce" in this subsection (d-5) applies to all
3property purchased on or after July 1, 2017 for the purpose of
4being attached to a motor vehicle or trailer as a part thereof,
5regardless of whether the motor vehicle or trailer was
6purchased before, on, or after July 1, 2017.
7 If an item ceases to meet requirements (1) through (3)
8under this subsection (d-5), then the tax is imposed on the
9selling price, allowing for a reasonable depreciation for the
10period during which the item qualified for the exemption.
11 For purposes of this subsection (d-5):
12 "Motor vehicle" excludes limousines, but otherwise
13 means that term as defined in Section 1-146 of the Illinois
14 Vehicle Code.
15 "Trailer" means (i) "trailer", as defined in Section
16 1-209 of the Illinois Vehicle Code, (ii) "semitrailer", as
17 defined in Section 1-187 of the Illinois Vehicle Code, and
18 (iii) "pole trailer", as defined in Section 1-161 of the
19 Illinois Vehicle Code.
20 (e) For aircraft and watercraft purchased on or after
21January 1 2014, "use as rolling stock moving in interstate
22commerce" in paragraph paragraphs (d) and (d-1) of the
23definition of "sale of service" in Section 2 occurs when,
24during a 12-month period, the rolling stock has carried persons
25or property for hire in interstate commerce for greater than
2650% of its total trips for that period or for greater than 50%

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1of its total miles for that period. The person claiming the
2exemption shall make an election at the time of purchase to use
3either the trips or mileage method and document that election
4in their books and records. If no election is made under this
5subsection to use the trips or mileage method, the person shall
6be deemed to have chosen the mileage method. For aircraft,
7flight hours may be used in lieu of recording miles in
8determining whether the aircraft meets the mileage test in this
9subsection. For watercraft, nautical miles or trip hours may be
10used in lieu of recording miles in determining whether the
11watercraft meets the mileage test in this subsection.
12 Notwithstanding any other provision of law to the contrary,
13property purchased on or after January 1, 2014 for the purpose
14of being attached to aircraft or watercraft as a part thereof
15qualifies as rolling stock moving in interstate commerce only
16if the aircraft or watercraft to which it will be attached
17qualifies as rolling stock moving in interstate commerce under
18the test set forth in this subsection (e), regardless of when
19the aircraft or watercraft was purchased. Persons who purchased
20aircraft or watercraft prior to January 1, 2014 shall make an
21election to use either the trips or mileage method and document
22that election in their books and records for the purpose of
23determining whether property purchased on or after January 1,
242014 for the purpose of being attached to aircraft or
25watercraft as a part thereof qualifies as rolling stock moving
26in interstate commerce under this subsection (e).

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1 (f) The election to use either the trips or mileage method
2made under the provisions of subsections (c), (d), or (e) of
3this Section will remain in effect for the duration of the
4purchaser's ownership of that item.
5(Source: P.A. 98-584, eff. 8-27-13.)
6 Section 20. The Retailers' Occupation Tax Act is amended by
7changing Sections 2-5 and 2-51 as follows:
8 (35 ILCS 120/2-5)
9 Sec. 2-5. Exemptions. Gross receipts from proceeds from the
10sale of the following tangible personal property are exempt
11from the tax imposed by this Act:
12 (1) Farm chemicals.
13 (2) Farm machinery and equipment, both new and used,
14including that manufactured on special order, certified by the
15purchaser to be used primarily for production agriculture or
16State or federal agricultural programs, including individual
17replacement parts for the machinery and equipment, including
18machinery and equipment purchased for lease, and including
19implements of husbandry defined in Section 1-130 of the
20Illinois Vehicle Code, farm machinery and agricultural
21chemical and fertilizer spreaders, and nurse wagons required to
22be registered under Section 3-809 of the Illinois Vehicle Code,
23but excluding other motor vehicles required to be registered
24under the Illinois Vehicle Code. Horticultural polyhouses or

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1hoop houses used for propagating, growing, or overwintering
2plants shall be considered farm machinery and equipment under
3this item (2). Agricultural chemical tender tanks and dry boxes
4shall include units sold separately from a motor vehicle
5required to be licensed and units sold mounted on a motor
6vehicle required to be licensed, if the selling price of the
7tender is separately stated.
8 Farm machinery and equipment shall include precision
9farming equipment that is installed or purchased to be
10installed on farm machinery and equipment including, but not
11limited to, tractors, harvesters, sprayers, planters, seeders,
12or spreaders. Precision farming equipment includes, but is not
13limited to, soil testing sensors, computers, monitors,
14software, global positioning and mapping systems, and other
15such equipment.
16 Farm machinery and equipment also includes computers,
17sensors, software, and related equipment used primarily in the
18computer-assisted operation of production agriculture
19facilities, equipment, and activities such as, but not limited
20to, the collection, monitoring, and correlation of animal and
21crop data for the purpose of formulating animal diets and
22agricultural chemicals. This item (2) is exempt from the
23provisions of Section 2-70.
24 (3) Until July 1, 2003, distillation machinery and
25equipment, sold as a unit or kit, assembled or installed by the
26retailer, certified by the user to be used only for the

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1production of ethyl alcohol that will be used for consumption
2as motor fuel or as a component of motor fuel for the personal
3use of the user, and not subject to sale or resale.
4 (4) Until July 1, 2003 and beginning again September 1,
52004 through August 30, 2014, graphic arts machinery and
6equipment, including repair and replacement parts, both new and
7used, and including that manufactured on special order or
8purchased for lease, certified by the purchaser to be used
9primarily for graphic arts production. Equipment includes
10chemicals or chemicals acting as catalysts but only if the
11chemicals or chemicals acting as catalysts effect a direct and
12immediate change upon a graphic arts product.
13 (5) A motor vehicle that is used for automobile renting, as
14defined in the Automobile Renting Occupation and Use Tax Act.
15This paragraph is exempt from the provisions of Section 2-70.
16 (6) Personal property sold by a teacher-sponsored student
17organization affiliated with an elementary or secondary school
18located in Illinois.
19 (7) Until July 1, 2003, proceeds of that portion of the
20selling price of a passenger car the sale of which is subject
21to the Replacement Vehicle Tax.
22 (8) Personal property sold to an Illinois county fair
23association for use in conducting, operating, or promoting the
24county fair.
25 (9) Personal property sold to a not-for-profit arts or
26cultural organization that establishes, by proof required by

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1the Department by rule, that it has received an exemption under
2Section 501(c)(3) of the Internal Revenue Code and that is
3organized and operated primarily for the presentation or
4support of arts or cultural programming, activities, or
5services. These organizations include, but are not limited to,
6music and dramatic arts organizations such as symphony
7orchestras and theatrical groups, arts and cultural service
8organizations, local arts councils, visual arts organizations,
9and media arts organizations. On and after the effective date
10of this amendatory Act of the 92nd General Assembly, however,
11an entity otherwise eligible for this exemption shall not make
12tax-free purchases unless it has an active identification
13number issued by the Department.
14 (10) Personal property sold by a corporation, society,
15association, foundation, institution, or organization, other
16than a limited liability company, that is organized and
17operated as a not-for-profit service enterprise for the benefit
18of persons 65 years of age or older if the personal property
19was not purchased by the enterprise for the purpose of resale
20by the enterprise.
21 (11) Personal property sold to a governmental body, to a
22corporation, society, association, foundation, or institution
23organized and operated exclusively for charitable, religious,
24or educational purposes, or to a not-for-profit corporation,
25society, association, foundation, institution, or organization
26that has no compensated officers or employees and that is

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1organized and operated primarily for the recreation of persons
255 years of age or older. A limited liability company may
3qualify for the exemption under this paragraph only if the
4limited liability company is organized and operated
5exclusively for educational purposes. On and after July 1,
61987, however, no entity otherwise eligible for this exemption
7shall make tax-free purchases unless it has an active
8identification number issued by the Department.
9 (12) (Blank). Tangible personal property sold to
10interstate carriers for hire for use as rolling stock moving in
11interstate commerce or to lessors under leases of one year or
12longer executed or in effect at the time of purchase by
13interstate carriers for hire for use as rolling stock moving in
14interstate commerce and equipment operated by a
15telecommunications provider, licensed as a common carrier by
16the Federal Communications Commission, which is permanently
17installed in or affixed to aircraft moving in interstate
18commerce.
19 (12-5) On and after July 1, 2003 and through June 30, 2004,
20motor vehicles of the second division with a gross vehicle
21weight in excess of 8,000 pounds that are subject to the
22commercial distribution fee imposed under Section 3-815.1 of
23the Illinois Vehicle Code. Beginning on July 1, 2004 and
24through June 30, 2005, the use in this State of motor vehicles
25of the second division: (i) with a gross vehicle weight rating
26in excess of 8,000 pounds; (ii) that are subject to the

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1commercial distribution fee imposed under Section 3-815.1 of
2the Illinois Vehicle Code; and (iii) that are primarily used
3for commercial purposes. Through June 30, 2005, this exemption
4applies to repair and replacement parts added after the initial
5purchase of such a motor vehicle if that motor vehicle is used
6in a manner that would qualify for the rolling stock exemption
7otherwise provided for in this Act. For purposes of this
8paragraph, "used for commercial purposes" means the
9transportation of persons or property in furtherance of any
10commercial or industrial enterprise whether for-hire or not.
11 (13) Proceeds from sales to owners, lessors, or shippers of
12tangible personal property that is utilized by interstate
13carriers for hire for use as rolling stock moving in interstate
14commerce and equipment operated by a telecommunications
15provider, licensed as a common carrier by the Federal
16Communications Commission, which is permanently installed in
17or affixed to aircraft moving in interstate commerce.
18 (14) Machinery and equipment that will be used by the
19purchaser, or a lessee of the purchaser, primarily in the
20process of manufacturing or assembling tangible personal
21property for wholesale or retail sale or lease, whether the
22sale or lease is made directly by the manufacturer or by some
23other person, whether the materials used in the process are
24owned by the manufacturer or some other person, or whether the
25sale or lease is made apart from or as an incident to the
26seller's engaging in the service occupation of producing

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1machines, tools, dies, jigs, patterns, gauges, or other similar
2items of no commercial value on special order for a particular
3purchaser. The exemption provided by this paragraph (14) does
4not include machinery and equipment used in (i) the generation
5of electricity for wholesale or retail sale; (ii) the
6generation or treatment of natural or artificial gas for
7wholesale or retail sale that is delivered to customers through
8pipes, pipelines, or mains; or (iii) the treatment of water for
9wholesale or retail sale that is delivered to customers through
10pipes, pipelines, or mains. The provisions of Public Act 98-583
11are declaratory of existing law as to the meaning and scope of
12this exemption.
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

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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 120/2-51)
24 Sec. 2-51. Motor vehicles; trailers; use as rolling stock
25definition.

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1 (a) (Blank). Through June 30, 2003, "use as rolling stock
2moving in interstate commerce" in paragraphs (12) and (13) of
3Section 2-5 means for motor vehicles, as defined in Section
41-146 of the Illinois Vehicle Code, and trailers, as defined in
5Section 1-209 of the Illinois Vehicle Code, when on 15 or more
6occasions in a 12-month period the motor vehicle and trailer
7has carried persons or property for hire in interstate
8commerce, even just between points in Illinois, if the motor
9vehicle and trailer transports persons whose journeys or
10property whose shipments originate or terminate outside
11Illinois. This definition applies to all property purchased for
12the purpose of being attached to those motor vehicles or
13trailers as a part thereof.
14 (b) (Blank). On and after July 1, 2003 and through June 30,
152004, "use as rolling stock moving in interstate commerce" in
16paragraphs (12) and (13) of Section 2-5 occurs for motor
17vehicles, as defined in Section 1-146 of the Illinois Vehicle
18Code, when during a 12-month period the rolling stock has
19carried persons or property for hire in interstate commerce for
2051% of its total trips and transports persons whose journeys or
21property whose shipments originate or terminate outside
22Illinois. Trips that are only between points in Illinois shall
23not be counted as interstate trips when calculating whether the
24tangible personal property qualifies for the exemption but such
25trips shall be included in total trips taken.
26 (c) This subsection (c) applies to motor vehicles, other

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1than limousines, purchased through June 30, 2017. For motor
2vehicles, other than limousines, purchased on or after July 1,
32017, subsection (d-5) applies. This subsection (c) applies to
4limousines purchased before, on, or after July 1, 2017. "Use
5Beginning July 1, 2004, "use as rolling stock moving in
6interstate commerce" in paragraph paragraphs (12) and (13) of
7Section 2-5 occurs for motor vehicles, as defined in Section
81-146 of the Illinois Vehicle Code, when during a 12-month
9period the rolling stock has carried persons or property for
10hire in interstate commerce for greater than 50% of its total
11trips for that period or for greater than 50% of its total
12miles for that period. The person claiming the exemption shall
13make an election at the time of purchase to use either the
14trips or mileage method. Persons who purchased motor vehicles
15prior to July 1, 2004 shall make an election to use either the
16trips or mileage method and document that election in their
17books and records. If no election is made under this subsection
18to use the trips or mileage method, the person shall be deemed
19to have chosen the mileage method.
20 For purposes of determining qualifying trips or miles,
21motor vehicles that carry persons or property for hire, even
22just between points in Illinois, will be considered used for
23hire in interstate commerce if the motor vehicle transports
24persons whose journeys or property whose shipments originate or
25terminate outside Illinois. The exemption for motor vehicles
26used as rolling stock moving in interstate commerce may be

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1claimed only for the following vehicles: (i) motor vehicles
2whose gross vehicle weight rating exceeds 16,000 pounds; and
3(ii) limousines, as defined in Section 1-139.1 of the Illinois
4Vehicle Code. Through June 30, 2017, this This definition
5applies to all property purchased for the purpose of being
6attached to those motor vehicles as a part thereof. On and
7after July 1, 2017, this definition applies to property
8purchased for the purpose of being attached to limousines as a
9part thereof.
10 (d) For purchases made through June 30, 2017 Beginning July
111, 2004, "use as rolling stock moving in interstate commerce"
12in paragraph paragraphs (12) and (13) of Section 2-5 occurs for
13trailers, as defined in Section 1-209 of the Illinois Vehicle
14Code, semitrailers as defined in Section 1-187 of the Illinois
15Vehicle Code, and pole trailers as defined in Section 1-161 of
16the Illinois Vehicle Code, when during a 12-month period the
17rolling stock has carried persons or property for hire in
18interstate commerce for greater than 50% of its total trips for
19that period or for greater than 50% of its total miles for that
20period. The person claiming the exemption for a trailer or
21trailers that will not be dedicated to a motor vehicle or group
22of motor vehicles shall make an election at the time of
23purchase to use either the trips or mileage method. Persons who
24purchased trailers prior to July 1, 2004 that are not dedicated
25to a motor vehicle or group of motor vehicles shall make an
26election to use either the trips or mileage method and document

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1that election in their books and records. If no election is
2made under this subsection to use the trips or mileage method,
3the person shall be deemed to have chosen the mileage method.
4 For purposes of determining qualifying trips or miles,
5trailers, semitrailers, or pole trailers that carry property
6for hire, even just between points in Illinois, will be
7considered used for hire in interstate commerce if the
8trailers, semitrailers, or pole trailers transport property
9whose shipments originate or terminate outside Illinois. This
10definition applies to all property purchased for the purpose of
11being attached to those trailers, semitrailers, or pole
12trailers as a part thereof. In lieu of a person providing
13documentation regarding the qualifying use of each individual
14trailer, semitrailer, or pole trailer, that person may document
15such qualifying use by providing documentation of the
16following:
17 (1) If a trailer, semitrailer, or pole trailer is
18 dedicated to a motor vehicle that qualifies as rolling
19 stock moving in interstate commerce under subsection (c) of
20 this Section, then that trailer, semitrailer, or pole
21 trailer qualifies as rolling stock moving in interstate
22 commerce under this subsection.
23 (2) If a trailer, semitrailer, or pole trailer is
24 dedicated to a group of motor vehicles that all qualify as
25 rolling stock moving in interstate commerce under
26 subsection (c) of this Section, then that trailer,

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1 semitrailer, or pole trailer qualifies as rolling stock
2 moving in interstate commerce under this subsection.
3 (3) If one or more trailers, semitrailers, or pole
4 trailers are dedicated to a group of motor vehicles and not
5 all of those motor vehicles in that group qualify as
6 rolling stock moving in interstate commerce under
7 subsection (c) of this Section, then the percentage of
8 those trailers, semitrailers, or pole trailers that
9 qualifies as rolling stock moving in interstate commerce
10 under this subsection is equal to the percentage of those
11 motor vehicles in that group that qualify as rolling stock
12 moving in interstate commerce under subsection (c) of this
13 Section to which those trailers, semitrailers, or pole
14 trailers are dedicated. However, to determine the
15 qualification for the exemption provided under this item
16 (3), the mathematical application of the qualifying
17 percentage to one or more trailers, semitrailers, or pole
18 trailers under this subpart shall not be allowed as to any
19 fraction of a trailer, semitrailer, or pole trailer.
20 (d-5) For motor vehicles and trailers purchased on or after
21July 1, 2017, "use as rolling stock moving in interstate
22commerce" means that:
23 (1) the motor vehicle or trailer is used to transport
24 persons or property for hire;
25 (2) for purposes of the exemption under paragraph (13)
26 of Section 2-5, the purchaser who is an owner, lessor, or

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1 shipper claiming the exemption certifies that the motor
2 vehicle or trailer will be utilized, from the time of
3 purchase and continuing through the statute of limitations
4 for issuing a notice of tax liability under this Act, by an
5 interstate carrier or carriers for hire who hold, and are
6 required by Federal Motor Carrier Safety Administration
7 regulations to hold, an active USDOT Number with the
8 Carrier Operation listed as "Interstate" and the Operation
9 Classification listed as "authorized for hire", "exempt
10 for hire", or both "authorized for hire" and "exempt for
11 hire"; except that this paragraph (2) does not apply to a
12 motor vehicle or trailer used at an airport to support the
13 operation of an aircraft moving in interstate commerce, as
14 long as (i) in the case of a motor vehicle, the motor
15 vehicle meets paragraphs (1) and (3) of this subsection
16 (d-5) or (ii) in the case of a trailer, the trailer meets
17 paragraph (1) of this subsection (d-5); and
18 (3) for motor vehicles, the gross vehicle weight rating
19 exceeds 16,000 pounds.
20 The definition of "use as rolling stock moving in
21interstate commerce" in this subsection (d-5) applies to all
22property purchased on or after July 1, 2017 for the purpose of
23being attached to a motor vehicle or trailer as a part thereof,
24regardless of whether the motor vehicle or trailer was
25purchased before, on, or after July 1, 2017.
26 If an item ceases to meet requirements (1) through (3)

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1under this subsection (d-5), then the tax is imposed on the
2selling price, allowing for a reasonable depreciation for the
3period during which the item qualified for the exemption.
4 For purposes of this subsection (d-5):
5 "Motor vehicle" excludes limousines, but otherwise
6 means that term as defined in Section 1-146 of the Illinois
7 Vehicle Code.
8 "Trailer" means (i) "trailer", as defined in Section
9 1-209 of the Illinois Vehicle Code, (ii) "semitrailer", as
10 defined in Section 1-187 of the Illinois Vehicle Code, and
11 (iii) "pole trailer", as defined in Section 1-161 of the
12 Illinois Vehicle Code.
13 (e) For aircraft and watercraft purchased on or after
14January 1, 2014, "use as rolling stock moving in interstate
15commerce" in paragraph paragraphs (12) and (13) of Section 2-5
16occurs when, during a 12-month period, the rolling stock has
17carried persons or property for hire in interstate commerce for
18greater than 50% of its total trips for that period or for
19greater than 50% of its total miles for that period. The person
20claiming the exemption shall make an election at the time of
21purchase to use either the trips or mileage method and document
22that election in their books and records. If no election is
23made under this subsection to use the trips or mileage method,
24the person shall be deemed to have chosen the mileage method.
25For aircraft, flight hours may be used in lieu of recording
26miles in determining whether the aircraft meets the mileage

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1test in this subsection. For watercraft, nautical miles or trip
2hours may be used in lieu of recording miles in determining
3whether the watercraft meets the mileage test in this
4subsection.
5 Notwithstanding any other provision of law to the contrary,
6property purchased on or after January 1, 2014 for the purpose
7of being attached to aircraft or watercraft as a part thereof
8qualifies as rolling stock moving in interstate commerce only
9if the aircraft or watercraft to which it will be attached
10qualifies as rolling stock moving in interstate commerce under
11the test set forth in this subsection (e), regardless of when
12the aircraft or watercraft was purchased. Persons who purchased
13aircraft or watercraft prior to January 1, 2014 shall make an
14election to use either the trips or mileage method and document
15that election in their books and records for the purpose of
16determining whether property purchased on or after January 1,
172014 for the purpose of being attached to aircraft or
18watercraft as a part thereof qualifies as rolling stock moving
19in interstate commerce under this subsection (e).
20 (f) The election to use either the trips or mileage method
21made under the provisions of subsections (c), (d), or (e) of
22this Section will remain in effect for the duration of the
23purchaser's ownership of that item.
24(Source: P.A. 98-584, eff. 8-27-13.)
25 Section 99. Effective date. This Act takes effect July 1,
262017.
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