Sen. Toi W. Hutchinson

Filed: 5/17/2017

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1 AMENDMENT TO SENATE BILL 9

2 AMENDMENT NO. ______. Amend Senate Bill 9 by replacing

3 everything after the enacting clause with the following:

4 "ARTICLE 5. BUDGET ECONOMIC STABILIZATION FUND ACT

5 Section 5-1. Short title. This Act may be cited as the

6 Budget Economic Stabilization Fund Act.

7 Section 5-5. Legislative intent.

8 The General Assembly finds that, in order to restore

9 Illinois' fiscal health, retaining a share of above-trend State

10 revenues for future needs and for reducing the need for new

11 taxes or increasing any rate of tax or otherwise modifying the

12 tax structure, including the elimination or modification of

13 deductions, exclusions, or exemptions, is a priority.

14 Section 5-10. Definitions. As used in this Act:

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1 "Above-trend revenues" means general funds revenue

2 collections that exceed 2.4% of the prior fiscal year's general

3 funds revenue collections.

4 "General funds" means the General Revenue Fund, the Common

5 School Fund, the Education Assistance Fund, and the General

6 Revenue Common School Special Account Fund.

7 "General funds revenue collections" means, for each fiscal

8 year, all gross personal and corporate income taxes, other

9 taxes, fees, and other revenues expected to be deposited into

10 the State's general funds and recurring transfers into general

11 funds from the State Lottery and gaming, but does not include

12 other transfers and federal funds.

13 "Unpaid bills" means: pending vouchers approved for

14 payment but not paid as of December 31st for each fiscal year

15 by the Office of the Comptroller; pending transfers required by

16 State statute that have been recorded but have not been paid

17 from the General Revenue Fund, Common School Fund, or Education

18 Assistance Fund; and all vouchers for invoices that have been

19 certified as a proper bill, as defined by the State Prompt

20 Payment Act, by the Departments of Healthcare and Family

21 Services, Central Management Services, Human Services,

22 Revenue, and Aging but not yet approved by the Comptroller as

23 of December 31st of each fiscal year from the General Revenue

24 Fund, Common School Fund, Education Assistance Fund, Health

25 Insurance Fund, Income Tax Refund Fund, and Healthcare Provider

26 Relief Fund.

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1 Section 5-15. Certification of the backlog of bills. The

2 amount of unpaid bills shall be reported by the Comptroller and

3 the Departments of Healthcare and Family Services, Central

4 Management Services, Human Services, Revenue, and Aging to the

5 Governor's Office of Management and Budget no later than

6 January 10th of each year. By January 15th of each year, the

7 Governor's Office of Management and Budget shall notify the

8 Comptroller, Treasurer, the Speaker and Minority Leader of the

9 House, and the President and Minority Leader of the Senate of

10 the total amount of unpaid bills as of the preceding December

11 31st.

12 Section 5-20. Payment of unpaid bills. If unpaid bills

13 total more than $1,000,000,000, the Governor shall include in

14 his or her budget for the next fiscal year an amount to pay

15 unpaid bills equal to the lesser of (i) 50% of above-trend

16 revenues that the Governor projects to be received by the State

17 in the next fiscal year or (ii) the amount of above-trend

18 revenues needed to reduce the unpaid bills to $1,000,000,000.

19 This amount to pay off unpaid bills shall be included in the

20 Governor's budget as an appropriation to the Bill Backlog

21 Payment Fund from the General Revenue Fund. Nothing in this Act

22 prohibits the Governor from including in his or her budget, or

23 the General Assembly from appropriating, additional moneys for

24 the payment of unpaid bills. If for any reason the

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1 appropriations enacted are insufficient to meet the payment of

2 unpaid bills required to be included in the Governor's budget

3 under this Section, then there is hereby appropriated, on a

4 continuing annual basis in each fiscal year, from the General

5 Revenue Fund, the amounts necessary for this payment.

6 Section 5-25. Transfers into the Budget Economic

7 Stabilization Fund.

8 (a) If unpaid bills total less than $1,000,000,000 the

9 Governor shall include in his or her budget for the next fiscal

10 year at least 50% of any above-trend revenues that the Governor

11 projects to be received in the next fiscal year for deposit to

12 the Budget Economic Stabilization Fund as an appropriation from

13 the General Revenue Fund. Except as provided in subsection (b)

14 of this Section, if for any reason the appropriations enacted

15 are insufficient to make the deposit required by this Section,

16 then this Section shall constitute a continuing appropriation

17 from the General Revenue Fund of all amounts necessary for this

18 deposit.

19 (b) If the balance of the Budget Economic Stabilization

20 Fund at the beginning of the next fiscal year is projected by

21 the Governor to exceed 5% of the general funds revenue

22 collections estimated for the next fiscal year, transfers into

23 the Budget Economic Stabilization Fund are not required for

24 that fiscal year.

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1 Section 5-30. Withdrawal from Budget Economic

2 Stabilization Fund.

3 (a) Upon the direction of the Governor at any time within a

4 fiscal year and within the limitations set forth in this

5 Section, the Comptroller and the Treasurer shall transfer the

6 amounts designated by the Governor from the Budget Economic

7 Stabilization Fund to general funds as specified by the

8 Governor. The transfer shall be made as soon as practicable on

9 or after the 30th day after the Governor has provided written

10 notice of his or her direction to transfer to the Clerk of the

11 House of Representatives, the Secretary of the Senate, and the

12 Index Department of the Office of the Secretary of State, with

13 copies of the notice provided to the Comptroller and Treasurer.

14 The notice shall be published on the website of the Governor's

15 Office of Management and Budget. The amount directed to be

16 transferred may not exceed the limits set forth in subsection

17 (c) of this Section. The Governor may direct a transfer from

18 the Budget Economic Stabilization Fund to any of the general

19 funds only if: he or she estimates that general funds revenue

20 collections for the current fiscal year will be less than the

21 general funds revenue collections as estimated at the time of

22 enactment of appropriations for the current fiscal year; the

23 transfer is necessary to provide for the health, safety, and

24 welfare of the people of the State of Illinois; and the funds

25 transferred are to be spent within previously enacted

26 appropriations.

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1 (b) In addition to transfers directed by the Governor

2 within a fiscal year, transfers or appropriations from the

3 Budget Economic Stabilization Fund for the current or next

4 fiscal year may be made by vote of the General Assembly if:

5 (1) the General Assembly projects that general funds

6 revenue collections for the current or next fiscal year are

7 less than the general funds revenue collections as

8 estimated at the time of enactment of appropriations for

9 the current fiscal year for the preceding year;

10 (2) the General Assembly finds that general funds

11 revenue collections have remained stagnant or dropped

12 during 2 consecutive fiscal quarters within the preceding

13 12 months as compared to the corresponding 2 fiscal

14 quarters of the prior fiscal year; or

15 (3) that the State Coincident Index for the State of

16 Illinois has remained stagnant or dropped over 2

17 consecutive quarters within the preceding 12 months, as

18 published in the Federal Reserve Bank of Philadelphia's

19 publication entitled "State Coincident Indexes" or its

20 successor publication.

21 (c) Transfers or appropriations from the Budget Economic

22 Stabilization Fund may not, during any fiscal year, exceed the

23 lesser of:

24 (1) 50% of the Budget Economic Stabilization Fund's

25 balance;

26 (2) in the case of appropriation enacted by the General

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1 Assembly, 50% of the difference between (i) general funds

2 revenue collections, as projected by the Commission on

3 Government Forecasting and Accountability to be received

4 in the next fiscal year, and (ii) a revised general fund

5 revenue collections projection for the current fiscal year

6 presented to the General Assembly by the Commission on

7 Government Forecasting and Accountability; or

8 (3) in the case of transfers to be directed by the

9 Governor within a fiscal year, 50% of the difference

10 between (i) general funds revenue collections, to be

11 received in the next fiscal year as projected by the

12 Governor, and (ii) a revised general fund revenue

13 collections projection for the current fiscal year as

14 projected by the Governor.

15 Section 5-35. Fund creation.

16 (a) There is created the Budget Economic Stabilization Fund

17 as a special fund in the State Treasury consisting of moneys

18 appropriated or transferred to that Fund as provided in Section

19 5-30 of this Act and as otherwise provided by law. All earnings

20 on Budget Economic Stabilization Fund investments shall be

21 deposited into that Fund.

22 (b) There is created the Bill Backlog Payment Fund as a

23 special fund in the State Treasury consisting of moneys

24 appropriated or transferred to that Fund as provided in Section -

25 25 of this Act and as otherwise provided by law. All earnings

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1 on Bill Backlog Payment Fund investments shall be deposited

2 into that Fund.

3 ARTICLE 30. AMENDATORY PROVISIONS

4 Section 30-5. The State Finance Act is amended by changing

5 Section 6z-51 and by adding Sections 5.878 and 5.879 as

6 follows:

7 (30 ILCS 105/5.878 new)

8 Sec. 5.878. The Budget Economic Stabilization Fund.

9 (30 ILCS 105/5.879 new)

10 Sec. 5.879. The Bill Backlog Payment Fund.

11 (30 ILCS 105/6z-51)

12 Sec. 6z-51. Budget Stabilization Fund.

13 (a) The Budget Stabilization Fund, a special fund in the

14 State Treasury, shall consist of moneys appropriated or

15 transferred to that Fund, as provided in Section 6z-43 and as

16 otherwise provided by law. All earnings on Budget Stabilization

17 Fund investments shall be deposited into that Fund.

18 (b) Until an initial transfer has been made to the Budget

19 Economic Stabilization Fund under Section 5-30 of the Budget

20 Economic Stabilization Fund Act, the ~~The~~ State Comptroller may

21 direct the State Treasurer to transfer moneys from the Budget

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1 Stabilization Fund to the General Revenue Fund in order to meet

2 cash flow deficits resulting from timing variations between

3 disbursements and the receipt of funds within a fiscal year.

4 Any moneys so borrowed in any fiscal year other than Fiscal

5 Year 2011 shall be repaid by June 30 of the fiscal year in

6 which they were borrowed. Any moneys so borrowed in Fiscal Year

7 2011 shall be repaid no later than July 15, 2011.

8 (c) During Fiscal Year 2017 only, amounts may be expended

9 from the Budget Stabilization Fund only pursuant to specific

10 authorization by appropriation. Any moneys expended pursuant

11 to appropriation shall not be subject to repayment.

12 (Source: P.A. 99-523, eff. 6-30-16.)

13 Section 30-10. The Illinois Income Tax Act is amended by

14 changing Sections 201, 203, 204, 212, 222, 804, 901, and 1501

15 and by adding Section 225 as follows:

16 (35 ILCS 5/201) (from Ch. 120, par. 2-201)

17 Sec. 201. Tax Imposed.

18 (a) In general. A tax measured by net income is hereby

19 imposed on every individual, corporation, trust and estate for

20 each taxable year ending after July 31, 1969 on the privilege

21 of earning or receiving income in or as a resident of this

22 State. Such tax shall be in addition to all other occupation or

23 privilege taxes imposed by this State or by any municipal

24 corporation or political subdivision thereof.

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1 (b) Rates. The tax imposed by subsection (a) of this

2 Section shall be determined as follows, except as adjusted by

3 subsection (d-1):

4 (1) In the case of an individual, trust or estate, for

5 taxable years ending prior to July 1, 1989, an amount equal

6 to 2 1/2% of the taxpayer's net income for the taxable

7 year.

8 (2) In the case of an individual, trust or estate, for

9 taxable years beginning prior to July 1, 1989 and ending

10 after June 30, 1989, an amount equal to the sum of (i) 2

11 1/2% of the taxpayer's net income for the period prior to

12 July 1, 1989, as calculated under Section 202.3, and (ii)

13 3% of the taxpayer's net income for the period after June

14 30, 1989, as calculated under Section 202.3.

15 (3) In the case of an individual, trust or estate, for

16 taxable years beginning after June 30, 1989, and ending

17 prior to January 1, 2011, an amount equal to 3% of the

18 taxpayer's net income for the taxable year.

19 (4) In the case of an individual, trust, or estate, for

20 taxable years beginning prior to January 1, 2011, and

21 ending after December 31, 2010, an amount equal to the sum

22 of (i) 3% of the taxpayer's net income for the period prior

23 to January 1, 2011, as calculated under Section 202.5, and

24 (ii) 5% of the taxpayer's net income for the period after

25 December 31, 2010, as calculated under Section 202.5.

26 (5) In the case of an individual, trust, or estate, for

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1 taxable years beginning on or after January 1, 2011, and

2 ending prior to January 1, 2015, an amount equal to 5% of

3 the taxpayer's net income for the taxable year.

4 (5.1) In the case of an individual, trust, or estate,

5 for taxable years beginning prior to January 1, 2015, and

6 ending after December 31, 2014, an amount equal to the sum

7 of (i) 5% of the taxpayer's net income for the period prior

8 to January 1, 2015, as calculated under Section 202.5, and

9 (ii) 3.75% of the taxpayer's net income for the period

10 after December 31, 2014, as calculated under Section 202.5.

11 (5.2) In the case of an individual, trust, or estate,

12 for taxable years beginning on or after January 1, 2015,

13 and ending prior to January 1, 2017 ~~January 1, 2025~~, an

14 amount equal to 3.75% of the taxpayer's net income for the

15 taxable year.

16 (5.3) In the case of an individual, trust, or estate,

17 for taxable years beginning prior to January 1, 2017

18 ~~January 1, 2025~~, and ending after December 31, 2016

19 ~~December 31, 2024~~, an amount equal to the sum of (i) 3.75%

20 of the taxpayer's net income for the period prior to

21 January 1, 2017 ~~January 1, 2025~~, as calculated under

22 Section 202.5, and (ii) 4.95% ~~3.25%~~ of the taxpayer's net

23 income for the period after December 31, 2016 ~~December 31,~~

24 ~~2024~~, as calculated under Section 202.5.

25 (5.4) In the case of an individual, trust, or estate,

26 for taxable years beginning on or after January 1, 2017 and

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1 ending prior to January 1, 2024 ~~January 1, 2025~~, an amount

2 equal to 4.95% ~~3.25%~~ of the taxpayer's net income for the

3 taxable year.

4 (5.5) In the case of an individual, trust, or estate,

5 for taxable years beginning prior to January 1, 2024 and

6 ending after December 31, 2023, an amount equal to the sum

7 of (i) 4.95% of the taxpayer's net income for the period

8 prior to January 1, 2024, as calculated under Section

9 202.5, and (ii) 3.75% of the taxpayer's net income for the

10 period after December 31, 2023, as calculated under Section

11 202.5.

12 (5.6) In the case of an individual, trust, or estate,

13 for taxable years beginning on or after January 1, 2024,

14 3.75% of the taxpayer's net income for the taxable year.

15 (6) In the case of a corporation, for taxable years

16 ending prior to July 1, 1989, an amount equal to 4% of the

17 taxpayer's net income for the taxable year.

18 (7) In the case of a corporation, for taxable years

19 beginning prior to July 1, 1989 and ending after June 30,

20 1989, an amount equal to the sum of (i) 4% of the

21 taxpayer's net income for the period prior to July 1, 1989,

22 as calculated under Section 202.3, and (ii) 4.8% of the

23 taxpayer's net income for the period after June 30, 1989,

24 as calculated under Section 202.3.

25 (8) In the case of a corporation, for taxable years

26 beginning after June 30, 1989, and ending prior to January

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1 1, 2011, an amount equal to 4.8% of the taxpayer's net

2 income for the taxable year.

3 (9) In the case of a corporation, for taxable years

4 beginning prior to January 1, 2011, and ending after

5 December 31, 2010, an amount equal to the sum of (i) 4.8%

6 of the taxpayer's net income for the period prior to

7 January 1, 2011, as calculated under Section 202.5, and

8 (ii) 7% of the taxpayer's net income for the period after

9 December 31, 2010, as calculated under Section 202.5.

10 (10) In the case of a corporation, for taxable years

11 beginning on or after January 1, 2011, and ending prior to

12 January 1, 2015, an amount equal to 7% of the taxpayer's

13 net income for the taxable year.

14 (11) In the case of a corporation, for taxable years

15 beginning prior to January 1, 2015, and ending after

16 December 31, 2014, an amount equal to the sum of (i) 7% of

17 the taxpayer's net income for the period prior to January

18 1, 2015, as calculated under Section 202.5, and (ii) 5.25%

19 of the taxpayer's net income for the period after December

20 31, 2014, as calculated under Section 202.5.

21 (12) In the case of a corporation, for taxable years

22 beginning on or after January 1, 2015, and ending prior to

23 January 1, 2017 ~~January 1, 2025~~, an amount equal to 5.25%

24 of the taxpayer's net income for the taxable year.

25 (13) In the case of a corporation, for taxable years

26 beginning prior to January 1, 2017 ~~January 1, 2025~~, and

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1 ending after December 31, 2016 ~~December 31, 2024~~, an amount

2 equal to the sum of (i) 5.25% of the taxpayer's net income

3 for the period prior to January 1, 2017 ~~January 1, 2025~~, as

4 calculated under Section 202.5, and (ii) 7% ~~4.8%~~ of the

5 taxpayer's net income for the period after December 31,

6 2016 ~~December 31, 2024~~, as calculated under Section 202.5.

7 (14) In the case of a corporation, for taxable years

8 beginning on or after January 1, 2017 and ending prior to

9 January 1, 2024 ~~January 1, 2025~~, an amount equal to 7% ~~4.8%~~

10 of the taxpayer's net income for the taxable year.

11 (15) In the case of a corporation, for taxable years

12 beginning prior to January 1, 2024 and ending after

13 December 31, 2023, an amount equal to the sum of (i) 7% of

14 the taxpayer's net income for the period prior to January

15 1, 2024, as calculated under Section 202.5, and (ii) 5.25%

16 of the taxpayer's net income for the period after December

17 31, 2023, as calculated under Section 202.5.

18 (16) In the case of a corporation, for taxable years

19 beginning on or after January 1, 2024, 5.25% of the

20 taxpayer's net income for the taxable year.

21 The rates under this subsection (b) are subject to the

22 provisions of Section 201.5.

23 (c) Personal Property Tax Replacement Income Tax.

24 Beginning on July 1, 1979 and thereafter, in addition to such

25 income tax, there is also hereby imposed the Personal Property

26 Tax Replacement Income Tax measured by net income on every

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1 corporation (including Subchapter S corporations), partnership

2 and trust, for each taxable year ending after June 30, 1979.

3 Such taxes are imposed on the privilege of earning or receiving

4 income in or as a resident of this State. The Personal Property

5 Tax Replacement Income Tax shall be in addition to the income

6 tax imposed by subsections (a) and (b) of this Section and in

7 addition to all other occupation or privilege taxes imposed by

8 this State or by any municipal corporation or political

9 subdivision thereof.

10 (d) Additional Personal Property Tax Replacement Income

11 Tax Rates. The personal property tax replacement income tax

12 imposed by this subsection and subsection (c) of this Section

13 in the case of a corporation, other than a Subchapter S

14 corporation and except as adjusted by subsection (d-1), shall

15 be an additional amount equal to 2.85% of such taxpayer's net

16 income for the taxable year, except that beginning on January

17 1, 1981, and thereafter, the rate of 2.85% specified in this

18 subsection shall be reduced to 2.5%, and in the case of a

19 partnership, trust or a Subchapter S corporation shall be an

20 additional amount equal to 1.5% of such taxpayer's net income

21 for the taxable year.

22 (d-1) Rate reduction for certain foreign insurers. In the

23 case of a foreign insurer, as defined by Section 35A-5 of the

24 Illinois Insurance Code, whose state or country of domicile

25 imposes on insurers domiciled in Illinois a retaliatory tax

26 (excluding any insurer whose premiums from reinsurance assumed

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1 are 50% or more of its total insurance premiums as determined

2 under paragraph (2) of subsection (b) of Section 304, except

3 that for purposes of this determination premiums from

4 reinsurance do not include premiums from inter-affiliate

5 reinsurance arrangements), beginning with taxable years ending

6 on or after December 31, 1999, the sum of the rates of tax

7 imposed by subsections (b) and (d) shall be reduced (but not

8 increased) to the rate at which the total amount of tax imposed

9 under this Act, net of all credits allowed under this Act,

10 shall equal (i) the total amount of tax that would be imposed

11 on the foreign insurer's net income allocable to Illinois for

12 the taxable year by such foreign insurer's state or country of

13 domicile if that net income were subject to all income taxes

14 and taxes measured by net income imposed by such foreign

15 insurer's state or country of domicile, net of all credits

16 allowed or (ii) a rate of zero if no such tax is imposed on such

17 income by the foreign insurer's state of domicile. For the

18 purposes of this subsection (d-1), an inter-affiliate includes

19 a mutual insurer under common management.

20 (1) For the purposes of subsection (d-1), in no event

21 shall the sum of the rates of tax imposed by subsections

22 (b) and (d) be reduced below the rate at which the sum of:

23 (A) the total amount of tax imposed on such foreign

24 insurer under this Act for a taxable year, net of all

25 credits allowed under this Act, plus

26 (B) the privilege tax imposed by Section 409 of the

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1 Illinois Insurance Code, the fire insurance company

2 tax imposed by Section 12 of the Fire Investigation

3 Act, and the fire department taxes imposed under

4 Section 11-10-1 of the Illinois Municipal Code,

5 equals 1.25% for taxable years ending prior to December 31,

6 2003, or 1.75% for taxable years ending on or after

7 December 31, 2003, of the net taxable premiums written for

8 the taxable year, as described by subsection (1) of Section

9 409 of the Illinois Insurance Code. This paragraph will in

10 no event increase the rates imposed under subsections (b)

11 and (d).

12 (2) Any reduction in the rates of tax imposed by this

13 subsection shall be applied first against the rates imposed

14 by subsection (b) and only after the tax imposed by

15 subsection (a) net of all credits allowed under this

16 Section other than the credit allowed under subsection (i)

17 has been reduced to zero, against the rates imposed by

18 subsection (d).

19 This subsection (d-1) is exempt from the provisions of

20 Section 250.

21 (e) Investment credit. A taxpayer shall be allowed a credit

22 against the Personal Property Tax Replacement Income Tax for

23 investment in qualified property.

24 (1) A taxpayer shall be allowed a credit equal to .5%

25 of the basis of qualified property placed in service during

26 the taxable year, provided such property is placed in

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1 service on or after July 1, 1984. There shall be allowed an

2 additional credit equal to .5% of the basis of qualified

3 property placed in service during the taxable year,

4 provided such property is placed in service on or after

5 July 1, 1986, and the taxpayer's base employment within

6 Illinois has increased by 1% or more over the preceding

7 year as determined by the taxpayer's employment records

8 filed with the Illinois Department of Employment Security.

9 Taxpayers who are new to Illinois shall be deemed to have

10 met the 1% growth in base employment for the first year in

11 which they file employment records with the Illinois

12 Department of Employment Security. The provisions added to

13 this Section by Public Act 85-1200 (and restored by Public

14 Act 87-895) shall be construed as declaratory of existing

15 law and not as a new enactment. If, in any year, the

16 increase in base employment within Illinois over the

17 preceding year is less than 1%, the additional credit shall

18 be limited to that percentage times a fraction, the

19 numerator of which is .5% and the denominator of which is

20 1%, but shall not exceed .5%. The investment credit shall

21 not be allowed to the extent that it would reduce a

22 taxpayer's liability in any tax year below zero, nor may

23 any credit for qualified property be allowed for any year

24 other than the year in which the property was placed in

25 service in Illinois. For tax years ending on or after

26 December 31, 1987, and on or before December 31, 1988, the

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1 credit shall be allowed for the tax year in which the

2 property is placed in service, or, if the amount of the

3 credit exceeds the tax liability for that year, whether it

4 exceeds the original liability or the liability as later

5 amended, such excess may be carried forward and applied to

6 the tax liability of the 5 taxable years following the

7 excess credit years if the taxpayer (i) makes investments

8 which cause the creation of a minimum of 2,000 full-time

9 equivalent jobs in Illinois, (ii) is located in an

10 enterprise zone established pursuant to the Illinois

11 Enterprise Zone Act and (iii) is certified by the

12 Department of Commerce and Community Affairs (now

13 Department of Commerce and Economic Opportunity) as

14 complying with the requirements specified in clause (i) and

15 (ii) by July 1, 1986. The Department of Commerce and

16 Community Affairs (now Department of Commerce and Economic

17 Opportunity) shall notify the Department of Revenue of all

18 such certifications immediately. For tax years ending

19 after December 31, 1988, the credit shall be allowed for

20 the tax year in which the property is placed in service,

21 or, if the amount of the credit exceeds the tax liability

22 for that year, whether it exceeds the original liability or

23 the liability as later amended, such excess may be carried

24 forward and applied to the tax liability of the 5 taxable

25 years following the excess credit years. The credit shall

26 be applied to the earliest year for which there is a

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1 liability. If there is credit from more than one tax year

2 that is available to offset a liability, earlier credit

3 shall be applied first.

4 (2) The term "qualified property" means property

5 which:

6 (A) is tangible, whether new or used, including

7 buildings and structural components of buildings and

8 signs that are real property, but not including land or

9 improvements to real property that are not a structural

10 component of a building such as landscaping, sewer

11 lines, local access roads, fencing, parking lots, and

12 other appurtenances;

13 (B) is depreciable pursuant to Section 167 of the

14 Internal Revenue Code, except that "3-year property"

15 as defined in Section 168(c)(2)(A) of that Code is not

16 eligible for the credit provided by this subsection

17 (e);

18 (C) is acquired by purchase as defined in Section

19 179(d) of the Internal Revenue Code;

20 (D) is used in Illinois by a taxpayer who is

21 primarily engaged in manufacturing, or in mining coal

22 or fluorite, or in retailing, or was placed in service

23 on or after July 1, 2006 in a River Edge Redevelopment

24 Zone established pursuant to the River Edge

25 Redevelopment Zone Act; and

26 (E) has not previously been used in Illinois in

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1 such a manner and by such a person as would qualify for

2 the credit provided by this subsection (e) or

3 subsection (f).

4 (3) For purposes of this subsection (e),

5 "manufacturing" means the material staging and production

6 of tangible personal property by procedures commonly

7 regarded as manufacturing, processing, fabrication, or

8 assembling which changes some existing material into new

9 shapes, new qualities, or new combinations. For purposes of

10 this subsection (e) the term "mining" shall have the same

11 meaning as the term "mining" in Section 613(c) of the

12 Internal Revenue Code. For purposes of this subsection (e),

13 the term "retailing" means the sale of tangible personal

14 property for use or consumption and not for resale, or

15 services rendered in conjunction with the sale of tangible

16 personal property for use or consumption and not for

17 resale. For purposes of this subsection (e), "tangible

18 personal property" has the same meaning as when that term

19 is used in the Retailers' Occupation Tax Act, and, for

20 taxable years ending after December 31, 2008, does not

21 include the generation, transmission, or distribution of

22 electricity.

23 (4) The basis of qualified property shall be the basis

24 used to compute the depreciation deduction for federal

25 income tax purposes.

26 (5) If the basis of the property for federal income tax

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1 depreciation purposes is increased after it has been placed

2 in service in Illinois by the taxpayer, the amount of such

3 increase shall be deemed property placed in service on the

4 date of such increase in basis.

5 (6) The term "placed in service" shall have the same

6 meaning as under Section 46 of the Internal Revenue Code.

7 (7) If during any taxable year, any property ceases to

8 be qualified property in the hands of the taxpayer within

9 48 months after being placed in service, or the situs of

10 any qualified property is moved outside Illinois within 48

11 months after being placed in service, the Personal Property

12 Tax Replacement Income Tax for such taxable year shall be

13 increased. Such increase shall be determined by (i)

14 recomputing the investment credit which would have been

15 allowed for the year in which credit for such property was

16 originally allowed by eliminating such property from such

17 computation and, (ii) subtracting such recomputed credit

18 from the amount of credit previously allowed. For the

19 purposes of this paragraph (7), a reduction of the basis of

20 qualified property resulting from a redetermination of the

21 purchase price shall be deemed a disposition of qualified

22 property to the extent of such reduction.

23 (8) Unless the investment credit is extended by law,

24 the basis of qualified property shall not include costs

25 incurred after December 31, 2018, except for costs incurred

26 pursuant to a binding contract entered into on or before

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1 December 31, 2018.

2 (9) Each taxable year ending before December 31, 2000,

3 a partnership may elect to pass through to its partners the

4 credits to which the partnership is entitled under this

5 subsection (e) for the taxable year. A partner may use the

6 credit allocated to him or her under this paragraph only

7 against the tax imposed in subsections (c) and (d) of this

8 Section. If the partnership makes that election, those

9 credits shall be allocated among the partners in the

10 partnership in accordance with the rules set forth in

11 Section 704(b) of the Internal Revenue Code, and the rules

12 promulgated under that Section, and the allocated amount of

13 the credits shall be allowed to the partners for that

14 taxable year. The partnership shall make this election on

15 its Personal Property Tax Replacement Income Tax return for

16 that taxable year. The election to pass through the credits

17 shall be irrevocable.

18 For taxable years ending on or after December 31, 2000,

19 a partner that qualifies its partnership for a subtraction

20 under subparagraph (I) of paragraph (2) of subsection (d)

21 of Section 203 or a shareholder that qualifies a Subchapter

22 S corporation for a subtraction under subparagraph (S) of

23 paragraph (2) of subsection (b) of Section 203 shall be

24 allowed a credit under this subsection (e) equal to its

25 share of the credit earned under this subsection (e) during

26 the taxable year by the partnership or Subchapter S

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1 corporation, determined in accordance with the

2 determination of income and distributive share of income

3 under Sections 702 and 704 and Subchapter S of the Internal

4 Revenue Code. This paragraph is exempt from the provisions

5 of Section 250.

6 (f) Investment credit; Enterprise Zone; River Edge

7 Redevelopment Zone.

8 (1) A taxpayer shall be allowed a credit against the

9 tax imposed by subsections (a) and (b) of this Section for

10 investment in qualified property which is placed in service

11 in an Enterprise Zone created pursuant to the Illinois

12 Enterprise Zone Act or, for property placed in service on

13 or after July 1, 2006, a River Edge Redevelopment Zone

14 established pursuant to the River Edge Redevelopment Zone

15 Act. For partners, shareholders of Subchapter S

16 corporations, and owners of limited liability companies,

17 if the liability company is treated as a partnership for

18 purposes of federal and State income taxation, there shall

19 be allowed a credit under this subsection (f) to be

20 determined in accordance with the determination of income

21 and distributive share of income under Sections 702 and 704

22 and Subchapter S of the Internal Revenue Code. The credit

23 shall be .5% of the basis for such property. The credit

24 shall be available only in the taxable year in which the

25 property is placed in service in the Enterprise Zone or

26 River Edge Redevelopment Zone and shall not be allowed to

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1 the extent that it would reduce a taxpayer's liability for

2 the tax imposed by subsections (a) and (b) of this Section

3 to below zero. For tax years ending on or after December

4 31, 1985, the credit shall be allowed for the tax year in

5 which the property is placed in service, or, if the amount

6 of the credit exceeds the tax liability for that year,

7 whether it exceeds the original liability or the liability

8 as later amended, such excess may be carried forward and

9 applied to the tax liability of the 5 taxable years

10 following the excess credit year. The credit shall be

11 applied to the earliest year for which there is a

12 liability. If there is credit from more than one tax year

13 that is available to offset a liability, the credit

14 accruing first in time shall be applied first.

15 (2) The term qualified property means property which:

16 (A) is tangible, whether new or used, including

17 buildings and structural components of buildings;

18 (B) is depreciable pursuant to Section 167 of the

19 Internal Revenue Code, except that "3-year property"

20 as defined in Section 168(c)(2)(A) of that Code is not

21 eligible for the credit provided by this subsection

22 (f);

23 (C) is acquired by purchase as defined in Section

24 179(d) of the Internal Revenue Code;

25 (D) is used in the Enterprise Zone or River Edge

26 Redevelopment Zone by the taxpayer; and

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1 (E) has not been previously used in Illinois in

2 such a manner and by such a person as would qualify for

3 the credit provided by this subsection (f) or

4 subsection (e).

5 (3) The basis of qualified property shall be the basis

6 used to compute the depreciation deduction for federal

7 income tax purposes.

8 (4) If the basis of the property for federal income tax

9 depreciation purposes is increased after it has been placed

10 in service in the Enterprise Zone or River Edge

11 Redevelopment Zone by the taxpayer, the amount of such

12 increase shall be deemed property placed in service on the

13 date of such increase in basis.

14 (5) The term "placed in service" shall have the same

15 meaning as under Section 46 of the Internal Revenue Code.

16 (6) If during any taxable year, any property ceases to

17 be qualified property in the hands of the taxpayer within

18 48 months after being placed in service, or the situs of

19 any qualified property is moved outside the Enterprise Zone

20 or River Edge Redevelopment Zone within 48 months after

21 being placed in service, the tax imposed under subsections

22 (a) and (b) of this Section for such taxable year shall be

23 increased. Such increase shall be determined by (i)

24 recomputing the investment credit which would have been

25 allowed for the year in which credit for such property was

26 originally allowed by eliminating such property from such

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1 computation, and (ii) subtracting such recomputed credit

2 from the amount of credit previously allowed. For the

3 purposes of this paragraph (6), a reduction of the basis of

4 qualified property resulting from a redetermination of the

5 purchase price shall be deemed a disposition of qualified

6 property to the extent of such reduction.

7 (7) There shall be allowed an additional credit equal

8 to 0.5% of the basis of qualified property placed in

9 service during the taxable year in a River Edge

10 Redevelopment Zone, provided such property is placed in

11 service on or after July 1, 2006, and the taxpayer's base

12 employment within Illinois has increased by 1% or more over

13 the preceding year as determined by the taxpayer's

14 employment records filed with the Illinois Department of

15 Employment Security. Taxpayers who are new to Illinois

16 shall be deemed to have met the 1% growth in base

17 employment for the first year in which they file employment

18 records with the Illinois Department of Employment

19 Security. If, in any year, the increase in base employment

20 within Illinois over the preceding year is less than 1%,

21 the additional credit shall be limited to that percentage

22 times a fraction, the numerator of which is 0.5% and the

23 denominator of which is 1%, but shall not exceed 0.5%.

24 (g) (Blank).

25 (h) Investment credit; High Impact Business.

26 (1) Subject to subsections (b) and (b-5) of Section 5.5

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1 of the Illinois Enterprise Zone Act, a taxpayer shall be

2 allowed a credit against the tax imposed by subsections (a)

3 and (b) of this Section for investment in qualified

4 property which is placed in service by a Department of

5 Commerce and Economic Opportunity designated High Impact

6 Business. The credit shall be .5% of the basis for such

7 property. The credit shall not be available (i) until the

8 minimum investments in qualified property set forth in

9 subdivision (a)(3)(A) of Section 5.5 of the Illinois

10 Enterprise Zone Act have been satisfied or (ii) until the

11 time authorized in subsection (b-5) of the Illinois

12 Enterprise Zone Act for entities designated as High Impact

13 Businesses under subdivisions (a)(3)(B), (a)(3)(C), and

14 (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone

15 Act, and shall not be allowed to the extent that it would

16 reduce a taxpayer's liability for the tax imposed by

17 subsections (a) and (b) of this Section to below zero. The

18 credit applicable to such investments shall be taken in the

19 taxable year in which such investments have been completed.

20 The credit for additional investments beyond the minimum

21 investment by a designated high impact business authorized

22 under subdivision (a)(3)(A) of Section 5.5 of the Illinois

23 Enterprise Zone Act shall be available only in the taxable

24 year in which the property is placed in service and shall

25 not be allowed to the extent that it would reduce a

26 taxpayer's liability for the tax imposed by subsections (a)

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1 and (b) of this Section to below zero. For tax years ending

2 on or after December 31, 1987, the credit shall be allowed

3 for the tax year in which the property is placed in

4 service, or, if the amount of the credit exceeds the tax

5 liability for that year, whether it exceeds the original

6 liability or the liability as later amended, such excess

7 may be carried forward and applied to the tax liability of

8 the 5 taxable years following the excess credit year. The

9 credit shall be applied to the earliest year for which

10 there is a liability. If there is credit from more than one

11 tax year that is available to offset a liability, the

12 credit accruing first in time shall be applied first.

13 Changes made in this subdivision (h)(1) by Public Act

14 88-670 restore changes made by Public Act 85-1182 and

15 reflect existing law.

16 (2) The term qualified property means property which:

17 (A) is tangible, whether new or used, including

18 buildings and structural components of buildings;

19 (B) is depreciable pursuant to Section 167 of the

20 Internal Revenue Code, except that "3-year property"

21 as defined in Section 168(c)(2)(A) of that Code is not

22 eligible for the credit provided by this subsection

23 (h);

24 (C) is acquired by purchase as defined in Section

25 179(d) of the Internal Revenue Code; and

26 (D) is not eligible for the Enterprise Zone

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1 Investment Credit provided by subsection (f) of this

2 Section.

3 (3) The basis of qualified property shall be the basis

4 used to compute the depreciation deduction for federal

5 income tax purposes.

6 (4) If the basis of the property for federal income tax

7 depreciation purposes is increased after it has been placed

8 in service in a federally designated Foreign Trade Zone or

9 Sub-Zone located in Illinois by the taxpayer, the amount of

10 such increase shall be deemed property placed in service on

11 the date of such increase in basis.

12 (5) The term "placed in service" shall have the same

13 meaning as under Section 46 of the Internal Revenue Code.

14 (6) If during any taxable year ending on or before

15 December 31, 1996, any property ceases to be qualified

16 property in the hands of the taxpayer within 48 months

17 after being placed in service, or the situs of any

18 qualified property is moved outside Illinois within 48

19 months after being placed in service, the tax imposed under

20 subsections (a) and (b) of this Section for such taxable

21 year shall be increased. Such increase shall be determined

22 by (i) recomputing the investment credit which would have

23 been allowed for the year in which credit for such property

24 was originally allowed by eliminating such property from

25 such computation, and (ii) subtracting such recomputed

26 credit from the amount of credit previously allowed. For

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1 the purposes of this paragraph (6), a reduction of the

2 basis of qualified property resulting from a

3 redetermination of the purchase price shall be deemed a

4 disposition of qualified property to the extent of such

5 reduction.

6 (7) Beginning with tax years ending after December 31,

7 1996, if a taxpayer qualifies for the credit under this

8 subsection (h) and thereby is granted a tax abatement and

9 the taxpayer relocates its entire facility in violation of

10 the explicit terms and length of the contract under Section

11 18-183 of the Property Tax Code, the tax imposed under

12 subsections (a) and (b) of this Section shall be increased

13 for the taxable year in which the taxpayer relocated its

14 facility by an amount equal to the amount of credit

15 received by the taxpayer under this subsection (h).

16 (i) Credit for Personal Property Tax Replacement Income

17 Tax. For tax years ending prior to December 31, 2003, a credit

18 shall be allowed against the tax imposed by subsections (a) and

19 (b) of this Section for the tax imposed by subsections (c) and

20 (d) of this Section. This credit shall be computed by

21 multiplying the tax imposed by subsections (c) and (d) of this

22 Section by a fraction, the numerator of which is base income

23 allocable to Illinois and the denominator of which is Illinois

24 base income, and further multiplying the product by the tax

25 rate imposed by subsections (a) and (b) of this Section.

26 Any credit earned on or after December 31, 1986 under this

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1 subsection which is unused in the year the credit is computed

2 because it exceeds the tax liability imposed by subsections (a)

3 and (b) for that year (whether it exceeds the original

4 liability or the liability as later amended) may be carried

5 forward and applied to the tax liability imposed by subsections

6 (a) and (b) of the 5 taxable years following the excess credit

7 year, provided that no credit may be carried forward to any

8 year ending on or after December 31, 2003. This credit shall be

9 applied first to the earliest year for which there is a

10 liability. If there is a credit under this subsection from more

11 than one tax year that is available to offset a liability the

12 earliest credit arising under this subsection shall be applied

13 first.

14 If, during any taxable year ending on or after December 31,

15 1986, the tax imposed by subsections (c) and (d) of this

16 Section for which a taxpayer has claimed a credit under this

17 subsection (i) is reduced, the amount of credit for such tax

18 shall also be reduced. Such reduction shall be determined by

19 recomputing the credit to take into account the reduced tax

20 imposed by subsections (c) and (d). If any portion of the

21 reduced amount of credit has been carried to a different

22 taxable year, an amended return shall be filed for such taxable

23 year to reduce the amount of credit claimed.

24 (j) Training expense credit. Beginning with tax years

25 ending on or after December 31, 1986 and prior to December 31,

26 2003, a taxpayer shall be allowed a credit against the tax

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1 imposed by subsections (a) and (b) under this Section for all

2 amounts paid or accrued, on behalf of all persons employed by

3 the taxpayer in Illinois or Illinois residents employed outside

4 of Illinois by a taxpayer, for educational or vocational

5 training in semi-technical or technical fields or semi-skilled

6 or skilled fields, which were deducted from gross income in the

7 computation of taxable income. The credit against the tax

8 imposed by subsections (a) and (b) shall be 1.6% of such

9 training expenses. For partners, shareholders of subchapter S

10 corporations, and owners of limited liability companies, if the

11 liability company is treated as a partnership for purposes of

12 federal and State income taxation, there shall be allowed a

13 credit under this subsection (j) to be determined in accordance

14 with the determination of income and distributive share of

15 income under Sections 702 and 704 and subchapter S of the

16 Internal Revenue Code.

17 Any credit allowed under this subsection which is unused in

18 the year the credit is earned may be carried forward to each of

19 the 5 taxable years following the year for which the credit is

20 first computed until it is used. This credit shall be applied

21 first to the earliest year for which there is a liability. If

22 there is a credit under this subsection from more than one tax

23 year that is available to offset a liability the earliest

24 credit arising under this subsection shall be applied first. No

25 carryforward credit may be claimed in any tax year ending on or

26 after December 31, 2003.

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1 (k) Research and development credit. For tax years ending

2 after July 1, 1990 and prior to December 31, 2003, and

3 beginning again for tax years ending on or after December 31,

4 2004~~, and ending prior to January 1, 2016,~~a taxpayer shall be

5 allowed a credit against the tax imposed by subsections (a) and

6 (b) of this Section for increasing research activities in this

7 State. The credit allowed against the tax imposed by

8 subsections (a) and (b) shall be equal to 6 1/2% of the

9 qualifying expenditures for increasing research activities in

10 this State. For partners, shareholders of subchapter S

11 corporations, and owners of limited liability companies, if the

12 liability company is treated as a partnership for purposes of

13 federal and State income taxation, there shall be allowed a

14 credit under this subsection to be determined in accordance

15 with the determination of income and distributive share of

16 income under Sections 702 and 704 and subchapter S of the

17 Internal Revenue Code.

18 For purposes of this subsection, "qualifying expenditures"

19 means the qualifying expenditures as defined for the federal

20 credit for increasing research activities which would be

21 allowable under Section 41 of the Internal Revenue Code and

22 which are conducted in this State, "qualifying expenditures for

23 increasing research activities in this State" means the excess

24 of qualifying expenditures for the taxable year in which

25 incurred over qualifying expenditures for the base period,

26 "qualifying expenditures for the base period" means(i) for tax

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1 years ending prior to December 31, 2017, the average of the

2 qualifying expenditures for each year in the base period; and

3 (2) for tax years ending on or after December 31, 2017, 50% of

4 the average of the qualifying expenditures for each year in the

5 base period, and "base period" means the 3 taxable years

6 immediately preceding the taxable year for which the

7 determination is being made.

8 Any credit in excess of the tax liability for the taxable

9 year may be carried forward. A taxpayer may elect to have the

10 unused credit shown on its final completed return carried over

11 as a credit against the tax liability for the following 5

12 taxable years or until it has been fully used, whichever occurs

13 first; provided that no credit earned in a tax year ending

14 prior to December 31, 2003 may be carried forward to any year

15 ending on or after December 31, 2003.

16 If an unused credit is carried forward to a given year from

17 2 or more earlier years, that credit arising in the earliest

18 year will be applied first against the tax liability for the

19 given year. If a tax liability for the given year still

20 remains, the credit from the next earliest year will then be

21 applied, and so on, until all credits have been used or no tax

22 liability for the given year remains. Any remaining unused

23 credit or credits then will be carried forward to the next

24 following year in which a tax liability is incurred, except

25 that no credit can be carried forward to a year which is more

26 than 5 years after the year in which the expense for which the

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1 credit is given was incurred.

2 No inference shall be drawn from this amendatory Act of the

3 91st General Assembly in construing this Section for taxable

4 years beginning before January 1, 1999.

5 This subsection (k) is exempt from the provisions of

6 Section 250.

7 It is the intent of the General Assembly that the research

8 and development credit under this subsection (k) shall apply

9 continuously for all tax years ending on or after December 31,

10 2004, including, but not limited to, the period beginning on

11 January 1, 2016 and ending on the effective date of this

12 amendatory Act of the 100th General Assembly. All actions taken

13 in reliance on the continuation of the credit under this

14 subsection (k) by any taxpayer are hereby validated.

15 (l) Environmental Remediation Tax Credit.

16 (i) For tax years ending after December 31, 1997 and on

17 or before December 31, 2001, a taxpayer shall be allowed a

18 credit against the tax imposed by subsections (a) and (b)

19 of this Section for certain amounts paid for unreimbursed

20 eligible remediation costs, as specified in this

21 subsection. For purposes of this Section, "unreimbursed

22 eligible remediation costs" means costs approved by the

23 Illinois Environmental Protection Agency ("Agency") under

24 Section 58.14 of the Environmental Protection Act that were

25 paid in performing environmental remediation at a site for

26 which a No Further Remediation Letter was issued by the

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1 Agency and recorded under Section 58.10 of the

2 Environmental Protection Act. The credit must be claimed

3 for the taxable year in which Agency approval of the

4 eligible remediation costs is granted. The credit is not

5 available to any taxpayer if the taxpayer or any related

6 party caused or contributed to, in any material respect, a

7 release of regulated substances on, in, or under the site

8 that was identified and addressed by the remedial action

9 pursuant to the Site Remediation Program of the

10 Environmental Protection Act. After the Pollution Control

11 Board rules are adopted pursuant to the Illinois

12 Administrative Procedure Act for the administration and

13 enforcement of Section 58.9 of the Environmental

14 Protection Act, determinations as to credit availability

15 for purposes of this Section shall be made consistent with

16 those rules. For purposes of this Section, "taxpayer"

17 includes a person whose tax attributes the taxpayer has

18 succeeded to under Section 381 of the Internal Revenue Code

19 and "related party" includes the persons disallowed a

20 deduction for losses by paragraphs (b), (c), and (f)(1) of

21 Section 267 of the Internal Revenue Code by virtue of being

22 a related taxpayer, as well as any of its partners. The

23 credit allowed against the tax imposed by subsections (a)

24 and (b) shall be equal to 25% of the unreimbursed eligible

25 remediation costs in excess of $100,000 per site, except

26 that the $100,000 threshold shall not apply to any site

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1 contained in an enterprise zone as determined by the

2 Department of Commerce and Community Affairs (now

3 Department of Commerce and Economic Opportunity). The

4 total credit allowed shall not exceed $40,000 per year with

5 a maximum total of $150,000 per site. For partners and

6 shareholders of subchapter S corporations, there shall be

7 allowed a credit under this subsection to be determined in

8 accordance with the determination of income and

9 distributive share of income under Sections 702 and 704 and

10 subchapter S of the Internal Revenue Code.

11 (ii) A credit allowed under this subsection that is

12 unused in the year the credit is earned may be carried

13 forward to each of the 5 taxable years following the year

14 for which the credit is first earned until it is used. The

15 term "unused credit" does not include any amounts of

16 unreimbursed eligible remediation costs in excess of the

17 maximum credit per site authorized under paragraph (i).

18 This credit shall be applied first to the earliest year for

19 which there is a liability. If there is a credit under this

20 subsection from more than one tax year that is available to

21 offset a liability, the earliest credit arising under this

22 subsection shall be applied first. A credit allowed under

23 this subsection may be sold to a buyer as part of a sale of

24 all or part of the remediation site for which the credit

25 was granted. The purchaser of a remediation site and the

26 tax credit shall succeed to the unused credit and remaining

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1 carry-forward period of the seller. To perfect the

2 transfer, the assignor shall record the transfer in the

3 chain of title for the site and provide written notice to

4 the Director of the Illinois Department of Revenue of the

5 assignor's intent to sell the remediation site and the

6 amount of the tax credit to be transferred as a portion of

7 the sale. In no event may a credit be transferred to any

8 taxpayer if the taxpayer or a related party would not be

9 eligible under the provisions of subsection (i).

10 (iii) For purposes of this Section, the term "site"

11 shall have the same meaning as under Section 58.2 of the

12 Environmental Protection Act.

13 (m) Education expense credit. Beginning with tax years

14 ending after December 31, 1999, a taxpayer who is the custodian

15 of one or more qualifying pupils shall be allowed a credit

16 against the tax imposed by subsections (a) and (b) of this

17 Section for qualified education expenses incurred on behalf of

18 the qualifying pupils. The credit shall be equal to 25% of

19 qualified education expenses, but in no event may the total

20 credit under this subsection claimed by a family that is the

21 custodian of qualifying pupils exceed (i) $500 for tax years

22 ending prior to December 31, 2017, and (ii) $750 for tax years

23 ending on or after December 31, 2017. In no event shall a

24 credit under this subsection reduce the taxpayer's liability

25 under this Act to less than zero.Notwithstanding any other

26 provision of law, for taxable years beginning on or after

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1 January 1, 2018, no taxpayer may claim a credit under this

2 subsection (m) if the taxpayer's adjusted gross income for the

3 taxable year exceeds (i) $500,000, in the case of spouses

4 filing a joint federal tax return or (ii) $250,000, in the case

5 of all other taxpayers. This subsection is exempt from the

6 provisions of Section 250 of this Act.

7 For purposes of this subsection:

8 "Qualifying pupils" means individuals who (i) are

9 residents of the State of Illinois, (ii) are under the age of

10 21 at the close of the school year for which a credit is

11 sought, and (iii) during the school year for which a credit is

12 sought were full-time pupils enrolled in a kindergarten through

13 twelfth grade education program at any school, as defined in

14 this subsection.

15 "Qualified education expense" means the amount incurred on

16 behalf of a qualifying pupil in excess of $250 for tuition,

17 book fees, and lab fees at the school in which the pupil is

18 enrolled during the regular school year.

19 "School" means any public or nonpublic elementary or

20 secondary school in Illinois that is in compliance with Title

21 VI of the Civil Rights Act of 1964 and attendance at which

22 satisfies the requirements of Section 26-1 of the School Code,

23 except that nothing shall be construed to require a child to

24 attend any particular public or nonpublic school to qualify for

25 the credit under this Section.

26 "Custodian" means, with respect to qualifying pupils, an

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1 Illinois resident who is a parent, the parents, a legal

2 guardian, or the legal guardians of the qualifying pupils.

3 (n) River Edge Redevelopment Zone site remediation tax

4 credit.

5 (i) For tax years ending on or after December 31, 2006,

6 a taxpayer shall be allowed a credit against the tax

7 imposed by subsections (a) and (b) of this Section for

8 certain amounts paid for unreimbursed eligible remediation

9 costs, as specified in this subsection. For purposes of

10 this Section, "unreimbursed eligible remediation costs"

11 means costs approved by the Illinois Environmental

12 Protection Agency ("Agency") under Section 58.14a of the

13 Environmental Protection Act that were paid in performing

14 environmental remediation at a site within a River Edge

15 Redevelopment Zone for which a No Further Remediation

16 Letter was issued by the Agency and recorded under Section

17 58.10 of the Environmental Protection Act. The credit must

18 be claimed for the taxable year in which Agency approval of

19 the eligible remediation costs is granted. The credit is

20 not available to any taxpayer if the taxpayer or any

21 related party caused or contributed to, in any material

22 respect, a release of regulated substances on, in, or under

23 the site that was identified and addressed by the remedial

24 action pursuant to the Site Remediation Program of the

25 Environmental Protection Act. Determinations as to credit

26 availability for purposes of this Section shall be made

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1 consistent with rules adopted by the Pollution Control

2 Board pursuant to the Illinois Administrative Procedure

3 Act for the administration and enforcement of Section 58.9

4 of the Environmental Protection Act. For purposes of this

5 Section, "taxpayer" includes a person whose tax attributes

6 the taxpayer has succeeded to under Section 381 of the

7 Internal Revenue Code and "related party" includes the

8 persons disallowed a deduction for losses by paragraphs

9 (b), (c), and (f)(1) of Section 267 of the Internal Revenue

10 Code by virtue of being a related taxpayer, as well as any

11 of its partners. The credit allowed against the tax imposed

12 by subsections (a) and (b) shall be equal to 25% of the

13 unreimbursed eligible remediation costs in excess of

14 $100,000 per site.

15 (ii) A credit allowed under this subsection that is

16 unused in the year the credit is earned may be carried

17 forward to each of the 5 taxable years following the year

18 for which the credit is first earned until it is used. This

19 credit shall be applied first to the earliest year for

20 which there is a liability. If there is a credit under this

21 subsection from more than one tax year that is available to

22 offset a liability, the earliest credit arising under this

23 subsection shall be applied first. A credit allowed under

24 this subsection may be sold to a buyer as part of a sale of

25 all or part of the remediation site for which the credit

26 was granted. The purchaser of a remediation site and the

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1 tax credit shall succeed to the unused credit and remaining

2 carry-forward period of the seller. To perfect the

3 transfer, the assignor shall record the transfer in the

4 chain of title for the site and provide written notice to

5 the Director of the Illinois Department of Revenue of the

6 assignor's intent to sell the remediation site and the

7 amount of the tax credit to be transferred as a portion of

8 the sale. In no event may a credit be transferred to any

9 taxpayer if the taxpayer or a related party would not be

10 eligible under the provisions of subsection (i).

11 (iii) For purposes of this Section, the term "site"

12 shall have the same meaning as under Section 58.2 of the

13 Environmental Protection Act.

14 (o) For each of taxable years during the Compassionate Use

15 of Medical Cannabis Pilot Program, a surcharge is imposed on

16 all taxpayers on income arising from the sale or exchange of

17 capital assets, depreciable business property, real property

18 used in the trade or business, and Section 197 intangibles of

19 an organization registrant under the Compassionate Use of

20 Medical Cannabis Pilot Program Act. The amount of the surcharge

21 is equal to the amount of federal income tax liability for the

22 taxable year attributable to those sales and exchanges. The

23 surcharge imposed does not apply if:

24 (1) the medical cannabis cultivation center

25 registration, medical cannabis dispensary registration, or

26 the property of a registration is transferred as a result

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1 of any of the following:

2 (A) bankruptcy, a receivership, or a debt

3 adjustment initiated by or against the initial

4 registration or the substantial owners of the initial

5 registration;

6 (B) cancellation, revocation, or termination of

7 any registration by the Illinois Department of Public

8 Health;

9 (C) a determination by the Illinois Department of

10 Public Health that transfer of the registration is in

11 the best interests of Illinois qualifying patients as

12 defined by the Compassionate Use of Medical Cannabis

13 Pilot Program Act;

14 (D) the death of an owner of the equity interest in

15 a registrant;

16 (E) the acquisition of a controlling interest in

17 the stock or substantially all of the assets of a

18 publicly traded company;

19 (F) a transfer by a parent company to a wholly

20 owned subsidiary; or

21 (G) the transfer or sale to or by one person to

22 another person where both persons were initial owners

23 of the registration when the registration was issued;

24 or

25 (2) the cannabis cultivation center registration,

26 medical cannabis dispensary registration, or the

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1 controlling interest in a registrant's property is

2 transferred in a transaction to lineal descendants in which

3 no gain or loss is recognized or as a result of a

4 transaction in accordance with Section 351 of the Internal

5 Revenue Code in which no gain or loss is recognized.

6 (Source: P.A. 97-2, eff. 5-6-11; 97-636, eff. 6-1-12; 97-905,

7 eff. 8-7-12; 98-109, eff. 7-25-13; 98-122, eff. 1-1-14; 98-756,

8 eff. 7-16-14.)

9 (35 ILCS 5/203) (from Ch. 120, par. 2-203)

10 Sec. 203. Base income defined.

11 (a) Individuals.

12 (1) In general. In the case of an individual, base

13 income means an amount equal to the taxpayer's adjusted

14 gross income for the taxable year as modified by paragraph

15 (2).

16 (2) Modifications. The adjusted gross income referred

17 to in paragraph (1) shall be modified by adding thereto the

18 sum of the following amounts:

19 (A) An amount equal to all amounts paid or accrued

20 to the taxpayer as interest or dividends during the

21 taxable year to the extent excluded from gross income

22 in the computation of adjusted gross income, except

23 stock dividends of qualified public utilities

24 described in Section 305(e) of the Internal Revenue

25 Code;

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1 (B) An amount equal to the amount of tax imposed by

2 this Act to the extent deducted from gross income in

3 the computation of adjusted gross income for the

4 taxable year;

5 (C) An amount equal to the amount received during

6 the taxable year as a recovery or refund of real

7 property taxes paid with respect to the taxpayer's

8 principal residence under the Revenue Act of 1939 and

9 for which a deduction was previously taken under

10 subparagraph (L) of this paragraph (2) prior to July 1,

11 1991, the retrospective application date of Article 4

12 of Public Act 87-17. In the case of multi-unit or

13 multi-use structures and farm dwellings, the taxes on

14 the taxpayer's principal residence shall be that

15 portion of the total taxes for the entire property

16 which is attributable to such principal residence;

17 (D) An amount equal to the amount of the capital

18 gain deduction allowable under the Internal Revenue

19 Code, to the extent deducted from gross income in the

20 computation of adjusted gross income;

21 (D-5) An amount, to the extent not included in

22 adjusted gross income, equal to the amount of money

23 withdrawn by the taxpayer in the taxable year from a

24 medical care savings account and the interest earned on

25 the account in the taxable year of a withdrawal

26 pursuant to subsection (b) of Section 20 of the Medical

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1 Care Savings Account Act or subsection (b) of Section

2 20 of the Medical Care Savings Account Act of 2000;

3 (D-10) For taxable years ending after December 31,

4 1997, an amount equal to any eligible remediation costs

5 that the individual deducted in computing adjusted

6 gross income and for which the individual claims a

7 credit under subsection (l) of Section 201;

8 (D-15) For taxable years 2001 and thereafter, an

9 amount equal to the bonus depreciation deduction taken

10 on the taxpayer's federal income tax return for the

11 taxable year under subsection (k) of Section 168 of the

12 Internal Revenue Code;

13 (D-16) If the taxpayer sells, transfers, abandons,

14 or otherwise disposes of property for which the

15 taxpayer was required in any taxable year to make an

16 addition modification under subparagraph (D-15), then

17 an amount equal to the aggregate amount of the

18 deductions taken in all taxable years under

19 subparagraph (Z) with respect to that property.

20 If the taxpayer continues to own property through

21 the last day of the last tax year for which the

22 taxpayer may claim a depreciation deduction for

23 federal income tax purposes and for which the taxpayer

24 was allowed in any taxable year to make a subtraction

25 modification under subparagraph (Z), then an amount

26 equal to that subtraction modification.

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1 The taxpayer is required to make the addition

2 modification under this subparagraph only once with

3 respect to any one piece of property;

4 (D-17) An amount equal to the amount otherwise

5 allowed as a deduction in computing base income for

6 interest paid, accrued, or incurred, directly or

7 indirectly, (i) for taxable years ending on or after

8 December 31, 2004, to a foreign person who would be a

9 member of the same unitary business group but for the

10 fact that foreign person's business activity outside

11 the United States is 80% or more of the foreign

12 person's total business activity and (ii) for taxable

13 years ending on or after December 31, 2008, to a person

14 who would be a member of the same unitary business

15 group but for the fact that the person is prohibited

16 under Section 1501(a)(27) from being included in the

17 unitary business group because he or she is ordinarily

18 required to apportion business income under different

19 subsections of Section 304. The addition modification

20 required by this subparagraph shall be reduced to the

21 extent that dividends were included in base income of

22 the unitary group for the same taxable year and

23 received by the taxpayer or by a member of the

24 taxpayer's unitary business group (including amounts

25 included in gross income under Sections 951 through 964

26 of the Internal Revenue Code and amounts included in

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LRB100 06347 HLH 26556 a

1 gross income under Section 78 of the Internal Revenue

2 Code) with respect to the stock of the same person to

3 whom the interest was paid, accrued, or incurred.

4 This paragraph shall not apply to the following:

5 (i) an item of interest paid, accrued, or

6 incurred, directly or indirectly, to a person who

7 is subject in a foreign country or state, other

8 than a state which requires mandatory unitary

9 reporting, to a tax on or measured by net income

10 with respect to such interest; or

11 (ii) an item of interest paid, accrued, or

12 incurred, directly or indirectly, to a person if

13 the taxpayer can establish, based on a

14 preponderance of the evidence, both of the

15 following:

16 (a) the person, during the same taxable

17 year, paid, accrued, or incurred, the interest

18 to a person that is not a related member, and

19 (b) the transaction giving rise to the

20 interest expense between the taxpayer and the

21 person did not have as a principal purpose the

22 avoidance of Illinois income tax, and is paid

23 pursuant to a contract or agreement that

24 reflects an arm's-length interest rate and

25 terms; or

26 (iii) the taxpayer can establish, based on

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1 clear and convincing evidence, that the interest

2 paid, accrued, or incurred relates to a contract or

3 agreement entered into at arm's-length rates and

4 terms and the principal purpose for the payment is

5 not federal or Illinois tax avoidance; or

6 (iv) an item of interest paid, accrued, or

7 incurred, directly or indirectly, to a person if

8 the taxpayer establishes by clear and convincing

9 evidence that the adjustments are unreasonable; or

10 if the taxpayer and the Director agree in writing

11 to the application or use of an alternative method

12 of apportionment under Section 304(f).

13 Nothing in this subsection shall preclude the

14 Director from making any other adjustment

15 otherwise allowed under Section 404 of this Act for

16 any tax year beginning after the effective date of

17 this amendment provided such adjustment is made

18 pursuant to regulation adopted by the Department

19 and such regulations provide methods and standards

20 by which the Department will utilize its authority

21 under Section 404 of this Act;

22 (D-18) An amount equal to the amount of intangible

23 expenses and costs otherwise allowed as a deduction in

24 computing base income, and that were paid, accrued, or

25 incurred, directly or indirectly, (i) for taxable

26 years ending on or after December 31, 2004, to a

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LRB100 06347 HLH 26556 a

1 foreign person who would be a member of the same

2 unitary business group but for the fact that the

3 foreign person's business activity outside the United

4 States is 80% or more of that person's total business

5 activity and (ii) for taxable years ending on or after

6 December 31, 2008, to a person who would be a member of

7 the same unitary business group but for the fact that

8 the person is prohibited under Section 1501(a)(27)

9 from being included in the unitary business group

10 because he or she is ordinarily required to apportion

11 business income under different subsections of Section

12 304. The addition modification required by this

13 subparagraph shall be reduced to the extent that

14 dividends were included in base income of the unitary

15 group for the same taxable year and received by the

16 taxpayer or by a member of the taxpayer's unitary

17 business group (including amounts included in gross

18 income under Sections 951 through 964 of the Internal

19 Revenue Code and amounts included in gross income under

20 Section 78 of the Internal Revenue Code) with respect

21 to the stock of the same person to whom the intangible

22 expenses and costs were directly or indirectly paid,

23 incurred, or accrued. The preceding sentence does not

24 apply to the extent that the same dividends caused a

25 reduction to the addition modification required under

26 Section 203(a)(2)(D-17) of this Act. As used in this

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1 subparagraph, the term "intangible expenses and costs"

2 includes (1) expenses, losses, and costs for, or

3 related to, the direct or indirect acquisition, use,

4 maintenance or management, ownership, sale, exchange,

5 or any other disposition of intangible property; (2)

6 losses incurred, directly or indirectly, from

7 factoring transactions or discounting transactions;

8 (3) royalty, patent, technical, and copyright fees;

9 (4) licensing fees; and (5) other similar expenses and

10 costs. For purposes of this subparagraph, "intangible

11 property" includes patents, patent applications, trade

12 names, trademarks, service marks, copyrights, mask

13 works, trade secrets, and similar types of intangible

14 assets.

15 This paragraph shall not apply to the following:

16 (i) any item of intangible expenses or costs

17 paid, accrued, or incurred, directly or

18 indirectly, from a transaction with a person who is

19 subject in a foreign country or state, other than a

20 state which requires mandatory unitary reporting,

21 to a tax on or measured by net income with respect

22 to such item; or

23 (ii) any item of intangible expense or cost

24 paid, accrued, or incurred, directly or

25 indirectly, if the taxpayer can establish, based

26 on a preponderance of the evidence, both of the

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LRB100 06347 HLH 26556 a

1 following:

2 (a) the person during the same taxable

3 year paid, accrued, or incurred, the

4 intangible expense or cost to a person that is

5 not a related member, and

6 (b) the transaction giving rise to the

7 intangible expense or cost between the

8 taxpayer and the person did not have as a

9 principal purpose the avoidance of Illinois

10 income tax, and is paid pursuant to a contract

11 or agreement that reflects arm's-length terms;

12 or

13 (iii) any item of intangible expense or cost

14 paid, accrued, or incurred, directly or

15 indirectly, from a transaction with a person if the

16 taxpayer establishes by clear and convincing

17 evidence, that the adjustments are unreasonable;

18 or if the taxpayer and the Director agree in

19 writing to the application or use of an alternative

20 method of apportionment under Section 304(f);

21 Nothing in this subsection shall preclude the

22 Director from making any other adjustment

23 otherwise allowed under Section 404 of this Act for

24 any tax year beginning after the effective date of

25 this amendment provided such adjustment is made

26 pursuant to regulation adopted by the Department

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1 and such regulations provide methods and standards

2 by which the Department will utilize its authority

3 under Section 404 of this Act;

4 (D-19) For taxable years ending on or after

5 December 31, 2008, an amount equal to the amount of

6 insurance premium expenses and costs otherwise allowed

7 as a deduction in computing base income, and that were

8 paid, accrued, or incurred, directly or indirectly, to

9 a person who would be a member of the same unitary

10 business group but for the fact that the person is

11 prohibited under Section 1501(a)(27) from being

12 included in the unitary business group because he or

13 she is ordinarily required to apportion business

14 income under different subsections of Section 304. The

15 addition modification required by this subparagraph

16 shall be reduced to the extent that dividends were

17 included in base income of the unitary group for the

18 same taxable year and received by the taxpayer or by a

19 member of the taxpayer's unitary business group

20 (including amounts included in gross income under

21 Sections 951 through 964 of the Internal Revenue Code

22 and amounts included in gross income under Section 78

23 of the Internal Revenue Code) with respect to the stock

24 of the same person to whom the premiums and costs were

25 directly or indirectly paid, incurred, or accrued. The

26 preceding sentence does not apply to the extent that

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LRB100 06347 HLH 26556 a

1 the same dividends caused a reduction to the addition

2 modification required under Section 203(a)(2)(D-17) or

3 Section 203(a)(2)(D-18) of this Act.

4 (D-20) For taxable years beginning on or after

5 January 1, 2002 and ending on or before December 31,

6 2006, in the case of a distribution from a qualified

7 tuition program under Section 529 of the Internal

8 Revenue Code, other than (i) a distribution from a

9 College Savings Pool created under Section 16.5 of the

10 State Treasurer Act or (ii) a distribution from the

11 Illinois Prepaid Tuition Trust Fund, an amount equal to

12 the amount excluded from gross income under Section

13 529(c)(3)(B). For taxable years beginning on or after

14 January 1, 2007, in the case of a distribution from a

15 qualified tuition program under Section 529 of the

16 Internal Revenue Code, other than (i) a distribution

17 from a College Savings Pool created under Section 16.5

18 of the State Treasurer Act, (ii) a distribution from

19 the Illinois Prepaid Tuition Trust Fund, or (iii) a

20 distribution from a qualified tuition program under

21 Section 529 of the Internal Revenue Code that (I)

22 adopts and determines that its offering materials

23 comply with the College Savings Plans Network's

24 disclosure principles and (II) has made reasonable

25 efforts to inform in-state residents of the existence

26 of in-state qualified tuition programs by informing

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1 Illinois residents directly and, where applicable, to

2 inform financial intermediaries distributing the

3 program to inform in-state residents of the existence

4 of in-state qualified tuition programs at least

5 annually, an amount equal to the amount excluded from

6 gross income under Section 529(c)(3)(B).

7 For the purposes of this subparagraph (D-20), a

8 qualified tuition program has made reasonable efforts

9 if it makes disclosures (which may use the term

10 "in-state program" or "in-state plan" and need not

11 specifically refer to Illinois or its qualified

12 programs by name) (i) directly to prospective

13 participants in its offering materials or makes a

14 public disclosure, such as a website posting; and (ii)

15 where applicable, to intermediaries selling the

16 out-of-state program in the same manner that the

17 out-of-state program distributes its offering

18 materials;

19 (D-21) For taxable years beginning on or after

20 January 1, 2007, in the case of transfer of moneys from

21 a qualified tuition program under Section 529 of the

22 Internal Revenue Code that is administered by the State

23 to an out-of-state program, an amount equal to the

24 amount of moneys previously deducted from base income

25 under subsection (a)(2)(Y) of this Section;

26 (D-22) For taxable years beginning on or after

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LRB100 06347 HLH 26556 a

1 January 1, 2009, in the case of a nonqualified

2 withdrawal or refund of moneys from a qualified tuition

3 program under Section 529 of the Internal Revenue Code

4 administered by the State that is not used for

5 qualified expenses at an eligible education

6 institution, an amount equal to the contribution

7 component of the nonqualified withdrawal or refund

8 that was previously deducted from base income under

9 subsection (a)(2)(y) of this Section, provided that

10 the withdrawal or refund did not result from the

11 beneficiary's death or disability;

12 (D-23) An amount equal to the credit allowable to

13 the taxpayer under Section 218(a) of this Act,

14 determined without regard to Section 218(c) of this

15 Act;

16 (D-24) For taxable years beginning on or after

17 January 1, 2017, an amount equal to the deduction

18 allowed under Section 199 of the Internal Revenue Code

19 for the taxable year;

20 and by deducting from the total so obtained the sum of the

21 following amounts:

22 (E) For taxable years ending before December 31,

23 2001, any amount included in such total in respect of

24 any compensation (including but not limited to any

25 compensation paid or accrued to a serviceman while a

26 prisoner of war or missing in action) paid to a

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LRB100 06347 HLH 26556 a

1 resident by reason of being on active duty in the Armed

2 Forces of the United States and in respect of any

3 compensation paid or accrued to a resident who as a

4 governmental employee was a prisoner of war or missing

5 in action, and in respect of any compensation paid to a

6 resident in 1971 or thereafter for annual training

7 performed pursuant to Sections 502 and 503, Title 32,

8 United States Code as a member of the Illinois National

9 Guard or, beginning with taxable years ending on or

10 after December 31, 2007, the National Guard of any

11 other state. For taxable years ending on or after

12 December 31, 2001, any amount included in such total in

13 respect of any compensation (including but not limited

14 to any compensation paid or accrued to a serviceman

15 while a prisoner of war or missing in action) paid to a

16 resident by reason of being a member of any component

17 of the Armed Forces of the United States and in respect

18 of any compensation paid or accrued to a resident who

19 as a governmental employee was a prisoner of war or

20 missing in action, and in respect of any compensation

21 paid to a resident in 2001 or thereafter by reason of

22 being a member of the Illinois National Guard or,

23 beginning with taxable years ending on or after

24 December 31, 2007, the National Guard of any other

25 state. The provisions of this subparagraph (E) are

26 exempt from the provisions of Section 250;

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LRB100 06347 HLH 26556 a

1 (F) An amount equal to all amounts included in such

2 total pursuant to the provisions of Sections 402(a),

3 402(c), 403(a), 403(b), 406(a), 407(a), and 408 of the

4 Internal Revenue Code, or included in such total as

5 distributions under the provisions of any retirement

6 or disability plan for employees of any governmental

7 agency or unit, or retirement payments to retired

8 partners, which payments are excluded in computing net

9 earnings from self employment by Section 1402 of the

10 Internal Revenue Code and regulations adopted pursuant

11 thereto;

12 (G) The valuation limitation amount;

13 (H) An amount equal to the amount of any tax

14 imposed by this Act which was refunded to the taxpayer

15 and included in such total for the taxable year;

16 (I) An amount equal to all amounts included in such

17 total pursuant to the provisions of Section 111 of the

18 Internal Revenue Code as a recovery of items previously

19 deducted from adjusted gross income in the computation

20 of taxable income;

21 (J) An amount equal to those dividends included in

22 such total which were paid by a corporation which

23 conducts business operations in a River Edge

24 Redevelopment Zone or zones created under the River

25 Edge Redevelopment Zone Act, and conducts

26 substantially all of its operations in a River Edge

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LRB100 06347 HLH 26556 a

1 Redevelopment Zone or zones. This subparagraph (J) is

2 exempt from the provisions of Section 250;

3 (K) An amount equal to those dividends included in

4 such total that were paid by a corporation that

5 conducts business operations in a federally designated

6 Foreign Trade Zone or Sub-Zone and that is designated a

7 High Impact Business located in Illinois; provided

8 that dividends eligible for the deduction provided in

9 subparagraph (J) of paragraph (2) of this subsection

10 shall not be eligible for the deduction provided under

11 this subparagraph (K);

12 (L) For taxable years ending after December 31,

13 1983, an amount equal to all social security benefits

14 and railroad retirement benefits included in such

15 total pursuant to Sections 72(r) and 86 of the Internal

16 Revenue Code;

17 (M) With the exception of any amounts subtracted

18 under subparagraph (N), an amount equal to the sum of

19 all amounts disallowed as deductions by (i) Sections

20 171(a) (2), and 265(2) of the Internal Revenue Code,

21 and all amounts of expenses allocable to interest and

22 disallowed as deductions by Section 265(1) of the

23 Internal Revenue Code; and (ii) for taxable years

24 ending on or after August 13, 1999, Sections 171(a)(2),

25 265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue

26 Code, plus, for taxable years ending on or after

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1 December 31, 2011, Section 45G(e)(3) of the Internal

2 Revenue Code and, for taxable years ending on or after

3 December 31, 2008, any amount included in gross income

4 under Section 87 of the Internal Revenue Code; the

5 provisions of this subparagraph are exempt from the

6 provisions of Section 250;

7 (N) An amount equal to all amounts included in such

8 total which are exempt from taxation by this State

9 either by reason of its statutes or Constitution or by

10 reason of the Constitution, treaties or statutes of the

11 United States; provided that, in the case of any

12 statute of this State that exempts income derived from

13 bonds or other obligations from the tax imposed under

14 this Act, the amount exempted shall be the interest net

15 of bond premium amortization;

16 (O) An amount equal to any contribution made to a

17 job training project established pursuant to the Tax

18 Increment Allocation Redevelopment Act;

19 (P) An amount equal to the amount of the deduction

20 used to compute the federal income tax credit for

21 restoration of substantial amounts held under claim of

22 right for the taxable year pursuant to Section 1341 of

23 the Internal Revenue Code or of any itemized deduction

24 taken from adjusted gross income in the computation of

25 taxable income for restoration of substantial amounts

26 held under claim of right for the taxable year;

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LRB100 06347 HLH 26556 a

1 (Q) An amount equal to any amounts included in such

2 total, received by the taxpayer as an acceleration in

3 the payment of life, endowment or annuity benefits in

4 advance of the time they would otherwise be payable as

5 an indemnity for a terminal illness;

6 (R) An amount equal to the amount of any federal or

7 State bonus paid to veterans of the Persian Gulf War;

8 (S) An amount, to the extent included in adjusted

9 gross income, equal to the amount of a contribution

10 made in the taxable year on behalf of the taxpayer to a

11 medical care savings account established under the

12 Medical Care Savings Account Act or the Medical Care

13 Savings Account Act of 2000 to the extent the

14 contribution is accepted by the account administrator

15 as provided in that Act;

16 (T) An amount, to the extent included in adjusted

17 gross income, equal to the amount of interest earned in

18 the taxable year on a medical care savings account

19 established under the Medical Care Savings Account Act

20 or the Medical Care Savings Account Act of 2000 on

21 behalf of the taxpayer, other than interest added

22 pursuant to item (D-5) of this paragraph (2);

23 (U) For one taxable year beginning on or after

24 January 1, 1994, an amount equal to the total amount of

25 tax imposed and paid under subsections (a) and (b) of

26 Section 201 of this Act on grant amounts received by

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LRB100 06347 HLH 26556 a

1 the taxpayer under the Nursing Home Grant Assistance

2 Act during the taxpayer's taxable years 1992 and 1993;

3 (V) Beginning with tax years ending on or after

4 December 31, 1995 and ending with tax years ending on

5 or before December 31, 2004, an amount equal to the

6 amount paid by a taxpayer who is a self-employed

7 taxpayer, a partner of a partnership, or a shareholder

8 in a Subchapter S corporation for health insurance or

9 long-term care insurance for that taxpayer or that

10 taxpayer's spouse or dependents, to the extent that the

11 amount paid for that health insurance or long-term care

12 insurance may be deducted under Section 213 of the

13 Internal Revenue Code, has not been deducted on the

14 federal income tax return of the taxpayer, and does not

15 exceed the taxable income attributable to that

16 taxpayer's income, self-employment income, or

17 Subchapter S corporation income; except that no

18 deduction shall be allowed under this item (V) if the

19 taxpayer is eligible to participate in any health

20 insurance or long-term care insurance plan of an

21 employer of the taxpayer or the taxpayer's spouse. The

22 amount of the health insurance and long-term care

23 insurance subtracted under this item (V) shall be

24 determined by multiplying total health insurance and

25 long-term care insurance premiums paid by the taxpayer

26 times a number that represents the fractional

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LRB100 06347 HLH 26556 a

1 percentage of eligible medical expenses under Section

2 213 of the Internal Revenue Code of 1986 not actually

3 deducted on the taxpayer's federal income tax return;

4 (W) For taxable years beginning on or after January

5 1, 1998, all amounts included in the taxpayer's federal

6 gross income in the taxable year from amounts converted

7 from a regular IRA to a Roth IRA. This paragraph is

8 exempt from the provisions of Section 250;

9 (X) For taxable year 1999 and thereafter, an amount

10 equal to the amount of any (i) distributions, to the

11 extent includible in gross income for federal income

12 tax purposes, made to the taxpayer because of his or

13 her status as a victim of persecution for racial or

14 religious reasons by Nazi Germany or any other Axis

15 regime or as an heir of the victim and (ii) items of

16 income, to the extent includible in gross income for

17 federal income tax purposes, attributable to, derived

18 from or in any way related to assets stolen from,

19 hidden from, or otherwise lost to a victim of

20 persecution for racial or religious reasons by Nazi

21 Germany or any other Axis regime immediately prior to,

22 during, and immediately after World War II, including,

23 but not limited to, interest on the proceeds receivable

24 as insurance under policies issued to a victim of

25 persecution for racial or religious reasons by Nazi

26 Germany or any other Axis regime by European insurance

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1 companies immediately prior to and during World War II;

2 provided, however, this subtraction from federal

3 adjusted gross income does not apply to assets acquired

4 with such assets or with the proceeds from the sale of

5 such assets; provided, further, this paragraph shall

6 only apply to a taxpayer who was the first recipient of

7 such assets after their recovery and who is a victim of

8 persecution for racial or religious reasons by Nazi

9 Germany or any other Axis regime or as an heir of the

10 victim. The amount of and the eligibility for any

11 public assistance, benefit, or similar entitlement is

12 not affected by the inclusion of items (i) and (ii) of

13 this paragraph in gross income for federal income tax

14 purposes. This paragraph is exempt from the provisions

15 of Section 250;

16 (Y) For taxable years beginning on or after January

17 1, 2002 and ending on or before December 31, 2004,

18 moneys contributed in the taxable year to a College

19 Savings Pool account under Section 16.5 of the State

20 Treasurer Act, except that amounts excluded from gross

21 income under Section 529(c)(3)(C)(i) of the Internal

22 Revenue Code shall not be considered moneys

23 contributed under this subparagraph (Y). For taxable

24 years beginning on or after January 1, 2005, a maximum

25 of $10,000 contributed in the taxable year to (i) a

26 College Savings Pool account under Section 16.5 of the

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1 State Treasurer Act or (ii) the Illinois Prepaid

2 Tuition Trust Fund, except that amounts excluded from

3 gross income under Section 529(c)(3)(C)(i) of the

4 Internal Revenue Code shall not be considered moneys

5 contributed under this subparagraph (Y). For purposes

6 of this subparagraph, contributions made by an

7 employer on behalf of an employee, or matching

8 contributions made by an employee, shall be treated as

9 made by the employee. This subparagraph (Y) is exempt

10 from the provisions of Section 250;

11 (Z) For taxable years 2001 and thereafter, for the

12 taxable year in which the bonus depreciation deduction

13 is taken on the taxpayer's federal income tax return

14 under subsection (k) of Section 168 of the Internal

15 Revenue Code and for each applicable taxable year

16 thereafter, an amount equal to "x", where:

17 (1) "y" equals the amount of the depreciation

18 deduction taken for the taxable year on the

19 taxpayer's federal income tax return on property

20 for which the bonus depreciation deduction was

21 taken in any year under subsection (k) of Section

22 168 of the Internal Revenue Code, but not including

23 the bonus depreciation deduction;

24 (2) for taxable years ending on or before

25 December 31, 2005, "x" equals "y" multiplied by 30

26 and then divided by 70 (or "y" multiplied by

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1 0.429); and

2 (3) for taxable years ending after December

3 31, 2005:

4 (i) for property on which a bonus

5 depreciation deduction of 30% of the adjusted

6 basis was taken, "x" equals "y" multiplied by

7 30 and then divided by 70 (or "y" multiplied by

8 0.429); and

9 (ii) for property on which a bonus

10 depreciation deduction of 50% of the adjusted

11 basis was taken, "x" equals "y" multiplied by

12 1.0.

13 The aggregate amount deducted under this

14 subparagraph in all taxable years for any one piece of

15 property may not exceed the amount of the bonus

16 depreciation deduction taken on that property on the

17 taxpayer's federal income tax return under subsection

18 (k) of Section 168 of the Internal Revenue Code. This

19 subparagraph (Z) is exempt from the provisions of

20 Section 250;

21 (AA) If the taxpayer sells, transfers, abandons,

22 or otherwise disposes of property for which the

23 taxpayer was required in any taxable year to make an

24 addition modification under subparagraph (D-15), then

25 an amount equal to that addition modification.

26 If the taxpayer continues to own property through

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1 the last day of the last tax year for which the

2 taxpayer may claim a depreciation deduction for

3 federal income tax purposes and for which the taxpayer

4 was required in any taxable year to make an addition

5 modification under subparagraph (D-15), then an amount

6 equal to that addition modification.

7 The taxpayer is allowed to take the deduction under

8 this subparagraph only once with respect to any one

9 piece of property.

10 This subparagraph (AA) is exempt from the

11 provisions of Section 250;

12 (BB) Any amount included in adjusted gross income,

13 other than salary, received by a driver in a

14 ridesharing arrangement using a motor vehicle;

15 (CC) The amount of (i) any interest income (net of

16 the deductions allocable thereto) taken into account

17 for the taxable year with respect to a transaction with

18 a taxpayer that is required to make an addition

19 modification with respect to such transaction under

20 Section 203(a)(2)(D-17), 203(b)(2)(E-12),

21 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed

22 the amount of that addition modification, and (ii) any

23 income from intangible property (net of the deductions

24 allocable thereto) taken into account for the taxable

25 year with respect to a transaction with a taxpayer that

26 is required to make an addition modification with

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1 respect to such transaction under Section

2 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or

3 203(d)(2)(D-8), but not to exceed the amount of that

4 addition modification. This subparagraph (CC) is

5 exempt from the provisions of Section 250;

6 (DD) An amount equal to the interest income taken

7 into account for the taxable year (net of the

8 deductions allocable thereto) with respect to

9 transactions with (i) a foreign person who would be a

10 member of the taxpayer's unitary business group but for

11 the fact that the foreign person's business activity

12 outside the United States is 80% or more of that

13 person's total business activity and (ii) for taxable

14 years ending on or after December 31, 2008, to a person

15 who would be a member of the same unitary business

16 group but for the fact that the person is prohibited

17 under Section 1501(a)(27) from being included in the

18 unitary business group because he or she is ordinarily

19 required to apportion business income under different

20 subsections of Section 304, but not to exceed the

21 addition modification required to be made for the same

22 taxable year under Section 203(a)(2)(D-17) for

23 interest paid, accrued, or incurred, directly or

24 indirectly, to the same person. This subparagraph (DD)

25 is exempt from the provisions of Section 250;

26 (EE) An amount equal to the income from intangible

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1 property taken into account for the taxable year (net

2 of the deductions allocable thereto) with respect to

3 transactions with (i) a foreign person who would be a

4 member of the taxpayer's unitary business group but for

5 the fact that the foreign person's business activity

6 outside the United States is 80% or more of that

7 person's total business activity and (ii) for taxable

8 years ending on or after December 31, 2008, to a person

9 who would be a member of the same unitary business

10 group but for the fact that the person is prohibited

11 under Section 1501(a)(27) from being included in the

12 unitary business group because he or she is ordinarily

13 required to apportion business income under different

14 subsections of Section 304, but not to exceed the

15 addition modification required to be made for the same

16 taxable year under Section 203(a)(2)(D-18) for

17 intangible expenses and costs paid, accrued, or

18 incurred, directly or indirectly, to the same foreign

19 person. This subparagraph (EE) is exempt from the

20 provisions of Section 250;

21 (FF) An amount equal to any amount awarded to the

22 taxpayer during the taxable year by the Court of Claims

23 under subsection (c) of Section 8 of the Court of

24 Claims Act for time unjustly served in a State prison.

25 This subparagraph (FF) is exempt from the provisions of

26 Section 250; and

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1 (GG) For taxable years ending on or after December

2 31, 2011, in the case of a taxpayer who was required to

3 add back any insurance premiums under Section

4 203(a)(2)(D-19), such taxpayer may elect to subtract

5 that part of a reimbursement received from the

6 insurance company equal to the amount of the expense or

7 loss (including expenses incurred by the insurance

8 company) that would have been taken into account as a

9 deduction for federal income tax purposes if the

10 expense or loss had been uninsured. If a taxpayer makes

11 the election provided for by this subparagraph (GG),

12 the insurer to which the premiums were paid must add

13 back to income the amount subtracted by the taxpayer

14 pursuant to this subparagraph (GG). This subparagraph

15 (GG) is exempt from the provisions of Section 250.

16 (b) Corporations.

17 (1) In general. In the case of a corporation, base

18 income means an amount equal to the taxpayer's taxable

19 income for the taxable year as modified by paragraph (2).

20 (2) Modifications. The taxable income referred to in

21 paragraph (1) shall be modified by adding thereto the sum

22 of the following amounts:

23 (A) An amount equal to all amounts paid or accrued

24 to the taxpayer as interest and all distributions

25 received from regulated investment companies during

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1 the taxable year to the extent excluded from gross

2 income in the computation of taxable income;

3 (B) An amount equal to the amount of tax imposed by

4 this Act to the extent deducted from gross income in

5 the computation of taxable income for the taxable year;

6 (C) In the case of a regulated investment company,

7 an amount equal to the excess of (i) the net long-term

8 capital gain for the taxable year, over (ii) the amount

9 of the capital gain dividends designated as such in

10 accordance with Section 852(b)(3)(C) of the Internal

11 Revenue Code and any amount designated under Section

12 852(b)(3)(D) of the Internal Revenue Code,

13 attributable to the taxable year (this amendatory Act

14 of 1995 (Public Act 89-89) is declarative of existing

15 law and is not a new enactment);

16 (D) The amount of any net operating loss deduction

17 taken in arriving at taxable income, other than a net

18 operating loss carried forward from a taxable year

19 ending prior to December 31, 1986;

20 (E) For taxable years in which a net operating loss

21 carryback or carryforward from a taxable year ending

22 prior to December 31, 1986 is an element of taxable

23 income under paragraph (1) of subsection (e) or

24 subparagraph (E) of paragraph (2) of subsection (e),

25 the amount by which addition modifications other than

26 those provided by this subparagraph (E) exceeded

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1 subtraction modifications in such earlier taxable

2 year, with the following limitations applied in the

3 order that they are listed:

4 (i) the addition modification relating to the

5 net operating loss carried back or forward to the

6 taxable year from any taxable year ending prior to

7 December 31, 1986 shall be reduced by the amount of

8 addition modification under this subparagraph (E)

9 which related to that net operating loss and which

10 was taken into account in calculating the base

11 income of an earlier taxable year, and

12 (ii) the addition modification relating to the

13 net operating loss carried back or forward to the

14 taxable year from any taxable year ending prior to

15 December 31, 1986 shall not exceed the amount of

16 such carryback or carryforward;

17 For taxable years in which there is a net operating

18 loss carryback or carryforward from more than one other

19 taxable year ending prior to December 31, 1986, the

20 addition modification provided in this subparagraph

21 (E) shall be the sum of the amounts computed

22 independently under the preceding provisions of this

23 subparagraph (E) for each such taxable year;

24 (E-5) For taxable years ending after December 31,

25 1997, an amount equal to any eligible remediation costs

26 that the corporation deducted in computing adjusted

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1 gross income and for which the corporation claims a

2 credit under subsection (l) of Section 201;

3 (E-10) For taxable years 2001 and thereafter, an

4 amount equal to the bonus depreciation deduction taken

5 on the taxpayer's federal income tax return for the

6 taxable year under subsection (k) of Section 168 of the

7 Internal Revenue Code;

8 (E-11) If the taxpayer sells, transfers, abandons,

9 or otherwise disposes of property for which the

10 taxpayer was required in any taxable year to make an

11 addition modification under subparagraph (E-10), then

12 an amount equal to the aggregate amount of the

13 deductions taken in all taxable years under

14 subparagraph (T) with respect to that property.

15 If the taxpayer continues to own property through

16 the last day of the last tax year for which the

17 taxpayer may claim a depreciation deduction for

18 federal income tax purposes and for which the taxpayer

19 was allowed in any taxable year to make a subtraction

20 modification under subparagraph (T), then an amount

21 equal to that subtraction modification.

22 The taxpayer is required to make the addition

23 modification under this subparagraph only once with

24 respect to any one piece of property;

25 (E-12) An amount equal to the amount otherwise

26 allowed as a deduction in computing base income for

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1 interest paid, accrued, or incurred, directly or

2 indirectly, (i) for taxable years ending on or after

3 December 31, 2004, to a foreign person who would be a

4 member of the same unitary business group but for the

5 fact the foreign person's business activity outside

6 the United States is 80% or more of the foreign

7 person's total business activity and (ii) for taxable

8 years ending on or after December 31, 2008, to a person

9 who would be a member of the same unitary business

10 group but for the fact that the person is prohibited

11 under Section 1501(a)(27) from being included in the

12 unitary business group because he or she is ordinarily

13 required to apportion business income under different

14 subsections of Section 304. The addition modification

15 required by this subparagraph shall be reduced to the

16 extent that dividends were included in base income of

17 the unitary group for the same taxable year and

18 received by the taxpayer or by a member of the

19 taxpayer's unitary business group (including amounts

20 included in gross income pursuant to Sections 951

21 through 964 of the Internal Revenue Code and amounts

22 included in gross income under Section 78 of the

23 Internal Revenue Code) with respect to the stock of the

24 same person to whom the interest was paid, accrued, or

25 incurred.

26 This paragraph shall not apply to the following:

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LRB100 06347 HLH 26556 a

1 (i) an item of interest paid, accrued, or

2 incurred, directly or indirectly, to a person who

3 is subject in a foreign country or state, other

4 than a state which requires mandatory unitary

5 reporting, to a tax on or measured by net income

6 with respect to such interest; or

7 (ii) an item of interest paid, accrued, or

8 incurred, directly or indirectly, to a person if

9 the taxpayer can establish, based on a

10 preponderance of the evidence, both of the

11 following:

12 (a) the person, during the same taxable

13 year, paid, accrued, or incurred, the interest

14 to a person that is not a related member, and

15 (b) the transaction giving rise to the

16 interest expense between the taxpayer and the

17 person did not have as a principal purpose the

18 avoidance of Illinois income tax, and is paid

19 pursuant to a contract or agreement that

20 reflects an arm's-length interest rate and

21 terms; or

22 (iii) the taxpayer can establish, based on

23 clear and convincing evidence, that the interest

24 paid, accrued, or incurred relates to a contract or

25 agreement entered into at arm's-length rates and

26 terms and the principal purpose for the payment is

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LRB100 06347 HLH 26556 a

1 not federal or Illinois tax avoidance; or

2 (iv) an item of interest paid, accrued, or

3 incurred, directly or indirectly, to a person if

4 the taxpayer establishes by clear and convincing

5 evidence that the adjustments are unreasonable; or

6 if the taxpayer and the Director agree in writing

7 to the application or use of an alternative method

8 of apportionment under Section 304(f).

9 Nothing in this subsection shall preclude the

10 Director from making any other adjustment

11 otherwise allowed under Section 404 of this Act for

12 any tax year beginning after the effective date of

13 this amendment provided such adjustment is made

14 pursuant to regulation adopted by the Department

15 and such regulations provide methods and standards

16 by which the Department will utilize its authority

17 under Section 404 of this Act;

18 (E-13) An amount equal to the amount of intangible

19 expenses and costs otherwise allowed as a deduction in

20 computing base income, and that were paid, accrued, or

21 incurred, directly or indirectly, (i) for taxable

22 years ending on or after December 31, 2004, to a

23 foreign person who would be a member of the same

24 unitary business group but for the fact that the

25 foreign person's business activity outside the United

26 States is 80% or more of that person's total business

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LRB100 06347 HLH 26556 a

1 activity and (ii) for taxable years ending on or after

2 December 31, 2008, to a person who would be a member of

3 the same unitary business group but for the fact that

4 the person is prohibited under Section 1501(a)(27)

5 from being included in the unitary business group

6 because he or she is ordinarily required to apportion

7 business income under different subsections of Section

8 304. The addition modification required by this

9 subparagraph shall be reduced to the extent that

10 dividends were included in base income of the unitary

11 group for the same taxable year and received by the

12 taxpayer or by a member of the taxpayer's unitary

13 business group (including amounts included in gross

14 income pursuant to Sections 951 through 964 of the

15 Internal Revenue Code and amounts included in gross

16 income under Section 78 of the Internal Revenue Code)

17 with respect to the stock of the same person to whom

18 the intangible expenses and costs were directly or

19 indirectly paid, incurred, or accrued. The preceding

20 sentence shall not apply to the extent that the same

21 dividends caused a reduction to the addition

22 modification required under Section 203(b)(2)(E-12) of

23 this Act. As used in this subparagraph, the term

24 "intangible expenses and costs" includes (1) expenses,

25 losses, and costs for, or related to, the direct or

26 indirect acquisition, use, maintenance or management,

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LRB100 06347 HLH 26556 a

1 ownership, sale, exchange, or any other disposition of

2 intangible property; (2) losses incurred, directly or

3 indirectly, from factoring transactions or discounting

4 transactions; (3) royalty, patent, technical, and

5 copyright fees; (4) licensing fees; and (5) other

6 similar expenses and costs. For purposes of this

7 subparagraph, "intangible property" includes patents,

8 patent applications, trade names, trademarks, service

9 marks, copyrights, mask works, trade secrets, and

10 similar types of intangible assets.

11 This paragraph shall not apply to the following:

12 (i) any item of intangible expenses or costs

13 paid, accrued, or incurred, directly or

14 indirectly, from a transaction with a person who is

15 subject in a foreign country or state, other than a

16 state which requires mandatory unitary reporting,

17 to a tax on or measured by net income with respect

18 to such item; or

19 (ii) any item of intangible expense or cost

20 paid, accrued, or incurred, directly or

21 indirectly, if the taxpayer can establish, based

22 on a preponderance of the evidence, both of the

23 following:

24 (a) the person during the same taxable

25 year paid, accrued, or incurred, the

26 intangible expense or cost to a person that is

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LRB100 06347 HLH 26556 a

1 not a related member, and

2 (b) the transaction giving rise to the

3 intangible expense or cost between the

4 taxpayer and the person did not have as a

5 principal purpose the avoidance of Illinois

6 income tax, and is paid pursuant to a contract

7 or agreement that reflects arm's-length terms;

8 or

9 (iii) any item of intangible expense or cost

10 paid, accrued, or incurred, directly or

11 indirectly, from a transaction with a person if the

12 taxpayer establishes by clear and convincing

13 evidence, that the adjustments are unreasonable;

14 or if the taxpayer and the Director agree in

15 writing to the application or use of an alternative

16 method of apportionment under Section 304(f);

17 Nothing in this subsection shall preclude the

18 Director from making any other adjustment

19 otherwise allowed under Section 404 of this Act for

20 any tax year beginning after the effective date of

21 this amendment provided such adjustment is made

22 pursuant to regulation adopted by the Department

23 and such regulations provide methods and standards

24 by which the Department will utilize its authority

25 under Section 404 of this Act;

26 (E-14) For taxable years ending on or after

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1 December 31, 2008, an amount equal to the amount of

2 insurance premium expenses and costs otherwise allowed

3 as a deduction in computing base income, and that were

4 paid, accrued, or incurred, directly or indirectly, to

5 a person who would be a member of the same unitary

6 business group but for the fact that the person is

7 prohibited under Section 1501(a)(27) from being

8 included in the unitary business group because he or

9 she is ordinarily required to apportion business

10 income under different subsections of Section 304. The

11 addition modification required by this subparagraph

12 shall be reduced to the extent that dividends were

13 included in base income of the unitary group for the

14 same taxable year and received by the taxpayer or by a

15 member of the taxpayer's unitary business group

16 (including amounts included in gross income under

17 Sections 951 through 964 of the Internal Revenue Code

18 and amounts included in gross income under Section 78

19 of the Internal Revenue Code) with respect to the stock

20 of the same person to whom the premiums and costs were

21 directly or indirectly paid, incurred, or accrued. The

22 preceding sentence does not apply to the extent that

23 the same dividends caused a reduction to the addition

24 modification required under Section 203(b)(2)(E-12) or

25 Section 203(b)(2)(E-13) of this Act;

26 (E-15) For taxable years beginning after December

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LRB100 06347 HLH 26556 a

1 31, 2008, any deduction for dividends paid by a captive

2 real estate investment trust that is allowed to a real

3 estate investment trust under Section 857(b)(2)(B) of

4 the Internal Revenue Code for dividends paid;

5 (E-16) An amount equal to the credit allowable to

6 the taxpayer under Section 218(a) of this Act,

7 determined without regard to Section 218(c) of this

8 Act;

9 (E-17) For taxable years beginning on or after

10 January 1, 2017, an amount equal to the deduction

11 allowed under Section 199 of the Internal Revenue Code

12 for the taxable year;

13 and by deducting from the total so obtained the sum of the

14 following amounts:

15 (F) An amount equal to the amount of any tax

16 imposed by this Act which was refunded to the taxpayer

17 and included in such total for the taxable year;

18 (G) An amount equal to any amount included in such

19 total under Section 78 of the Internal Revenue Code;

20 (H) In the case of a regulated investment company,

21 an amount equal to the amount of exempt interest

22 dividends as defined in subsection (b) (5) of Section

23 852 of the Internal Revenue Code, paid to shareholders

24 for the taxable year;

25 (I) With the exception of any amounts subtracted

26 under subparagraph (J), an amount equal to the sum of

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1 all amounts disallowed as deductions by (i) Sections

2 171(a) (2), and 265(a)(2) and amounts disallowed as

3 interest expense by Section 291(a)(3) of the Internal

4 Revenue Code, and all amounts of expenses allocable to

5 interest and disallowed as deductions by Section

6 265(a)(1) of the Internal Revenue Code; and (ii) for

7 taxable years ending on or after August 13, 1999,

8 Sections 171(a)(2), 265, 280C, 291(a)(3), and

9 832(b)(5)(B)(i) of the Internal Revenue Code, plus,

10 for tax years ending on or after December 31, 2011,

11 amounts disallowed as deductions by Section 45G(e)(3)

12 of the Internal Revenue Code and, for taxable years

13 ending on or after December 31, 2008, any amount

14 included in gross income under Section 87 of the

15 Internal Revenue Code and the policyholders' share of

16 tax-exempt interest of a life insurance company under

17 Section 807(a)(2)(B) of the Internal Revenue Code (in

18 the case of a life insurance company with gross income

19 from a decrease in reserves for the tax year) or

20 Section 807(b)(1)(B) of the Internal Revenue Code (in

21 the case of a life insurance company allowed a

22 deduction for an increase in reserves for the tax

23 year); the provisions of this subparagraph are exempt

24 from the provisions of Section 250;

25 (J) An amount equal to all amounts included in such

26 total which are exempt from taxation by this State

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1 either by reason of its statutes or Constitution or by

2 reason of the Constitution, treaties or statutes of the

3 United States; provided that, in the case of any

4 statute of this State that exempts income derived from

5 bonds or other obligations from the tax imposed under

6 this Act, the amount exempted shall be the interest net

7 of bond premium amortization;

8 (K) An amount equal to those dividends included in

9 such total which were paid by a corporation which

10 conducts business operations in a River Edge

11 Redevelopment Zone or zones created under the River

12 Edge Redevelopment Zone Act and conducts substantially

13 all of its operations in a River Edge Redevelopment

14 Zone or zones. This subparagraph (K) is exempt from the

15 provisions of Section 250;

16 (L) An amount equal to those dividends included in

17 such total that were paid by a corporation that

18 conducts business operations in a federally designated

19 Foreign Trade Zone or Sub-Zone and that is designated a

20 High Impact Business located in Illinois; provided

21 that dividends eligible for the deduction provided in

22 subparagraph (K) of paragraph 2 of this subsection

23 shall not be eligible for the deduction provided under

24 this subparagraph (L);

25 (M) For any taxpayer that is a financial

26 organization within the meaning of Section 304(c) of

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1 this Act, an amount included in such total as interest

2 income from a loan or loans made by such taxpayer to a

3 borrower, to the extent that such a loan is secured by

4 property which is eligible for the River Edge

5 Redevelopment Zone Investment Credit. To determine the

6 portion of a loan or loans that is secured by property

7 eligible for a Section 201(f) investment credit to the

8 borrower, the entire principal amount of the loan or

9 loans between the taxpayer and the borrower should be

10 divided into the basis of the Section 201(f) investment

11 credit property which secures the loan or loans, using

12 for this purpose the original basis of such property on

13 the date that it was placed in service in the River

14 Edge Redevelopment Zone. The subtraction modification

15 available to taxpayer in any year under this subsection

16 shall be that portion of the total interest paid by the

17 borrower with respect to such loan attributable to the

18 eligible property as calculated under the previous

19 sentence. This subparagraph (M) is exempt from the

20 provisions of Section 250;

21 (M-1) For any taxpayer that is a financial

22 organization within the meaning of Section 304(c) of

23 this Act, an amount included in such total as interest

24 income from a loan or loans made by such taxpayer to a

25 borrower, to the extent that such a loan is secured by

26 property which is eligible for the High Impact Business

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LRB100 06347 HLH 26556 a

1 Investment Credit. To determine the portion of a loan

2 or loans that is secured by property eligible for a

3 Section 201(h) investment credit to the borrower, the

4 entire principal amount of the loan or loans between

5 the taxpayer and the borrower should be divided into

6 the basis of the Section 201(h) investment credit

7 property which secures the loan or loans, using for

8 this purpose the original basis of such property on the

9 date that it was placed in service in a federally

10 designated Foreign Trade Zone or Sub-Zone located in

11 Illinois. No taxpayer that is eligible for the

12 deduction provided in subparagraph (M) of paragraph

13 (2) of this subsection shall be eligible for the

14 deduction provided under this subparagraph (M-1). The

15 subtraction modification available to taxpayers in any

16 year under this subsection shall be that portion of the

17 total interest paid by the borrower with respect to

18 such loan attributable to the eligible property as

19 calculated under the previous sentence;

20 (N) Two times any contribution made during the

21 taxable year to a designated zone organization to the

22 extent that the contribution (i) qualifies as a

23 charitable contribution under subsection (c) of

24 Section 170 of the Internal Revenue Code and (ii) must,

25 by its terms, be used for a project approved by the

26 Department of Commerce and Economic Opportunity under

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1 Section 11 of the Illinois Enterprise Zone Act or under

2 Section 10-10 of the River Edge Redevelopment Zone Act.

3 This subparagraph (N) is exempt from the provisions of

4 Section 250;

5 (O) An amount equal to: (i) 85% for taxable years

6 ending on or before December 31, 1992, or, a percentage

7 equal to the percentage allowable under Section

8 243(a)(1) of the Internal Revenue Code of 1986 for

9 taxable years ending after December 31, 1992, of the

10 amount by which dividends included in taxable income

11 and received from a corporation that is not created or

12 organized under the laws of the United States or any

13 state or political subdivision thereof, including, for

14 taxable years ending on or after December 31, 1988,

15 dividends received or deemed received or paid or deemed

16 paid under Sections 951 through 965 of the Internal

17 Revenue Code, exceed the amount of the modification

18 provided under subparagraph (G) of paragraph (2) of

19 this subsection (b) which is related to such dividends,

20 and including, for taxable years ending on or after

21 December 31, 2008, dividends received from a captive

22 real estate investment trust; plus (ii) 100% of the

23 amount by which dividends, included in taxable income

24 and received, including, for taxable years ending on or

25 after December 31, 1988, dividends received or deemed

26 received or paid or deemed paid under Sections 951

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1 through 964 of the Internal Revenue Code and including,

2 for taxable years ending on or after December 31, 2008,

3 dividends received from a captive real estate

4 investment trust, from any such corporation specified

5 in clause (i) that would but for the provisions of

6 Section 1504 (b) (3) of the Internal Revenue Code be

7 treated as a member of the affiliated group which

8 includes the dividend recipient, exceed the amount of

9 the modification provided under subparagraph (G) of

10 paragraph (2) of this subsection (b) which is related

11 to such dividends. This subparagraph (O) is exempt from

12 the provisions of Section 250 of this Act;

13 (P) An amount equal to any contribution made to a

14 job training project established pursuant to the Tax

15 Increment Allocation Redevelopment Act;

16 (Q) An amount equal to the amount of the deduction

17 used to compute the federal income tax credit for

18 restoration of substantial amounts held under claim of

19 right for the taxable year pursuant to Section 1341 of

20 the Internal Revenue Code;

21 (R) On and after July 20, 1999, in the case of an

22 attorney-in-fact with respect to whom an interinsurer

23 or a reciprocal insurer has made the election under

24 Section 835 of the Internal Revenue Code, 26 U.S.C.

25 835, an amount equal to the excess, if any, of the

26 amounts paid or incurred by that interinsurer or

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1 reciprocal insurer in the taxable year to the

2 attorney-in-fact over the deduction allowed to that

3 interinsurer or reciprocal insurer with respect to the

4 attorney-in-fact under Section 835(b) of the Internal

5 Revenue Code for the taxable year; the provisions of

6 this subparagraph are exempt from the provisions of

7 Section 250;

8 (S) For taxable years ending on or after December

9 31, 1997, in the case of a Subchapter S corporation, an

10 amount equal to all amounts of income allocable to a

11 shareholder subject to the Personal Property Tax

12 Replacement Income Tax imposed by subsections (c) and

13 (d) of Section 201 of this Act, including amounts

14 allocable to organizations exempt from federal income

15 tax by reason of Section 501(a) of the Internal Revenue

16 Code. This subparagraph (S) is exempt from the

17 provisions of Section 250;

18 (T) For taxable years 2001 and thereafter, for the

19 taxable year in which the bonus depreciation deduction

20 is taken on the taxpayer's federal income tax return

21 under subsection (k) of Section 168 of the Internal

22 Revenue Code and for each applicable taxable year

23 thereafter, an amount equal to "x", where:

24 (1) "y" equals the amount of the depreciation

25 deduction taken for the taxable year on the

26 taxpayer's federal income tax return on property

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1 for which the bonus depreciation deduction was

2 taken in any year under subsection (k) of Section

3 168 of the Internal Revenue Code, but not including

4 the bonus depreciation deduction;

5 (2) for taxable years ending on or before

6 December 31, 2005, "x" equals "y" multiplied by 30

7 and then divided by 70 (or "y" multiplied by

8 0.429); and

9 (3) for taxable years ending after December

10 31, 2005:

11 (i) for property on which a bonus

12 depreciation deduction of 30% of the adjusted

13 basis was taken, "x" equals "y" multiplied by

14 30 and then divided by 70 (or "y" multiplied by

15 0.429); and

16 (ii) for property on which a bonus

17 depreciation deduction of 50% of the adjusted

18 basis was taken, "x" equals "y" multiplied by

19 1.0.

20 The aggregate amount deducted under this

21 subparagraph in all taxable years for any one piece of

22 property may not exceed the amount of the bonus

23 depreciation deduction taken on that property on the

24 taxpayer's federal income tax return under subsection

25 (k) of Section 168 of the Internal Revenue Code. This

26 subparagraph (T) is exempt from the provisions of

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1 Section 250;

2 (U) If the taxpayer sells, transfers, abandons, or

3 otherwise disposes of property for which the taxpayer

4 was required in any taxable year to make an addition

5 modification under subparagraph (E-10), then an amount

6 equal to that addition modification.

7 If the taxpayer continues to own property through

8 the last day of the last tax year for which the

9 taxpayer may claim a depreciation deduction for

10 federal income tax purposes and for which the taxpayer

11 was required in any taxable year to make an addition

12 modification under subparagraph (E-10), then an amount

13 equal to that addition modification.

14 The taxpayer is allowed to take the deduction under

15 this subparagraph only once with respect to any one

16 piece of property.

17 This subparagraph (U) is exempt from the

18 provisions of Section 250;

19 (V) The amount of: (i) any interest income (net of

20 the deductions allocable thereto) taken into account

21 for the taxable year with respect to a transaction with

22 a taxpayer that is required to make an addition

23 modification with respect to such transaction under

24 Section 203(a)(2)(D-17), 203(b)(2)(E-12),

25 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed

26 the amount of such addition modification, (ii) any

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1 income from intangible property (net of the deductions

2 allocable thereto) taken into account for the taxable

3 year with respect to a transaction with a taxpayer that

4 is required to make an addition modification with

5 respect to such transaction under Section

6 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or

7 203(d)(2)(D-8), but not to exceed the amount of such

8 addition modification, and (iii) any insurance premium

9 income (net of deductions allocable thereto) taken

10 into account for the taxable year with respect to a

11 transaction with a taxpayer that is required to make an

12 addition modification with respect to such transaction

13 under Section 203(a)(2)(D-19), Section

14 203(b)(2)(E-14), Section 203(c)(2)(G-14), or Section

15 203(d)(2)(D-9), but not to exceed the amount of that

16 addition modification. This subparagraph (V) is exempt

17 from the provisions of Section 250;

18 (W) An amount equal to the interest income taken

19 into account for the taxable year (net of the

20 deductions allocable thereto) with respect to

21 transactions with (i) a foreign person who would be a

22 member of the taxpayer's unitary business group but for

23 the fact that the foreign person's business activity

24 outside the United States is 80% or more of that

25 person's total business activity and (ii) for taxable

26 years ending on or after December 31, 2008, to a person

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1 who would be a member of the same unitary business

2 group but for the fact that the person is prohibited

3 under Section 1501(a)(27) from being included in the

4 unitary business group because he or she is ordinarily

5 required to apportion business income under different

6 subsections of Section 304, but not to exceed the

7 addition modification required to be made for the same

8 taxable year under Section 203(b)(2)(E-12) for

9 interest paid, accrued, or incurred, directly or

10 indirectly, to the same person. This subparagraph (W)

11 is exempt from the provisions of Section 250;

12 (X) An amount equal to the income from intangible

13 property taken into account for the taxable year (net

14 of the deductions allocable thereto) with respect to

15 transactions with (i) a foreign person who would be a

16 member of the taxpayer's unitary business group but for

17 the fact that the foreign person's business activity

18 outside the United States is 80% or more of that

19 person's total business activity and (ii) for taxable

20 years ending on or after December 31, 2008, to a person

21 who would be a member of the same unitary business

22 group but for the fact that the person is prohibited

23 under Section 1501(a)(27) from being included in the

24 unitary business group because he or she is ordinarily

25 required to apportion business income under different

26 subsections of Section 304, but not to exceed the

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1 addition modification required to be made for the same

2 taxable year under Section 203(b)(2)(E-13) for

3 intangible expenses and costs paid, accrued, or

4 incurred, directly or indirectly, to the same foreign

5 person. This subparagraph (X) is exempt from the

6 provisions of Section 250;

7 (Y) For taxable years ending on or after December

8 31, 2011, in the case of a taxpayer who was required to

9 add back any insurance premiums under Section

10 203(b)(2)(E-14), such taxpayer may elect to subtract

11 that part of a reimbursement received from the

12 insurance company equal to the amount of the expense or

13 loss (including expenses incurred by the insurance

14 company) that would have been taken into account as a

15 deduction for federal income tax purposes if the

16 expense or loss had been uninsured. If a taxpayer makes

17 the election provided for by this subparagraph (Y), the

18 insurer to which the premiums were paid must add back

19 to income the amount subtracted by the taxpayer

20 pursuant to this subparagraph (Y). This subparagraph

21 (Y) is exempt from the provisions of Section 250; and

22 (Z) The difference between the nondeductible

23 controlled foreign corporation dividends under Section

24 965(e)(3) of the Internal Revenue Code over the taxable

25 income of the taxpayer, computed without regard to

26 Section 965(e)(2)(A) of the Internal Revenue Code, and

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1 without regard to any net operating loss deduction.

2 This subparagraph (Z) is exempt from the provisions of

3 Section 250.

4 (3) Special rule. For purposes of paragraph (2) (A),

5 "gross income" in the case of a life insurance company, for

6 tax years ending on and after December 31, 1994, and prior

7 to December 31, 2011, shall mean the gross investment

8 income for the taxable year and, for tax years ending on or

9 after December 31, 2011, shall mean all amounts included in

10 life insurance gross income under Section 803(a)(3) of the

11 Internal Revenue Code.

12 (c) Trusts and estates.

13 (1) In general. In the case of a trust or estate, base

14 income means an amount equal to the taxpayer's taxable

15 income for the taxable year as modified by paragraph (2).

16 (2) Modifications. Subject to the provisions of

17 paragraph (3), the taxable income referred to in paragraph

18 (1) shall be modified by adding thereto the sum of the

19 following amounts:

20 (A) An amount equal to all amounts paid or accrued

21 to the taxpayer as interest or dividends during the

22 taxable year to the extent excluded from gross income

23 in the computation of taxable income;

24 (B) In the case of (i) an estate, $600; (ii) a

25 trust which, under its governing instrument, is

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1 required to distribute all of its income currently,

2 $300; and (iii) any other trust, $100, but in each such

3 case, only to the extent such amount was deducted in

4 the computation of taxable income;

5 (C) An amount equal to the amount of tax imposed by

6 this Act to the extent deducted from gross income in

7 the computation of taxable income for the taxable year;

8 (D) The amount of any net operating loss deduction

9 taken in arriving at taxable income, other than a net

10 operating loss carried forward from a taxable year

11 ending prior to December 31, 1986;

12 (E) For taxable years in which a net operating loss

13 carryback or carryforward from a taxable year ending

14 prior to December 31, 1986 is an element of taxable

15 income under paragraph (1) of subsection (e) or

16 subparagraph (E) of paragraph (2) of subsection (e),

17 the amount by which addition modifications other than

18 those provided by this subparagraph (E) exceeded

19 subtraction modifications in such taxable year, with

20 the following limitations applied in the order that

21 they are listed:

22 (i) the addition modification relating to the

23 net operating loss carried back or forward to the

24 taxable year from any taxable year ending prior to

25 December 31, 1986 shall be reduced by the amount of

26 addition modification under this subparagraph (E)

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1 which related to that net operating loss and which

2 was taken into account in calculating the base

3 income of an earlier taxable year, and

4 (ii) the addition modification relating to the

5 net operating loss carried back or forward to the

6 taxable year from any taxable year ending prior to

7 December 31, 1986 shall not exceed the amount of

8 such carryback or carryforward;

9 For taxable years in which there is a net operating

10 loss carryback or carryforward from more than one other

11 taxable year ending prior to December 31, 1986, the

12 addition modification provided in this subparagraph

13 (E) shall be the sum of the amounts computed

14 independently under the preceding provisions of this

15 subparagraph (E) for each such taxable year;

16 (F) For taxable years ending on or after January 1,

17 1989, an amount equal to the tax deducted pursuant to

18 Section 164 of the Internal Revenue Code if the trust

19 or estate is claiming the same tax for purposes of the

20 Illinois foreign tax credit under Section 601 of this

21 Act;

22 (G) An amount equal to the amount of the capital

23 gain deduction allowable under the Internal Revenue

24 Code, to the extent deducted from gross income in the

25 computation of taxable income;

26 (G-5) For taxable years ending after December 31,

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1 1997, an amount equal to any eligible remediation costs

2 that the trust or estate deducted in computing adjusted

3 gross income and for which the trust or estate claims a

4 credit under subsection (l) of Section 201;

5 (G-10) For taxable years 2001 and thereafter, an

6 amount equal to the bonus depreciation deduction taken

7 on the taxpayer's federal income tax return for the

8 taxable year under subsection (k) of Section 168 of the

9 Internal Revenue Code; and

10 (G-11) If the taxpayer sells, transfers, abandons,

11 or otherwise disposes of property for which the

12 taxpayer was required in any taxable year to make an

13 addition modification under subparagraph (G-10), then

14 an amount equal to the aggregate amount of the

15 deductions taken in all taxable years under

16 subparagraph (R) with respect to that property.

17 If the taxpayer continues to own property through

18 the last day of the last tax year for which the

19 taxpayer may claim a depreciation deduction for

20 federal income tax purposes and for which the taxpayer

21 was allowed in any taxable year to make a subtraction

22 modification under subparagraph (R), then an amount

23 equal to that subtraction modification.

24 The taxpayer is required to make the addition

25 modification under this subparagraph only once with

26 respect to any one piece of property;

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1 (G-12) An amount equal to the amount otherwise

2 allowed as a deduction in computing base income for

3 interest paid, accrued, or incurred, directly or

4 indirectly, (i) for taxable years ending on or after

5 December 31, 2004, to a foreign person who would be a

6 member of the same unitary business group but for the

7 fact that the foreign person's business activity

8 outside the United States is 80% or more of the foreign

9 person's total business activity and (ii) for taxable

10 years ending on or after December 31, 2008, to a person

11 who would be a member of the same unitary business

12 group but for the fact that the person is prohibited

13 under Section 1501(a)(27) from being included in the

14 unitary business group because he or she is ordinarily

15 required to apportion business income under different

16 subsections of Section 304. The addition modification

17 required by this subparagraph shall be reduced to the

18 extent that dividends were included in base income of

19 the unitary group for the same taxable year and

20 received by the taxpayer or by a member of the

21 taxpayer's unitary business group (including amounts

22 included in gross income pursuant to Sections 951

23 through 964 of the Internal Revenue Code and amounts

24 included in gross income under Section 78 of the

25 Internal Revenue Code) with respect to the stock of the

26 same person to whom the interest was paid, accrued, or

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1 incurred.

2 This paragraph shall not apply to the following:

3 (i) an item of interest paid, accrued, or

4 incurred, directly or indirectly, to a person who

5 is subject in a foreign country or state, other

6 than a state which requires mandatory unitary

7 reporting, to a tax on or measured by net income

8 with respect to such interest; or

9 (ii) an item of interest paid, accrued, or

10 incurred, directly or indirectly, to a person if

11 the taxpayer can establish, based on a

12 preponderance of the evidence, both of the

13 following:

14 (a) the person, during the same taxable

15 year, paid, accrued, or incurred, the interest

16 to a person that is not a related member, and

17 (b) the transaction giving rise to the

18 interest expense between the taxpayer and the

19 person did not have as a principal purpose the

20 avoidance of Illinois income tax, and is paid

21 pursuant to a contract or agreement that

22 reflects an arm's-length interest rate and

23 terms; or

24 (iii) the taxpayer can establish, based on

25 clear and convincing evidence, that the interest

26 paid, accrued, or incurred relates to a contract or

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1 agreement entered into at arm's-length rates and

2 terms and the principal purpose for the payment is

3 not federal or Illinois tax avoidance; or

4 (iv) an item of interest paid, accrued, or

5 incurred, directly or indirectly, to a person if

6 the taxpayer establishes by clear and convincing

7 evidence that the adjustments are unreasonable; or

8 if the taxpayer and the Director agree in writing

9 to the application or use of an alternative method

10 of apportionment under Section 304(f).

11 Nothing in this subsection shall preclude the

12 Director from making any other adjustment

13 otherwise allowed under Section 404 of this Act for

14 any tax year beginning after the effective date of

15 this amendment provided such adjustment is made

16 pursuant to regulation adopted by the Department

17 and such regulations provide methods and standards

18 by which the Department will utilize its authority

19 under Section 404 of this Act;

20 (G-13) An amount equal to the amount of intangible

21 expenses and costs otherwise allowed as a deduction in

22 computing base income, and that were paid, accrued, or

23 incurred, directly or indirectly, (i) for taxable

24 years ending on or after December 31, 2004, to a

25 foreign person who would be a member of the same

26 unitary business group but for the fact that the

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1 foreign person's business activity outside the United

2 States is 80% or more of that person's total business

3 activity and (ii) for taxable years ending on or after

4 December 31, 2008, to a person who would be a member of

5 the same unitary business group but for the fact that

6 the person is prohibited under Section 1501(a)(27)

7 from being included in the unitary business group

8 because he or she is ordinarily required to apportion

9 business income under different subsections of Section

10 304. The addition modification required by this

11 subparagraph shall be reduced to the extent that

12 dividends were included in base income of the unitary

13 group for the same taxable year and received by the

14 taxpayer or by a member of the taxpayer's unitary

15 business group (including amounts included in gross

16 income pursuant to Sections 951 through 964 of the

17 Internal Revenue Code and amounts included in gross

18 income under Section 78 of the Internal Revenue Code)

19 with respect to the stock of the same person to whom

20 the intangible expenses and costs were directly or

21 indirectly paid, incurred, or accrued. The preceding

22 sentence shall not apply to the extent that the same

23 dividends caused a reduction to the addition

24 modification required under Section 203(c)(2)(G-12) of

25 this Act. As used in this subparagraph, the term

26 "intangible expenses and costs" includes: (1)

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1 expenses, losses, and costs for or related to the

2 direct or indirect acquisition, use, maintenance or

3 management, ownership, sale, exchange, or any other

4 disposition of intangible property; (2) losses

5 incurred, directly or indirectly, from factoring

6 transactions or discounting transactions; (3) royalty,

7 patent, technical, and copyright fees; (4) licensing

8 fees; and (5) other similar expenses and costs. For

9 purposes of this subparagraph, "intangible property"

10 includes patents, patent applications, trade names,

11 trademarks, service marks, copyrights, mask works,

12 trade secrets, and similar types of intangible assets.

13 This paragraph shall not apply to the following:

14 (i) any item of intangible expenses or costs

15 paid, accrued, or incurred, directly or

16 indirectly, from a transaction with a person who is

17 subject in a foreign country or state, other than a

18 state which requires mandatory unitary reporting,

19 to a tax on or measured by net income with respect

20 to such item; or

21 (ii) any item of intangible expense or cost

22 paid, accrued, or incurred, directly or

23 indirectly, if the taxpayer can establish, based

24 on a preponderance of the evidence, both of the

25 following:

26 (a) the person during the same taxable

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1 year paid, accrued, or incurred, the

2 intangible expense or cost to a person that is

3 not a related member, and

4 (b) the transaction giving rise to the

5 intangible expense or cost between the

6 taxpayer and the person did not have as a

7 principal purpose the avoidance of Illinois

8 income tax, and is paid pursuant to a contract

9 or agreement that reflects arm's-length terms;

10 or

11 (iii) any item of intangible expense or cost

12 paid, accrued, or incurred, directly or

13 indirectly, from a transaction with a person if the

14 taxpayer establishes by clear and convincing

15 evidence, that the adjustments are unreasonable;

16 or if the taxpayer and the Director agree in

17 writing to the application or use of an alternative

18 method of apportionment under Section 304(f);

19 Nothing in this subsection shall preclude the

20 Director from making any other adjustment

21 otherwise allowed under Section 404 of this Act for

22 any tax year beginning after the effective date of

23 this amendment provided such adjustment is made

24 pursuant to regulation adopted by the Department

25 and such regulations provide methods and standards

26 by which the Department will utilize its authority

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1 under Section 404 of this Act;

2 (G-14) For taxable years ending on or after

3 December 31, 2008, an amount equal to the amount of

4 insurance premium expenses and costs otherwise allowed

5 as a deduction in computing base income, and that were

6 paid, accrued, or incurred, directly or indirectly, to

7 a person who would be a member of the same unitary

8 business group but for the fact that the person is

9 prohibited under Section 1501(a)(27) from being

10 included in the unitary business group because he or

11 she is ordinarily required to apportion business

12 income under different subsections of Section 304. The

13 addition modification required by this subparagraph

14 shall be reduced to the extent that dividends were

15 included in base income of the unitary group for the

16 same taxable year and received by the taxpayer or by a

17 member of the taxpayer's unitary business group

18 (including amounts included in gross income under

19 Sections 951 through 964 of the Internal Revenue Code

20 and amounts included in gross income under Section 78

21 of the Internal Revenue Code) with respect to the stock

22 of the same person to whom the premiums and costs were

23 directly or indirectly paid, incurred, or accrued. The

24 preceding sentence does not apply to the extent that

25 the same dividends caused a reduction to the addition

26 modification required under Section 203(c)(2)(G-12) or

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1 Section 203(c)(2)(G-13) of this Act;

2 (G-15) An amount equal to the credit allowable to

3 the taxpayer under Section 218(a) of this Act,

4 determined without regard to Section 218(c) of this

5 Act;

6 (G-16) For taxable years beginning on or after

7 January 1, 2017, an amount equal to the deduction

8 allowed under Section 199 of the Internal Revenue Code

9 for the taxable year;

10 and by deducting from the total so obtained the sum of the

11 following amounts:

12 (H) An amount equal to all amounts included in such

13 total pursuant to the provisions of Sections 402(a),

14 402(c), 403(a), 403(b), 406(a), 407(a) and 408 of the

15 Internal Revenue Code or included in such total as

16 distributions under the provisions of any retirement

17 or disability plan for employees of any governmental

18 agency or unit, or retirement payments to retired

19 partners, which payments are excluded in computing net

20 earnings from self employment by Section 1402 of the

21 Internal Revenue Code and regulations adopted pursuant

22 thereto;

23 (I) The valuation limitation amount;

24 (J) An amount equal to the amount of any tax

25 imposed by this Act which was refunded to the taxpayer

26 and included in such total for the taxable year;

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1 (K) An amount equal to all amounts included in

2 taxable income as modified by subparagraphs (A), (B),

3 (C), (D), (E), (F) and (G) which are exempt from

4 taxation by this State either by reason of its statutes

5 or Constitution or by reason of the Constitution,

6 treaties or statutes of the United States; provided

7 that, in the case of any statute of this State that

8 exempts income derived from bonds or other obligations

9 from the tax imposed under this Act, the amount

10 exempted shall be the interest net of bond premium

11 amortization;

12 (L) With the exception of any amounts subtracted

13 under subparagraph (K), an amount equal to the sum of

14 all amounts disallowed as deductions by (i) Sections

15 171(a) (2) and 265(a)(2) of the Internal Revenue Code,

16 and all amounts of expenses allocable to interest and

17 disallowed as deductions by Section 265(1) of the

18 Internal Revenue Code; and (ii) for taxable years

19 ending on or after August 13, 1999, Sections 171(a)(2),

20 265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue

21 Code, plus, (iii) for taxable years ending on or after

22 December 31, 2011, Section 45G(e)(3) of the Internal

23 Revenue Code and, for taxable years ending on or after

24 December 31, 2008, any amount included in gross income

25 under Section 87 of the Internal Revenue Code; the

26 provisions of this subparagraph are exempt from the

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1 provisions of Section 250;

2 (M) An amount equal to those dividends included in

3 such total which were paid by a corporation which

4 conducts business operations in a River Edge

5 Redevelopment Zone or zones created under the River

6 Edge Redevelopment Zone Act and conducts substantially

7 all of its operations in a River Edge Redevelopment

8 Zone or zones. This subparagraph (M) is exempt from the

9 provisions of Section 250;

10 (N) An amount equal to any contribution made to a

11 job training project established pursuant to the Tax

12 Increment Allocation Redevelopment Act;

13 (O) An amount equal to those dividends included in

14 such total that were paid by a corporation that

15 conducts business operations in a federally designated

16 Foreign Trade Zone or Sub-Zone and that is designated a

17 High Impact Business located in Illinois; provided

18 that dividends eligible for the deduction provided in

19 subparagraph (M) of paragraph (2) of this subsection

20 shall not be eligible for the deduction provided under

21 this subparagraph (O);

22 (P) An amount equal to the amount of the deduction

23 used to compute the federal income tax credit for

24 restoration of substantial amounts held under claim of

25 right for the taxable year pursuant to Section 1341 of

26 the Internal Revenue Code;

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LRB100 06347 HLH 26556 a

1 (Q) For taxable year 1999 and thereafter, an amount

2 equal to the amount of any (i) distributions, to the

3 extent includible in gross income for federal income

4 tax purposes, made to the taxpayer because of his or

5 her status as a victim of persecution for racial or

6 religious reasons by Nazi Germany or any other Axis

7 regime or as an heir of the victim and (ii) items of

8 income, to the extent includible in gross income for

9 federal income tax purposes, attributable to, derived

10 from or in any way related to assets stolen from,

11 hidden from, or otherwise lost to a victim of

12 persecution for racial or religious reasons by Nazi

13 Germany or any other Axis regime immediately prior to,

14 during, and immediately after World War II, including,

15 but not limited to, interest on the proceeds receivable

16 as insurance under policies issued to a victim of

17 persecution for racial or religious reasons by Nazi

18 Germany or any other Axis regime by European insurance

19 companies immediately prior to and during World War II;

20 provided, however, this subtraction from federal

21 adjusted gross income does not apply to assets acquired

22 with such assets or with the proceeds from the sale of

23 such assets; provided, further, this paragraph shall

24 only apply to a taxpayer who was the first recipient of

25 such assets after their recovery and who is a victim of

26 persecution for racial or religious reasons by Nazi

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1 Germany or any other Axis regime or as an heir of the

2 victim. The amount of and the eligibility for any

3 public assistance, benefit, or similar entitlement is

4 not affected by the inclusion of items (i) and (ii) of

5 this paragraph in gross income for federal income tax

6 purposes. This paragraph is exempt from the provisions

7 of Section 250;

8 (R) For taxable years 2001 and thereafter, for the

9 taxable year in which the bonus depreciation deduction

10 is taken on the taxpayer's federal income tax return

11 under subsection (k) of Section 168 of the Internal

12 Revenue Code and for each applicable taxable year

13 thereafter, an amount equal to "x", where:

14 (1) "y" equals the amount of the depreciation

15 deduction taken for the taxable year on the

16 taxpayer's federal income tax return on property

17 for which the bonus depreciation deduction was

18 taken in any year under subsection (k) of Section

19 168 of the Internal Revenue Code, but not including

20 the bonus depreciation deduction;

21 (2) for taxable years ending on or before

22 December 31, 2005, "x" equals "y" multiplied by 30

23 and then divided by 70 (or "y" multiplied by

24 0.429); and

25 (3) for taxable years ending after December

26 31, 2005:

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1 (i) for property on which a bonus

2 depreciation deduction of 30% of the adjusted

3 basis was taken, "x" equals "y" multiplied by

4 30 and then divided by 70 (or "y" multiplied by

5 0.429); and

6 (ii) for property on which a bonus

7 depreciation deduction of 50% of the adjusted

8 basis was taken, "x" equals "y" multiplied by

9 1.0.

10 The aggregate amount deducted under this

11 subparagraph in all taxable years for any one piece of

12 property may not exceed the amount of the bonus

13 depreciation deduction taken on that property on the

14 taxpayer's federal income tax return under subsection

15 (k) of Section 168 of the Internal Revenue Code. This

16 subparagraph (R) is exempt from the provisions of

17 Section 250;

18 (S) If the taxpayer sells, transfers, abandons, or

19 otherwise disposes of property for which the taxpayer

20 was required in any taxable year to make an addition

21 modification under subparagraph (G-10), then an amount

22 equal to that addition modification.

23 If the taxpayer continues to own property through

24 the last day of the last tax year for which the

25 taxpayer may claim a depreciation deduction for

26 federal income tax purposes and for which the taxpayer

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1 was required in any taxable year to make an addition

2 modification under subparagraph (G-10), then an amount

3 equal to that addition modification.

4 The taxpayer is allowed to take the deduction under

5 this subparagraph only once with respect to any one

6 piece of property.

7 This subparagraph (S) is exempt from the

8 provisions of Section 250;

9 (T) The amount of (i) any interest income (net of

10 the deductions allocable thereto) taken into account

11 for the taxable year with respect to a transaction with

12 a taxpayer that is required to make an addition

13 modification with respect to such transaction under

14 Section 203(a)(2)(D-17), 203(b)(2)(E-12),

15 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed

16 the amount of such addition modification and (ii) any

17 income from intangible property (net of the deductions

18 allocable thereto) taken into account for the taxable

19 year with respect to a transaction with a taxpayer that

20 is required to make an addition modification with

21 respect to such transaction under Section

22 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or

23 203(d)(2)(D-8), but not to exceed the amount of such

24 addition modification. This subparagraph (T) is exempt

25 from the provisions of Section 250;

26 (U) An amount equal to the interest income taken

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1 into account for the taxable year (net of the

2 deductions allocable thereto) with respect to

3 transactions with (i) a foreign person who would be a

4 member of the taxpayer's unitary business group but for

5 the fact the foreign person's business activity

6 outside the United States is 80% or more of that

7 person's total business activity and (ii) for taxable

8 years ending on or after December 31, 2008, to a person

9 who would be a member of the same unitary business

10 group but for the fact that the person is prohibited

11 under Section 1501(a)(27) from being included in the

12 unitary business group because he or she is ordinarily

13 required to apportion business income under different

14 subsections of Section 304, but not to exceed the

15 addition modification required to be made for the same

16 taxable year under Section 203(c)(2)(G-12) for

17 interest paid, accrued, or incurred, directly or

18 indirectly, to the same person. This subparagraph (U)

19 is exempt from the provisions of Section 250;

20 (V) An amount equal to the income from intangible

21 property taken into account for the taxable year (net

22 of the deductions allocable thereto) with respect to

23 transactions with (i) a foreign person who would be a

24 member of the taxpayer's unitary business group but for

25 the fact that the foreign person's business activity

26 outside the United States is 80% or more of that

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1 person's total business activity and (ii) for taxable

2 years ending on or after December 31, 2008, to a person

3 who would be a member of the same unitary business

4 group but for the fact that the person is prohibited

5 under Section 1501(a)(27) from being included in the

6 unitary business group because he or she is ordinarily

7 required to apportion business income under different

8 subsections of Section 304, but not to exceed the

9 addition modification required to be made for the same

10 taxable year under Section 203(c)(2)(G-13) for

11 intangible expenses and costs paid, accrued, or

12 incurred, directly or indirectly, to the same foreign

13 person. This subparagraph (V) is exempt from the

14 provisions of Section 250;

15 (W) in the case of an estate, an amount equal to

16 all amounts included in such total pursuant to the

17 provisions of Section 111 of the Internal Revenue Code

18 as a recovery of items previously deducted by the

19 decedent from adjusted gross income in the computation

20 of taxable income. This subparagraph (W) is exempt from

21 Section 250;

22 (X) an amount equal to the refund included in such

23 total of any tax deducted for federal income tax

24 purposes, to the extent that deduction was added back

25 under subparagraph (F). This subparagraph (X) is

26 exempt from the provisions of Section 250; and

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1 (Y) For taxable years ending on or after December

2 31, 2011, in the case of a taxpayer who was required to

3 add back any insurance premiums under Section

4 203(c)(2)(G-14), such taxpayer may elect to subtract

5 that part of a reimbursement received from the

6 insurance company equal to the amount of the expense or

7 loss (including expenses incurred by the insurance

8 company) that would have been taken into account as a

9 deduction for federal income tax purposes if the

10 expense or loss had been uninsured. If a taxpayer makes

11 the election provided for by this subparagraph (Y), the

12 insurer to which the premiums were paid must add back

13 to income the amount subtracted by the taxpayer

14 pursuant to this subparagraph (Y). This subparagraph

15 (Y) is exempt from the provisions of Section 250.

16 (3) Limitation. The amount of any modification

17 otherwise required under this subsection shall, under

18 regulations prescribed by the Department, be adjusted by

19 any amounts included therein which were properly paid,

20 credited, or required to be distributed, or permanently set

21 aside for charitable purposes pursuant to Internal Revenue

22 Code Section 642(c) during the taxable year.

23 (d) Partnerships.

24 (1) In general. In the case of a partnership, base

25 income means an amount equal to the taxpayer's taxable

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1 income for the taxable year as modified by paragraph (2).

2 (2) Modifications. The taxable income referred to in

3 paragraph (1) shall be modified by adding thereto the sum

4 of the following amounts:

5 (A) An amount equal to all amounts paid or accrued

6 to the taxpayer as interest or dividends during the

7 taxable year to the extent excluded from gross income

8 in the computation of taxable income;

9 (B) An amount equal to the amount of tax imposed by

10 this Act to the extent deducted from gross income for

11 the taxable year;

12 (C) The amount of deductions allowed to the

13 partnership pursuant to Section 707 (c) of the Internal

14 Revenue Code in calculating its taxable income;

15 (D) An amount equal to the amount of the capital

16 gain deduction allowable under the Internal Revenue

17 Code, to the extent deducted from gross income in the

18 computation of taxable income;

19 (D-5) For taxable years 2001 and thereafter, an

20 amount equal to the bonus depreciation deduction taken

21 on the taxpayer's federal income tax return for the

22 taxable year under subsection (k) of Section 168 of the

23 Internal Revenue Code;

24 (D-6) If the taxpayer sells, transfers, abandons,

25 or otherwise disposes of property for which the

26 taxpayer was required in any taxable year to make an

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1 addition modification under subparagraph (D-5), then

2 an amount equal to the aggregate amount of the

3 deductions taken in all taxable years under

4 subparagraph (O) with respect to that property.

5 If the taxpayer continues to own property through

6 the last day of the last tax year for which the

7 taxpayer may claim a depreciation deduction for

8 federal income tax purposes and for which the taxpayer

9 was allowed in any taxable year to make a subtraction

10 modification under subparagraph (O), then an amount

11 equal to that subtraction modification.

12 The taxpayer is required to make the addition

13 modification under this subparagraph only once with

14 respect to any one piece of property;

15 (D-7) An amount equal to the amount otherwise

16 allowed as a deduction in computing base income for

17 interest paid, accrued, or incurred, directly or

18 indirectly, (i) for taxable years ending on or after

19 December 31, 2004, to a foreign person who would be a

20 member of the same unitary business group but for the

21 fact the foreign person's business activity outside

22 the United States is 80% or more of the foreign

23 person's total business activity and (ii) for taxable

24 years ending on or after December 31, 2008, to a person

25 who would be a member of the same unitary business

26 group but for the fact that the person is prohibited

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1 under Section 1501(a)(27) from being included in the

2 unitary business group because he or she is ordinarily

3 required to apportion business income under different

4 subsections of Section 304. The addition modification

5 required by this subparagraph shall be reduced to the

6 extent that dividends were included in base income of

7 the unitary group for the same taxable year and

8 received by the taxpayer or by a member of the

9 taxpayer's unitary business group (including amounts

10 included in gross income pursuant to Sections 951

11 through 964 of the Internal Revenue Code and amounts

12 included in gross income under Section 78 of the

13 Internal Revenue Code) with respect to the stock of the

14 same person to whom the interest was paid, accrued, or

15 incurred.

16 This paragraph shall not apply to the following:

17 (i) an item of interest paid, accrued, or

18 incurred, directly or indirectly, to a person who

19 is subject in a foreign country or state, other

20 than a state which requires mandatory unitary

21 reporting, to a tax on or measured by net income

22 with respect to such interest; or

23 (ii) an item of interest paid, accrued, or

24 incurred, directly or indirectly, to a person if

25 the taxpayer can establish, based on a

26 preponderance of the evidence, both of the

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1 following:

2 (a) the person, during the same taxable

3 year, paid, accrued, or incurred, the interest

4 to a person that is not a related member, and

5 (b) the transaction giving rise to the

6 interest expense between the taxpayer and the

7 person did not have as a principal purpose the

8 avoidance of Illinois income tax, and is paid

9 pursuant to a contract or agreement that

10 reflects an arm's-length interest rate and

11 terms; or

12 (iii) the taxpayer can establish, based on

13 clear and convincing evidence, that the interest

14 paid, accrued, or incurred relates to a contract or

15 agreement entered into at arm's-length rates and

16 terms and the principal purpose for the payment is

17 not federal or Illinois tax avoidance; or

18 (iv) an item of interest paid, accrued, or

19 incurred, directly or indirectly, to a person if

20 the taxpayer establishes by clear and convincing

21 evidence that the adjustments are unreasonable; or

22 if the taxpayer and the Director agree in writing

23 to the application or use of an alternative method

24 of apportionment under Section 304(f).

25 Nothing in this subsection shall preclude the

26 Director from making any other adjustment

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1 otherwise allowed under Section 404 of this Act for

2 any tax year beginning after the effective date of

3 this amendment provided such adjustment is made

4 pursuant to regulation adopted by the Department

5 and such regulations provide methods and standards

6 by which the Department will utilize its authority

7 under Section 404 of this Act; and

8 (D-8) An amount equal to the amount of intangible

9 expenses and costs otherwise allowed as a deduction in

10 computing base income, and that were paid, accrued, or

11 incurred, directly or indirectly, (i) for taxable

12 years ending on or after December 31, 2004, to a

13 foreign person who would be a member of the same

14 unitary business group but for the fact that the

15 foreign person's business activity outside the United

16 States is 80% or more of that person's total business

17 activity and (ii) for taxable years ending on or after

18 December 31, 2008, to a person who would be a member of

19 the same unitary business group but for the fact that

20 the person is prohibited under Section 1501(a)(27)

21 from being included in the unitary business group

22 because he or she is ordinarily required to apportion

23 business income under different subsections of Section

24 304. The addition modification required by this

25 subparagraph shall be reduced to the extent that

26 dividends were included in base income of the unitary

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1 group for the same taxable year and received by the

2 taxpayer or by a member of the taxpayer's unitary

3 business group (including amounts included in gross

4 income pursuant to Sections 951 through 964 of the

5 Internal Revenue Code and amounts included in gross

6 income under Section 78 of the Internal Revenue Code)

7 with respect to the stock of the same person to whom

8 the intangible expenses and costs were directly or

9 indirectly paid, incurred or accrued. The preceding

10 sentence shall not apply to the extent that the same

11 dividends caused a reduction to the addition

12 modification required under Section 203(d)(2)(D-7) of

13 this Act. As used in this subparagraph, the term

14 "intangible expenses and costs" includes (1) expenses,

15 losses, and costs for, or related to, the direct or

16 indirect acquisition, use, maintenance or management,

17 ownership, sale, exchange, or any other disposition of

18 intangible property; (2) losses incurred, directly or

19 indirectly, from factoring transactions or discounting

20 transactions; (3) royalty, patent, technical, and

21 copyright fees; (4) licensing fees; and (5) other

22 similar expenses and costs. For purposes of this

23 subparagraph, "intangible property" includes patents,

24 patent applications, trade names, trademarks, service

25 marks, copyrights, mask works, trade secrets, and

26 similar types of intangible assets;

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1 This paragraph shall not apply to the following:

2 (i) any item of intangible expenses or costs

3 paid, accrued, or incurred, directly or

4 indirectly, from a transaction with a person who is

5 subject in a foreign country or state, other than a

6 state which requires mandatory unitary reporting,

7 to a tax on or measured by net income with respect

8 to such item; or

9 (ii) any item of intangible expense or cost

10 paid, accrued, or incurred, directly or

11 indirectly, if the taxpayer can establish, based

12 on a preponderance of the evidence, both of the

13 following:

14 (a) the person during the same taxable

15 year paid, accrued, or incurred, the

16 intangible expense or cost to a person that is

17 not a related member, and

18 (b) the transaction giving rise to the

19 intangible expense or cost between the

20 taxpayer and the person did not have as a

21 principal purpose the avoidance of Illinois

22 income tax, and is paid pursuant to a contract

23 or agreement that reflects arm's-length terms;

24 or

25 (iii) any item of intangible expense or cost

26 paid, accrued, or incurred, directly or

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1 indirectly, from a transaction with a person if the

2 taxpayer establishes by clear and convincing

3 evidence, that the adjustments are unreasonable;

4 or if the taxpayer and the Director agree in

5 writing to the application or use of an alternative

6 method of apportionment under Section 304(f);

7 Nothing in this subsection shall preclude the

8 Director from making any other adjustment

9 otherwise allowed under Section 404 of this Act for

10 any tax year beginning after the effective date of

11 this amendment provided such adjustment is made

12 pursuant to regulation adopted by the Department

13 and such regulations provide methods and standards

14 by which the Department will utilize its authority

15 under Section 404 of this Act;

16 (D-9) For taxable years ending on or after December

17 31, 2008, an amount equal to the amount of insurance

18 premium expenses and costs otherwise allowed as a

19 deduction in computing base income, and that were paid,

20 accrued, or incurred, directly or indirectly, to a

21 person who would be a member of the same unitary

22 business group but for the fact that the person is

23 prohibited under Section 1501(a)(27) from being

24 included in the unitary business group because he or

25 she is ordinarily required to apportion business

26 income under different subsections of Section 304. The

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1 addition modification required by this subparagraph

2 shall be reduced to the extent that dividends were

3 included in base income of the unitary group for the

4 same taxable year and received by the taxpayer or by a

5 member of the taxpayer's unitary business group

6 (including amounts included in gross income under

7 Sections 951 through 964 of the Internal Revenue Code

8 and amounts included in gross income under Section 78

9 of the Internal Revenue Code) with respect to the stock

10 of the same person to whom the premiums and costs were

11 directly or indirectly paid, incurred, or accrued. The

12 preceding sentence does not apply to the extent that

13 the same dividends caused a reduction to the addition

14 modification required under Section 203(d)(2)(D-7) or

15 Section 203(d)(2)(D-8) of this Act;

16 (D-10) An amount equal to the credit allowable to

17 the taxpayer under Section 218(a) of this Act,

18 determined without regard to Section 218(c) of this

19 Act;

20 (D-11) For taxable years beginning on or after

21 January 1, 2017, an amount equal to the deduction

22 allowed under Section 199 of the Internal Revenue Code

23 for the taxable year;

24 and by deducting from the total so obtained the following

25 amounts:

26 (E) The valuation limitation amount;

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1 (F) An amount equal to the amount of any tax

2 imposed by this Act which was refunded to the taxpayer

3 and included in such total for the taxable year;

4 (G) An amount equal to all amounts included in

5 taxable income as modified by subparagraphs (A), (B),

6 (C) and (D) which are exempt from taxation by this

7 State either by reason of its statutes or Constitution

8 or by reason of the Constitution, treaties or statutes

9 of the United States; provided that, in the case of any

10 statute of this State that exempts income derived from

11 bonds or other obligations from the tax imposed under

12 this Act, the amount exempted shall be the interest net

13 of bond premium amortization;

14 (H) Any income of the partnership which

15 constitutes personal service income as defined in

16 Section 1348 (b) (1) of the Internal Revenue Code (as

17 in effect December 31, 1981) or a reasonable allowance

18 for compensation paid or accrued for services rendered

19 by partners to the partnership, whichever is greater;

20 this subparagraph (H) is exempt from the provisions of

21 Section 250;

22 (I) An amount equal to all amounts of income

23 distributable to an entity subject to the Personal

24 Property Tax Replacement Income Tax imposed by

25 subsections (c) and (d) of Section 201 of this Act

26 including amounts distributable to organizations

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1 exempt from federal income tax by reason of Section

2 501(a) of the Internal Revenue Code; this subparagraph

3 (I) is exempt from the provisions of Section 250;

4 (J) With the exception of any amounts subtracted

5 under subparagraph (G), an amount equal to the sum of

6 all amounts disallowed as deductions by (i) Sections

7 171(a) (2), and 265(2) of the Internal Revenue Code,

8 and all amounts of expenses allocable to interest and

9 disallowed as deductions by Section 265(1) of the

10 Internal Revenue Code; and (ii) for taxable years

11 ending on or after August 13, 1999, Sections 171(a)(2),

12 265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue

13 Code, plus, (iii) for taxable years ending on or after

14 December 31, 2011, Section 45G(e)(3) of the Internal

15 Revenue Code and, for taxable years ending on or after

16 December 31, 2008, any amount included in gross income

17 under Section 87 of the Internal Revenue Code; the

18 provisions of this subparagraph are exempt from the

19 provisions of Section 250;

20 (K) An amount equal to those dividends included in

21 such total which were paid by a corporation which

22 conducts business operations in a River Edge

23 Redevelopment Zone or zones created under the River

24 Edge Redevelopment Zone Act and conducts substantially

25 all of its operations from a River Edge Redevelopment

26 Zone or zones. This subparagraph (K) is exempt from the

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1 provisions of Section 250;

2 (L) An amount equal to any contribution made to a

3 job training project established pursuant to the Real

4 Property Tax Increment Allocation Redevelopment Act;

5 (M) An amount equal to those dividends included in

6 such total that were paid by a corporation that

7 conducts business operations in a federally designated

8 Foreign Trade Zone or Sub-Zone and that is designated a

9 High Impact Business located in Illinois; provided

10 that dividends eligible for the deduction provided in

11 subparagraph (K) of paragraph (2) of this subsection

12 shall not be eligible for the deduction provided under

13 this subparagraph (M);

14 (N) An amount equal to the amount of the deduction

15 used to compute the federal income tax credit for

16 restoration of substantial amounts held under claim of

17 right for the taxable year pursuant to Section 1341 of

18 the Internal Revenue Code;

19 (O) For taxable years 2001 and thereafter, for the

20 taxable year in which the bonus depreciation deduction

21 is taken on the taxpayer's federal income tax return

22 under subsection (k) of Section 168 of the Internal

23 Revenue Code and for each applicable taxable year

24 thereafter, an amount equal to "x", where:

25 (1) "y" equals the amount of the depreciation

26 deduction taken for the taxable year on the

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1 taxpayer's federal income tax return on property

2 for which the bonus depreciation deduction was

3 taken in any year under subsection (k) of Section

4 168 of the Internal Revenue Code, but not including

5 the bonus depreciation deduction;

6 (2) for taxable years ending on or before

7 December 31, 2005, "x" equals "y" multiplied by 30

8 and then divided by 70 (or "y" multiplied by

9 0.429); and

10 (3) for taxable years ending after December

11 31, 2005:

12 (i) for property on which a bonus

13 depreciation deduction of 30% of the adjusted

14 basis was taken, "x" equals "y" multiplied by

15 30 and then divided by 70 (or "y" multiplied by

16 0.429); and

17 (ii) for property on which a bonus

18 depreciation deduction of 50% of the adjusted

19 basis was taken, "x" equals "y" multiplied by

20 1.0.

21 The aggregate amount deducted under this

22 subparagraph in all taxable years for any one piece of

23 property may not exceed the amount of the bonus

24 depreciation deduction taken on that property on the

25 taxpayer's federal income tax return under subsection

26 (k) of Section 168 of the Internal Revenue Code. This

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1 subparagraph (O) is exempt from the provisions of

2 Section 250;

3 (P) If the taxpayer sells, transfers, abandons, or

4 otherwise disposes of property for which the taxpayer

5 was required in any taxable year to make an addition

6 modification under subparagraph (D-5), then an amount

7 equal to that addition modification.

8 If the taxpayer continues to own property through

9 the last day of the last tax year for which the

10 taxpayer may claim a depreciation deduction for

11 federal income tax purposes and for which the taxpayer

12 was required in any taxable year to make an addition

13 modification under subparagraph (D-5), then an amount

14 equal to that addition modification.

15 The taxpayer is allowed to take the deduction under

16 this subparagraph only once with respect to any one

17 piece of property.

18 This subparagraph (P) is exempt from the

19 provisions of Section 250;

20 (Q) The amount of (i) any interest income (net of

21 the deductions allocable thereto) taken into account

22 for the taxable year with respect to a transaction with

23 a taxpayer that is required to make an addition

24 modification with respect to such transaction under

25 Section 203(a)(2)(D-17), 203(b)(2)(E-12),

26 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed

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1 the amount of such addition modification and (ii) any

2 income from intangible property (net of the deductions

3 allocable thereto) taken into account for the taxable

4 year with respect to a transaction with a taxpayer that

5 is required to make an addition modification with

6 respect to such transaction under Section

7 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or

8 203(d)(2)(D-8), but not to exceed the amount of such

9 addition modification. This subparagraph (Q) is exempt

10 from Section 250;

11 (R) An amount equal to the interest income taken

12 into account for the taxable year (net of the

13 deductions allocable thereto) with respect to

14 transactions with (i) a foreign person who would be a

15 member of the taxpayer's unitary business group but for

16 the fact that the foreign person's business activity

17 outside the United States is 80% or more of that

18 person's total business activity and (ii) for taxable

19 years ending on or after December 31, 2008, to a person

20 who would be a member of the same unitary business

21 group but for the fact that the person is prohibited

22 under Section 1501(a)(27) from being included in the

23 unitary business group because he or she is ordinarily

24 required to apportion business income under different

25 subsections of Section 304, but not to exceed the

26 addition modification required to be made for the same

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1 taxable year under Section 203(d)(2)(D-7) for interest

2 paid, accrued, or incurred, directly or indirectly, to

3 the same person. This subparagraph (R) is exempt from

4 Section 250;

5 (S) An amount equal to the income from intangible

6 property taken into account for the taxable year (net

7 of the deductions allocable thereto) with respect to

8 transactions with (i) a foreign person who would be a

9 member of the taxpayer's unitary business group but for

10 the fact that the foreign person's business activity

11 outside the United States is 80% or more of that

12 person's total business activity and (ii) for taxable

13 years ending on or after December 31, 2008, to a person

14 who would be a member of the same unitary business

15 group but for the fact that the person is prohibited

16 under Section 1501(a)(27) from being included in the

17 unitary business group because he or she is ordinarily

18 required to apportion business income under different

19 subsections of Section 304, but not to exceed the

20 addition modification required to be made for the same

21 taxable year under Section 203(d)(2)(D-8) for

22 intangible expenses and costs paid, accrued, or

23 incurred, directly or indirectly, to the same person.

24 This subparagraph (S) is exempt from Section 250; and

25 (T) For taxable years ending on or after December

26 31, 2011, in the case of a taxpayer who was required to

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1 add back any insurance premiums under Section

2 203(d)(2)(D-9), such taxpayer may elect to subtract

3 that part of a reimbursement received from the

4 insurance company equal to the amount of the expense or

5 loss (including expenses incurred by the insurance

6 company) that would have been taken into account as a

7 deduction for federal income tax purposes if the

8 expense or loss had been uninsured. If a taxpayer makes

9 the election provided for by this subparagraph (T), the

10 insurer to which the premiums were paid must add back

11 to income the amount subtracted by the taxpayer

12 pursuant to this subparagraph (T). This subparagraph

13 (T) is exempt from the provisions of Section 250.

14 (e) Gross income; adjusted gross income; taxable income.

15 (1) In general. Subject to the provisions of paragraph

16 (2) and subsection (b) (3), for purposes of this Section

17 and Section 803(e), a taxpayer's gross income, adjusted

18 gross income, or taxable income for the taxable year shall

19 mean the amount of gross income, adjusted gross income or

20 taxable income properly reportable for federal income tax

21 purposes for the taxable year under the provisions of the

22 Internal Revenue Code. Taxable income may be less than

23 zero. However, for taxable years ending on or after

24 December 31, 1986, net operating loss carryforwards from

25 taxable years ending prior to December 31, 1986, may not

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1 exceed the sum of federal taxable income for the taxable

2 year before net operating loss deduction, plus the excess

3 of addition modifications over subtraction modifications

4 for the taxable year. For taxable years ending prior to

5 December 31, 1986, taxable income may never be an amount in

6 excess of the net operating loss for the taxable year as

7 defined in subsections (c) and (d) of Section 172 of the

8 Internal Revenue Code, provided that when taxable income of

9 a corporation (other than a Subchapter S corporation),

10 trust, or estate is less than zero and addition

11 modifications, other than those provided by subparagraph

12 (E) of paragraph (2) of subsection (b) for corporations or

13 subparagraph (E) of paragraph (2) of subsection (c) for

14 trusts and estates, exceed subtraction modifications, an

15 addition modification must be made under those

16 subparagraphs for any other taxable year to which the

17 taxable income less than zero (net operating loss) is

18 applied under Section 172 of the Internal Revenue Code or

19 under subparagraph (E) of paragraph (2) of this subsection

20 (e) applied in conjunction with Section 172 of the Internal

21 Revenue Code.

22 (2) Special rule. For purposes of paragraph (1) of this

23 subsection, the taxable income properly reportable for

24 federal income tax purposes shall mean:

25 (A) Certain life insurance companies. In the case

26 of a life insurance company subject to the tax imposed

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1 by Section 801 of the Internal Revenue Code, life

2 insurance company taxable income, plus the amount of

3 distribution from pre-1984 policyholder surplus

4 accounts as calculated under Section 815a of the

5 Internal Revenue Code;

6 (B) Certain other insurance companies. In the case

7 of mutual insurance companies subject to the tax

8 imposed by Section 831 of the Internal Revenue Code,

9 insurance company taxable income;

10 (C) Regulated investment companies. In the case of

11 a regulated investment company subject to the tax

12 imposed by Section 852 of the Internal Revenue Code,

13 investment company taxable income;

14 (D) Real estate investment trusts. In the case of a

15 real estate investment trust subject to the tax imposed

16 by Section 857 of the Internal Revenue Code, real

17 estate investment trust taxable income;

18 (E) Consolidated corporations. In the case of a

19 corporation which is a member of an affiliated group of

20 corporations filing a consolidated income tax return

21 for the taxable year for federal income tax purposes,

22 taxable income determined as if such corporation had

23 filed a separate return for federal income tax purposes

24 for the taxable year and each preceding taxable year

25 for which it was a member of an affiliated group. For

26 purposes of this subparagraph, the taxpayer's separate

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1 taxable income shall be determined as if the election

2 provided by Section 243(b) (2) of the Internal Revenue

3 Code had been in effect for all such years;

4 (F) Cooperatives. In the case of a cooperative

5 corporation or association, the taxable income of such

6 organization determined in accordance with the

7 provisions of Section 1381 through 1388 of the Internal

8 Revenue Code, but without regard to the prohibition

9 against offsetting losses from patronage activities

10 against income from nonpatronage activities; except

11 that a cooperative corporation or association may make

12 an election to follow its federal income tax treatment

13 of patronage losses and nonpatronage losses. In the

14 event such election is made, such losses shall be

15 computed and carried over in a manner consistent with

16 subsection (a) of Section 207 of this Act and

17 apportioned by the apportionment factor reported by

18 the cooperative on its Illinois income tax return filed

19 for the taxable year in which the losses are incurred.

20 The election shall be effective for all taxable years

21 with original returns due on or after the date of the

22 election. In addition, the cooperative may file an

23 amended return or returns, as allowed under this Act,

24 to provide that the election shall be effective for

25 losses incurred or carried forward for taxable years

26 occurring prior to the date of the election. Once made,

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1 the election may only be revoked upon approval of the

2 Director. The Department shall adopt rules setting

3 forth requirements for documenting the elections and

4 any resulting Illinois net loss and the standards to be

5 used by the Director in evaluating requests to revoke

6 elections. Public Act 96-932 is declaratory of

7 existing law;

8 (G) Subchapter S corporations. In the case of: (i)

9 a Subchapter S corporation for which there is in effect

10 an election for the taxable year under Section 1362 of

11 the Internal Revenue Code, the taxable income of such

12 corporation determined in accordance with Section

13 1363(b) of the Internal Revenue Code, except that

14 taxable income shall take into account those items

15 which are required by Section 1363(b)(1) of the

16 Internal Revenue Code to be separately stated; and (ii)

17 a Subchapter S corporation for which there is in effect

18 a federal election to opt out of the provisions of the

19 Subchapter S Revision Act of 1982 and have applied

20 instead the prior federal Subchapter S rules as in

21 effect on July 1, 1982, the taxable income of such

22 corporation determined in accordance with the federal

23 Subchapter S rules as in effect on July 1, 1982; and

24 (H) Partnerships. In the case of a partnership,

25 taxable income determined in accordance with Section

26 703 of the Internal Revenue Code, except that taxable

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1 income shall take into account those items which are

2 required by Section 703(a)(1) to be separately stated

3 but which would be taken into account by an individual

4 in calculating his taxable income.

5 (3) Recapture of business expenses on disposition of

6 asset or business. Notwithstanding any other law to the

7 contrary, if in prior years income from an asset or

8 business has been classified as business income and in a

9 later year is demonstrated to be non-business income, then

10 all expenses, without limitation, deducted in such later

11 year and in the 2 immediately preceding taxable years

12 related to that asset or business that generated the

13 non-business income shall be added back and recaptured as

14 business income in the year of the disposition of the asset

15 or business. Such amount shall be apportioned to Illinois

16 using the greater of the apportionment fraction computed

17 for the business under Section 304 of this Act for the

18 taxable year or the average of the apportionment fractions

19 computed for the business under Section 304 of this Act for

20 the taxable year and for the 2 immediately preceding

21 taxable years.

22 (f) Valuation limitation amount.

23 (1) In general. The valuation limitation amount

24 referred to in subsections (a) (2) (G), (c) (2) (I) and

25 (d)(2) (E) is an amount equal to:

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1 (A) The sum of the pre-August 1, 1969 appreciation

2 amounts (to the extent consisting of gain reportable

3 under the provisions of Section 1245 or 1250 of the

4 Internal Revenue Code) for all property in respect of

5 which such gain was reported for the taxable year; plus

6 (B) The lesser of (i) the sum of the pre-August 1,

7 1969 appreciation amounts (to the extent consisting of

8 capital gain) for all property in respect of which such

9 gain was reported for federal income tax purposes for

10 the taxable year, or (ii) the net capital gain for the

11 taxable year, reduced in either case by any amount of

12 such gain included in the amount determined under

13 subsection (a) (2) (F) or (c) (2) (H).

14 (2) Pre-August 1, 1969 appreciation amount.

15 (A) If the fair market value of property referred

16 to in paragraph (1) was readily ascertainable on August

17 1, 1969, the pre-August 1, 1969 appreciation amount for

18 such property is the lesser of (i) the excess of such

19 fair market value over the taxpayer's basis (for

20 determining gain) for such property on that date

21 (determined under the Internal Revenue Code as in

22 effect on that date), or (ii) the total gain realized

23 and reportable for federal income tax purposes in

24 respect of the sale, exchange or other disposition of

25 such property.

26 (B) If the fair market value of property referred

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1 to in paragraph (1) was not readily ascertainable on

2 August 1, 1969, the pre-August 1, 1969 appreciation

3 amount for such property is that amount which bears the

4 same ratio to the total gain reported in respect of the

5 property for federal income tax purposes for the

6 taxable year, as the number of full calendar months in

7 that part of the taxpayer's holding period for the

8 property ending July 31, 1969 bears to the number of

9 full calendar months in the taxpayer's entire holding

10 period for the property.

11 (C) The Department shall prescribe such

12 regulations as may be necessary to carry out the

13 purposes of this paragraph.

14 (g) Double deductions. Unless specifically provided

15 otherwise, nothing in this Section shall permit the same item

16 to be deducted more than once.

17 (h) Legislative intention. Except as expressly provided by

18 this Section there shall be no modifications or limitations on

19 the amounts of income, gain, loss or deduction taken into

20 account in determining gross income, adjusted gross income or

21 taxable income for federal income tax purposes for the taxable

22 year, or in the amount of such items entering into the

23 computation of base income and net income under this Act for

24 such taxable year, whether in respect of property values as of

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1 August 1, 1969 or otherwise.

2 (Source: P.A. 96-45, eff. 7-15-09; 96-120, eff. 8-4-09; 96-198,

3 eff. 8-10-09; 96-328, eff. 8-11-09; 96-520, eff. 8-14-09;

4 96-835, eff. 12-16-09; 96-932, eff. 1-1-11; 96-935, eff.

5 6-21-10; 96-1214, eff. 7-22-10; 97-333, eff. 8-12-11; 97-507,

6 eff. 8-23-11; 97-905, eff. 8-7-12.)

7 (35 ILCS 5/204) (from Ch. 120, par. 2-204)

8 Sec. 204. Standard Exemption.

9 (a) Allowance of exemption. In computing net income under

10 this Act, there shall be allowed as an exemption the sum of the

11 amounts determined under subsections (b), (c) and (d),

12 multiplied by a fraction the numerator of which is the amount

13 of the taxpayer's base income allocable to this State for the

14 taxable year and the denominator of which is the taxpayer's

15 total base income for the taxable year.

16 (b) Basic amount. For the purpose of subsection (a) of this

17 Section, except as provided by subsection (a) of Section 205

18 and in this subsection, each taxpayer shall be allowed a basic

19 amount of $1000, except that for corporations the basic amount

20 shall be zero for tax years ending on or after December 31,

21 2003, and for individuals the basic amount shall be:

22 (1) for taxable years ending on or after December 31,

23 1998 and prior to December 31, 1999, $1,300;

24 (2) for taxable years ending on or after December 31,

25 1999 and prior to December 31, 2000, $1,650;

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1 (3) for taxable years ending on or after December 31,

2 2000 and prior to December 31, 2012, $2,000;

3 (4) for taxable years ending on or after December 31,

4 2012 and prior to December 31, 2013, $2,050;

5 (5) for taxable years ending on or after December 31,

6 2013, $2,050 plus the cost-of-living adjustment under

7 subsection (d-5).

8 For taxable years ending on or after December 31, 1992, a

9 taxpayer whose Illinois base income exceeds the basic amount

10 and who is claimed as a dependent on another person's tax

11 return under the Internal Revenue Code shall not be allowed any

12 basic amount under this subsection.

13 (c) Additional amount for individuals. In the case of an

14 individual taxpayer, there shall be allowed for the purpose of

15 subsection (a), in addition to the basic amount provided by

16 subsection (b), an additional exemption equal to the basic

17 amount for each exemption in excess of one allowable to such

18 individual taxpayer for the taxable year under Section 151 of

19 the Internal Revenue Code.

20 (d) Additional exemptions for an individual taxpayer and

21 his or her spouse. In the case of an individual taxpayer and

22 his or her spouse, he or she shall each be allowed additional

23 exemptions as follows:

24 (1) Additional exemption for taxpayer or spouse 65

25 years of age or older.

26 (A) For taxpayer. An additional exemption of

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1 $1,000 for the taxpayer if he or she has attained the

2 age of 65 before the end of the taxable year.

3 (B) For spouse when a joint return is not filed. An

4 additional exemption of $1,000 for the spouse of the

5 taxpayer if a joint return is not made by the taxpayer

6 and his spouse, and if the spouse has attained the age

7 of 65 before the end of such taxable year, and, for the

8 calendar year in which the taxable year of the taxpayer

9 begins, has no gross income and is not the dependent of

10 another taxpayer.

11 (2) Additional exemption for blindness of taxpayer or

12 spouse.

13 (A) For taxpayer. An additional exemption of

14 $1,000 for the taxpayer if he or she is blind at the

15 end of the taxable year.

16 (B) For spouse when a joint return is not filed. An

17 additional exemption of $1,000 for the spouse of the

18 taxpayer if a separate return is made by the taxpayer,

19 and if the spouse is blind and, for the calendar year

20 in which the taxable year of the taxpayer begins, has

21 no gross income and is not the dependent of another

22 taxpayer. For purposes of this paragraph, the

23 determination of whether the spouse is blind shall be

24 made as of the end of the taxable year of the taxpayer;

25 except that if the spouse dies during such taxable year

26 such determination shall be made as of the time of such

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1 death.

2 (C) Blindness defined. For purposes of this

3 subsection, an individual is blind only if his or her

4 central visual acuity does not exceed 20/200 in the

5 better eye with correcting lenses, or if his or her

6 visual acuity is greater than 20/200 but is accompanied

7 by a limitation in the fields of vision such that the

8 widest diameter of the visual fields subtends an angle

9 no greater than 20 degrees.

10 (d-5) Cost-of-living adjustment. For purposes of item (5)

11 of subsection (b), the cost-of-living adjustment for any

12 calendar year and for taxable years ending prior to the end of

13 the subsequent calendar year is equal to $2,050 times the

14 percentage (if any) by which:

15 (1) the Consumer Price Index for the preceding calendar

16 year, exceeds

17 (2) the Consumer Price Index for the calendar year

18 2011.

19 The Consumer Price Index for any calendar year is the

20 average of the Consumer Price Index as of the close of the

21 12-month period ending on August 31 of that calendar year.

22 The term "Consumer Price Index" means the last Consumer

23 Price Index for All Urban Consumers published by the United

24 States Department of Labor or any successor agency.

25 If any cost-of-living adjustment is not a multiple of $25,

26 that adjustment shall be rounded to the next lowest multiple of

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1 $25.

2 (e) Cross reference. See Article 3 for the manner of

3 determining base income allocable to this State.

4 (f) Application of Section 250. Section 250 does not apply

5 to the amendments to this Section made by Public Act 90-613.

6 (g) Notwithstanding any other provision of law, for taxable

7 years beginning on or after January 1, 2018, no taxpayer may

8 claim an exemption under this Section if the taxpayer's

9 adjusted gross income for the taxable year exceeds (i)

10 $500,000, in the case of spouses filing a joint federal tax

11 return or (ii) $250,000, in the case of all other taxpayers.

12 (Source: P.A. 97-507, eff. 8-23-11; 97-652, eff. 6-1-12.)

13 (35 ILCS 5/212)

14 Sec. 212. Earned income tax credit.

15 (a) With respect to the federal earned income tax credit

16 allowed for the taxable year under Section 32 of the federal

17 Internal Revenue Code, 26 U.S.C. 32, each individual taxpayer

18 is entitled to a credit against the tax imposed by subsections

19 (a) and (b) of Section 201 in an amount equal to (i) 5% of the

20 federal tax credit for each taxable year beginning on or after

21 January 1, 2000 and ending prior to December 31, 2012, (ii)

22 7.5% of the federal tax credit for each taxable year beginning

23 on or after January 1, 2012 and ending prior to December 31,

24 2013, ~~and~~ (iii) 10% of the federal tax credit for each taxable

25 year beginning on or after January 1, 2013 and beginning prior

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1 to January 1, 2017, (iv) 11% of the federal tax credit for each

2 taxable year beginning on or after January 1, 2017 and

3 beginning prior to January 1, 2018, (v) 12% of the federal tax

4 credit for each taxable year beginning on or after January 1,

5 2018 and beginning prior to January 1, 2019, (vi) 13% of the

6 federal tax credit for each taxable year beginning on or after

7 January 1, 2019 and beginning prior to January 1, 2020, (vii)

8 14% of the federal tax credit for each taxable year beginning

9 on or after January 1, 2020 and beginning prior to January 1,

10 2021, and (viii) 15% of the federal tax credit for each taxable

11 year beginning on or after January 1, 2021.

12 For a non-resident or part-year resident, the amount of the

13 credit under this Section shall be in proportion to the amount

14 of income attributable to this State.

15 (b) For taxable years beginning before January 1, 2003, in

16 no event shall a credit under this Section reduce the

17 taxpayer's liability to less than zero. For each taxable year

18 beginning on or after January 1, 2003, if the amount of the

19 credit exceeds the income tax liability for the applicable tax

20 year, then the excess credit shall be refunded to the taxpayer.

21 The amount of a refund shall not be included in the taxpayer's

22 income or resources for the purposes of determining eligibility

23 or benefit level in any means-tested benefit program

24 administered by a governmental entity unless required by

25 federal law.

26 (c) This Section is exempt from the provisions of Section

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1 250.

2 (Source: P.A. 97-652, eff. 6-1-12.)

3 (35 ILCS 5/222)

4 Sec. 222. Live theater production credit.

5 (a) For tax years beginning on or after January 1, 2012 and

6 beginning prior to January 1, 2027, a taxpayer who has received

7 a tax credit award under the Live Theater Production Tax Credit

8 Act is entitled to a credit against the taxes imposed under

9 subsections (a) and (b) of Section 201 of this Act in an amount

10 determined under that Act by the Department of Commerce and

11 Economic Opportunity.

12 (b) If the taxpayer is a partnership, limited liability

13 partnership, limited liability company, or Subchapter S

14 corporation, the tax credit award is allowed to the partners,

15 unit holders, or shareholders in accordance with the

16 determination of income and distributive share of income under

17 Sections 702 and 704 and Subchapter S of the Internal Revenue

18 Code.

19 (c) A sale, assignment, or transfer of the tax credit award

20 may be made by the taxpayer earning the credit within one year

21 after the credit is awarded in accordance with rules adopted by

22 the Department of Commerce and Economic Opportunity.

23 (d) The Department of Revenue, in cooperation with the

24 Department of Commerce and Economic Opportunity, shall adopt

25 rules to enforce and administer the provisions of this Section.

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1 (e) The tax credit award may not be carried back. If the

2 amount of the credit exceeds the tax liability for the year,

3 the excess may be carried forward and applied to the tax

4 liability of the 5 tax years following the excess credit year.

5 The tax credit award shall be applied to the earliest year for

6 which there is a tax liability. If there are credits from more

7 than one tax year that are available to offset liability, the

8 earlier credit shall be applied first. In no event may a credit

9 under this Section reduce the taxpayer's liability to less than

10 zero.

11 (Source: P.A. 97-636, eff. 6-1-12.)

12 (35 ILCS 5/225 new)

13 Sec. 225. Credit for instructional materials and supplies.

14 For taxable years beginning on and after January 1, 2017, a

15 taxpayer shall be allowed a credit in the amount paid by the

16 taxpayer during the taxable year for instructional materials

17 and supplies with respect to classroom based instruction in a

18 qualified school, or $250, whichever is less, provided that the

19 taxpayer is a teacher, instructor, counselor, principal, or

20 aide in a qualified school for at least 900 hours during a

21 school year.

22 The credit may not be carried back and may not reduce the

23 taxpayer's liability to less than zero. If the amount of the

24 credit exceeds the tax liability for the year, the excess may

25 be carried forward and applied to the tax liability of the 5

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1 taxable years following the excess credit year. The tax credit

2 shall be applied to the earliest year for which there is a tax

3 liability. If there are credits for more than one year that are

4 available to offset a liability, the earlier credit shall be

5 applied first.

6 For purposes of this Section, the term "materials and

7 supplies" means amounts paid for instructional materials or

8 supplies that are designated for classroom use in any qualified

9 school. For purposes of this Section, the term "qualified

10 school" means a public school or non-public school located in

11 Illinois.

12 This Section is exempt from the provisions of Section 250.

13 (35 ILCS 5/804) (from Ch. 120, par. 8-804)

14 Sec. 804. Failure to Pay Estimated Tax.

15 (a) In general. In case of any underpayment of estimated

16 tax by a taxpayer, except as provided in subsection (d) or (e),

17 the taxpayer shall be liable to a penalty in an amount

18 determined at the rate prescribed by Section 3-3 of the Uniform

19 Penalty and Interest Act upon the amount of the underpayment

20 (determined under subsection (b)) for each required

21 installment.

22 (b) Amount of underpayment. For purposes of subsection (a),

23 the amount of the underpayment shall be the excess of:

24 (1) the amount of the installment which would be

25 required to be paid under subsection (c), over

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1 (2) the amount, if any, of the installment paid on or

2 before the last date prescribed for payment.

3 (c) Amount of Required Installments.

4 (1) Amount.

5 (A) In General. Except as provided in paragraphs

6 (2) and (3), the amount of any required installment

7 shall be 25% of the required annual payment.

8 (B) Required Annual Payment. For purposes of

9 subparagraph (A), the term "required annual payment"

10 means the lesser of:

11 (i) 90% of the tax shown on the return for the

12 taxable year, or if no return is filed, 90% of the

13 tax for such year;

14 (ii) for installments due prior to February 1,

15 2011, and after January 31, 2012, 100% of the tax

16 shown on the return of the taxpayer for the

17 preceding taxable year if a return showing a

18 liability for tax was filed by the taxpayer for the

19 preceding taxable year and such preceding year was

20 a taxable year of 12 months; or

21 (iii) for installments due after January 31,

22 2011, and prior to February 1, 2012, 150% of the

23 tax shown on the return of the taxpayer for the

24 preceding taxable year if a return showing a

25 liability for tax was filed by the taxpayer for the

26 preceding taxable year and such preceding year was

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1 a taxable year of 12 months.

2 (2) Lower Required Installment where Annualized Income

3 Installment is Less Than Amount Determined Under Paragraph

4 (1).

5 (A) In General. In the case of any required

6 installment if a taxpayer establishes that the

7 annualized income installment is less than the amount

8 determined under paragraph (1),

9 (i) the amount of such required installment

10 shall be the annualized income installment, and

11 (ii) any reduction in a required installment

12 resulting from the application of this

13 subparagraph shall be recaptured by increasing the

14 amount of the next required installment determined

15 under paragraph (1) by the amount of such

16 reduction, and by increasing subsequent required

17 installments to the extent that the reduction has

18 not previously been recaptured under this clause.

19 (B) Determination of Annualized Income

20 Installment. In the case of any required installment,

21 the annualized income installment is the excess, if

22 any, of:

23 (i) an amount equal to the applicable

24 percentage of the tax for the taxable year computed

25 by placing on an annualized basis the net income

26 for months in the taxable year ending before the

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1 due date for the installment, over

2 (ii) the aggregate amount of any prior

3 required installments for the taxable year.

4 (C) Applicable Percentage.

5	`In the case of the following`	`The applicable`
6	`required installments:`	`percentage is:`
7	`1st` ...............................	`22.5%`
8	`2nd` ...............................	`45%`
9	`3rd` ...............................	`67.5%`
10	`4th` ...............................	`90%`

11 (D) Annualized Net Income; Individuals. For

12 individuals, net income shall be placed on an

13 annualized basis by:

14 (i) multiplying by 12, or in the case of a

15 taxable year of less than 12 months, by the number

16 of months in the taxable year, the net income

17 computed without regard to the standard exemption

18 for the months in the taxable year ending before

19 the month in which the installment is required to

20 be paid;

21 (ii) dividing the resulting amount by the

22 number of months in the taxable year ending before

23 the month in which such installment date falls; and

24 (iii) deducting from such amount the standard

25 exemption allowable for the taxable year, such

26 standard exemption being determined as of the last

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1 date prescribed for payment of the installment.

2 (E) Annualized Net Income; Corporations. For

3 corporations, net income shall be placed on an

4 annualized basis by multiplying by 12 the taxable

5 income

6 (i) for the first 3 months of the taxable year,

7 in the case of the installment required to be paid

8 in the 4th month,

9 (ii) for the first 3 months or for the first 5

10 months of the taxable year, in the case of the

11 installment required to be paid in the 6th month,

12 (iii) for the first 6 months or for the first 8

13 months of the taxable year, in the case of the

14 installment required to be paid in the 9th month,

15 and

16 (iv) for the first 9 months or for the first 11

17 months of the taxable year, in the case of the

18 installment required to be paid in the 12th month

19 of the taxable year,

20 then dividing the resulting amount by the number of

21 months in the taxable year (3, 5, 6, 8, 9, or 11 as the

22 case may be).

23 (3) Notwithstanding any other provision of this

24 subsection (c), in the case of a federally regulated

25 exchange that elects to apportion its income under Section

26 304(c-1) of this Act, the amount of each required

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1 installment due prior to June 30 of the first taxable year

2 to which the election applies shall be 25% of the tax that

3 would have been shown on the return for that taxable year

4 if the taxpayer had not made such election.

5 (d) Exceptions. Notwithstanding the provisions of the

6 preceding subsections, the penalty imposed by subsection (a)

7 shall not be imposed if the taxpayer was not required to file

8 an Illinois income tax return for the preceding taxable year,

9 or, for individuals, if the taxpayer had no tax liability for

10 the preceding taxable year and such year was a taxable year of

11 12 months. The penalty imposed by subsection (a) shall also not

12 be imposed on any underpayments of estimated tax due before the

13 effective date of this amendatory Act of 1998 which

14 underpayments are solely attributable to the change in

15 apportionment from subsection (a) to subsection (h) of Section

16 304. The provisions of this amendatory Act of 1998 apply to tax

17 years ending on or after December 31, 1998.

18 (e) The penalty imposed for underpayment of estimated tax

19 by subsection (a) of this Section shall not be imposed to the

20 extent that the Director or his or her designate determines,

21 pursuant to Section 3-8 of the Uniform Penalty and Interest Act

22 that the penalty should not be imposed.

23 (f) Definition of tax. For purposes of subsections (b) and

24 (c), the term "tax" means the excess of the tax imposed under

25 Article 2 of this Act, over the amounts credited against such

26 tax under Sections 601(b) (3) and (4).

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1 (g) Application of Section in case of tax withheld under

2 Article 7. For purposes of applying this Section:

3 (1) tax withheld from compensation for the taxable year

4 shall be deemed a payment of estimated tax, and an equal

5 part of such amount shall be deemed paid on each

6 installment date for such taxable year, unless the taxpayer

7 establishes the dates on which all amounts were actually

8 withheld, in which case the amounts so withheld shall be

9 deemed payments of estimated tax on the dates on which such

10 amounts were actually withheld;

11 (2) amounts timely paid by a partnership, Subchapter S

12 corporation, or trust on behalf of a partner, shareholder,

13 or beneficiary pursuant to subsection (f) of Section 502 or

14 Section 709.5 and claimed as a payment of estimated tax

15 shall be deemed a payment of estimated tax made on the last

16 day of the taxable year of the partnership, Subchapter S

17 corporation, or trust for which the income from the

18 withholding is made was computed; and

19 (3) all other amounts pursuant to Article 7 shall be

20 deemed a payment of estimated tax on the date the payment

21 is made to the taxpayer of the amount from which the tax is

22 withheld.

23 (g-5) Amounts withheld under the State Salary and Annuity

24 Withholding Act. An individual who has amounts withheld under

25 paragraph (10) of Section 4 of the State Salary and Annuity

26 Withholding Act may elect to have those amounts treated as

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1 payments of estimated tax made on the dates on which those

2 amounts are actually withheld.

3 (g-10) Notwithstanding any other provision of law, no

4 penalty shall apply with respect to an underpayment of

5 estimated tax for the first, second, or third quarter of any

6 taxable year beginning on or after January 1, 2017 and

7 beginning prior to January 1, 2018 if (i) the underpayment was

8 due to the changes made by this amendatory Act of the 100th

9 General Assembly, (ii) the payment was otherwise timely made,

10 and (iii) the balance due is included with the taxpayer's

11 estimated tax payment for the fourth quarter.

12 (i) Short taxable year. The application of this Section to

13 taxable years of less than 12 months shall be in accordance

14 with regulations prescribed by the Department.

15 The changes in this Section made by Public Act 84-127 shall

16 apply to taxable years ending on or after January 1, 1986.

17 (Source: P.A. 96-1496, eff. 1-13-11; 97-507, eff. 8-23-11;

18 97-636, eff. 6-1-12.)

19 (35 ILCS 5/901) (from Ch. 120, par. 9-901)

20 Sec. 901. Collection authority.

21 (a) In general.

22 The Department shall collect the taxes imposed by this Act.

23 The Department shall collect certified past due child support

24 amounts under Section 2505-650 of the Department of Revenue Law

25 (20 ILCS 2505/2505-650). Except as provided in subsections (c),

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1 (e), (f), (g), and (h) of this Section, money collected

2 pursuant to subsections (a) and (b) of Section 201 of this Act

3 shall be paid into the General Revenue Fund in the State

4 treasury; money collected pursuant to subsections (c) and (d)

5 of Section 201 of this Act shall be paid into the Personal

6 Property Tax Replacement Fund, a special fund in the State

7 Treasury; and money collected under Section 2505-650 of the

8 Department of Revenue Law (20 ILCS 2505/2505-650) shall be paid

9 into the Child Support Enforcement Trust Fund, a special fund

10 outside the State Treasury, or to the State Disbursement Unit

11 established under Section 10-26 of the Illinois Public Aid

12 Code, as directed by the Department of Healthcare and Family

13 Services.

14 (b) Local Government Distributive Fund.

15 Beginning August 1, 1969, and continuing through June 30,

16 1994, the Treasurer shall transfer each month from the General

17 Revenue Fund to a special fund in the State treasury, to be

18 known as the "Local Government Distributive Fund", an amount

19 equal to 1/12 of the net revenue realized from the tax imposed

20 by subsections (a) and (b) of Section 201 of this Act during

21 the preceding month. Beginning July 1, 1994, and continuing

22 through June 30, 1995, the Treasurer shall transfer each month

23 from the General Revenue Fund to the Local Government

24 Distributive Fund an amount equal to 1/11 of the net revenue

25 realized from the tax imposed by subsections (a) and (b) of

26 Section 201 of this Act during the preceding month. Beginning

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1 July 1, 1995 and continuing through January 31, 2011, the

2 Treasurer shall transfer each month from the General Revenue

3 Fund to the Local Government Distributive Fund an amount equal

4 to the net of (i) 1/10 of the net revenue realized from the tax

5 imposed by subsections (a) and (b) of Section 201 of the

6 Illinois Income Tax Act during the preceding month (ii) minus,

7 beginning July 1, 2003 and ending June 30, 2004, $6,666,666,

8 and beginning July 1, 2004, zero. Beginning February 1, 2011,

9 and continuing through January 31, 2015, the Treasurer shall

10 transfer each month from the General Revenue Fund to the Local

11 Government Distributive Fund an amount equal to the sum of (i)

12 6% (10% of the ratio of the 3% individual income tax rate prior

13 to 2011 to the 5% individual income tax rate after 2010) of the

14 net revenue realized from the tax imposed by subsections (a)

15 and (b) of Section 201 of this Act upon individuals, trusts,

16 and estates during the preceding month and (ii) 6.86% (10% of

17 the ratio of the 4.8% corporate income tax rate prior to 2011

18 to the 7% corporate income tax rate after 2010) of the net

19 revenue realized from the tax imposed by subsections (a) and

20 (b) of Section 201 of this Act upon corporations during the

21 preceding month. Beginning February 1, 2015 and continuing

22 through January 31, 2017 ~~January 31, 2025~~, the Treasurer shall

23 transfer each month from the General Revenue Fund to the Local

24 Government Distributive Fund an amount equal to the sum of (i)

25 8% (10% of the ratio of the 3% individual income tax rate prior

26 to 2011 to the 3.75% individual income tax rate after 2014) of

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1 the net revenue realized from the tax imposed by subsections

2 (a) and (b) of Section 201 of this Act upon individuals,

3 trusts, and estates during the preceding month and (ii) 9.14%

4 (10% of the ratio of the 4.8% corporate income tax rate prior

5 to 2011 to the 5.25% corporate income tax rate after 2014) of

6 the net revenue realized from the tax imposed by subsections

7 (a) and (b) of Section 201 of this Act upon corporations during

8 the preceding month. Beginning February 1, 2017 and continuing

9 through January 31, 2024 ~~February 1, 2025~~, the Treasurer shall

10 transfer each month from the General Revenue Fund to the Local

11 Government Distributive Fund an amount equal to the sum of (i)

12 6.06% ~~9.23%~~ (10% of the ratio of the 3% individual income tax

13 rate prior to 2011 to the 4.95% ~~3.25%~~ individual income tax

14 rate beginning in 2017 ~~after 2024~~) of the net revenue realized

15 from the tax imposed by subsections (a) and (b) of Section 201

16 of this Act upon individuals, trusts, and estates during the

17 preceding month and (ii) 6.86% (10% of the ratio of the 4.8%

18 corporate income tax rate prior to 2011 to the 7% corporate

19 income tax rate beginning in 2017) ~~10%~~ of the net revenue

20 realized from the tax imposed by subsections (a) and (b) of

21 Section 201 of this Act upon corporations during the preceding

22 month. Beginning February 1, 2024, the Treasurer shall transfer

23 each month from the General Revenue Fund to the Local

24 Government Distributive Fund an amount equal to the sum of (i)

25 8% (10% of the ratio of the 3% individual income tax rate prior

26 to 2011 to the 3.75% individual income tax rate after 2024) of

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1 the net revenue realized from the tax imposed by subsections

2 (a) and (b) of Section 201 of this Act upon individuals,

3 trusts, and estates during the preceding month and (ii) 9.14%

4 (10% of the ratio of the 4.8% corporate income tax rate prior

5 to 2011 to the 5.25% corporate income tax rate beginning in

6 2024) of the net revenue realized from the tax imposed by

7 subsections (a) and (b) of Section 201 of this Act upon

8 corporations during the preceding month. Net revenue realized

9 for a month shall be defined as the revenue from the tax

10 imposed by subsections (a) and (b) of Section 201 of this Act

11 which is deposited in the General Revenue Fund, the Education

12 Assistance Fund, the Income Tax Surcharge Local Government

13 Distributive Fund, the Fund for the Advancement of Education,

14 and the Commitment to Human Services Fund during the month

15 minus the amount paid out of the General Revenue Fund in State

16 warrants during that same month as refunds to taxpayers for

17 overpayment of liability under the tax imposed by subsections

18 (a) and (b) of Section 201 of this Act.

19 Beginning on August 26, 2014 (the effective date of Public

20 Act 98-1052), the Comptroller shall perform the transfers

21 required by this subsection (b) no later than 60 days after he

22 or she receives the certification from the Treasurer as

23 provided in Section 1 of the State Revenue Sharing Act.

24 (c) Deposits Into Income Tax Refund Fund.

25 (1) Beginning on January 1, 1989 and thereafter, the

26 Department shall deposit a percentage of the amounts

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1 collected pursuant to subsections (a) and (b)(1), (2), and

2 (3), of Section 201 of this Act into a fund in the State

3 treasury known as the Income Tax Refund Fund. The

4 Department shall deposit 6% of such amounts during the

5 period beginning January 1, 1989 and ending on June 30,

6 1989. Beginning with State fiscal year 1990 and for each

7 fiscal year thereafter, the percentage deposited into the

8 Income Tax Refund Fund during a fiscal year shall be the

9 Annual Percentage. For fiscal years 1999 through 2001, the

10 Annual Percentage shall be 7.1%. For fiscal year 2003, the

11 Annual Percentage shall be 8%. For fiscal year 2004, the

12 Annual Percentage shall be 11.7%. Upon the effective date

13 of this amendatory Act of the 93rd General Assembly, the

14 Annual Percentage shall be 10% for fiscal year 2005. For

15 fiscal year 2006, the Annual Percentage shall be 9.75%. For

16 fiscal year 2007, the Annual Percentage shall be 9.75%. For

17 fiscal year 2008, the Annual Percentage shall be 7.75%. For

18 fiscal year 2009, the Annual Percentage shall be 9.75%. For

19 fiscal year 2010, the Annual Percentage shall be 9.75%. For

20 fiscal year 2011, the Annual Percentage shall be 8.75%. For

21 fiscal year 2012, the Annual Percentage shall be 8.75%. For

22 fiscal year 2013, the Annual Percentage shall be 9.75%. For

23 fiscal year 2014, the Annual Percentage shall be 9.5%. For

24 fiscal year 2015, the Annual Percentage shall be 10%. For

25 all other fiscal years, the Annual Percentage shall be

26 calculated as a fraction, the numerator of which shall be

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1 the amount of refunds approved for payment by the

2 Department during the preceding fiscal year as a result of

3 overpayment of tax liability under subsections (a) and

4 (b)(1), (2), and (3) of Section 201 of this Act plus the

5 amount of such refunds remaining approved but unpaid at the

6 end of the preceding fiscal year, minus the amounts

7 transferred into the Income Tax Refund Fund from the

8 Tobacco Settlement Recovery Fund, and the denominator of

9 which shall be the amounts which will be collected pursuant

10 to subsections (a) and (b)(1), (2), and (3) of Section 201

11 of this Act during the preceding fiscal year; except that

12 in State fiscal year 2002, the Annual Percentage shall in

13 no event exceed 7.6%. The Director of Revenue shall certify

14 the Annual Percentage to the Comptroller on the last

15 business day of the fiscal year immediately preceding the

16 fiscal year for which it is to be effective.

17 (2) Beginning on January 1, 1989 and thereafter, the

18 Department shall deposit a percentage of the amounts

19 collected pursuant to subsections (a) and (b)(6), (7), and

20 (8), (c) and (d) of Section 201 of this Act into a fund in

21 the State treasury known as the Income Tax Refund Fund. The

22 Department shall deposit 18% of such amounts during the

23 period beginning January 1, 1989 and ending on June 30,

24 1989. Beginning with State fiscal year 1990 and for each

25 fiscal year thereafter, the percentage deposited into the

26 Income Tax Refund Fund during a fiscal year shall be the

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1 Annual Percentage. For fiscal years 1999, 2000, and 2001,

2 the Annual Percentage shall be 19%. For fiscal year 2003,

3 the Annual Percentage shall be 27%. For fiscal year 2004,

4 the Annual Percentage shall be 32%. Upon the effective date

5 of this amendatory Act of the 93rd General Assembly, the

6 Annual Percentage shall be 24% for fiscal year 2005. For

7 fiscal year 2006, the Annual Percentage shall be 20%. For

8 fiscal year 2007, the Annual Percentage shall be 17.5%. For

9 fiscal year 2008, the Annual Percentage shall be 15.5%. For

10 fiscal year 2009, the Annual Percentage shall be 17.5%. For

11 fiscal year 2010, the Annual Percentage shall be 17.5%. For

12 fiscal year 2011, the Annual Percentage shall be 17.5%. For

13 fiscal year 2012, the Annual Percentage shall be 17.5%. For

14 fiscal year 2013, the Annual Percentage shall be 14%. For

15 fiscal year 2014, the Annual Percentage shall be 13.4%. For

16 fiscal year 2015, the Annual Percentage shall be 14%. For

17 all other fiscal years, the Annual Percentage shall be

18 calculated as a fraction, the numerator of which shall be

19 the amount of refunds approved for payment by the

20 Department during the preceding fiscal year as a result of

21 overpayment of tax liability under subsections (a) and

22 (b)(6), (7), and (8), (c) and (d) of Section 201 of this

23 Act plus the amount of such refunds remaining approved but

24 unpaid at the end of the preceding fiscal year, and the

25 denominator of which shall be the amounts which will be

26 collected pursuant to subsections (a) and (b)(6), (7), and

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1 (8), (c) and (d) of Section 201 of this Act during the

2 preceding fiscal year; except that in State fiscal year

3 2002, the Annual Percentage shall in no event exceed 23%.

4 The Director of Revenue shall certify the Annual Percentage

5 to the Comptroller on the last business day of the fiscal

6 year immediately preceding the fiscal year for which it is

7 to be effective.

8 (3) The Comptroller shall order transferred and the

9 Treasurer shall transfer from the Tobacco Settlement

10 Recovery Fund to the Income Tax Refund Fund (i) $35,000,000

11 in January, 2001, (ii) $35,000,000 in January, 2002, and

12 (iii) $35,000,000 in January, 2003.

13 (d) Expenditures from Income Tax Refund Fund.

14 (1) Beginning January 1, 1989, money in the Income Tax

15 Refund Fund shall be expended exclusively for the purpose

16 of paying refunds resulting from overpayment of tax

17 liability under Section 201 of this Act, for paying rebates

18 under Section 208.1 in the event that the amounts in the

19 Homeowners' Tax Relief Fund are insufficient for that

20 purpose, and for making transfers pursuant to this

21 subsection (d).

22 (2) The Director shall order payment of refunds

23 resulting from overpayment of tax liability under Section

24 201 of this Act from the Income Tax Refund Fund only to the

25 extent that amounts collected pursuant to Section 201 of

26 this Act and transfers pursuant to this subsection (d) and

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1 item (3) of subsection (c) have been deposited and retained

2 in the Fund.

3 (3) As soon as possible after the end of each fiscal

4 year, the Director shall order transferred and the State

5 Treasurer and State Comptroller shall transfer from the

6 Income Tax Refund Fund to the Personal Property Tax

7 Replacement Fund an amount, certified by the Director to

8 the Comptroller, equal to the excess of the amount

9 collected pursuant to subsections (c) and (d) of Section

10 201 of this Act deposited into the Income Tax Refund Fund

11 during the fiscal year over the amount of refunds resulting

12 from overpayment of tax liability under subsections (c) and

13 (d) of Section 201 of this Act paid from the Income Tax

14 Refund Fund during the fiscal year.

15 (4) As soon as possible after the end of each fiscal

16 year, the Director shall order transferred and the State

17 Treasurer and State Comptroller shall transfer from the

18 Personal Property Tax Replacement Fund to the Income Tax

19 Refund Fund an amount, certified by the Director to the

20 Comptroller, equal to the excess of the amount of refunds

21 resulting from overpayment of tax liability under

22 subsections (c) and (d) of Section 201 of this Act paid

23 from the Income Tax Refund Fund during the fiscal year over

24 the amount collected pursuant to subsections (c) and (d) of

25 Section 201 of this Act deposited into the Income Tax

26 Refund Fund during the fiscal year.

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1 (4.5) As soon as possible after the end of fiscal year

2 1999 and of each fiscal year thereafter, the Director shall

3 order transferred and the State Treasurer and State

4 Comptroller shall transfer from the Income Tax Refund Fund

5 to the General Revenue Fund any surplus remaining in the

6 Income Tax Refund Fund as of the end of such fiscal year;

7 excluding for fiscal years 2000, 2001, and 2002 amounts

8 attributable to transfers under item (3) of subsection (c)

9 less refunds resulting from the earned income tax credit.

10 (5) This Act shall constitute an irrevocable and

11 continuing appropriation from the Income Tax Refund Fund

12 for the purpose of paying refunds upon the order of the

13 Director in accordance with the provisions of this Section.

14 (e) Deposits into the Education Assistance Fund and the

15 Income Tax Surcharge Local Government Distributive Fund.

16 On July 1, 1991, and thereafter, of the amounts collected

17 pursuant to subsections (a) and (b) of Section 201 of this Act,

18 minus deposits into the Income Tax Refund Fund, the Department

19 shall deposit 7.3% into the Education Assistance Fund in the

20 State Treasury. Beginning July 1, 1991, and continuing through

21 January 31, 1993, of the amounts collected pursuant to

22 subsections (a) and (b) of Section 201 of the Illinois Income

23 Tax Act, minus deposits into the Income Tax Refund Fund, the

24 Department shall deposit 3.0% into the Income Tax Surcharge

25 Local Government Distributive Fund in the State Treasury.

26 Beginning February 1, 1993 and continuing through June 30,

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1 1993, of the amounts collected pursuant to subsections (a) and

2 (b) of Section 201 of the Illinois Income Tax Act, minus

3 deposits into the Income Tax Refund Fund, the Department shall

4 deposit 4.4% into the Income Tax Surcharge Local Government

5 Distributive Fund in the State Treasury. Beginning July 1,

6 1993, and continuing through June 30, 1994, of the amounts

7 collected under subsections (a) and (b) of Section 201 of this

8 Act, minus deposits into the Income Tax Refund Fund, the

9 Department shall deposit 1.475% into the Income Tax Surcharge

10 Local Government Distributive Fund in the State Treasury.

11 (f) Deposits into the Fund for the Advancement of

12 Education. Beginning February 1, 2015, the Department shall

13 deposit the following portions of the revenue realized from the

14 tax imposed upon individuals, trusts, and estates by

15 subsections (a) and (b) of Section 201 of this Act during the

16 preceding month, minus deposits into the Income Tax Refund

17 Fund, into the Fund for the Advancement of Education:

18 (1) beginning February 1, 2015, and prior to February

19 1, 2025, 1/30; and

20 (2) beginning February 1, 2025, 1/26.

21 If the rate of tax imposed by subsection (a) and (b) of

22 Section 201 is reduced pursuant to Section 201.5 of this Act,

23 the Department shall not make the deposits required by this

24 subsection (f) on or after the effective date of the reduction.

25 (g) Deposits into the Commitment to Human Services Fund.

26 Beginning February 1, 2015, the Department shall deposit the

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1 following portions of the revenue realized from the tax imposed

2 upon individuals, trusts, and estates by subsections (a) and

3 (b) of Section 201 of this Act during the preceding month,

4 minus deposits into the Income Tax Refund Fund, into the

5 Commitment to Human Services Fund:

6 (1) beginning February 1, 2015, and prior to February

7 1, 2025, 1/30; and

8 (2) beginning February 1, 2025, 1/26.

9 If the rate of tax imposed by subsection (a) and (b) of

10 Section 201 is reduced pursuant to Section 201.5 of this Act,

11 the Department shall not make the deposits required by this

12 subsection (g) on or after the effective date of the reduction.

13 (h) Deposits into the Tax Compliance and Administration

14 Fund. Beginning on the first day of the first calendar month to

15 occur on or after August 26, 2014 (the effective date of Public

16 Act 98-1098), each month the Department shall pay into the Tax

17 Compliance and Administration Fund, to be used, subject to

18 appropriation, to fund additional auditors and compliance

19 personnel at the Department, an amount equal to 1/12 of 5% of

20 the cash receipts collected during the preceding fiscal year by

21 the Audit Bureau of the Department from the tax imposed by

22 subsections (a), (b), (c), and (d) of Section 201 of this Act,

23 net of deposits into the Income Tax Refund Fund made from those

24 cash receipts.

25 (Source: P.A. 98-24, eff. 6-19-13; 98-674, eff. 6-30-14;

26 98-1052, eff. 8-26-14; 98-1098, eff. 8-26-14; 99-78, eff.

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1 7-20-15.)

2 (35 ILCS 5/1501) (from Ch. 120, par. 15-1501)

3 Sec. 1501. Definitions.

4 (a) In general. When used in this Act, where not otherwise

5 distinctly expressed or manifestly incompatible with the

6 intent thereof:

7 (1) Business income. The term "business income" means

8 all income that may be treated as apportionable business

9 income under the Constitution of the United States.

10 Business income is net of the deductions allocable thereto.

11 Such term does not include compensation or the deductions

12 allocable thereto. For each taxable year beginning on or

13 after January 1, 2003, a taxpayer may elect to treat all

14 income other than compensation as business income. This

15 election shall be made in accordance with rules adopted by

16 the Department and, once made, shall be irrevocable.

17 (1.5) Captive real estate investment trust:

18 (A) The term "captive real estate investment

19 trust" means a corporation, trust, or association:

20 (i) that is considered a real estate

21 investment trust for the taxable year under

22 Section 856 of the Internal Revenue Code;

23 (ii) the certificates of beneficial interest

24 or shares of which are not regularly traded on an

25 established securities market; and

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1 (iii) of which more than 50% of the voting

2 power or value of the beneficial interest or

3 shares, at any time during the last half of the

4 taxable year, is owned or controlled, directly,

5 indirectly, or constructively, by a single

6 corporation.

7 (B) The term "captive real estate investment

8 trust" does not include:

9 (i) a real estate investment trust of which

10 more than 50% of the voting power or value of the

11 beneficial interest or shares is owned or

12 controlled, directly, indirectly, or

13 constructively, by:

14 (a) a real estate investment trust, other

15 than a captive real estate investment trust;

16 (b) a person who is exempt from taxation

17 under Section 501 of the Internal Revenue Code,

18 and who is not required to treat income

19 received from the real estate investment trust

20 as unrelated business taxable income under

21 Section 512 of the Internal Revenue Code;

22 (c) a listed Australian property trust, if

23 no more than 50% of the voting power or value

24 of the beneficial interest or shares of that

25 trust, at any time during the last half of the

26 taxable year, is owned or controlled, directly

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1 or indirectly, by a single person;

2 (d) an entity organized as a trust,

3 provided a listed Australian property trust

4 described in subparagraph (c) owns or

5 controls, directly or indirectly, or

6 constructively, 75% or more of the voting power

7 or value of the beneficial interests or shares

8 of such entity; or

9 (e) an entity that is organized outside of

10 the laws of the United States and that

11 satisfies all of the following criteria:

12 (1) at least 75% of the entity's total

13 asset value at the close of its taxable

14 year is represented by real estate assets

15 (as defined in Section 856(c)(5)(B) of the

16 Internal Revenue Code, thereby including

17 shares or certificates of beneficial

18 interest in any real estate investment

19 trust), cash and cash equivalents, and

20 U.S. Government securities;

21 (2) the entity is not subject to tax on

22 amounts that are distributed to its

23 beneficial owners or is exempt from

24 entity-level taxation;

25 (3) the entity distributes at least

26 85% of its taxable income (as computed in

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1 the jurisdiction in which it is organized)

2 to the holders of its shares or

3 certificates of beneficial interest on an

4 annual basis;

5 (4) either (i) the shares or

6 beneficial interests of the entity are

7 regularly traded on an established

8 securities market or (ii) not more than 10%

9 of the voting power or value in the entity

10 is held, directly, indirectly, or

11 constructively, by a single entity or

12 individual; and

13 (5) the entity is organized in a

14 country that has entered into a tax treaty

15 with the United States; or

16 (ii) during its first taxable year for which it

17 elects to be treated as a real estate investment

18 trust under Section 856(c)(1) of the Internal

19 Revenue Code, a real estate investment trust the

20 certificates of beneficial interest or shares of

21 which are not regularly traded on an established

22 securities market, but only if the certificates of

23 beneficial interest or shares of the real estate

24 investment trust are regularly traded on an

25 established securities market prior to the earlier

26 of the due date (including extensions) for filing

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1 its return under this Act for that first taxable

2 year or the date it actually files that return.

3 (C) For the purposes of this subsection (1.5), the

4 constructive ownership rules prescribed under Section

5 318(a) of the Internal Revenue Code, as modified by

6 Section 856(d)(5) of the Internal Revenue Code, apply

7 in determining the ownership of stock, assets, or net

8 profits of any person.

9 (D) For the purposes of this item (1.5), for

10 taxable years ending on or after August 16, 2007, the

11 voting power or value of the beneficial interest or

12 shares of a real estate investment trust does not

13 include any voting power or value of beneficial

14 interest or shares in a real estate investment trust

15 held directly or indirectly in a segregated asset

16 account by a life insurance company (as described in

17 Section 817 of the Internal Revenue Code) to the extent

18 such voting power or value is for the benefit of

19 entities or persons who are either immune from taxation

20 or exempt from taxation under subtitle A of the

21 Internal Revenue Code.

22 (2) Commercial domicile. The term "commercial

23 domicile" means the principal place from which the trade or

24 business of the taxpayer is directed or managed.

25 (3) Compensation. The term "compensation" means wages,

26 salaries, commissions and any other form of remuneration

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1 paid to employees for personal services.

2 (4) Corporation. The term "corporation" includes

3 associations, joint-stock companies, insurance companies

4 and cooperatives. Any entity, including a limited

5 liability company formed under the Illinois Limited

6 Liability Company Act, shall be treated as a corporation if

7 it is so classified for federal income tax purposes.

8 (5) Department. The term "Department" means the

9 Department of Revenue of this State.

10 (6) Director. The term "Director" means the Director of

11 Revenue of this State.

12 (7) Fiduciary. The term "fiduciary" means a guardian,

13 trustee, executor, administrator, receiver, or any person

14 acting in any fiduciary capacity for any person.

15 (8) Financial organization.

16 (A) The term "financial organization" means any

17 bank, bank holding company, trust company, savings

18 bank, industrial bank, land bank, safe deposit

19 company, private banker, savings and loan association,

20 building and loan association, credit union, currency

21 exchange, cooperative bank, small loan company, sales

22 finance company, investment company, or any person

23 which is owned by a bank or bank holding company. For

24 the purpose of this Section a "person" will include

25 only those persons which a bank holding company may

26 acquire and hold an interest in, directly or

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1 indirectly, under the provisions of the Bank Holding

2 Company Act of 1956 (12 U.S.C. 1841, et seq.), except

3 where interests in any person must be disposed of

4 within certain required time limits under the Bank

5 Holding Company Act of 1956.

6 (B) For purposes of subparagraph (A) of this

7 paragraph, the term "bank" includes (i) any entity that

8 is regulated by the Comptroller of the Currency under

9 the National Bank Act, or by the Federal Reserve Board,

10 or by the Federal Deposit Insurance Corporation and

11 (ii) any federally or State chartered bank operating as

12 a credit card bank.

13 (C) For purposes of subparagraph (A) of this

14 paragraph, the term "sales finance company" has the

15 meaning provided in the following item (i) or (ii):

16 (i) A person primarily engaged in one or more

17 of the following businesses: the business of

18 purchasing customer receivables, the business of

19 making loans upon the security of customer

20 receivables, the business of making loans for the

21 express purpose of funding purchases of tangible

22 personal property or services by the borrower, or

23 the business of finance leasing. For purposes of

24 this item (i), "customer receivable" means:

25 (a) a retail installment contract or

26 retail charge agreement within the meaning of

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1 the Sales Finance Agency Act, the Retail

2 Installment Sales Act, or the Motor Vehicle

3 Retail Installment Sales Act;

4 (b) an installment, charge, credit, or

5 similar contract or agreement arising from the

6 sale of tangible personal property or services

7 in a transaction involving a deferred payment

8 price payable in one or more installments

9 subsequent to the sale; or

10 (c) the outstanding balance of a contract

11 or agreement described in provisions (a) or (b)

12 of this item (i).

13 A customer receivable need not provide for

14 payment of interest on deferred payments. A sales

15 finance company may purchase a customer receivable

16 from, or make a loan secured by a customer

17 receivable to, the seller in the original

18 transaction or to a person who purchased the

19 customer receivable directly or indirectly from

20 that seller.

21 (ii) A corporation meeting each of the

22 following criteria:

23 (a) the corporation must be a member of an

24 "affiliated group" within the meaning of

25 Section 1504(a) of the Internal Revenue Code,

26 determined without regard to Section 1504(b)

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1 of the Internal Revenue Code;

2 (b) more than 50% of the gross income of

3 the corporation for the taxable year must be

4 interest income derived from qualifying loans.

5 A "qualifying loan" is a loan made to a member

6 of the corporation's affiliated group that

7 originates customer receivables (within the

8 meaning of item (i)) or to whom customer

9 receivables originated by a member of the

10 affiliated group have been transferred, to the

11 extent the average outstanding balance of

12 loans from that corporation to members of its

13 affiliated group during the taxable year do not

14 exceed the limitation amount for that

15 corporation. The "limitation amount" for a

16 corporation is the average outstanding

17 balances during the taxable year of customer

18 receivables (within the meaning of item (i))

19 originated by all members of the affiliated

20 group. If the average outstanding balances of

21 the loans made by a corporation to members of

22 its affiliated group exceed the limitation

23 amount, the interest income of that

24 corporation from qualifying loans shall be

25 equal to its interest income from loans to

26 members of its affiliated groups times a

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1 fraction equal to the limitation amount

2 divided by the average outstanding balances of

3 the loans made by that corporation to members

4 of its affiliated group;

5 (c) the total of all shareholder's equity

6 (including, without limitation, paid-in

7 capital on common and preferred stock and

8 retained earnings) of the corporation plus the

9 total of all of its loans, advances, and other

10 obligations payable or owed to members of its

11 affiliated group may not exceed 20% of the

12 total assets of the corporation at any time

13 during the tax year; and

14 (d) more than 50% of all interest-bearing

15 obligations of the affiliated group payable to

16 persons outside the group determined in

17 accordance with generally accepted accounting

18 principles must be obligations of the

19 corporation.

20 This amendatory Act of the 91st General Assembly is

21 declaratory of existing law.

22 (D) Subparagraphs (B) and (C) of this paragraph are

23 declaratory of existing law and apply retroactively,

24 for all tax years beginning on or before December 31,

25 1996, to all original returns, to all amended returns

26 filed no later than 30 days after the effective date of

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1 this amendatory Act of 1996, and to all notices issued

2 on or before the effective date of this amendatory Act

3 of 1996 under subsection (a) of Section 903, subsection

4 (a) of Section 904, subsection (e) of Section 909, or

5 Section 912. A taxpayer that is a "financial

6 organization" that engages in any transaction with an

7 affiliate shall be a "financial organization" for all

8 purposes of this Act.

9 (E) For all tax years beginning on or before

10 December 31, 1996, a taxpayer that falls within the

11 definition of a "financial organization" under

12 subparagraphs (B) or (C) of this paragraph, but who

13 does not fall within the definition of a "financial

14 organization" under the Proposed Regulations issued by

15 the Department of Revenue on July 19, 1996, may

16 irrevocably elect to apply the Proposed Regulations

17 for all of those years as though the Proposed

18 Regulations had been lawfully promulgated, adopted,

19 and in effect for all of those years. For purposes of

20 applying subparagraphs (B) or (C) of this paragraph to

21 all of those years, the election allowed by this

22 subparagraph applies only to the taxpayer making the

23 election and to those members of the taxpayer's unitary

24 business group who are ordinarily required to

25 apportion business income under the same subsection of

26 Section 304 of this Act as the taxpayer making the

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1 election. No election allowed by this subparagraph

2 shall be made under a claim filed under subsection (d)

3 of Section 909 more than 30 days after the effective

4 date of this amendatory Act of 1996.

5 (F) Finance Leases. For purposes of this

6 subsection, a finance lease shall be treated as a loan

7 or other extension of credit, rather than as a lease,

8 regardless of how the transaction is characterized for

9 any other purpose, including the purposes of any

10 regulatory agency to which the lessor is subject. A

11 finance lease is any transaction in the form of a lease

12 in which the lessee is treated as the owner of the

13 leased asset entitled to any deduction for

14 depreciation allowed under Section 167 of the Internal

15 Revenue Code.

16 (9) Fiscal year. The term "fiscal year" means an

17 accounting period of 12 months ending on the last day of

18 any month other than December.

19 (9.5) Fixed place of business. The term "fixed place of

20 business" has the same meaning as that term is given in

21 Section 864 of the Internal Revenue Code and the related

22 Treasury regulations.

23 (10) Includes and including. The terms "includes" and

24 "including" when used in a definition contained in this Act

25 shall not be deemed to exclude other things otherwise

26 within the meaning of the term defined.

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1 (11) Internal Revenue Code. The term "Internal Revenue

2 Code" means the United States Internal Revenue Code of 1954

3 or any successor law or laws relating to federal income

4 taxes in effect for the taxable year.

5 (11.5) Investment partnership.

6 (A) The term "investment partnership" means any

7 entity that is treated as a partnership for federal

8 income tax purposes that meets the following

9 requirements:

10 (i) no less than 90% of the partnership's cost

11 of its total assets consists of qualifying

12 investment securities, deposits at banks or other

13 financial institutions, and office space and

14 equipment reasonably necessary to carry on its

15 activities as an investment partnership;

16 (ii) no less than 90% of its gross income

17 consists of interest, dividends, and gains from

18 the sale or exchange of qualifying investment

19 securities; and

20 (iii) the partnership is not a dealer in

21 qualifying investment securities.

22 (B) For purposes of this paragraph (11.5), the term

23 "qualifying investment securities" includes all of the

24 following:

25 (i) common stock, including preferred or debt

26 securities convertible into common stock, and

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1 preferred stock;

2 (ii) bonds, debentures, and other debt

3 securities;

4 (iii) foreign and domestic currency deposits

5 secured by federal, state, or local governmental

6 agencies;

7 (iv) mortgage or asset-backed securities

8 secured by federal, state, or local governmental

9 agencies;

10 (v) repurchase agreements and loan

11 participations;

12 (vi) foreign currency exchange contracts and

13 forward and futures contracts on foreign

14 currencies;

15 (vii) stock and bond index securities and

16 futures contracts and other similar financial

17 securities and futures contracts on those

18 securities;

19 (viii) options for the purchase or sale of any

20 of the securities, currencies, contracts, or

21 financial instruments described in items (i) to

22 (vii), inclusive;

23 (ix) regulated futures contracts;

24 (x) commodities (not described in Section

25 1221(a)(1) of the Internal Revenue Code) or

26 futures, forwards, and options with respect to

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1 such commodities, provided, however, that any item

2 of a physical commodity to which title is actually

3 acquired in the partnership's capacity as a dealer

4 in such commodity shall not be a qualifying

5 investment security;

6 (xi) derivatives; and

7 (xii) a partnership interest in another

8 partnership that is an investment partnership.

9 (12) Mathematical error. The term "mathematical error"

10 includes the following types of errors, omissions, or

11 defects in a return filed by a taxpayer which prevents

12 acceptance of the return as filed for processing:

13 (A) arithmetic errors or incorrect computations on

14 the return or supporting schedules;

15 (B) entries on the wrong lines;

16 (C) omission of required supporting forms or

17 schedules or the omission of the information in whole

18 or in part called for thereon; and

19 (D) an attempt to claim, exclude, deduct, or

20 improperly report, in a manner directly contrary to the

21 provisions of the Act and regulations thereunder any

22 item of income, exemption, deduction, or credit.

23 (13) Nonbusiness income. The term "nonbusiness income"

24 means all income other than business income or

25 compensation.

26 (14) Nonresident. The term "nonresident" means a

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1 person who is not a resident.

2 (15) Paid, incurred and accrued. The terms "paid",

3 "incurred" and "accrued" shall be construed according to

4 the method of accounting upon the basis of which the

5 person's base income is computed under this Act.

6 (16) Partnership and partner. The term "partnership"

7 includes a syndicate, group, pool, joint venture or other

8 unincorporated organization, through or by means of which

9 any business, financial operation, or venture is carried

10 on, and which is not, within the meaning of this Act, a

11 trust or estate or a corporation; and the term "partner"

12 includes a member in such syndicate, group, pool, joint

13 venture or organization.

14 The term "partnership" includes any entity, including

15 a limited liability company formed under the Illinois

16 Limited Liability Company Act, classified as a partnership

17 for federal income tax purposes.

18 The term "partnership" does not include a syndicate,

19 group, pool, joint venture, or other unincorporated

20 organization established for the sole purpose of playing

21 the Illinois State Lottery.

22 (17) Part-year resident. The term "part-year resident"

23 means an individual who became a resident during the

24 taxable year or ceased to be a resident during the taxable

25 year. Under Section 1501(a)(20)(A)(i) residence commences

26 with presence in this State for other than a temporary or

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1 transitory purpose and ceases with absence from this State

2 for other than a temporary or transitory purpose. Under

3 Section 1501(a)(20)(A)(ii) residence commences with the

4 establishment of domicile in this State and ceases with the

5 establishment of domicile in another State.

6 (18) Person. The term "person" shall be construed to

7 mean and include an individual, a trust, estate,

8 partnership, association, firm, company, corporation,

9 limited liability company, or fiduciary. For purposes of

10 Section 1301 and 1302 of this Act, a "person" means (i) an

11 individual, (ii) a corporation, (iii) an officer, agent, or

12 employee of a corporation, (iv) a member, agent or employee

13 of a partnership, or (v) a member, manager, employee,

14 officer, director, or agent of a limited liability company

15 who in such capacity commits an offense specified in

16 Section 1301 and 1302.

17 (18A) Records. The term "records" includes all data

18 maintained by the taxpayer, whether on paper, microfilm,

19 microfiche, or any type of machine-sensible data

20 compilation.

21 (19) Regulations. The term "regulations" includes

22 rules promulgated and forms prescribed by the Department.

23 (20) Resident. The term "resident" means:

24 (A) an individual (i) who is in this State for

25 other than a temporary or transitory purpose during the

26 taxable year; or (ii) who is domiciled in this State

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1 but is absent from the State for a temporary or

2 transitory purpose during the taxable year;

3 (B) The estate of a decedent who at his or her

4 death was domiciled in this State;

5 (C) A trust created by a will of a decedent who at

6 his death was domiciled in this State; and

7 (D) An irrevocable trust, the grantor of which was

8 domiciled in this State at the time such trust became

9 irrevocable. For purpose of this subparagraph, a trust

10 shall be considered irrevocable to the extent that the

11 grantor is not treated as the owner thereof under

12 Sections 671 through 678 of the Internal Revenue Code.

13 (21) Sales. The term "sales" means all gross receipts

14 of the taxpayer not allocated under Sections 301, 302 and

15 303.

16 (22) State. The term "state" when applied to a

17 jurisdiction other than this State means any state of the

18 United States, the District of Columbia, the Commonwealth

19 of Puerto Rico, any Territory or Possession of the United

20 States, and any foreign country, or any political

21 subdivision of any of the foregoing. For purposes of the

22 foreign tax credit under Section 601, the term "state"

23 means any state of the United States, the District of

24 Columbia, the Commonwealth of Puerto Rico, and any

25 territory or possession of the United States, or any

26 political subdivision of any of the foregoing, effective

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1 for tax years ending on or after December 31, 1989.

2 (23) Taxable year. The term "taxable year" means the

3 calendar year, or the fiscal year ending during such

4 calendar year, upon the basis of which the base income is

5 computed under this Act. "Taxable year" means, in the case

6 of a return made for a fractional part of a year under the

7 provisions of this Act, the period for which such return is

8 made.

9 (24) Taxpayer. The term "taxpayer" means any person

10 subject to the tax imposed by this Act.

11 (25) International banking facility. The term

12 international banking facility shall have the same meaning

13 as is set forth in the Illinois Banking Act or as is set

14 forth in the laws of the United States or regulations of

15 the Board of Governors of the Federal Reserve System.

16 (26) Income Tax Return Preparer.

17 (A) The term "income tax return preparer" means any

18 person who prepares for compensation, or who employs

19 one or more persons to prepare for compensation, any

20 return of tax imposed by this Act or any claim for

21 refund of tax imposed by this Act. The preparation of a

22 substantial portion of a return or claim for refund

23 shall be treated as the preparation of that return or

24 claim for refund.

25 (B) A person is not an income tax return preparer

26 if all he or she does is

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1 (i) furnish typing, reproducing, or other

2 mechanical assistance;

3 (ii) prepare returns or claims for refunds for

4 the employer by whom he or she is regularly and

5 continuously employed;

6 (iii) prepare as a fiduciary returns or claims

7 for refunds for any person; or

8 (iv) prepare claims for refunds for a taxpayer

9 in response to any notice of deficiency issued to

10 that taxpayer or in response to any waiver of

11 restriction after the commencement of an audit of

12 that taxpayer or of another taxpayer if a

13 determination in the audit of the other taxpayer

14 directly or indirectly affects the tax liability

15 of the taxpayer whose claims he or she is

16 preparing.

17 (27) Unitary business group.

18 (A) The term "unitary business group" means a group

19 of persons related through common ownership whose

20 business activities are integrated with, dependent

21 upon and contribute to each other. The group will not

22 include those members whose business activity outside

23 the United States is 80% or more of any such member's

24 total business activity; for purposes of this

25 paragraph and clause (a)(3)(B)(ii) of Section 304,

26 business activity within the United States shall be

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1 measured by means of the factors ordinarily applicable

2 under subsections (a), (b), (c), (d), or (h) of Section

3 304 except that, in the case of members ordinarily

4 required to apportion business income by means of the 3

5 factor formula of property, payroll and sales

6 specified in subsection (a) of Section 304, including

7 the formula as weighted in subsection (h) of Section

8 304, such members shall not use the sales factor in the

9 computation and the results of the property and payroll

10 factor computations of subsection (a) of Section 304

11 shall be divided by 2 (by one if either the property or

12 payroll factor has a denominator of zero). The

13 computation required by the preceding sentence shall,

14 in each case, involve the division of the member's

15 property, payroll, or revenue miles in the United

16 States, insurance premiums on property or risk in the

17 United States, or financial organization business

18 income from sources within the United States, as the

19 case may be, by the respective worldwide figures for

20 such items. Common ownership in the case of

21 corporations is the direct or indirect control or

22 ownership of more than 50% of the outstanding voting

23 stock of the persons carrying on unitary business

24 activity. Unitary business activity can ordinarily be

25 illustrated where the activities of the members are:

26 (1) in the same general line (such as manufacturing,

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1 wholesaling, retailing of tangible personal property,

2 insurance, transportation or finance); or (2) are

3 steps in a vertically structured enterprise or process

4 (such as the steps involved in the production of

5 natural resources, which might include exploration,

6 mining, refining, and marketing); and, in either

7 instance, the members are functionally integrated

8 through the exercise of strong centralized management

9 (where, for example, authority over such matters as

10 purchasing, financing, tax compliance, product line,

11 personnel, marketing and capital investment is not

12 left to each member).

13 (B) In no event, for taxable years beginning prior

14 to January 1, 2017, and excepting any unitary business

15 group that apportions business income under Section

16 304(b) of this Act and is subject to the insurance

17 premium tax imposed under the Illinois Insurance Code,

18 shall any unitary business group include members which

19 are ordinarily required to apportion business income

20 under different subsections of Section 304 except that

21 for tax years ending on or after December 31, 1987 this

22 prohibition shall not apply to a holding company that

23 would otherwise be a member of a unitary business group

24 with taxpayers that apportion business income under

25 any of subsections (b), (c), (c-1), or (d) of Section

26 304. If a unitary business group would, but for the

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1 preceding sentence, include members that are

2 ordinarily required to apportion business income under

3 different subsections of Section 304, then for each

4 subsection of Section 304 for which there are two or

5 more members, there shall be a separate unitary

6 business group composed of such members. For purposes

7 of the preceding two sentences, a member is "ordinarily

8 required to apportion business income" under a

9 particular subsection of Section 304 if it would be

10 required to use the apportionment method prescribed by

11 such subsection except for the fact that it derives

12 business income solely from Illinois. As used in this

13 paragraph, the phrase "United States" means ~~only~~ the 50

14 states and the District of Columbia and ~~, but~~ does not

15 include any territory or possession of the United

16 States, but, for taxable years ending on or after

17 December 31, 2017, does include ~~or~~ any area over which

18 the United States has asserted jurisdiction or claimed

19 exclusive rights with respect to the exploration for or

20 exploitation of natural resources.

21 (C) Holding companies.

22 (i) For purposes of this subparagraph, a

23 "holding company" is a corporation (other than a

24 corporation that is a financial organization under

25 paragraph (8) of this subsection (a) of Section

26 1501 because it is a bank holding company under the

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1 provisions of the Bank Holding Company Act of 1956

2 (12 U.S.C. 1841, et seq.) or because it is owned by

3 a bank or a bank holding company) that owns a

4 controlling interest in one or more other

5 taxpayers ("controlled taxpayers"); that, during

6 the period that includes the taxable year and the 2

7 immediately preceding taxable years or, if the

8 corporation was formed during the current or

9 immediately preceding taxable year, the taxable

10 years in which the corporation has been in

11 existence, derived substantially all its gross

12 income from dividends, interest, rents, royalties,

13 fees or other charges received from controlled

14 taxpayers for the provision of services, and gains

15 on the sale or other disposition of interests in

16 controlled taxpayers or in property leased or

17 licensed to controlled taxpayers or used by the

18 taxpayer in providing services to controlled

19 taxpayers; and that incurs no substantial expenses

20 other than expenses (including interest and other

21 costs of borrowing) incurred in connection with

22 the acquisition and holding of interests in

23 controlled taxpayers and in the provision of

24 services to controlled taxpayers or in the leasing

25 or licensing of property to controlled taxpayers.

26 (ii) The income of a holding company which is a

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1 member of more than one unitary business group

2 shall be included in each unitary business group of

3 which it is a member on a pro rata basis, by

4 including in each unitary business group that

5 portion of the base income of the holding company

6 that bears the same proportion to the total base

7 income of the holding company as the gross receipts

8 of the unitary business group bears to the combined

9 gross receipts of all unitary business groups (in

10 both cases without regard to the holding company)

11 or on any other reasonable basis, consistently

12 applied.

13 (iii) A holding company shall apportion its

14 business income under the subsection of Section

15 304 used by the other members of its unitary

16 business group. The apportionment factors of a

17 holding company which would be a member of more

18 than one unitary business group shall be included

19 with the apportionment factors of each unitary

20 business group of which it is a member on a pro

21 rata basis using the same method used in clause

22 (ii).

23 (iv) The provisions of this subparagraph (C)

24 are intended to clarify existing law.

25 (D) If including the base income and factors of a

26 holding company in more than one unitary business group

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1 under subparagraph (C) does not fairly reflect the

2 degree of integration between the holding company and

3 one or more of the unitary business groups, the

4 dependence of the holding company and one or more of

5 the unitary business groups upon each other, or the

6 contributions between the holding company and one or

7 more of the unitary business groups, the holding

8 company may petition the Director, under the

9 procedures provided under Section 304(f), for

10 permission to include all base income and factors of

11 the holding company only with members of a unitary

12 business group apportioning their business income

13 under one subsection of subsections (a), (b), (c), or

14 (d) of Section 304. If the petition is granted, the

15 holding company shall be included in a unitary business

16 group only with persons apportioning their business

17 income under the selected subsection of Section 304

18 until the Director grants a petition of the holding

19 company either to be included in more than one unitary

20 business group under subparagraph (C) or to include its

21 base income and factors only with members of a unitary

22 business group apportioning their business income

23 under a different subsection of Section 304.

24 (E) If the unitary business group members'

25 accounting periods differ, the common parent's

26 accounting period or, if there is no common parent, the

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1 accounting period of the member that is expected to

2 have, on a recurring basis, the greatest Illinois

3 income tax liability must be used to determine whether

4 to use the apportionment method provided in subsection

5 (a) or subsection (h) of Section 304. The prohibition

6 against membership in a unitary business group for

7 taxpayers ordinarily required to apportion income

8 under different subsections of Section 304 does not

9 apply to taxpayers required to apportion income under

10 subsection (a) and subsection (h) of Section 304. The

11 provisions of this amendatory Act of 1998 apply to tax

12 years ending on or after December 31, 1998.

13 (28) Subchapter S corporation. The term "Subchapter S

14 corporation" means a corporation for which there is in

15 effect an election under Section 1362 of the Internal

16 Revenue Code, or for which there is a federal election to

17 opt out of the provisions of the Subchapter S Revision Act

18 of 1982 and have applied instead the prior federal

19 Subchapter S rules as in effect on July 1, 1982.

20 (30) Foreign person. The term "foreign person" means

21 any person who is a nonresident alien individual and any

22 nonindividual entity, regardless of where created or

23 organized, whose business activity outside the United

24 States is 80% or more of the entity's total business

25 activity.

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1 (b) Other definitions.

2 (1) Words denoting number, gender, and so forth, when

3 used in this Act, where not otherwise distinctly expressed

4 or manifestly incompatible with the intent thereof:

5 (A) Words importing the singular include and apply

6 to several persons, parties or things;

7 (B) Words importing the plural include the

8 singular; and

9 (C) Words importing the masculine gender include

10 the feminine as well.

11 (2) "Company" or "association" as including successors

12 and assigns. The word "company" or "association", when used

13 in reference to a corporation, shall be deemed to embrace

14 the words "successors and assigns of such company or

15 association", and in like manner as if these last-named

16 words, or words of similar import, were expressed.

17 (3) Other terms. Any term used in any Section of this

18 Act with respect to the application of, or in connection

19 with, the provisions of any other Section of this Act shall

20 have the same meaning as in such other Section.

21 (Source: P.A. 99-213, eff. 7-31-15.)

22 Section 30-15. The Film Production Services Tax Credit Act

23 of 2008 is amended by changing Section 42 as follows:

24 (35 ILCS 16/42)

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1 Sec. 42. Sunset of credits. The application of credits

2 awarded pursuant to this Act shall be limited by a reasonable

3 and appropriate sunset date. A taxpayer shall not be entitled

4 to take a credit awarded pursuant to this Act for tax years

5 beginning on or after January 1, 2027 ~~10 years after the~~

6 ~~effective date of this amendatory Act of the 97th General~~

7 ~~Assembly. After the initial 10-year sunset, the General~~

8 ~~Assembly may extend the sunset date by 5-year intervals~~.

9 (Source: P.A. 97-2, eff. 5-6-11; 97-3, eff. 5-6-11.)

10 Section 30-20. The Use Tax Act is amended by changing

11 Sections 2, 3, 3-5, 3-10, 3-10.5, 3-45, 3-50, 3-55, 3-65, 3-75,

12 3a, 4, 5, 6, 7, 8, 9, 10, and 11 and by adding Section 2a-2 as

13 follows:

14 (35 ILCS 105/2) (from Ch. 120, par. 439.2)

15 Sec. 2. Definitions.

16 "Use" means the exercise by any person of any right or

17 power over tangible personal property incident to the ownership

18 of that property or the exercise by any person of any right or

19 power over, or the enjoyment of, a taxable service, except that

20 it does not include the sale of such property or taxable

21 servicein any form as tangible personal propertyor a taxable

22 servicein the regular course of business to the extent that

23 such property or taxable service is not first subjected to a

24 use for which it was purchased, and does not include the use of

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1 such property or taxable serviceby its owner for demonstration

2 purposes: Provided that the property or service purchased is

3 deemed to be purchased for the purpose of resale, despite first

4 being used, to the extent to which it is resold as an

5 ingredient of an intentionally produced product or by-product

6 of manufacturing or is otherwise transferred to the purchaser

7 of tangible personal property or taxable service. "Use" does

8 not mean the demonstration use or interim use of tangible

9 personal property or a taxable service by a retailer before he

10 sells that tangible personal propertyor taxable service. For

11 watercraft or aircraft, if the period of demonstration use or

12 interim use by the retailer exceeds 18 months, the retailer

13 shall pay on the retailers' original cost price the tax imposed

14 by this Act, and no credit for that tax is permitted if the

15 watercraft or aircraft is subsequently sold by the retailer.

16 "Use" does not mean the physical incorporation of tangible

17 personal property, to the extent not first subjected to a use

18 for which it was purchased, as an ingredient or constituent,

19 into other tangible personal property (a) which is sold in the

20 regular course of business or (b) which the person

21 incorporating such ingredient or constituent therein has

22 undertaken at the time of such purchase to cause to be

23 transported in interstate commerce to destinations outside the

24 State of Illinois: Provided that the property purchased is

25 deemed to be purchased for the purpose of resale, despite first

26 being used, to the extent to which it is resold as an

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1 ingredient of an intentionally produced product or by-product

2 of manufacturing.

3 "Watercraft" means a Class 2, Class 3, or Class 4

4 watercraft as defined in Section 3-2 of the Boat Registration

5 and Safety Act, a personal watercraft, or any boat equipped

6 with an inboard motor.

7 "Purchase at retail" means the acquisition of the ownership

8 of or title to tangible personal propertyor the acquisition of

9 a taxable service through a sale at retail.

10 "Purchaser" means anyone who, through a sale at retail,

11 acquires a taxable service orthe ownership of tangible

12 personal property for a valuable consideration.

13 "Sale at retail" means any transfer of the ownership of or

14 title to tangible personal property to a purchaseror the

15 performance of a taxable service for a purchaser, for the

16 purpose of use, and not for the purpose of resale in any form

17 as tangible personal property or taxable serviceto the extent

18 not first subjected to a use for which it was purchased, for a

19 valuable consideration: Provided that the property purchased

20 is deemed to be purchased for the purpose of resale, despite

21 first being used, to the extent to which it is resold as an

22 ingredient of an intentionally produced product or by-product

23 of manufacturing. For this purpose, slag produced as an

24 incident to manufacturing pig iron or steel and sold is

25 considered to be an intentionally produced by-product of

26 manufacturing. "Sale at retail" includes any such transfer made

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1 for resale unless made in compliance with Section 2c of the

2 Retailers' Occupation Tax Act, as incorporated by reference

3 into Section 12 of this Act. Transactions whereby the

4 possession of the property is transferred but the seller

5 retains the title as security for payment of the selling price

6 are sales.

7 "Sale at retail" shall also be construed to include any

8 Illinois florist's sales transaction in which the purchase

9 order is received in Illinois by a florist and the sale is for

10 use or consumption, but the Illinois florist has a florist in

11 another state deliver the property to the purchaser or the

12 purchaser's donee in such other state.

13 Nonreusable tangible personal property that is used by

14 persons engaged in the business of operating a restaurant,

15 cafeteria, or drive-in is a sale for resale when it is

16 transferred to customers in the ordinary course of business as

17 part of the sale of food or beverages and is used to deliver,

18 package, or consume food or beverages, regardless of where

19 consumption of the food or beverages occurs. Examples of those

20 items include, but are not limited to nonreusable, paper and

21 plastic cups, plates, baskets, boxes, sleeves, buckets or other

22 containers, utensils, straws, placemats, napkins, doggie bags,

23 and wrapping or packaging materials that are transferred to

24 customers as part of the sale of food or beverages in the

25 ordinary course of business.

26 The purchase, employment and transfer of such tangible

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1 personal property as newsprint and ink for the primary purpose

2 of conveying news (with or without other information) is not a

3 purchase, use or sale of tangible personal property.

4 "Selling price" means the consideration for a sale valued

5 in money whether received in money or otherwise, including

6 cash, credits, property other than as hereinafter provided, and

7 services, but not including the value of or credit given for

8 traded-in tangible personal property where the item that is

9 traded-in is of like kind and character as that which is being

10 sold, and shall be determined without any deduction on account

11 of the cost of the property sold, the cost of materials used,

12 labor or service cost or any other expense whatsoever, but does

13 not include interest or finance charges which appear as

14 separate items on the bill of sale or sales contract nor

15 charges that are added to prices by sellers on account of the

16 seller's tax liability under the "Retailers' Occupation Tax

17 Act", or on account of the seller's duty to collect, from the

18 purchaser, the tax that is imposed by this Act, or, except as

19 otherwise provided with respect to any cigarette tax imposed by

20 a home rule unit, on account of the seller's tax liability

21 under any local occupation tax administered by the Department,

22 or, except as otherwise provided with respect to any cigarette

23 tax imposed by a home rule unit on account of the seller's duty

24 to collect, from the purchasers, the tax that is imposed under

25 any local use tax administered by the Department. Effective

26 December 1, 1985, "selling price" shall include charges that

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1 are added to prices by sellers on account of the seller's tax

2 liability under the Cigarette Tax Act, on account of the

3 seller's duty to collect, from the purchaser, the tax imposed

4 under the Cigarette Use Tax Act, and on account of the seller's

5 duty to collect, from the purchaser, any cigarette tax imposed

6 by a home rule unit.

7 Notwithstanding any law to the contrary, for any motor

8 vehicle, as defined in Section 1-146 of the Vehicle Code, that

9 is sold on or after January 1, 2015 for the purpose of leasing

10 the vehicle for a defined period that is longer than one year

11 and (1) is a motor vehicle of the second division that: (A) is

12 a self-contained motor vehicle designed or permanently

13 converted to provide living quarters for recreational,

14 camping, or travel use, with direct walk through access to the

15 living quarters from the driver's seat; (B) is of the van

16 configuration designed for the transportation of not less than

17 7 nor more than 16 passengers; or (C) has a gross vehicle

18 weight rating of 8,000 pounds or less or (2) is a motor vehicle

19 of the first division, "selling price" or "amount of sale"

20 means the consideration received by the lessor pursuant to the

21 lease contract, including amounts due at lease signing and all

22 monthly or other regular payments charged over the term of the

23 lease. Also included in the selling price is any amount

24 received by the lessor from the lessee for the leased vehicle

25 that is not calculated at the time the lease is executed,

26 including, but not limited to, excess mileage charges and

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1 charges for excess wear and tear. For sales that occur in

2 Illinois, with respect to any amount received by the lessor

3 from the lessee for the leased vehicle that is not calculated

4 at the time the lease is executed, the lessor who purchased the

5 motor vehicle does not incur the tax imposed by the Use Tax Act

6 on those amounts, and the retailer who makes the retail sale of

7 the motor vehicle to the lessor is not required to collect the

8 tax imposed by this Act or to pay the tax imposed by the

9 Retailers' Occupation Tax Act on those amounts. However, the

10 lessor who purchased the motor vehicle assumes the liability

11 for reporting and paying the tax on those amounts directly to

12 the Department in the same form (Illinois Retailers' Occupation

13 Tax, and local retailers' occupation taxes, if applicable) in

14 which the retailer would have reported and paid such tax if the

15 retailer had accounted for the tax to the Department. For

16 amounts received by the lessor from the lessee that are not

17 calculated at the time the lease is executed, the lessor must

18 file the return and pay the tax to the Department by the due

19 date otherwise required by this Act for returns other than

20 transaction returns. If the retailer is entitled under this Act

21 to a discount for collecting and remitting the tax imposed

22 under this Act to the Department with respect to the sale of

23 the motor vehicle to the lessor, then the right to the discount

24 provided in this Act shall be transferred to the lessor with

25 respect to the tax paid by the lessor for any amount received

26 by the lessor from the lessee for the leased vehicle that is

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1 not calculated at the time the lease is executed; provided that

2 the discount is only allowed if the return is timely filed and

3 for amounts timely paid. The "selling price" of a motor vehicle

4 that is sold on or after January 1, 2015 for the purpose of

5 leasing for a defined period of longer than one year shall not

6 be reduced by the value of or credit given for traded-in

7 tangible personal property owned by the lessor, nor shall it be

8 reduced by the value of or credit given for traded-in tangible

9 personal property owned by the lessee, regardless of whether

10 the trade-in value thereof is assigned by the lessee to the

11 lessor. In the case of a motor vehicle that is sold for the

12 purpose of leasing for a defined period of longer than one

13 year, the sale occurs at the time of the delivery of the

14 vehicle, regardless of the due date of any lease payments. A

15 lessor who incurs a Retailers' Occupation Tax liability on the

16 sale of a motor vehicle coming off lease may not take a credit

17 against that liability for the Use Tax the lessor paid upon the

18 purchase of the motor vehicle (or for any tax the lessor paid

19 with respect to any amount received by the lessor from the

20 lessee for the leased vehicle that was not calculated at the

21 time the lease was executed) if the selling price of the motor

22 vehicle at the time of purchase was calculated using the

23 definition of "selling price" as defined in this paragraph.

24 Notwithstanding any other provision of this Act to the

25 contrary, lessors shall file all returns and make all payments

26 required under this paragraph to the Department by electronic

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1 means in the manner and form as required by the Department.

2 This paragraph does not apply to leases of motor vehicles for

3 which, at the time the lease is entered into, the term of the

4 lease is not a defined period, including leases with a defined

5 initial period with the option to continue the lease on a

6 month-to-month or other basis beyond the initial defined

7 period.

8 The phrase "like kind and character" shall be liberally

9 construed (including but not limited to any form of motor

10 vehicle for any form of motor vehicle, or any kind of farm or

11 agricultural implement for any other kind of farm or

12 agricultural implement), while not including a kind of item

13 which, if sold at retail by that retailer, would be exempt from

14 retailers' occupation tax and use tax as an isolated or

15 occasional sale.

16 "Department" means the Department of Revenue.

17 "Person" means any natural individual, firm, partnership,

18 association, joint stock company, joint adventure, public or

19 private corporation, limited liability company, or a receiver,

20 executor, trustee, guardian or other representative appointed

21 by order of any court.

22 "Retailer" means and includes every person engaged in the

23 business of making sales at retail as defined in this Section.

24 A person who holds himself or herself out as being engaged

25 (or who habitually engages) in selling tangible personal

26 property or taxable servicesat retail is a retailer hereunder

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1 with respect to such sales (and not primarily in a nontaxable

2 service occupation) notwithstanding the fact that such person

3 designs and produces such tangible personal propertyor taxable

4 serviceon special order for the purchaser and in such a way as

5 to render the property or service of value only to such

6 purchaser, if such tangible personal propertyor taxable

7 serviceso produced on special order serves substantially the

8 same function as stock or standard items of tangible personal

9 property or taxable service that are sold at retail.

10 A person whose activities are organized and conducted

11 primarily as a not-for-profit service enterprise, and who

12 engages in selling tangible personal propertyor taxable

13 services at retail (whether to the public or merely to members

14 and their guests) is a retailer with respect to such

15 transactions, excepting only a person organized and operated

16 exclusively for charitable, religious or educational purposes

17 either (1), to the extent of sales by such person to its

18 members, students, patients or inmates of tangible personal

19 property to be used primarily for the purposes of such person,

20 or (2), to the extent of sales by such person of tangible

21 personal property or taxable services which are ~~is~~not sold or

22 offered for sale by persons organized for profit. The selling

23 of school books and school supplies by schools at retail to

24 students is not "primarily for the purposes of" the school

25 which does such selling. This paragraph does not apply to nor

26 subject to taxation occasional dinners, social or similar

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1 activities of a person organized and operated exclusively for

2 charitable, religious or educational purposes, whether or not

3 such activities are open to the public.

4 A person who is the recipient of a grant or contract under

5 Title VII of the Older Americans Act of 1965 (P.L. 92-258) and

6 serves meals to participants in the federal Nutrition Program

7 for the Elderly in return for contributions established in

8 amount by the individual participant pursuant to a schedule of

9 suggested fees as provided for in the federal Act is not a

10 retailer under this Act with respect to such transactions.

11 Persons who engage in the business of transferring tangible

12 personal propertyor taxable services upon the redemption of

13 trading stamps are retailers hereunder when engaged in such

14 business.

15 The isolated or occasional sale of tangible personal

16 property or taxable servicesat retail by a person who does not

17 hold himself out as being engaged (or who does not habitually

18 engage) in selling such tangible personal property or taxable

19 servicesat retail or a sale through a bulk vending machine

20 does not make such person a retailer hereunder. However, any

21 person who is engaged in a business which is not subject to the

22 tax imposed by the "Retailers' Occupation Tax Act" because of

23 involving the sale of or a contract to sell real estate or a

24 construction contract to improve real estate, but who, in the

25 course of conducting such business, transfers tangible

26 personal property to users or consumers in the finished form in

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1 which it was purchased, and which does not become real estate,

2 under any provision of a construction contract or real estate

3 sale or real estate sales agreement entered into with some

4 other person arising out of or because of such nontaxable

5 business, is a retailer to the extent of the value of the

6 tangible personal property so transferred. If, in such

7 transaction, a separate charge is made for the tangible

8 personal property so transferred, the value of such property,

9 for the purposes of this Act, is the amount so separately

10 charged, but not less than the cost of such property to the

11 transferor; if no separate charge is made, the value of such

12 property, for the purposes of this Act, is the cost to the

13 transferor of such tangible personal property.

14 "Retailer maintaining a place of business in this State",

15 or any like term, means and includes any of the following

16 retailers:

17 1. A retailer having or maintaining within this State,

18 directly or by a subsidiary, an office, distribution house,

19 sales house, warehouse or other place of business, or any

20 agent or other representative operating within this State

21 under the authority of the retailer or its subsidiary,

22 irrespective of whether such place of business or agent or

23 other representative is located here permanently or

24 temporarily, or whether such retailer or subsidiary is

25 licensed to do business in this State. However, the

26 ownership of property that is located at the premises of a

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1 printer with which the retailer has contracted for printing

2 and that consists of the final printed product, property

3 that becomes a part of the final printed product, or copy

4 from which the printed product is produced shall not result

5 in the retailer being deemed to have or maintain an office,

6 distribution house, sales house, warehouse, or other place

7 of business within this State.

8 1.1. A retailer having a contract with a person located

9 in this State under which the person, for a commission or

10 other consideration based upon the sale of tangible

11 personal property or taxable services by the retailer,

12 directly or indirectly refers potential customers to the

13 retailer by providing to the potential customers a

14 promotional code or other mechanism that allows the

15 retailer to track purchases referred by such persons.

16 Examples of mechanisms that allow the retailer to track

17 purchases referred by such persons include but are not

18 limited to the use of a link on the person's Internet

19 website, promotional codes distributed through the

20 person's hand-delivered or mailed material, and

21 promotional codes distributed by the person through radio

22 or other broadcast media. The provisions of this paragraph

23 1.1 shall apply only if the cumulative gross receipts from

24 sales of tangible personal property or taxable service by

25 the retailer to customers who are referred to the retailer

26 by all persons in this State under such contracts exceed

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1 $10,000 during the preceding 4 quarterly periods ending on

2 the last day of March, June, September, and December. A

3 retailer meeting the requirements of this paragraph 1.1

4 shall be presumed to be maintaining a place of business in

5 this State but may rebut this presumption by submitting

6 proof that the referrals or other activities pursued within

7 this State by such persons were not sufficient to meet the

8 nexus standards of the United States Constitution during

9 the preceding 4 quarterly periods.

10 1.2. Beginning July 1, 2011, a retailer having a

11 contract with a person located in this State under which:

12 A. the retailer sells the same or substantially

13 similar line of products or taxable services as the

14 person located in this State and does so using an

15 identical or substantially similar name, trade name,

16 or trademark as the person located in this State; and

17 B. the retailer provides a commission or other

18 consideration to the person located in this State based

19 upon the sale of tangible personal property or taxable

20 service by the retailer.

21 The provisions of this paragraph 1.2 shall apply only if

22 the cumulative gross receipts from sales of tangible

23 personal property or taxable service by the retailer to

24 customers in this State under all such contracts exceed

25 $10,000 during the preceding 4 quarterly periods ending on

26 the last day of March, June, September, and December.

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1 2. A retailer soliciting orders for tangible personal

2 property or taxable serviceby means of a telecommunication

3 or television shopping system (which utilizes toll free

4 numbers) which is intended by the retailer to be broadcast

5 by cable television or other means of broadcasting, to

6 consumers located in this State.

7 3. A retailer, pursuant to a contract with a

8 broadcaster or publisher located in this State, soliciting

9 orders for tangible personal property or taxable serviceby

10 means of advertising which is disseminated primarily to

11 consumers located in this State and only secondarily to

12 bordering jurisdictions.

13 4. A retailer soliciting orders for tangible personal

14 property or taxable serviceby mail if the solicitations

15 are substantial and recurring and if the retailer benefits

16 from any banking, financing, debt collection,

17 telecommunication, or marketing activities occurring in

18 this State or benefits from the location in this State of

19 authorized installation, servicing, or repair facilities.

20 5. A retailer that is owned or controlled by the same

21 interests that own or control any retailer engaging in

22 business in the same or similar line of business in this

23 State.

24 6. A retailer having a franchisee or licensee operating

25 under its trade name if the franchisee or licensee is

26 required to collect the tax under this Section.

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1 7. A retailer, pursuant to a contract with a cable

2 television operator located in this State, soliciting

3 orders for tangible personal property or taxable serviceby

4 means of advertising which is transmitted or distributed

5 over a cable television system in this State.

6 8. A retailer engaging in activities in Illinois, which

7 activities in the state in which the retail business

8 engaging in such activities is located would constitute

9 maintaining a place of business in that state.

10 "Bulk vending machine" means a vending machine, containing

11 unsorted confections, nuts, toys, or other items designed

12 primarily to be used or played with by children which, when a

13 coin or coins of a denomination not larger than $0.50 are

14 inserted, are dispensed in equal portions, at random and

15 without selection by the customer.

16 (Source: P.A. 98-628, eff. 1-1-15; 98-1080, eff. 8-26-14;

17 98-1089, eff. 1-1-15; 99-78, eff. 7-20-15.)

18 (35 ILCS 105/2a-2 new)

19 Sec. 2a-2. Taxable services. Beginning January 1, 2018,

20 "taxable service" means any of the following services:

21 (1) Providing space for storage.

22 (A) "Storage" means the retaining or keeping of

23 tangible personal property in this State for any

24 purpose. For purposes of this Section, tangible

25 personal property, does not include "grain" as defined

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1 in the Public Grain Warehouse and Warehouse Receipts

2 Act.

3 (B) "Space for storage" means (i) secure areas,

4 such as rooms, units, compartments or containers,

5 whether accessible from outside or from within a

6 building, that are designated for the use of a

7 purchaser, where the purchaser can store and retrieve

8 property, including self-storage units, mini-storage

9 units, and areas by any other name; (ii) any parking

10 lot, ramp, or parking garage for a vehicle, whether the

11 vehicle is parked by the operator of the vehicle or by

12 an attendant; (iii) any aircraft parking area, ramp, or

13 hanger; (iv) any boat slip, dock, or dry dock; (v) any

14 recreational vehicle parking area or garage; and (vi)

15 any other areas for storage or parking of tangible

16 personal property.

17 (C) "Self-storage or mini-storage" includes

18 storage lockers or storage units in apartment

19 complexes (if the locker or unit is utilized at the

20 tenant's option and includes payment of a fee in

21 addition to apartment rental), and in amusement parks,

22 water parks, recreational facilities, and other

23 locations where lockers are rented for self-storage.

24 (2) Repair, servicing, alteration, fitting, cleaning,

25 painting, coating, towing, inspection, or maintenance of

26 tangible personal property or tangible personal property

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1 that has been affixed to real estate; this paragraph (2)

2 does not apply to new construction, reconstruction, or

3 expansion of a building or structure.

4 (3) Landscaping services. "Landscaping services" means

5 services performed by a person who arranges and modifies

6 the natural condition of a given parcel or tract of land so

7 as to render the land suitable for public or private use or

8 enjoyment. Landscaping services include, but are not

9 limited to, mowing, watering, and aerating lawns; weeding;

10 mulching; raking leaves; tree and shrub trimming and

11 removal; planting of trees, shrubs, flowering and

12 non-flowering plants, and sod; spraying; fertilizing;

13 applying chemicals; lawn and garden installation;

14 constructing, remodeling, or repairing irrigation or lawn

15 sprinkler systems, patios (other than asphalt, tar,

16 macadam, or poured concrete), walkways (other than

17 asphalt, tar, macadam, or poured concrete), fences,

18 trellises, and retaining walls; grading (such as the

19 filling or leveling of topsoil for lawns and gardens), and

20 snow plowing and removal.

21 (4) Laundry, drycleaning, cloth pressing, dyeing, or

22 linen service, except when the service is performed by the

23 purchaser through the use of coin-operated, self-service

24 machines.

25 (5) Cable television service as defined in 47 U.S.C.

26 522(6), video and audio streaming services, and direct

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1 broadcast satellite service. "Direct broadcast satellite

2 service" includes the distribution or broadcasting of

3 programming or services by satellite, including audio or

4 video programming, to receiving equipment located at a

5 purchaser's premises. "Video and audio streaming service"

6 means the method used to deliver multimedia elements

7 including but not limited to video and audio from a data

8 streaming service provider to an end user.

9 (6) Private detective, private alarm, and private

10 security service for which the provider of the service is

11 required to be licensed pursuant to the Private Detective,

12 Private Alarm, Private Security, Fingerprint Vendor, and

13 Locksmith Act of 2004, or would be required to be so

14 licensed in performing those services in this State.

15 (7) Structural pest control services. "Structural pest

16 control services" means use of any device or the

17 application of any substance to prevent, repel, mitigate,

18 curb, control, or eradicate any structural pest in, on,

19 under, or around a structure, or within a part of, or

20 materials used in building, a structure; the use of any

21 pesticide, including insecticides, fungicides and other

22 wood treatment products, attractants, repellents,

23 rodenticides, fumigants, or mechanical devices for

24 preventing, controlling, eradicating, identifying,

25 mitigating, diminishing, or curbing insects, vermin, rats,

26 mice, or other pests in, on, under, or around a structure,

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1 or within a part of, or materials used in building, a

2 structure; vault fumigation and fumigation of box cars,

3 trucks, ships, airplanes, docks, warehouses, and common

4 carriers or soliciting to perform any of the foregoing

5 functions.

6 (8) Personal care services, including skin care, the

7 application of cosmetics, manicuring, pedicuring, hair

8 removal, tattooing, body piercing, tanning, and other

9 similar services. "Personal care services" does not

10 include personal care services provided by or on the order

11 of a licensed physician, licensed chiropractor, physician

12 assistant, advanced practice nurse, registered nurse, or

13 licensed practical nurse, or the cutting, coloring, or

14 styling of an individual's hair.

15 (35 ILCS 105/3) (from Ch. 120, par. 439.3)

16 Sec. 3. Tax imposed. A tax is imposed upon the privilege of

17 using in this Statea taxable service or tangible personal

18 property purchased at retail from a retailer, including

19 computer software, and including photographs, negatives, and

20 positives that are the product of photoprocessing, but not

21 including products of photoprocessing produced for use in

22 motion pictures for commercial exhibition. Beginning January

23 1, 2001, prepaid telephone calling arrangements shall be

24 considered tangible personal property subject to the tax

25 imposed under this Act regardless of the form in which those

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1 arrangements may be embodied, transmitted, or fixed by any

2 method now known or hereafter developed. Purchases of (1)

3 electricity delivered to customers by wire; (2) natural or

4 artificial gas that is delivered to customers through pipes,

5 pipelines, or mains; and (3) water that is delivered to

6 customers through pipes, pipelines, or mains are not subject to

7 tax under this Act. The provisions of this amendatory Act of

8 the 98th General Assembly are declaratory of existing law as to

9 the meaning and scope of this Act.

10 (Source: P.A. 98-583, eff. 1-1-14.)

11 (35 ILCS 105/3-5)

12 Sec. 3-5. Exemptions. Use of the following tangible

13 personal property or taxable serviceis exempt from the tax

14 imposed by this Act:

15 (1) Personal property or taxable services purchased from a

16 corporation, society, association, foundation, institution, or

17 organization, other than a limited liability company, that is

18 organized and operated as a not-for-profit service enterprise

19 for the benefit of persons 65 years of age or older if the

20 personal property or taxable servicewas not purchased by the

21 enterprise for the purpose of resale by the enterprise.

22 (2) Personal property or taxable service purchased by a

23 not-for-profit Illinois county fair association for use in

24 conducting, operating, or promoting the county fair.

25 (3) Personal property or taxable services purchased by a

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1 not-for-profit arts or cultural organization that establishes,

2 by proof required by the Department by rule, that it has

3 received an exemption under Section 501(c)(3) of the Internal

4 Revenue Code and that is organized and operated primarily for

5 the presentation or support of arts or cultural programming,

6 activities, or services. These organizations include, but are

7 not limited to, music and dramatic arts organizations such as

8 symphony orchestras and theatrical groups, arts and cultural

9 service organizations, local arts councils, visual arts

10 organizations, and media arts organizations. On and after the

11 effective date of this amendatory Act of the 92nd General

12 Assembly, however, an entity otherwise eligible for this

13 exemption shall not make tax-free purchases unless it has an

14 active identification number issued by the Department.

15 (4) Personal property or taxable services purchased by a

16 governmental body, by a corporation, society, association,

17 foundation, or institution organized and operated exclusively

18 for charitable, religious, or educational purposes, or by a

19 not-for-profit corporation, society, association, foundation,

20 institution, or organization that has no compensated officers

21 or employees and that is organized and operated primarily for

22 the recreation of persons 55 years of age or older. A limited

23 liability company may qualify for the exemption under this

24 paragraph only if the limited liability company is organized

25 and operated exclusively for educational purposes. On and after

26 July 1, 1987, however, no entity otherwise eligible for this

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1 exemption shall make tax-free purchases unless it has an active

2 exemption identification number issued by the Department.

3 (5) Until July 1, 2003, a passenger car that is a

4 replacement vehicle to the extent that the purchase price of

5 the car is subject to the Replacement Vehicle Tax.

6 (6) Until July 1, 2003 and beginning again on September 1,

7 2004 through August 30, 2014, graphic arts machinery and

8 equipment, including repair and replacement parts, both new and

9 used, and including that manufactured on special order,

10 certified by the purchaser to be used primarily for graphic

11 arts production, and including machinery and equipment

12 purchased for lease. Equipment includes chemicals or chemicals

13 acting as catalysts but only if the chemicals or chemicals

14 acting as catalysts effect a direct and immediate change upon a

15 graphic arts product. Beginning on July 1, 2017, graphic arts

16 machinery and equipment is included in the manufacturing and

17 assembling machinery and equipment exemption under paragraph

18 (18).

19 (7) Farm chemicals.

20 (8) Legal tender, currency, medallions, or gold or silver

21 coinage issued by the State of Illinois, the government of the

22 United States of America, or the government of any foreign

23 country, and bullion.

24 (9) Personal property purchased from a teacher-sponsored

25 student organization affiliated with an elementary or

26 secondary school located in Illinois.

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1 (10) A motor vehicle that is used for automobile renting,

2 as defined in the Automobile Renting Occupation and Use Tax

3 Act.

4 (11) Farm machinery and equipment, both new and used,

5 including that manufactured on special order, certified by the

6 purchaser to be used primarily for production agriculture or

7 State or federal agricultural programs, including individual

8 replacement parts for the machinery and equipment, including

9 machinery and equipment purchased for lease, and including

10 implements of husbandry defined in Section 1-130 of the

11 Illinois Vehicle Code, farm machinery and agricultural

12 chemical and fertilizer spreaders, and nurse wagons required to

13 be registered under Section 3-809 of the Illinois Vehicle Code,

14 but excluding other motor vehicles required to be registered

15 under the Illinois Vehicle Code. Horticultural polyhouses or

16 hoop houses used for propagating, growing, or overwintering

17 plants shall be considered farm machinery and equipment under

18 this item (11). Agricultural chemical tender tanks and dry

19 boxes shall include units sold separately from a motor vehicle

20 required to be licensed and units sold mounted on a motor

21 vehicle required to be licensed if the selling price of the

22 tender is separately stated.

23 Farm machinery and equipment shall include precision

24 farming equipment that is installed or purchased to be

25 installed on farm machinery and equipment including, but not

26 limited to, tractors, harvesters, sprayers, planters, seeders,

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1 or spreaders. Precision farming equipment includes, but is not

2 limited to, soil testing sensors, computers, monitors,

3 software, global positioning and mapping systems, and other

4 such equipment.

5 Farm machinery and equipment also includes computers,

6 sensors, software, and related equipment used primarily in the

7 computer-assisted operation of production agriculture

8 facilities, equipment, and activities such as, but not limited

9 to, the collection, monitoring, and correlation of animal and

10 crop data for the purpose of formulating animal diets and

11 agricultural chemicals. This item (11) is exempt from the

12 provisions of Section 3-90.

13 (12) Until June 30, 2013, fuel and petroleum products sold

14 to or used by an air common carrier, certified by the carrier

15 to be used for consumption, shipment, or storage in the conduct

16 of its business as an air common carrier, for a flight destined

17 for or returning from a location or locations outside the

18 United States without regard to previous or subsequent domestic

19 stopovers.

20 Beginning July 1, 2013, fuel and petroleum products sold to

21 or used by an air carrier, certified by the carrier to be used

22 for consumption, shipment, or storage in the conduct of its

23 business as an air common carrier, for a flight that (i) is

24 engaged in foreign trade or is engaged in trade between the

25 United States and any of its possessions and (ii) transports at

26 least one individual or package for hire from the city of

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1 origination to the city of final destination on the same

2 aircraft, without regard to a change in the flight number of

3 that aircraft.

4 (13) Proceeds of mandatory service charges separately

5 stated on customers' bills for the purchase and consumption of

6 food and beveragesor taxable services purchased at retail from

7 a retailer, to the extent that the proceeds of the service

8 charge are in fact turned over as tips or as a substitute for

9 tips to the employees who participate directly in preparing,

10 serving, hosting or cleaning up the food or beverage function

11 with respect to which the service charge is imposed.

12 (14) Until July 1, 2003, oil field exploration, drilling,

13 and production equipment, including (i) rigs and parts of rigs,

14 rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and

15 tubular goods, including casing and drill strings, (iii) pumps

16 and pump-jack units, (iv) storage tanks and flow lines, (v) any

17 individual replacement part for oil field exploration,

18 drilling, and production equipment, and (vi) machinery and

19 equipment purchased for lease; but excluding motor vehicles

20 required to be registered under the Illinois Vehicle Code.

21 (15) Photoprocessing machinery and equipment, including

22 repair and replacement parts, both new and used, including that

23 manufactured on special order, certified by the purchaser to be

24 used primarily for photoprocessing, and including

25 photoprocessing machinery and equipment purchased for lease.

26 (16) Coal and aggregate exploration, mining, off-highway

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1 hauling, processing, maintenance, and reclamation equipment,

2 including replacement parts and equipment, and including

3 equipment purchased for lease, but excluding motor vehicles

4 required to be registered under the Illinois Vehicle Code. The

5 changes made to this Section by Public Act 97-767 apply on and

6 after July 1, 2003, but no claim for credit or refund is

7 allowed on or after August 16, 2013 (the effective date of

8 Public Act 98-456) for such taxes paid during the period

9 beginning July 1, 2003 and ending on August 16, 2013 (the

10 effective date of Public Act 98-456).

11 (17) Until July 1, 2003, distillation machinery and

12 equipment, sold as a unit or kit, assembled or installed by the

13 retailer, certified by the user to be used only for the

14 production of ethyl alcohol that will be used for consumption

15 as motor fuel or as a component of motor fuel for the personal

16 use of the user, and not subject to sale or resale.

17 (18) Manufacturing and assembling machinery and equipment

18 used primarily in the process of manufacturing or assembling

19 tangible personal property for wholesale or retail sale or

20 lease, whether that sale or lease is made directly by the

21 manufacturer or by some other person, whether the materials

22 used in the process are owned by the manufacturer or some other

23 person, or whether that sale or lease is made apart from or as

24 an incident to the seller's engaging in the service occupation

25 of producing machines, tools, dies, jigs, patterns, gauges, or

26 other similar items of no commercial value on special order for

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1 a particular purchaser. The exemption provided by this

2 paragraph (18) does not include machinery and equipment used in

3 (i) the generation of electricity for wholesale or retail sale;

4 (ii) the generation or treatment of natural or artificial gas

5 for wholesale or retail sale that is delivered to customers

6 through pipes, pipelines, or mains; or (iii) the treatment of

7 water for wholesale or retail sale that is delivered to

8 customers through pipes, pipelines, or mains. The provisions of

9 Public Act 98-583 are declaratory of existing law as to the

10 meaning and scope of this exemption. Beginning on July 1, 2017,

11 the exemption provided by this paragraph (18) includes, but is

12 not limited to, graphic arts machinery and equipment, as

13 defined in paragraph (6) of this Section. Beginning on July 1,

14 2017, the exemption provided by this paragraph (18) includes,

15 but is not limited to, production related tangible personal

16 property, as defined in Section 3-50 of this Act. The exemption

17 provided by this paragraph (18) is exempt from the provisions

18 of Section 3-90.

19 (19) Personal property delivered to a purchaser or

20 purchaser's donee inside Illinois when the purchase order for

21 that personal property was received by a florist located

22 outside Illinois who has a florist located inside Illinois

23 deliver the personal property.

24 (20) Semen used for artificial insemination of livestock

25 for direct agricultural production.

26 (21) Horses, or interests in horses, registered with and

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1 meeting the requirements of any of the Arabian Horse Club

2 Registry of America, Appaloosa Horse Club, American Quarter

3 Horse Association, United States Trotting Association, or

4 Jockey Club, as appropriate, used for purposes of breeding or

5 racing for prizes. This item (21) is exempt from the provisions

6 of Section 3-90, and the exemption provided for under this item

7 (21) applies for all periods beginning May 30, 1995, but no

8 claim for credit or refund is allowed on or after January 1,

9 2008 for such taxes paid during the period beginning May 30,

10 2000 and ending on January 1, 2008.

11 (22) Computers and communications equipment utilized for

12 any hospital purpose and equipment used in the diagnosis,

13 analysis, or treatment of hospital patients purchased by a

14 lessor who leases the equipment, under a lease of one year or

15 longer executed or in effect at the time the lessor would

16 otherwise be subject to the tax imposed by this Act, to a

17 hospital that has been issued an active tax exemption

18 identification number by the Department under Section 1g of the

19 Retailers' Occupation Tax Act. If the equipment is leased in a

20 manner that does not qualify for this exemption or is used in

21 any other non-exempt manner, the lessor shall be liable for the

22 tax imposed under this Act or the Service Use Tax Act, as the

23 case may be, based on the fair market value of the property at

24 the time the non-qualifying use occurs. No lessor shall collect

25 or attempt to collect an amount (however designated) that

26 purports to reimburse that lessor for the tax imposed by this

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1 Act or the Service Use Tax Act, as the case may be, if the tax

2 has not been paid by the lessor. If a lessor improperly

3 collects any such amount from the lessee, the lessee shall have

4 a legal right to claim a refund of that amount from the lessor.

5 If, however, that amount is not refunded to the lessee for any

6 reason, the lessor is liable to pay that amount to the

7 Department.

8 (23) Personal property purchased by a lessor who leases the

9 property, under a lease of one year or longer executed or in

10 effect at the time the lessor would otherwise be subject to the

11 tax imposed by this Act, to a governmental body that has been

12 issued an active sales tax exemption identification number by

13 the Department under Section 1g of the Retailers' Occupation

14 Tax Act. If the property is leased in a manner that does not

15 qualify for this exemption or used in any other non-exempt

16 manner, the lessor shall be liable for the tax imposed under

17 this Act or the Service Use Tax Act, as the case may be, based

18 on the fair market value of the property at the time the

19 non-qualifying use occurs. No lessor shall collect or attempt

20 to collect an amount (however designated) that purports to

21 reimburse that lessor for the tax imposed by this Act or the

22 Service Use Tax Act, as the case may be, if the tax has not been

23 paid by the lessor. If a lessor improperly collects any such

24 amount from the lessee, the lessee shall have a legal right to

25 claim a refund of that amount from the lessor. If, however,

26 that amount is not refunded to the lessee for any reason, the

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1 lessor is liable to pay that amount to the Department.

2 (24) Beginning with taxable years ending on or after

3 December 31, 1995 and ending with taxable years ending on or

4 before December 31, 2004, personal property that is donated for

5 disaster relief to be used in a State or federally declared

6 disaster area in Illinois or bordering Illinois by a

7 manufacturer or retailer that is registered in this State to a

8 corporation, society, association, foundation, or institution

9 that has been issued a sales tax exemption identification

10 number by the Department that assists victims of the disaster

11 who reside within the declared disaster area.

12 (25) Beginning with taxable years ending on or after

13 December 31, 1995 and ending with taxable years ending on or

14 before December 31, 2004, personal property that is used in the

15 performance of infrastructure repairs in this State, including

16 but not limited to municipal roads and streets, access roads,

17 bridges, sidewalks, waste disposal systems, water and sewer

18 line extensions, water distribution and purification

19 facilities, storm water drainage and retention facilities, and

20 sewage treatment facilities, resulting from a State or

21 federally declared disaster in Illinois or bordering Illinois

22 when such repairs are initiated on facilities located in the

23 declared disaster area within 6 months after the disaster.

24 (26) Beginning July 1, 1999, game or game birds purchased

25 at a "game breeding and hunting preserve area" as that term is

26 used in the Wildlife Code. This paragraph is exempt from the

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1 provisions of Section 3-90.

2 (27) A motor vehicle, as that term is defined in Section

3 1-146 of the Illinois Vehicle Code, that is donated to a

4 corporation, limited liability company, society, association,

5 foundation, or institution that is determined by the Department

6 to be organized and operated exclusively for educational

7 purposes. For purposes of this exemption, "a corporation,

8 limited liability company, society, association, foundation,

9 or institution organized and operated exclusively for

10 educational purposes" means all tax-supported public schools,

11 private schools that offer systematic instruction in useful

12 branches of learning by methods common to public schools and

13 that compare favorably in their scope and intensity with the

14 course of study presented in tax-supported schools, and

15 vocational or technical schools or institutes organized and

16 operated exclusively to provide a course of study of not less

17 than 6 weeks duration and designed to prepare individuals to

18 follow a trade or to pursue a manual, technical, mechanical,

19 industrial, business, or commercial occupation.

20 (28) Beginning January 1, 2000, personal property,

21 including food, purchased through fundraising events for the

22 benefit of a public or private elementary or secondary school,

23 a group of those schools, or one or more school districts if

24 the events are sponsored by an entity recognized by the school

25 district that consists primarily of volunteers and includes

26 parents and teachers of the school children. This paragraph

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1 does not apply to fundraising events (i) for the benefit of

2 private home instruction or (ii) for which the fundraising

3 entity purchases the personal property sold at the events from

4 another individual or entity that sold the property for the

5 purpose of resale by the fundraising entity and that profits

6 from the sale to the fundraising entity. This paragraph is

7 exempt from the provisions of Section 3-90.

8 (29) Beginning January 1, 2000 and through December 31,

9 2001, new or used automatic vending machines that prepare and

10 serve hot food and beverages, including coffee, soup, and other

11 items, and replacement parts for these machines. Beginning

12 January 1, 2002 and through June 30, 2003, machines and parts

13 for machines used in commercial, coin-operated amusement and

14 vending business if a use or occupation tax is paid on the

15 gross receipts derived from the use of the commercial,

16 coin-operated amusement and vending machines. This paragraph

17 is exempt from the provisions of Section 3-90.

18 (30) Beginning January 1, 2001 and through June 30, 2016,

19 food for human consumption that is to be consumed off the

20 premises where it is sold (other than alcoholic beverages, soft

21 drinks, and food that has been prepared for immediate

22 consumption) and prescription and nonprescription medicines,

23 drugs, medical appliances, and insulin, urine testing

24 materials, syringes, and needles used by diabetics, for human

25 use, when purchased for use by a person receiving medical

26 assistance under Article V of the Illinois Public Aid Code who

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1 resides in a licensed long-term care facility, as defined in

2 the Nursing Home Care Act, or in a licensed facility as defined

3 in the ID/DD Community Care Act, the MC/DD Act, or the

4 Specialized Mental Health Rehabilitation Act of 2013.

5 (31) Beginning on the effective date of this amendatory Act

6 of the 92nd General Assembly, computers and communications

7 equipment utilized for any hospital purpose and equipment used

8 in the diagnosis, analysis, or treatment of hospital patients

9 purchased by a lessor who leases the equipment, under a lease

10 of one year or longer executed or in effect at the time the

11 lessor would otherwise be subject to the tax imposed by this

12 Act, to a hospital that has been issued an active tax exemption

13 identification number by the Department under Section 1g of the

14 Retailers' Occupation Tax Act. If the equipment is leased in a

15 manner that does not qualify for this exemption or is used in

16 any other nonexempt manner, the lessor shall be liable for the

17 tax imposed under this Act or the Service Use Tax Act, as the

18 case may be, based on the fair market value of the property at

19 the time the nonqualifying use occurs. No lessor shall collect

20 or attempt to collect an amount (however designated) that

21 purports to reimburse that lessor for the tax imposed by this

22 Act or the Service Use Tax Act, as the case may be, if the tax

23 has not been paid by the lessor. If a lessor improperly

24 collects any such amount from the lessee, the lessee shall have

25 a legal right to claim a refund of that amount from the lessor.

26 If, however, that amount is not refunded to the lessee for any

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1 reason, the lessor is liable to pay that amount to the

2 Department. This paragraph is exempt from the provisions of

3 Section 3-90.

4 (32) Beginning on the effective date of this amendatory Act

5 of the 92nd General Assembly, personal property purchased by a

6 lessor who leases the property, under a lease of one year or

7 longer executed or in effect at the time the lessor would

8 otherwise be subject to the tax imposed by this Act, to a

9 governmental body that has been issued an active sales tax

10 exemption identification number by the Department under

11 Section 1g of the Retailers' Occupation Tax Act. If the

12 property is leased in a manner that does not qualify for this

13 exemption or used in any other nonexempt manner, the lessor

14 shall be liable for the tax imposed under this Act or the

15 Service Use Tax Act, as the case may be, based on the fair

16 market value of the property at the time the nonqualifying use

17 occurs. No lessor shall collect or attempt to collect an amount

18 (however designated) that purports to reimburse that lessor for

19 the tax imposed by this Act or the Service Use Tax Act, as the

20 case may be, if the tax has not been paid by the lessor. If a

21 lessor improperly collects any such amount from the lessee, the

22 lessee shall have a legal right to claim a refund of that

23 amount from the lessor. If, however, that amount is not

24 refunded to the lessee for any reason, the lessor is liable to

25 pay that amount to the Department. This paragraph is exempt

26 from the provisions of Section 3-90.

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1 (33) On and after July 1, 2003 and through June 30, 2004,

2 the use in this State of motor vehicles of the second division

3 with a gross vehicle weight in excess of 8,000 pounds and that

4 are subject to the commercial distribution fee imposed under

5 Section 3-815.1 of the Illinois Vehicle Code. Beginning on July

6 1, 2004 and through June 30, 2005, the use in this State of

7 motor vehicles of the second division: (i) with a gross vehicle

8 weight rating in excess of 8,000 pounds; (ii) that are subject

9 to the commercial distribution fee imposed under Section

10 3-815.1 of the Illinois Vehicle Code; and (iii) that are

11 primarily used for commercial purposes. Through June 30, 2005,

12 this exemption applies to repair and replacement parts added

13 after the initial purchase of such a motor vehicle if that

14 motor vehicle is used in a manner that would qualify for the

15 rolling stock exemption otherwise provided for in this Act. For

16 purposes of this paragraph, the term "used for commercial

17 purposes" means the transportation of persons or property in

18 furtherance of any commercial or industrial enterprise,

19 whether for-hire or not.

20 (34) Beginning January 1, 2008, tangible personal property

21 used in the construction or maintenance of a community water

22 supply, as defined under Section 3.145 of the Environmental

23 Protection Act, that is operated by a not-for-profit

24 corporation that holds a valid water supply permit issued under

25 Title IV of the Environmental Protection Act. This paragraph is

26 exempt from the provisions of Section 3-90.

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1 (35) Beginning January 1, 2010, materials, parts,

2 equipment, components, and furnishings incorporated into or

3 upon an aircraft as part of the modification, refurbishment,

4 completion, replacement, repair, or maintenance of the

5 aircraft. This exemption includes consumable supplies used in

6 the modification, refurbishment, completion, replacement,

7 repair, and maintenance of aircraft, but excludes any

8 materials, parts, equipment, components, and consumable

9 supplies used in the modification, replacement, repair, and

10 maintenance of aircraft engines or power plants, whether such

11 engines or power plants are installed or uninstalled upon any

12 such aircraft. "Consumable supplies" include, but are not

13 limited to, adhesive, tape, sandpaper, general purpose

14 lubricants, cleaning solution, latex gloves, and protective

15 films. This exemption applies only to the use of qualifying

16 tangible personal property by persons who modify, refurbish,

17 complete, repair, replace, or maintain aircraft and who (i)

18 hold an Air Agency Certificate and are empowered to operate an

19 approved repair station by the Federal Aviation

20 Administration, (ii) have a Class IV Rating, and (iii) conduct

21 operations in accordance with Part 145 of the Federal Aviation

22 Regulations. The exemption does not include aircraft operated

23 by a commercial air carrier providing scheduled passenger air

24 service pursuant to authority issued under Part 121 or Part 129

25 of the Federal Aviation Regulations. The changes made to this

26 paragraph (35) by Public Act 98-534 are declarative of existing

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1 law.

2 (36) Tangible personal property purchased by a

3 public-facilities corporation, as described in Section

4 11-65-10 of the Illinois Municipal Code, for purposes of

5 constructing or furnishing a municipal convention hall, but

6 only if the legal title to the municipal convention hall is

7 transferred to the municipality without any further

8 consideration by or on behalf of the municipality at the time

9 of the completion of the municipal convention hall or upon the

10 retirement or redemption of any bonds or other debt instruments

11 issued by the public-facilities corporation in connection with

12 the development of the municipal convention hall. This

13 exemption includes existing public-facilities corporations as

14 provided in Section 11-65-25 of the Illinois Municipal Code.

15 This paragraph is exempt from the provisions of Section 3-90.

16 (37) Beginning January 1, 2017, menstrual pads, tampons,

17 and menstrual cups.

18 (38) Beginning January 1, 2018, taxable services performed

19 on or to tangible personal property the sale of which is exempt

20 from taxation under this Act. This paragraph is exempt from the

21 provisions of Section 2-70.

22 (39) Beginning January 1, 2018, taxable services performed

23 in a transaction that would be exempt from taxation under this

24 Act if it involved solely the sale of tangible personal

25 property. Such exemption could be due to the nature of the

26 seller or of the service provider, the purchaser or service

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1 recipient, or other features of the transaction, including but

2 not limited to the location or sale-for-resale nature of the

3 transaction. Any such exemption applies to transactions

4 involving solely the sale of tangible personal property, solely

5 the performance of taxable service, or some combination

6 thereof. This paragraph is exempt from the provisions of

7 Section 2-70.

8 (40) Beginning January 1, 2018, taxable services performed

9 for or provided to businesses making purchases of service for

10 the benefit of or in furtherance of the business. This

11 paragraph is exempt from the provisions of Section 2-70.

12 (Source: P.A. 98-104, eff. 7-22-13; 98-422, eff. 8-16-13;

13 98-456, eff. 8-16-13; 98-534, eff. 8-23-13; 98-574, eff.

14 1-1-14; 98-583, eff. 1-1-14; 98-756, eff. 7-16-14; 99-180, eff.

15 7-29-15; 99-855, eff. 8-19-16.)

16 (35 ILCS 105/3-10)

17 Sec. 3-10. Rate of tax. Unless otherwise provided in this

18 Section, the tax imposed by this Act is at the rate of 6.25% of

19 either the selling price or the fair market value, if any, of

20 the tangible personal property. Beginning on July 1, 2017, the

21 tax is also imposed at the rate of 6.25% of either the selling

22 price or the fair market value, if any, of taxable services. In

23 all cases where propertyor service functionally used or

24 consumed is the same as the property or servicethat was

25 purchased at retail, then the tax is imposed on the selling

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1 price of the propertyor taxable service. In all cases where

2 property functionally used or consumed is a by-product or waste

3 product that has been refined, manufactured, or produced from

4 property purchased at retail, then the tax is imposed on the

5 lower of the fair market value, if any, of the specific

6 property so used in this State or on the selling price of the

7 property purchased at retail. For purposes of this Section

8 "fair market value" means the price at which property or

9 servicewould change hands between a willing buyer and a

10 willing seller, neither being under any compulsion to buy or

11 sell and both having reasonable knowledge of the relevant

12 facts. The fair market value shall be established by Illinois

13 sales by the taxpayer of the same propertyor service as that

14 functionally used or consumed, or if there are no such sales by

15 the taxpayer, then comparable sales or purchases of propertyor

16 service of like kind and character in Illinois.

17 Beginning on July 1, 2000 and through December 31, 2000,

18 with respect to motor fuel, as defined in Section 1.1 of the

19 Motor Fuel Tax Law, and gasohol, as defined in Section 3-40 of

20 the Use Tax Act, the tax is imposed at the rate of 1.25%.

21 Beginning on August 6, 2010 through August 15, 2010, with

22 respect to sales tax holiday items as defined in Section 3-6 of

23 this Act, the tax is imposed at the rate of 1.25%.

24 With respect to gasohol, the tax imposed by this Act

25 applies to (i) 70% of the proceeds of sales made on or after

26 January 1, 1990, and before July 1, 2003, (ii) 80% of the

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1 proceeds of sales made on or after July 1, 2003 and on or

2 before December 31, 2018, and (iii) 100% of the proceeds of

3 sales made thereafter. If, at any time, however, the tax under

4 this Act on sales of gasohol is imposed at the rate of 1.25%,

5 then the tax imposed by this Act applies to 100% of the

6 proceeds of sales of gasohol made during that time.

7 With respect to majority blended ethanol fuel, the tax

8 imposed by this Act does not apply to the proceeds of sales

9 made on or after July 1, 2003 and on or before December 31,

10 2018 but applies to 100% of the proceeds of sales made

11 thereafter.

12 With respect to biodiesel blends with no less than 1% and

13 no more than 10% biodiesel, the tax imposed by this Act applies

14 to (i) 80% of the proceeds of sales made on or after July 1,

15 2003 and on or before December 31, 2018 and (ii) 100% of the

16 proceeds of sales made thereafter. If, at any time, however,

17 the tax under this Act on sales of biodiesel blends with no

18 less than 1% and no more than 10% biodiesel is imposed at the

19 rate of 1.25%, then the tax imposed by this Act applies to 100%

20 of the proceeds of sales of biodiesel blends with no less than

21 1% and no more than 10% biodiesel made during that time.

22 With respect to 100% biodiesel and biodiesel blends with

23 more than 10% but no more than 99% biodiesel, the tax imposed

24 by this Act does not apply to the proceeds of sales made on or

25 after July 1, 2003 and on or before December 31, 2018 but

26 applies to 100% of the proceeds of sales made thereafter.

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1 With respect to food for human consumption that is to be

2 consumed off the premises where it is sold (other than

3 alcoholic beverages, soft drinks, and food that has been

4 prepared for immediate consumption) and prescription and

5 nonprescription medicines, drugs, medical appliances, products

6 classified as Class III medical devices by the United States

7 Food and Drug Administration that are used for cancer treatment

8 pursuant to a prescription, as well as any accessories and

9 components related to those devices, modifications to a motor

10 vehicle for the purpose of rendering it usable by a person with

11 a disability, and insulin, urine testing materials, syringes,

12 and needles used by diabetics, for human use, the tax is

13 imposed at the rate of 1%. For the purposes of this Section,

14 until September 1, 2009: the term "soft drinks" means any

15 complete, finished, ready-to-use, non-alcoholic drink, whether

16 carbonated or not, including but not limited to soda water,

17 cola, fruit juice, vegetable juice, carbonated water, and all

18 other preparations commonly known as soft drinks of whatever

19 kind or description that are contained in any closed or sealed

20 bottle, can, carton, or container, regardless of size; but

21 "soft drinks" does not include coffee, tea, non-carbonated

22 water, infant formula, milk or milk products as defined in the

23 Grade A Pasteurized Milk and Milk Products Act, or drinks

24 containing 50% or more natural fruit or vegetable juice.

25 Notwithstanding any other provisions of this Act,

26 beginning September 1, 2009, "soft drinks" means non-alcoholic

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1 beverages that contain natural or artificial sweeteners. "Soft

2 drinks" do not include beverages that contain milk or milk

3 products, soy, rice or similar milk substitutes, or greater

4 than 50% of vegetable or fruit juice by volume.

5 Until August 1, 2009, and notwithstanding any other

6 provisions of this Act, "food for human consumption that is to

7 be consumed off the premises where it is sold" includes all

8 food sold through a vending machine, except soft drinks and

9 food products that are dispensed hot from a vending machine,

10 regardless of the location of the vending machine. Beginning

11 August 1, 2009, and notwithstanding any other provisions of

12 this Act, "food for human consumption that is to be consumed

13 off the premises where it is sold" includes all food sold

14 through a vending machine, except soft drinks, candy, and food

15 products that are dispensed hot from a vending machine,

16 regardless of the location of the vending machine.

17 Notwithstanding any other provisions of this Act,

18 beginning September 1, 2009, "food for human consumption that

19 is to be consumed off the premises where it is sold" does not

20 include candy. For purposes of this Section, "candy" means a

21 preparation of sugar, honey, or other natural or artificial

22 sweeteners in combination with chocolate, fruits, nuts or other

23 ingredients or flavorings in the form of bars, drops, or

24 pieces. "Candy" does not include any preparation that contains

25 flour or requires refrigeration.

26 Notwithstanding any other provisions of this Act,

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1 beginning September 1, 2009, "nonprescription medicines and

2 drugs" does not include grooming and hygiene products. For

3 purposes of this Section, "grooming and hygiene products"

4 includes, but is not limited to, soaps and cleaning solutions,

5 shampoo, toothpaste, mouthwash, antiperspirants, and sun tan

6 lotions and screens, unless those products are available by

7 prescription only, regardless of whether the products meet the

8 definition of "over-the-counter-drugs". For the purposes of

9 this paragraph, "over-the-counter-drug" means a drug for human

10 use that contains a label that identifies the product as a drug

11 as required by 21 C.F.R. � 201.66. The "over-the-counter-drug"

12 label includes:

13 (A) A "Drug Facts" panel; or

14 (B) A statement of the "active ingredient(s)" with a

15 list of those ingredients contained in the compound,

16 substance or preparation.

17 Beginning on the effective date of this amendatory Act of

18 the 98th General Assembly, "prescription and nonprescription

19 medicines and drugs" includes medical cannabis purchased from a

20 registered dispensing organization under the Compassionate Use

21 of Medical Cannabis Pilot Program Act.

22 If the property that is purchased at retail from a retailer

23 is acquired outside Illinois and used outside Illinois before

24 being brought to Illinois for use here and is taxable under

25 this Act, the "selling price" on which the tax is computed

26 shall be reduced by an amount that represents a reasonable

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1 allowance for depreciation for the period of prior out-of-state

2 use.

3 (Source: P.A. 98-122, eff. 1-1-14; 99-143, eff. 7-27-15;

4 99-858, eff. 8-19-16.)

5 (35 ILCS 105/3-10.5)

6 Sec. 3-10.5. Direct payment of retailers' occupation tax

7 and applicable local retailers' occupation tax by purchaser;

8 purchaser relieved of paying use tax and local retailers'

9 occupation tax reimbursement liabilities to retailer.

10 (a) A retailer who makes a retail sale of tangible personal

11 property or taxable serviceto a purchaser who provides the

12 retailer with a copy of the purchaser's valid Direct Pay Permit

13 issued under Section 2-10.5 of the Retailers' Occupation Tax

14 Act is not required under Section 3-45 of this Act to collect

15 the tax imposed by this Act on that sale.

16 (b) A purchaser who makes a purchase from a retailer who

17 would otherwise incur retailers' occupation tax liability on

18 the transaction and who provides the retailer with a copy of a

19 valid Direct Pay Permit issued under Section 2-10.5 of the

20 Retailers' Occupation Tax Act does not incur the tax imposed by

21 this Act on the purchase. The purchaser assumes the retailer's

22 obligation to pay the retailers' occupation tax directly to the

23 Department, including all local retailers' occupation tax

24 liabilities applicable to that retail sale.

25 (c) A purchaser who makes a purchase from a retailer who

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1 would not incur retailers' occupation tax liability on the

2 transaction and who provides the retailer with a copy of a

3 valid Direct Pay Permit issued under Section 2-10.5 of the

4 Retailers' Occupation Tax Act incurs the tax imposed by this

5 Act on the purchase. If, on any transaction, the retailer is

6 entitled under this Act to a discount for collecting and

7 remitting the tax imposed under this Act to the Department, the

8 right to the discount provided in Section 9 of this Act shall

9 be transferred to the Permit holder. If the retailer would not

10 be entitled to a discount as provided in Section 9 of this Act,

11 then the Permit holder is not entitled to a discount.

12 (Source: P.A. 92-484, eff. 8-23-01.)

13 (35 ILCS 105/3-45) (from Ch. 120, par. 439.3-45)

14 Sec. 3-45. Collection. The tax imposed by this Act shall be

15 collected from the purchaser by a retailer maintaining a place

16 of business in this State or a retailer authorized by the

17 Department under Section 6 of this Act, and shall be remitted

18 to the Department as provided in Section 9 of this Act, except

19 as provided in Section 3-10.5 of this Act.

20 The tax imposed by this Act that is not paid to a retailer

21 under this Section shall be paid to the Department directly by

22 any person using the property within this State as provided in

23 Section 10 of this Act.

24 Retailers shall collect the tax from users by adding the

25 tax to the selling price of tangible personal propertyor

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1 taxable service, when sold for use, in the manner prescribed by

2 the Department. The Department may adopt and promulgate

3 reasonable rules and regulations for the adding of the tax by

4 retailers to selling prices by prescribing bracket systems for

5 the purpose of enabling the retailers to add and collect, as

6 far as practicable, the amount of the tax.

7 If a seller collects use tax measured by receipts that are

8 not subject to use tax, or if a seller, in collecting use tax

9 measured by receipts that are subject to tax under this Act,

10 collects more from the purchaser than the required amount of

11 the use tax on the transaction, the purchaser shall have a

12 legal right to claim a refund of that amount from the seller.

13 If, however, that amount is not refunded to the purchaser for

14 any reason, the seller is liable to pay that amount to the

15 Department. This paragraph does not apply to an amount

16 collected by the seller as use tax on receipts that are subject

17 to tax under this Act as long as the collection is made in

18 compliance with the tax collection brackets prescribed by the

19 Department in its rules and regulations.

20 (Source: P.A. 91-51, eff. 6-30-99; 92-484, eff. 8-23-01.)

21 (35 ILCS 105/3-50) (from Ch. 120, par. 439.3-50)

22 Sec. 3-50. Manufacturing and assembly exemption. The

23 manufacturing and assembling machinery and equipment exemption

24 includes machinery and equipment that replaces machinery and

25 equipment in an existing manufacturing facility as well as

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1 machinery and equipment that are for use in an expanded or new

2 manufacturing facility. The machinery and equipment exemption

3 also includes machinery and equipment used in the general

4 maintenance or repair of exempt machinery and equipment or for

5 in-house manufacture of exempt machinery and equipment.

6 Beginning on July 1, 2017, the manufacturing and assembling

7 machinery and equipment exemption also includes graphic arts

8 machinery and equipment, as defined in paragraph (6) of Section

9 3-5. Beginning on July 1, 2017, the manufacturing and

10 assembling machinery and equipment exemption also includes

11 production related tangible personal property, as defined in

12 this Section. The machinery and equipment exemption does not

13 include machinery and equipment used in (i) the generation of

14 electricity for wholesale or retail sale; (ii) the generation

15 or treatment of natural or artificial gas for wholesale or

16 retail sale that is delivered to customers through pipes,

17 pipelines, or mains; or (iii) the treatment of water for

18 wholesale or retail sale that is delivered to customers through

19 pipes, pipelines, or mains. The provisions of this amendatory

20 Act of the 98th General Assembly are declaratory of existing

21 law as to the meaning and scope of this exemption. For the

22 purposes of this exemption, terms have the following meanings:

23 (1) "Manufacturing process" means the production of an

24 article of tangible personal property, whether the article

25 is a finished product or an article for use in the process

26 of manufacturing or assembling a different article of

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1 tangible personal property, by a procedure commonly

2 regarded as manufacturing, processing, fabricating, or

3 refining that changes some existing material into a

4 material with a different form, use, or name. In relation

5 to a recognized integrated business composed of a series of

6 operations that collectively constitute manufacturing, or

7 individually constitute manufacturing operations, the

8 manufacturing process commences with the first operation

9 or stage of production in the series and does not end until

10 the completion of the final product in the last operation

11 or stage of production in the series. For purposes of this

12 exemption, photoprocessing is a manufacturing process of

13 tangible personal property for wholesale or retail sale.

14 (2) "Assembling process" means the production of an

15 article of tangible personal property, whether the article

16 is a finished product or an article for use in the process

17 of manufacturing or assembling a different article of

18 tangible personal property, by the combination of existing

19 materials in a manner commonly regarded as assembling that

20 results in an article or material of a different form, use,

21 or name.

22 (3) "Machinery" means major mechanical machines or

23 major components of those machines contributing to a

24 manufacturing or assembling process.

25 (4) "Equipment" includes an independent device or tool

26 separate from machinery but essential to an integrated

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1 manufacturing or assembly process; including computers

2 used primarily in a manufacturer's computer assisted

3 design, computer assisted manufacturing (CAD/CAM) system;

4 any subunit or assembly comprising a component of any

5 machinery or auxiliary, adjunct, or attachment parts of

6 machinery, such as tools, dies, jigs, fixtures, patterns,

7 and molds; and any parts that require periodic replacement

8 in the course of normal operation; but does not include

9 hand tools. Equipment includes chemicals or chemicals

10 acting as catalysts but only if the chemicals or chemicals

11 acting as catalysts effect a direct and immediate change

12 upon a product being manufactured or assembled for

13 wholesale or retail sale or lease.

14 (5) "Production related tangible personal property"

15 means all tangible personal property that is used or

16 consumed by the purchaser in a manufacturing facility in

17 which a manufacturing process takes place and includes,

18 without limitation, tangible personal property that is

19 purchased for incorporation into real estate within a

20 manufacturing facility and tangible personal property that

21 is used or consumed in activities such as research and

22 development, preproduction material handling, receiving,

23 quality control, inventory control, storage, staging, and

24 packaging for shipping and transportation purposes.

25 "Production related tangible personal property" does not

26 include (i) tangible personal property that is used, within

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1 or without a manufacturing facility, in sales, purchasing,

2 accounting, fiscal management, marketing, personnel

3 recruitment or selection, or landscaping or (ii) tangible

4 personal property that is required to be titled or

5 registered with a department, agency, or unit of federal,

6 State, or local government.

7 The manufacturing and assembling machinery and equipment

8 exemption includes production related tangible personal

9 property that is purchased (i) on or after July 1, 2007 and on

10 or before June 30, 2008 or (ii) on and after July 1, 2017. The

11 exemption for production related tangible personal property

12 purchased on or after July 1, 2007 and on or before June 30,

13 2008 is subject to both of the following limitations:

14 (1) The maximum amount of the exemption for any one

15 taxpayer may not exceed 5% of the purchase price of

16 production related tangible personal property that is

17 purchased on or after July 1, 2007 and on or before June

18 30, 2008. A credit under Section 3-85 of this Act may not

19 be earned by the purchase of production related tangible

20 personal property for which an exemption is received under

21 this Section.

22 (2) The maximum aggregate amount of the exemptions for

23 production related tangible personal property awarded

24 under this Act and the Retailers' Occupation Tax Act to all

25 taxpayers may not exceed $10,000,000. If the claims for the

26 exemption exceed $10,000,000, then the Department shall

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1 reduce the amount of the exemption to each taxpayer on a

2 pro rata basis.

3 The Department may adopt rules to implement and administer the

4 exemption for production related tangible personal property.

5 The manufacturing and assembling machinery and equipment

6 exemption includes the sale of materials to a purchaser who

7 produces exempted types of machinery, equipment, or tools and

8 who rents or leases that machinery, equipment, or tools to a

9 manufacturer of tangible personal property. This exemption

10 also includes the sale of materials to a purchaser who

11 manufactures those materials into an exempted type of

12 machinery, equipment, or tools that the purchaser uses himself

13 or herself in the manufacturing of tangible personal property.

14 This exemption includes the sale of exempted types of machinery

15 or equipment to a purchaser who is not the manufacturer, but

16 who rents or leases the use of the property to a manufacturer.

17 The purchaser of the machinery and equipment who has an active

18 resale registration number shall furnish that number to the

19 seller at the time of purchase. A user of the machinery,

20 equipment, or tools without an active resale registration

21 number shall prepare a certificate of exemption for each

22 transaction stating facts establishing the exemption for that

23 transaction, and that certificate shall be available to the

24 Department for inspection or audit. The Department shall

25 prescribe the form of the certificate. Informal rulings,

26 opinions, or letters issued by the Department in response to an

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1 inquiry or request for an opinion from any person regarding the

2 coverage and applicability of this exemption to specific

3 devices shall be published, maintained as a public record, and

4 made available for public inspection and copying. If the

5 informal ruling, opinion, or letter contains trade secrets or

6 other confidential information, where possible, the Department

7 shall delete that information before publication. Whenever

8 informal rulings, opinions, or letters contain a policy of

9 general applicability, the Department shall formulate and

10 adopt that policy as a rule in accordance with the Illinois

11 Administrative Procedure Act.

12 The manufacturing and assembling machinery and equipment

13 exemption, including the addition of production related

14 tangible personal property, is exempt from the provisions of

15 Section 3-90.

16 (Source: P.A. 98-583, eff. 1-1-14.)

17 (35 ILCS 105/3-55) (from Ch. 120, par. 439.3-55)

18 Sec. 3-55. Multistate exemption. To prevent actual or

19 likely multistate taxation, the tax imposed by this Act does

20 not apply to the use of tangible personal property in this

21 State under the following circumstances:

22 (a) The use, in this State, of tangible personal property

23 acquired outside this State by a nonresident individual and

24 brought into this State by the individual for his or her own

25 use while temporarily within this State or while passing

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1 through this State.

2 (b) The use, in this State, of tangible personal property

3 by an interstate carrier for hire as rolling stock moving in

4 interstate commerce or by lessors under a lease of one year or

5 longer executed or in effect at the time of purchase of

6 tangible personal property by interstate carriers for-hire for

7 use as rolling stock moving in interstate commerce as long as

8 so used by the interstate carriers for-hire, and equipment

9 operated by a telecommunications provider, licensed as a common

10 carrier by the Federal Communications Commission, which is

11 permanently installed in or affixed to aircraft moving in

12 interstate commerce.

13 (c) The use, in this State, by owners, lessors, or shippers

14 of tangible personal property that is utilized by interstate

15 carriers for hire for use as rolling stock moving in interstate

16 commerce as long as so used by the interstate carriers for

17 hire, and equipment operated by a telecommunications provider,

18 licensed as a common carrier by the Federal Communications

19 Commission, which is permanently installed in or affixed to

20 aircraft moving in interstate commerce.

21 (d) The use, in this State, of tangible personal property

22 or taxable servicethat is acquired outside this State and

23 caused to be brought into or performed inthis State by a

24 person who has already paid a tax in another State in respect

25 to the sale, purchase, or use of that property, to the extent

26 of the amount of the tax properly due and paid in the other

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1 State.

2 (e) The temporary storage, in this State, of tangible

3 personal property that is acquired outside this State and that,

4 after being brought into this State and stored here

5 temporarily, is used solely outside this State or is physically

6 attached to or incorporated into other tangible personal

7 property that is used solely outside this State, or is altered

8 by converting, fabricating, manufacturing, printing,

9 processing, or shaping, and, as altered, is used solely outside

10 this State.

11 (f) The temporary storage in this State of building

12 materials and fixtures that are acquired either in this State

13 or outside this State by an Illinois registered combination

14 retailer and construction contractor, and that the purchaser

15 thereafter uses outside this State by incorporating that

16 property into real estate located outside this State.

17 (g) The use or purchase of tangible personal property by a

18 common carrier by rail or motor that receives the physical

19 possession of the property in Illinois, and that transports the

20 property, or shares with another common carrier in the

21 transportation of the property, out of Illinois on a standard

22 uniform bill of lading showing the seller of the property as

23 the shipper or consignor of the property to a destination

24 outside Illinois, for use outside Illinois.

25 (h) Except as provided in subsection (h-1), the use, in

26 this State, of a motor vehicle that was sold in this State to a

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1 nonresident, even though the motor vehicle is delivered to the

2 nonresident in this State, if the motor vehicle is not to be

3 titled in this State, and if a drive-away permit is issued to

4 the motor vehicle as provided in Section 3-603 of the Illinois

5 Vehicle Code or if the nonresident purchaser has vehicle

6 registration plates to transfer to the motor vehicle upon

7 returning to his or her home state. The issuance of the

8 drive-away permit or having the out-of-state registration

9 plates to be transferred shall be prima facie evidence that the

10 motor vehicle will not be titled in this State.

11 (h-1) The exemption under subsection (h) does not apply if

12 the state in which the motor vehicle will be titled does not

13 allow a reciprocal exemption for the use in that state of a

14 motor vehicle sold and delivered in that state to an Illinois

15 resident but titled in Illinois. The tax collected under this

16 Act on the sale of a motor vehicle in this State to a resident

17 of another state that does not allow a reciprocal exemption

18 shall be imposed at a rate equal to the state's rate of tax on

19 taxable property in the state in which the purchaser is a

20 resident, except that the tax shall not exceed the tax that

21 would otherwise be imposed under this Act. At the time of the

22 sale, the purchaser shall execute a statement, signed under

23 penalty of perjury, of his or her intent to title the vehicle

24 in the state in which the purchaser is a resident within 30

25 days after the sale and of the fact of the payment to the State

26 of Illinois of tax in an amount equivalent to the state's rate

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1 of tax on taxable property in his or her state of residence and

2 shall submit the statement to the appropriate tax collection

3 agency in his or her state of residence. In addition, the

4 retailer must retain a signed copy of the statement in his or

5 her records. Nothing in this subsection shall be construed to

6 require the removal of the vehicle from this state following

7 the filing of an intent to title the vehicle in the purchaser's

8 state of residence if the purchaser titles the vehicle in his

9 or her state of residence within 30 days after the date of

10 sale. The tax collected under this Act in accordance with this

11 subsection (h-1) shall be proportionately distributed as if the

12 tax were collected at the 6.25% general rate imposed under this

13 Act.

14 (h-2) The following exemptions apply with respect to

15 certain aircraft:

16 (1) Beginning on July 1, 2007, no tax is imposed under

17 this Act on the purchase of an aircraft, as defined in

18 Section 3 of the Illinois Aeronautics Act, if all of the

19 following conditions are met:

20 (A) the aircraft leaves this State within 15 days

21 after the later of either the issuance of the final

22 billing for the purchase of the aircraft or the

23 authorized approval for return to service, completion

24 of the maintenance record entry, and completion of the

25 test flight and ground test for inspection, as required

26 by 14 C.F.R. 91.407;

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1 (B) the aircraft is not based or registered in this

2 State after the purchase of the aircraft; and

3 (C) the purchaser provides the Department with a

4 signed and dated certification, on a form prescribed by

5 the Department, certifying that the requirements of

6 this item (1) are met. The certificate must also

7 include the name and address of the purchaser, the

8 address of the location where the aircraft is to be

9 titled or registered, the address of the primary

10 physical location of the aircraft, and other

11 information that the Department may reasonably

12 require.

13 (2) Beginning on July 1, 2007, no tax is imposed under

14 this Act on the use of an aircraft, as defined in Section 3

15 of the Illinois Aeronautics Act, that is temporarily

16 located in this State for the purpose of a prepurchase

17 evaluation if all of the following conditions are met:

18 (A) the aircraft is not based or registered in this

19 State after the prepurchase evaluation; and

20 (B) the purchaser provides the Department with a

21 signed and dated certification, on a form prescribed by

22 the Department, certifying that the requirements of

23 this item (2) are met. The certificate must also

24 include the name and address of the purchaser, the

25 address of the location where the aircraft is to be

26 titled or registered, the address of the primary

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1 physical location of the aircraft, and other

2 information that the Department may reasonably

3 require.

4 (3) Beginning on July 1, 2007, no tax is imposed under

5 this Act on the use of an aircraft, as defined in Section 3

6 of the Illinois Aeronautics Act, that is temporarily

7 located in this State for the purpose of a post-sale

8 customization if all of the following conditions are met:

9 (A) the aircraft leaves this State within 15 days

10 after the authorized approval for return to service,

11 completion of the maintenance record entry, and

12 completion of the test flight and ground test for

13 inspection, as required by 14 C.F.R. 91.407;

14 (B) the aircraft is not based or registered in this

15 State either before or after the post-sale

16 customization; and

17 (C) the purchaser provides the Department with a

18 signed and dated certification, on a form prescribed by

19 the Department, certifying that the requirements of

20 this item (3) are met. The certificate must also

21 include the name and address of the purchaser, the

22 address of the location where the aircraft is to be

23 titled or registered, the address of the primary

24 physical location of the aircraft, and other

25 information that the Department may reasonably

26 require.

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1 If tax becomes due under this subsection (h-2) because of

2 the purchaser's use of the aircraft in this State, the

3 purchaser shall file a return with the Department and pay the

4 tax on the fair market value of the aircraft. This return and

5 payment of the tax must be made no later than 30 days after the

6 aircraft is used in a taxable manner in this State. The tax is

7 based on the fair market value of the aircraft on the date that

8 it is first used in a taxable manner in this State.

9 For purposes of this subsection (h-2):

10 "Based in this State" means hangared, stored, or otherwise

11 used, excluding post-sale customizations as defined in this

12 Section, for 10 or more days in each 12-month period

13 immediately following the date of the sale of the aircraft.

14 "Post-sale customization" means any improvement,

15 maintenance, or repair that is performed on an aircraft

16 following a transfer of ownership of the aircraft.

17 "Prepurchase evaluation" means an examination of an

18 aircraft to provide a potential purchaser with information

19 relevant to the potential purchase.

20 "Registered in this State" means an aircraft registered

21 with the Department of Transportation, Aeronautics Division,

22 or titled or registered with the Federal Aviation

23 Administration to an address located in this State.

24 This subsection (h-2) is exempt from the provisions of

25 Section 3-90.

26 (i) Beginning July 1, 1999, the use, in this State, of fuel

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1 acquired outside this State and brought into this State in the

2 fuel supply tanks of locomotives engaged in freight hauling and

3 passenger service for interstate commerce. This subsection is

4 exempt from the provisions of Section 3-90.

5 (j) Beginning on January 1, 2002 and through June 30, 2016,

6 the use of tangible personal property purchased from an

7 Illinois retailer by a taxpayer engaged in centralized

8 purchasing activities in Illinois who will, upon receipt of the

9 property in Illinois, temporarily store the property in

10 Illinois (i) for the purpose of subsequently transporting it

11 outside this State for use or consumption thereafter solely

12 outside this State or (ii) for the purpose of being processed,

13 fabricated, or manufactured into, attached to, or incorporated

14 into other tangible personal property to be transported outside

15 this State and thereafter used or consumed solely outside this

16 State. The Director of Revenue shall, pursuant to rules adopted

17 in accordance with the Illinois Administrative Procedure Act,

18 issue a permit to any taxpayer in good standing with the

19 Department who is eligible for the exemption under this

20 subsection (j). The permit issued under this subsection (j)

21 shall authorize the holder, to the extent and in the manner

22 specified in the rules adopted under this Act, to purchase

23 tangible personal property from a retailer exempt from the

24 taxes imposed by this Act. Taxpayers shall maintain all

25 necessary books and records to substantiate the use and

26 consumption of all such tangible personal property outside of

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1 the State of Illinois.

2 (Source: P.A. 97-73, eff. 6-30-11.)

3 (35 ILCS 105/3-65) (from Ch. 120, par. 439.3-65)

4 Sec. 3-65. R.O.T. nontaxability. If the seller of tangible

5 personal propertyor taxable servicefor use would not be

6 taxable under the Retailers' Occupation Tax Act despite all

7 elements of the sale occurring in Illinois, then the tax

8 imposed by this Act does not apply to the use of the tangible

9 personal propertyor taxable service in this State.

10 (Source: P.A. 91-51, eff. 6-30-99.)

11 (35 ILCS 105/3-75) (from Ch. 120, par. 439.3-75)

12 Sec. 3-75. Serviceman transfer. Tangible personal property

13 purchased by a serviceman, as defined in Section 2 of the

14 Service Occupation Tax Act, is subject to the tax imposed by

15 this Act when purchased for transfer by the serviceman

16 incidental to completion of a maintenance agreement. Effective

17 January 1, 2018, purchases of tangible personal property

18 purchased for transfer incidental to performance of a taxable

19 service is not subject to the tax imposed by this Act.

20 (Source: P.A. 91-51, eff. 6-30-99.)

21 (35 ILCS 105/3a) (from Ch. 120, par. 439.3a)

22 Sec. 3a. The tax imposed by the Act shall when collected be

23 stated as a distinct item separate and apart from the selling

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1 price of the tangible personal propertyor taxable service.

2 However, where it is not possible to state the sales tax

3 separately in situations such as sales from vending machines or

4 sales of liquor by the drink the Department may by rule exempt

5 such sales from this requirement so long as purchasers are

6 notified by a sign that the tax is included in the selling

7 price.

8 (Source: P.A. 84-229.)

9 (35 ILCS 105/4) (from Ch. 120, par. 439.4)

10 Sec. 4. Evidence that tangible personal property or taxable

11 servicewas sold by any person for delivery to a person

12 residing or engaged in business in this State shall be prima

13 facie evidence that such tangible personal property or taxable

14 servicewas sold for use in this State.

15 (Source: Laws 1955, p. 2027.)

16 (35 ILCS 105/5) (from Ch. 120, par. 439.5)

17 Sec. 5. Except as to motor vehicles and other items of

18 tangible personal property that must be titled or registered

19 under an Illinois law, but that cannot be so titled or

20 registered without a use tax receipt or exemption determination

21 from the Department, every retailer maintaining a place of

22 business in this State and making sales of tangible personal

23 property or taxable service for use in this State (whether

24 those sales are made within or without this State) shall, when

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1 collecting the tax as provided in Section 3-45 of this Act from

2 the purchaser, give to the purchaser (if demanded by the

3 purchaser) a receipt for the tax in the manner and form

4 prescribed by the Department. The receipt shall be sufficient

5 to relieve the purchaser from further liability for the tax to

6 which the receipt may refer. Each retailer shall list with the

7 Department the names and addresses of all of his or her agents

8 operating in this State and the location of any and all of his

9 or her distribution or sales houses, offices, or other places

10 of business in this State.

11 (Source: P.A. 86-1475.)

12 (35 ILCS 105/7) (from Ch. 120, par. 439.7)

13 Sec. 7.

14 It is unlawful for any retailer to advertise or hold out or

15 state to the public or to any purchaser, consumer or user,

16 directly or indirectly, that the tax or any part thereof

17 imposed by Section 3 hereof will be assumed or absorbed by the

18 retailer or that it will not be added to the selling price of

19 the property or taxable service sold, or if added that it or

20 any part thereof will be refunded other than when the retailer

21 refunds the selling price and tax because of the merchandise's

22 being returned to the retailer (or the taxable service

23 transaction's being partially or wholly cancelled) or other

24 than when the retailer credits or refunds the tax to the

25 purchaser to support a claim filed with the Department under

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1 the Retailers' Occupation Tax Act or under this Act. Any person

2 violating any of the provisions of this Section within this

3 State shall be guilty of a Class A misdemeanor.

4 (Source: P.A. 77-2830.)

5 (35 ILCS 105/9) (from Ch. 120, par. 439.9)

6 Sec. 9. Except as to motor vehicles, watercraft, aircraft,

7 and trailers that are required to be registered with an agency

8 of this State, each retailer required or authorized to collect

9 the tax imposed by this Act shall pay to the Department the

10 amount of such tax (except as otherwise provided) at the time

11 when he is required to file his return for the period during

12 which such tax was collected, less a discount of 2.1% prior to

13 January 1, 1990, and 1.75% on and after January 1, 1990, or $5

14 per calendar year, whichever is greater, which is allowed to

15 reimburse the retailer for expenses incurred in collecting the

16 tax, keeping records, preparing and filing returns, remitting

17 the tax and supplying data to the Department on request.

18 However, on and after July 1, 2017, in no event shall a vendor

19 discount under this Act exceed $1,000 for any retailer in any

20 calendar month.In the case of retailers who report and pay the

21 tax on a transaction by transaction basis, as provided in this

22 Section, such discount shall be taken with each such tax

23 remittance instead of when such retailer files his periodic

24 return. The Department may disallow the discount for retailers

25 whose certificate of registration is revoked at the time the

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1 return is filed, but only if the Department's decision to

2 revoke the certificate of registration has become final. A

3 retailer need not remit that part of any tax collected by him

4 to the extent that he is required to remit and does remit the

5 tax imposed by the Retailers' Occupation Tax Act, with respect

6 to the sale of the same property.

7 Where such tangible personal property or taxable service is

8 sold under a conditional sales contract, or under any other

9 form of sale wherein the payment of the principal sum, or a

10 part thereof, is extended beyond the close of the period for

11 which the return is filed, the retailer, in collecting the tax

12 (except as to motor vehicles, watercraft, aircraft, and

13 trailers that are required to be registered with an agency of

14 this State), may collect for each tax return period, only the

15 tax applicable to that part of the selling price actually

16 received during such tax return period.

17 Except as provided in this Section, on or before the

18 twentieth day of each calendar month, such retailer shall file

19 a return for the preceding calendar month. Such return shall be

20 filed on forms prescribed by the Department and shall furnish

21 such information as the Department may reasonably require.

22 The Department may require returns to be filed on a

23 quarterly basis. If so required, a return for each calendar

24 quarter shall be filed on or before the twentieth day of the

25 calendar month following the end of such calendar quarter. The

26 taxpayer shall also file a return with the Department for each

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1 of the first two months of each calendar quarter, on or before

2 the twentieth day of the following calendar month, stating:

3 1. The name of the seller;

4 2. The address of the principal place of business from

5 which he engages in the business of selling tangible

6 personal property at retail in this State;

7 3. The total amount of taxable receipts received by him

8 during the preceding calendar month from sales of tangible

9 personal property by him during such preceding calendar

10 month, including receipts from charge and time sales, but

11 less all deductions allowed by law;

12 4. The amount of credit provided in Section 2d of this

13 Act;

14 5. The amount of tax due;

15 5-5. The signature of the taxpayer; and

16 6. Such other reasonable information as the Department

17 may require.

18 If a taxpayer fails to sign a return within 30 days after

19 the proper notice and demand for signature by the Department,

20 the return shall be considered valid and any amount shown to be

21 due on the return shall be deemed assessed.

22 Beginning October 1, 1993, a taxpayer who has an average

23 monthly tax liability of $150,000 or more shall make all

24 payments required by rules of the Department by electronic

25 funds transfer. Beginning October 1, 1994, a taxpayer who has

26 an average monthly tax liability of $100,000 or more shall make

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1 all payments required by rules of the Department by electronic

2 funds transfer. Beginning October 1, 1995, a taxpayer who has

3 an average monthly tax liability of $50,000 or more shall make

4 all payments required by rules of the Department by electronic

5 funds transfer. Beginning October 1, 2000, a taxpayer who has

6 an annual tax liability of $200,000 or more shall make all

7 payments required by rules of the Department by electronic

8 funds transfer. The term "annual tax liability" shall be the

9 sum of the taxpayer's liabilities under this Act, and under all

10 other State and local occupation and use tax laws administered

11 by the Department, for the immediately preceding calendar year.

12 The term "average monthly tax liability" means the sum of the

13 taxpayer's liabilities under this Act, and under all other

14 State and local occupation and use tax laws administered by the

15 Department, for the immediately preceding calendar year

16 divided by 12. Beginning on October 1, 2002, a taxpayer who has

17 a tax liability in the amount set forth in subsection (b) of

18 Section 2505-210 of the Department of Revenue Law shall make

19 all payments required by rules of the Department by electronic

20 funds transfer.

21 Before August 1 of each year beginning in 1993, the

22 Department shall notify all taxpayers required to make payments

23 by electronic funds transfer. All taxpayers required to make

24 payments by electronic funds transfer shall make those payments

25 for a minimum of one year beginning on October 1.

26 Any taxpayer not required to make payments by electronic

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1 funds transfer may make payments by electronic funds transfer

2 with the permission of the Department.

3 All taxpayers required to make payment by electronic funds

4 transfer and any taxpayers authorized to voluntarily make

5 payments by electronic funds transfer shall make those payments

6 in the manner authorized by the Department.

7 The Department shall adopt such rules as are necessary to

8 effectuate a program of electronic funds transfer and the

9 requirements of this Section.

10 Before October 1, 2000, if the taxpayer's average monthly

11 tax liability to the Department under this Act, the Retailers'

12 Occupation Tax Act, the Service Occupation Tax Act, the Service

13 Use Tax Act was $10,000 or more during the preceding 4 complete

14 calendar quarters, he shall file a return with the Department

15 each month by the 20th day of the month next following the

16 month during which such tax liability is incurred and shall

17 make payments to the Department on or before the 7th, 15th,

18 22nd and last day of the month during which such liability is

19 incurred. On and after October 1, 2000, if the taxpayer's

20 average monthly tax liability to the Department under this Act,

21 the Retailers' Occupation Tax Act, the Service Occupation Tax

22 Act, and the Service Use Tax Act was $20,000 or more during the

23 preceding 4 complete calendar quarters, he shall file a return

24 with the Department each month by the 20th day of the month

25 next following the month during which such tax liability is

26 incurred and shall make payment to the Department on or before

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1 the 7th, 15th, 22nd and last day of the month during which such

2 liability is incurred. If the month during which such tax

3 liability is incurred began prior to January 1, 1985, each

4 payment shall be in an amount equal to 1/4 of the taxpayer's

5 actual liability for the month or an amount set by the

6 Department not to exceed 1/4 of the average monthly liability

7 of the taxpayer to the Department for the preceding 4 complete

8 calendar quarters (excluding the month of highest liability and

9 the month of lowest liability in such 4 quarter period). If the

10 month during which such tax liability is incurred begins on or

11 after January 1, 1985, and prior to January 1, 1987, each

12 payment shall be in an amount equal to 22.5% of the taxpayer's

13 actual liability for the month or 27.5% of the taxpayer's

14 liability for the same calendar month of the preceding year. If

15 the month during which such tax liability is incurred begins on

16 or after January 1, 1987, and prior to January 1, 1988, each

17 payment shall be in an amount equal to 22.5% of the taxpayer's

18 actual liability for the month or 26.25% of the taxpayer's

19 liability for the same calendar month of the preceding year. If

20 the month during which such tax liability is incurred begins on

21 or after January 1, 1988, and prior to January 1, 1989, or

22 begins on or after January 1, 1996, each payment shall be in an

23 amount equal to 22.5% of the taxpayer's actual liability for

24 the month or 25% of the taxpayer's liability for the same

25 calendar month of the preceding year. If the month during which

26 such tax liability is incurred begins on or after January 1,

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1 1989, and prior to January 1, 1996, each payment shall be in an

2 amount equal to 22.5% of the taxpayer's actual liability for

3 the month or 25% of the taxpayer's liability for the same

4 calendar month of the preceding year or 100% of the taxpayer's

5 actual liability for the quarter monthly reporting period. The

6 amount of such quarter monthly payments shall be credited

7 against the final tax liability of the taxpayer's return for

8 that month. Before October 1, 2000, once applicable, the

9 requirement of the making of quarter monthly payments to the

10 Department shall continue until such taxpayer's average

11 monthly liability to the Department during the preceding 4

12 complete calendar quarters (excluding the month of highest

13 liability and the month of lowest liability) is less than

14 $9,000, or until such taxpayer's average monthly liability to

15 the Department as computed for each calendar quarter of the 4

16 preceding complete calendar quarter period is less than

17 $10,000. However, if a taxpayer can show the Department that a

18 substantial change in the taxpayer's business has occurred

19 which causes the taxpayer to anticipate that his average

20 monthly tax liability for the reasonably foreseeable future

21 will fall below the $10,000 threshold stated above, then such

22 taxpayer may petition the Department for change in such

23 taxpayer's reporting status. On and after October 1, 2000, once

24 applicable, the requirement of the making of quarter monthly

25 payments to the Department shall continue until such taxpayer's

26 average monthly liability to the Department during the

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1 preceding 4 complete calendar quarters (excluding the month of

2 highest liability and the month of lowest liability) is less

3 than $19,000 or until such taxpayer's average monthly liability

4 to the Department as computed for each calendar quarter of the

5 4 preceding complete calendar quarter period is less than

6 $20,000. However, if a taxpayer can show the Department that a

7 substantial change in the taxpayer's business has occurred

8 which causes the taxpayer to anticipate that his average

9 monthly tax liability for the reasonably foreseeable future

10 will fall below the $20,000 threshold stated above, then such

11 taxpayer may petition the Department for a change in such

12 taxpayer's reporting status. The Department shall change such

13 taxpayer's reporting status unless it finds that such change is

14 seasonal in nature and not likely to be long term. If any such

15 quarter monthly payment is not paid at the time or in the

16 amount required by this Section, then the taxpayer shall be

17 liable for penalties and interest on the difference between the

18 minimum amount due and the amount of such quarter monthly

19 payment actually and timely paid, except insofar as the

20 taxpayer has previously made payments for that month to the

21 Department in excess of the minimum payments previously due as

22 provided in this Section. The Department shall make reasonable

23 rules and regulations to govern the quarter monthly payment

24 amount and quarter monthly payment dates for taxpayers who file

25 on other than a calendar monthly basis.

26 If any such payment provided for in this Section exceeds

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1 the taxpayer's liabilities under this Act, the Retailers'

2 Occupation Tax Act, the Service Occupation Tax Act and the

3 Service Use Tax Act, as shown by an original monthly return,

4 the Department shall issue to the taxpayer a credit memorandum

5 no later than 30 days after the date of payment, which

6 memorandum may be submitted by the taxpayer to the Department

7 in payment of tax liability subsequently to be remitted by the

8 taxpayer to the Department or be assigned by the taxpayer to a

9 similar taxpayer under this Act, the Retailers' Occupation Tax

10 Act, the Service Occupation Tax Act or the Service Use Tax Act,

11 in accordance with reasonable rules and regulations to be

12 prescribed by the Department, except that if such excess

13 payment is shown on an original monthly return and is made

14 after December 31, 1986, no credit memorandum shall be issued,

15 unless requested by the taxpayer. If no such request is made,

16 the taxpayer may credit such excess payment against tax

17 liability subsequently to be remitted by the taxpayer to the

18 Department under this Act, the Retailers' Occupation Tax Act,

19 the Service Occupation Tax Act or the Service Use Tax Act, in

20 accordance with reasonable rules and regulations prescribed by

21 the Department. If the Department subsequently determines that

22 all or any part of the credit taken was not actually due to the

23 taxpayer, the taxpayer's 2.1% or 1.75% vendor's discount shall

24 be reduced by 2.1% or 1.75% of the difference between the

25 credit taken and that actually due, and the taxpayer shall be

26 liable for penalties and interest on such difference.

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1 If the retailer is otherwise required to file a monthly

2 return and if the retailer's average monthly tax liability to

3 the Department does not exceed $200, the Department may

4 authorize his returns to be filed on a quarter annual basis,

5 with the return for January, February, and March of a given

6 year being due by April 20 of such year; with the return for

7 April, May and June of a given year being due by July 20 of such

8 year; with the return for July, August and September of a given

9 year being due by October 20 of such year, and with the return

10 for October, November and December of a given year being due by

11 January 20 of the following year.

12 If the retailer is otherwise required to file a monthly or

13 quarterly return and if the retailer's average monthly tax

14 liability to the Department does not exceed $50, the Department

15 may authorize his returns to be filed on an annual basis, with

16 the return for a given year being due by January 20 of the

17 following year.

18 Such quarter annual and annual returns, as to form and

19 substance, shall be subject to the same requirements as monthly

20 returns.

21 Notwithstanding any other provision in this Act concerning

22 the time within which a retailer may file his return, in the

23 case of any retailer who ceases to engage in a kind of business

24 which makes him responsible for filing returns under this Act,

25 such retailer shall file a final return under this Act with the

26 Department not more than one month after discontinuing such

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1 business.

2 In addition, with respect to motor vehicles, watercraft,

3 aircraft, and trailers that are required to be registered with

4 an agency of this State, every retailer selling this kind of

5 tangible personal property shall file, with the Department,

6 upon a form to be prescribed and supplied by the Department, a

7 separate return for each such item of tangible personal

8 property which the retailer sells, except that if, in the same

9 transaction, (i) a retailer of aircraft, watercraft, motor

10 vehicles or trailers transfers more than one aircraft,

11 watercraft, motor vehicle or trailer to another aircraft,

12 watercraft, motor vehicle or trailer retailer for the purpose

13 of resale or (ii) a retailer of aircraft, watercraft, motor

14 vehicles, or trailers transfers more than one aircraft,

15 watercraft, motor vehicle, or trailer to a purchaser for use as

16 a qualifying rolling stock as provided in Section 3-55 of this

17 Act, then that seller may report the transfer of all the

18 aircraft, watercraft, motor vehicles or trailers involved in

19 that transaction to the Department on the same uniform

20 invoice-transaction reporting return form. For purposes of

21 this Section, "watercraft" means a Class 2, Class 3, or Class 4

22 watercraft as defined in Section 3-2 of the Boat Registration

23 and Safety Act, a personal watercraft, or any boat equipped

24 with an inboard motor.

25 The transaction reporting return in the case of motor

26 vehicles or trailers that are required to be registered with an

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1 agency of this State, shall be the same document as the Uniform

2 Invoice referred to in Section 5-402 of the Illinois Vehicle

3 Code and must show the name and address of the seller; the name

4 and address of the purchaser; the amount of the selling price

5 including the amount allowed by the retailer for traded-in

6 property, if any; the amount allowed by the retailer for the

7 traded-in tangible personal property, if any, to the extent to

8 which Section 2 of this Act allows an exemption for the value

9 of traded-in property; the balance payable after deducting such

10 trade-in allowance from the total selling price; the amount of

11 tax due from the retailer with respect to such transaction; the

12 amount of tax collected from the purchaser by the retailer on

13 such transaction (or satisfactory evidence that such tax is not

14 due in that particular instance, if that is claimed to be the

15 fact); the place and date of the sale; a sufficient

16 identification of the property sold; such other information as

17 is required in Section 5-402 of the Illinois Vehicle Code, and

18 such other information as the Department may reasonably

19 require.

20 The transaction reporting return in the case of watercraft

21 and aircraft must show the name and address of the seller; the

22 name and address of the purchaser; the amount of the selling

23 price including the amount allowed by the retailer for

24 traded-in property, if any; the amount allowed by the retailer

25 for the traded-in tangible personal property, if any, to the

26 extent to which Section 2 of this Act allows an exemption for

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1 the value of traded-in property; the balance payable after

2 deducting such trade-in allowance from the total selling price;

3 the amount of tax due from the retailer with respect to such

4 transaction; the amount of tax collected from the purchaser by

5 the retailer on such transaction (or satisfactory evidence that

6 such tax is not due in that particular instance, if that is

7 claimed to be the fact); the place and date of the sale, a

8 sufficient identification of the property sold, and such other

9 information as the Department may reasonably require.

10 Such transaction reporting return shall be filed not later

11 than 20 days after the date of delivery of the item that is

12 being sold, but may be filed by the retailer at any time sooner

13 than that if he chooses to do so. The transaction reporting

14 return and tax remittance or proof of exemption from the tax

15 that is imposed by this Act may be transmitted to the

16 Department by way of the State agency with which, or State

17 officer with whom, the tangible personal property must be

18 titled or registered (if titling or registration is required)

19 if the Department and such agency or State officer determine

20 that this procedure will expedite the processing of

21 applications for title or registration.

22 With each such transaction reporting return, the retailer

23 shall remit the proper amount of tax due (or shall submit

24 satisfactory evidence that the sale is not taxable if that is

25 the case), to the Department or its agents, whereupon the

26 Department shall issue, in the purchaser's name, a tax receipt

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1 (or a certificate of exemption if the Department is satisfied

2 that the particular sale is tax exempt) which such purchaser

3 may submit to the agency with which, or State officer with

4 whom, he must title or register the tangible personal property

5 that is involved (if titling or registration is required) in

6 support of such purchaser's application for an Illinois

7 certificate or other evidence of title or registration to such

8 tangible personal property.

9 No retailer's failure or refusal to remit tax under this

10 Act precludes a user, who has paid the proper tax to the

11 retailer, from obtaining his certificate of title or other

12 evidence of title or registration (if titling or registration

13 is required) upon satisfying the Department that such user has

14 paid the proper tax (if tax is due) to the retailer. The

15 Department shall adopt appropriate rules to carry out the

16 mandate of this paragraph.

17 If the user who would otherwise pay tax to the retailer

18 wants the transaction reporting return filed and the payment of

19 tax or proof of exemption made to the Department before the

20 retailer is willing to take these actions and such user has not

21 paid the tax to the retailer, such user may certify to the fact

22 of such delay by the retailer, and may (upon the Department

23 being satisfied of the truth of such certification) transmit

24 the information required by the transaction reporting return

25 and the remittance for tax or proof of exemption directly to

26 the Department and obtain his tax receipt or exemption

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1 determination, in which event the transaction reporting return

2 and tax remittance (if a tax payment was required) shall be

3 credited by the Department to the proper retailer's account

4 with the Department, but without the 2.1% or 1.75% discount

5 provided for in this Section being allowed. When the user pays

6 the tax directly to the Department, he shall pay the tax in the

7 same amount and in the same form in which it would be remitted

8 if the tax had been remitted to the Department by the retailer.

9 Where a retailer collects the tax with respect to the

10 selling price of tangible personal propertyor taxable service

11 which he sells and the purchaser thereafter returns such

12 tangible personal property or cancels the providing of taxable

13 serviceand the retailer refunds the selling price thereof to

14 the purchaser, such retailer shall also refund, to the

15 purchaser, the tax so collected from the purchaser. When filing

16 his return for the period in which he refunds such tax to the

17 purchaser, the retailer may deduct the amount of the tax so

18 refunded by him to the purchaser from any other use tax which

19 such retailer may be required to pay or remit to the

20 Department, as shown by such return, if the amount of the tax

21 to be deducted was previously remitted to the Department by

22 such retailer. If the retailer has not previously remitted the

23 amount of such tax to the Department, he is entitled to no

24 deduction under this Act upon refunding such tax to the

25 purchaser.

26 Any retailer filing a return under this Section shall also

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1 include (for the purpose of paying tax thereon) the total tax

2 covered by such return upon the selling price of tangible

3 personal property or taxable servicepurchased by him at retail

4 from a retailer, but as to which the tax imposed by this Act

5 was not collected from the retailer filing such return, and

6 such retailer shall remit the amount of such tax to the

7 Department when filing such return.

8 If experience indicates such action to be practicable, the

9 Department may prescribe and furnish a combination or joint

10 return which will enable retailers, who are required to file

11 returns hereunder and also under the Retailers' Occupation Tax

12 Act, to furnish all the return information required by both

13 Acts on the one form.

14 Where the retailer has more than one business registered

15 with the Department under separate registration under this Act,

16 such retailer may not file each return that is due as a single

17 return covering all such registered businesses, but shall file

18 separate returns for each such registered business.

19 Beginning January 1, 1990, each month the Department shall

20 pay into the State and Local Sales Tax Reform Fund, a special

21 fund in the State Treasury which is hereby created, the net

22 revenue realized for the preceding month from the 1% tax on

23 sales of food for human consumption which is to be consumed off

24 the premises where it is sold (other than alcoholic beverages,

25 soft drinks and food which has been prepared for immediate

26 consumption) and prescription and nonprescription medicines,

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1 drugs, medical appliances, products classified as Class III

2 medical devices by the United States Food and Drug

3 Administration that are used for cancer treatment pursuant to a

4 prescription, as well as any accessories and components related

5 to those devices, and insulin, urine testing materials,

6 syringes and needles used by diabetics.

7 Beginning January 1, 1990, each month the Department shall

8 pay into the County and Mass Transit District Fund 4% of the

9 net revenue realized for the preceding month from the 6.25%

10 general rate on the selling price of tangible personal property

11 which is purchased outside Illinois at retail from a retailer

12 and which is titled or registered by an agency of this State's

13 government.

14 Beginning January 1, 1990, each month the Department shall

15 pay into the State and Local Sales Tax Reform Fund, a special

16 fund in the State Treasury, 20% of the net revenue realized for

17 the preceding month from the 6.25% general rate on the selling

18 price of tangible personal property, other than tangible

19 personal property which is purchased outside Illinois at retail

20 from a retailer and which is titled or registered by an agency

21 of this State's government.

22 From July 1, 2017 through June 30, 2018, no deposits shall

23 be made into the State and Local Sales Tax Reform Fund from the

24 net revenue realized from the 6.25% general rate on taxable

25 services. Beginning July 1, 2018 and through June 30, 2019,

26 each month the Department shall pay into the State and Local

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1 Sales Tax Reform Fund 7% of the net revenue realized for the

2 preceding month from the 6.25% general rate on the selling

3 price of taxable services. Beginning July 1, 2019 and through

4 June 30, 2020, each month the Department shall pay into the

5 State and Local Sales Tax Reform Fund 13% of the net revenue

6 realized for the preceding month from the 6.25% general rate on

7 the selling price of taxable services. Beginning July 1, 2020,

8 each month the Department shall pay into the State and Local

9 Sales Tax Reform Fund 20% of the net revenue realized for the

10 preceding month from the 6.25% general rate on the selling

11 price of taxable services.

12 Beginning August 1, 2000, each month the Department shall

13 pay into the State and Local Sales Tax Reform Fund 100% of the

14 net revenue realized for the preceding month from the 1.25%

15 rate on the selling price of motor fuel and gasohol. Beginning

16 September 1, 2010, each month the Department shall pay into the

17 State and Local Sales Tax Reform Fund 100% of the net revenue

18 realized for the preceding month from the 1.25% rate on the

19 selling price of sales tax holiday items.

20 Beginning January 1, 1990, each month the Department shall

21 pay into the Local Government Tax Fund 16% of the net revenue

22 realized for the preceding month from the 6.25% general rate on

23 the selling price of tangible personal property which is

24 purchased outside Illinois at retail from a retailer and which

25 is titled or registered by an agency of this State's

26 government.

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1 Beginning October 1, 2009, each month the Department shall

2 pay into the Capital Projects Fund an amount that is equal to

3 an amount estimated by the Department to represent 80% of the

4 net revenue realized for the preceding month from the sale of

5 candy, grooming and hygiene products, and soft drinks that had

6 been taxed at a rate of 1% prior to September 1, 2009 but that

7 are now taxed at 6.25%.

8 Beginning July 1, 2011, each month the Department shall pay

9 into the Clean Air Act Permit Fund 80% of the net revenue

10 realized for the preceding month from the 6.25% general rate on

11 the selling price of sorbents used in Illinois in the process

12 of sorbent injection as used to comply with the Environmental

13 Protection Act or the federal Clean Air Act, but the total

14 payment into the Clean Air Act Permit Fund under this Act and

15 the Retailers' Occupation Tax Act shall not exceed $2,000,000

16 in any fiscal year.

17 Beginning July 1, 2013, each month the Department shall pay

18 into the Underground Storage Tank Fund from the proceeds

19 collected under this Act, the Service Use Tax Act, the Service

20 Occupation Tax Act, and the Retailers' Occupation Tax Act an

21 amount equal to the average monthly deficit in the Underground

22 Storage Tank Fund during the prior year, as certified annually

23 by the Illinois Environmental Protection Agency, but the total

24 payment into the Underground Storage Tank Fund under this Act,

25 the Service Use Tax Act, the Service Occupation Tax Act, and

26 the Retailers' Occupation Tax Act shall not exceed $18,000,000

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1 in any State fiscal year. As used in this paragraph, the

2 "average monthly deficit" shall be equal to the difference

3 between the average monthly claims for payment by the fund and

4 the average monthly revenues deposited into the fund, excluding

5 payments made pursuant to this paragraph.

6 Beginning July 1, 2015, of the remainder of the moneys

7 received by the Department under this Act, the Service Use Tax

8 Act, the Service Occupation Tax Act, and the Retailers'

9 Occupation Tax Act, each month the Department shall deposit

10 $500,000 into the State Crime Laboratory Fund.

11 Of the remainder of the moneys received by the Department

12 pursuant to this Act, (a) 1.75% thereof shall be paid into the

13 Build Illinois Fund and (b) prior to July 1, 1989, 2.2% and on

14 and after July 1, 1989, 3.8% thereof shall be paid into the

15 Build Illinois Fund; provided, however, that if in any fiscal

16 year the sum of (1) the aggregate of 2.2% or 3.8%, as the case

17 may be, of the moneys received by the Department and required

18 to be paid into the Build Illinois Fund pursuant to Section 3

19 of the Retailers' Occupation Tax Act, Section 9 of the Use Tax

20 Act, Section 9 of the Service Use Tax Act, and Section 9 of the

21 Service Occupation Tax Act, such Acts being hereinafter called

22 the "Tax Acts" and such aggregate of 2.2% or 3.8%, as the case

23 may be, of moneys being hereinafter called the "Tax Act

24 Amount", and (2) the amount transferred to the Build Illinois

25 Fund from the State and Local Sales Tax Reform Fund shall be

26 less than the Annual Specified Amount (as defined in Section 3

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1 of the Retailers' Occupation Tax Act), an amount equal to the

2 difference shall be immediately paid into the Build Illinois

3 Fund from other moneys received by the Department pursuant to

4 the Tax Acts; and further provided, that if on the last

5 business day of any month the sum of (1) the Tax Act Amount

6 required to be deposited into the Build Illinois Bond Account

7 in the Build Illinois Fund during such month and (2) the amount

8 transferred during such month to the Build Illinois Fund from

9 the State and Local Sales Tax Reform Fund shall have been less

10 than 1/12 of the Annual Specified Amount, an amount equal to

11 the difference shall be immediately paid into the Build

12 Illinois Fund from other moneys received by the Department

13 pursuant to the Tax Acts; and, further provided, that in no

14 event shall the payments required under the preceding proviso

15 result in aggregate payments into the Build Illinois Fund

16 pursuant to this clause (b) for any fiscal year in excess of

17 the greater of (i) the Tax Act Amount or (ii) the Annual

18 Specified Amount for such fiscal year; and, further provided,

19 that the amounts payable into the Build Illinois Fund under

20 this clause (b) shall be payable only until such time as the

21 aggregate amount on deposit under each trust indenture securing

22 Bonds issued and outstanding pursuant to the Build Illinois

23 Bond Act is sufficient, taking into account any future

24 investment income, to fully provide, in accordance with such

25 indenture, for the defeasance of or the payment of the

26 principal of, premium, if any, and interest on the Bonds

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1 secured by such indenture and on any Bonds expected to be

2 issued thereafter and all fees and costs payable with respect

3 thereto, all as certified by the Director of the Bureau of the

4 Budget (now Governor's Office of Management and Budget). If on

5 the last business day of any month in which Bonds are

6 outstanding pursuant to the Build Illinois Bond Act, the

7 aggregate of the moneys deposited in the Build Illinois Bond

8 Account in the Build Illinois Fund in such month shall be less

9 than the amount required to be transferred in such month from

10 the Build Illinois Bond Account to the Build Illinois Bond

11 Retirement and Interest Fund pursuant to Section 13 of the

12 Build Illinois Bond Act, an amount equal to such deficiency

13 shall be immediately paid from other moneys received by the

14 Department pursuant to the Tax Acts to the Build Illinois Fund;

15 provided, however, that any amounts paid to the Build Illinois

16 Fund in any fiscal year pursuant to this sentence shall be

17 deemed to constitute payments pursuant to clause (b) of the

18 preceding sentence and shall reduce the amount otherwise

19 payable for such fiscal year pursuant to clause (b) of the

20 preceding sentence. The moneys received by the Department

21 pursuant to this Act and required to be deposited into the

22 Build Illinois Fund are subject to the pledge, claim and charge

23 set forth in Section 12 of the Build Illinois Bond Act.

24 Subject to payment of amounts into the Build Illinois Fund

25 as provided in the preceding paragraph or in any amendment

26 thereto hereafter enacted, the following specified monthly

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1 installment of the amount requested in the certificate of the

2 Chairman of the Metropolitan Pier and Exposition Authority

3 provided under Section 8.25f of the State Finance Act, but not

4 in excess of the sums designated as "Total Deposit", shall be

5 deposited in the aggregate from collections under Section 9 of

6 the Use Tax Act, Section 9 of the Service Use Tax Act, Section

7 9 of the Service Occupation Tax Act, and Section 3 of the

8 Retailers' Occupation Tax Act into the McCormick Place

9 Expansion Project Fund in the specified fiscal years.

10	`Fiscal Year`	`Total Deposit`
11	`1993`	`$0`
12	`1994`	`53,000,000`
13	`1995`	`58,000,000`
14	`1996`	`61,000,000`
15	`1997`	`64,000,000`
16	`1998`	`68,000,000`
17	`1999`	`71,000,000`
18	`2000`	`75,000,000`
19	`2001`	`80,000,000`
20	`2002`	`93,000,000`
21	`2003`	`99,000,000`
22	`2004`	`103,000,000`
23	`2005`	`108,000,000`
24	`2006`	`113,000,000`
25	`2007`	`119,000,000`
26	`2008`	`126,000,000`

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1	`2009`	`132,000,000`
2	`2010`	`139,000,000`
3	`2011`	`146,000,000`
4	`2012`	`153,000,000`
5	`2013`	`161,000,000`
6	`2014`	`170,000,000`
7	`2015`	`179,000,000`
8	`2016`	`189,000,000`
9	`2017`	`199,000,000`
10	`2018`	`210,000,000`
11	`2019`	`221,000,000`
12	`2020`	`233,000,000`
13	`2021`	`246,000,000`
14	`2022`	`260,000,000`
15	`2023`	`275,000,000`
16	`2024`	`275,000,000`
17	`2025`	`275,000,000`
18	`2026`	`279,000,000`
19	`2027`	`292,000,000`
20	`2028`	`307,000,000`
21	`2029`	`322,000,000`
22	`2030`	`338,000,000`
23	`2031`	`350,000,000`
24	`2032`	`350,000,000`
25	`and`
26	`each fiscal year`

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1		`thereafter that bonds`
2		`are outstanding under`
3		`Section 13.2 of the`
4		`Metropolitan Pier and`
5		`Exposition Authority Act,`
6		`but not after fiscal year 2060.`

7 Beginning July 20, 1993 and in each month of each fiscal

8 year thereafter, one-eighth of the amount requested in the

9 certificate of the Chairman of the Metropolitan Pier and

10 Exposition Authority for that fiscal year, less the amount

11 deposited into the McCormick Place Expansion Project Fund by

12 the State Treasurer in the respective month under subsection

13 (g) of Section 13 of the Metropolitan Pier and Exposition

14 Authority Act, plus cumulative deficiencies in the deposits

15 required under this Section for previous months and years,

16 shall be deposited into the McCormick Place Expansion Project

17 Fund, until the full amount requested for the fiscal year, but

18 not in excess of the amount specified above as "Total Deposit",

19 has been deposited.

20 Subject to payment of amounts into the Build Illinois Fund

21 and the McCormick Place Expansion Project Fund pursuant to the

22 preceding paragraphs or in any amendments thereto hereafter

23 enacted, beginning July 1, 1993 and ending on September 30,

24 2013, the Department shall each month pay into the Illinois Tax

25 Increment Fund 0.27% of 80% of the net revenue realized for the

26 preceding month from the 6.25% general rate on the selling

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1 price of tangible personal property.

2 Subject to payment of amounts into the Build Illinois Fund

3 and the McCormick Place Expansion Project Fund pursuant to the

4 preceding paragraphs or in any amendments thereto hereafter

5 enacted, beginning with the receipt of the first report of

6 taxes paid by an eligible business and continuing for a 25-year

7 period, the Department shall each month pay into the Energy

8 Infrastructure Fund 80% of the net revenue realized from the

9 6.25% general rate on the selling price of Illinois-mined coal

10 that was sold to an eligible business. For purposes of this

11 paragraph, the term "eligible business" means a new electric

12 generating facility certified pursuant to Section 605-332 of

13 the Department of Commerce and Economic Opportunity Law of the

14 Civil Administrative Code of Illinois.

15 Subject to payment of amounts into the Build Illinois Fund,

16 the McCormick Place Expansion Project Fund, the Illinois Tax

17 Increment Fund, and the Energy Infrastructure Fund pursuant to

18 the preceding paragraphs or in any amendments to this Section

19 hereafter enacted, beginning on the first day of the first

20 calendar month to occur on or after August 26, 2014 (the

21 effective date of Public Act 98-1098) ~~this amendatory Act of~~

22 ~~the 98th General Assembly~~, each month, from the collections

23 made under Section 9 of the Use Tax Act, Section 9 of the

24 Service Use Tax Act, Section 9 of the Service Occupation Tax

25 Act, and Section 3 of the Retailers' Occupation Tax Act, the

26 Department shall pay into the Tax Compliance and Administration

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1 Fund, to be used, subject to appropriation, to fund additional

2 auditors and compliance personnel at the Department of Revenue,

3 an amount equal to 1/12 of 5% of 80% of the cash receipts

4 collected during the preceding fiscal year by the Audit Bureau

5 of the Department under the Use Tax Act, the Service Use Tax

6 Act, the Service Occupation Tax Act, the Retailers' Occupation

7 Tax Act, and associated local occupation and use taxes

8 administered by the Department.

9 Of the remainder of the moneys received by the Department

10 pursuant to this Act, 75% thereof shall be paid into the State

11 Treasury and 25% shall be reserved in a special account and

12 used only for the transfer to the Common School Fund as part of

13 the monthly transfer from the General Revenue Fund in

14 accordance with Section 8a of the State Finance Act.

15 As soon as possible after the first day of each month, upon

16 certification of the Department of Revenue, the Comptroller

17 shall order transferred and the Treasurer shall transfer from

18 the General Revenue Fund to the Motor Fuel Tax Fund an amount

19 equal to 1.7% of 80% of the net revenue realized under this Act

20 for the second preceding month. Beginning April 1, 2000, this

21 transfer is no longer required and shall not be made.

22 Net revenue realized for a month shall be the revenue

23 collected by the State pursuant to this Act, less the amount

24 paid out during that month as refunds to taxpayers for

25 overpayment of liability.

26 For greater simplicity of administration, manufacturers,

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1 importers and wholesalers whose products are sold at retail in

2 Illinois by numerous retailers, and who wish to do so, may

3 assume the responsibility for accounting and paying to the

4 Department all tax accruing under this Act with respect to such

5 sales, if the retailers who are affected do not make written

6 objection to the Department to this arrangement.

7 (Source: P.A. 98-24, eff. 6-19-13; 98-109, eff. 7-25-13;

8 98-496, eff. 1-1-14; 98-756, eff. 7-16-14; 98-1098, eff.

9 8-26-14; 99-352, eff. 8-12-15; 99-858, eff. 8-19-16; 99-933,

10 eff. 1-27-17; revised 2-3-17.)

11 (35 ILCS 105/10) (from Ch. 120, par. 439.10)

12 Sec. 10. Except as to motor vehicles, aircraft, watercraft,

13 and trailers, and except as to cigarettes as defined in the

14 Cigarette Use Tax Act, when tangible personal propertyor

15 (beginning January 1, 2018 a taxable service)is purchased from

16 a retailer for use in this State by a purchaser who did not pay

17 the tax imposed by this Act to the retailer, and who does not

18 file returns with the Department as a retailer under Section 9

19 of this Act, such purchaser (by the last day of the month

20 following the calendar month in which such purchaser makes any

21 payment upon the selling price of such property) shall, except

22 as otherwise provided in this Section, file a return with the

23 Department and pay the tax upon that portion of the selling

24 price so paid by the purchaser during the preceding calendar

25 month. When tangible personal property, including but not

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1 limited to motor vehicles and aircraft, is purchased by a

2 lessor, under a lease for one year or longer, executed or in

3 effect at the time of purchase to an interstate carrier for

4 hire, who did not pay the tax imposed by this Act to the

5 retailer, such lessor (by the last day of the month following

6 the calendar month in which such property reverts to the use of

7 such lessor) shall file a return with the Department and pay

8 the tax upon the fair market value of such property on the date

9 of such reversion. However, in determining the fair market

10 value at the time of reversion, the fair market value of such

11 property shall not exceed the original purchase price of the

12 property that was paid by the lessor at the time of purchase.

13 Such return shall be filed on a form prescribed by the

14 Department and shall contain such information as the Department

15 may reasonably require. Such return and payment from the

16 purchaser shall be submitted to the Department sooner than the

17 last day of the month after the month in which the purchase is

18 made to the extent that that may be necessary in order to

19 secure the title to a motor vehicle or the certificate of

20 registration for an aircraft. However, except as to motor

21 vehicles and aircraft, and except as to cigarettes as defined

22 in the Cigarette Use Tax Act, if the purchaser's annual use tax

23 liability does not exceed $600, the purchaser may file the

24 return on an annual basis on or before April 15th of the year

25 following the year use tax liability was incurred. Individual

26 purchasers with an annual use tax liability that does not

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1 exceed $600 may, in lieu of the filing and payment requirements

2 in this Section, file and pay in compliance with Section 502.1

3 of the Illinois Income Tax Act.

4 If cigarettes, as defined in the Cigarette Use Tax Act, are

5 purchased from a retailer for use in this State by a purchaser

6 who did not pay the tax imposed by this Act to the retailer,

7 and who does not file returns with the Department as a retailer

8 under Section 9 of this Act, such purchaser must, within 30

9 days after acquiring the cigarettes, file a return with the

10 Department and pay the tax upon that portion of the selling

11 price so paid by the purchaser for the cigarettes.

12 In addition with respect to motor vehicles, aircraft,

13 watercraft, and trailers, a purchaser of such tangible personal

14 property for use in this State, who purchases such tangible

15 personal property from an out-of-state retailer, shall file

16 with the Department, upon a form to be prescribed and supplied

17 by the Department, a return for each such item of tangible

18 personal property purchased, except that if, in the same

19 transaction, (i) a purchaser of motor vehicles, aircraft,

20 watercraft, or trailers who is a retailer of motor vehicles,

21 aircraft, watercraft, or trailers purchases more than one motor

22 vehicle, aircraft, watercraft, or trailer for the purpose of

23 resale or (ii) a purchaser of motor vehicles, aircraft,

24 watercraft, or trailers purchases more than one motor vehicle,

25 aircraft, watercraft, or trailer for use as qualifying rolling

26 stock as provided in Section 3-55 of this Act, then the

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1 purchaser may report the purchase of all motor vehicles,

2 aircraft, watercraft, or trailers involved in that transaction

3 to the Department on a single return prescribed by the

4 Department. Such return in the case of motor vehicles and

5 aircraft must show the name and address of the seller, the

6 name, address of purchaser, the amount of the selling price

7 including the amount allowed by the retailer for traded in

8 property, if any; the amount allowed by the retailer for the

9 traded-in tangible personal property, if any, to the extent to

10 which Section 2 of this Act allows an exemption for the value

11 of traded-in property; the balance payable after deducting such

12 trade-in allowance from the total selling price; the amount of

13 tax due from the purchaser with respect to such transaction;

14 the amount of tax collected from the purchaser by the retailer

15 on such transaction (or satisfactory evidence that such tax is

16 not due in that particular instance if that is claimed to be

17 the fact); the place and date of the sale, a sufficient

18 identification of the property sold, and such other information

19 as the Department may reasonably require.

20 Such return shall be filed not later than 30 days after

21 such motor vehicle or aircraft is brought into this State for

22 use.

23 For purposes of this Section, "watercraft" means a Class 2,

24 Class 3, or Class 4 watercraft as defined in Section 3-2 of the

25 Boat Registration and Safety Act, a personal watercraft, or any

26 boat equipped with an inboard motor.

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1 The return and tax remittance or proof of exemption from

2 the tax that is imposed by this Act may be transmitted to the

3 Department by way of the State agency with which, or State

4 officer with whom, the tangible personal property must be

5 titled or registered (if titling or registration is required)

6 if the Department and such agency or State officer determine

7 that this procedure will expedite the processing of

8 applications for title or registration.

9 With each such return, the purchaser shall remit the proper

10 amount of tax due (or shall submit satisfactory evidence that

11 the sale is not taxable if that is the case), to the Department

12 or its agents, whereupon the Department shall issue, in the

13 purchaser's name, a tax receipt (or a certificate of exemption

14 if the Department is satisfied that the particular sale is tax

15 exempt) which such purchaser may submit to the agency with

16 which, or State officer with whom, he must title or register

17 the tangible personal property that is involved (if titling or

18 registration is required) in support of such purchaser's

19 application for an Illinois certificate or other evidence of

20 title or registration to such tangible personal property.

21 When a purchaser pays a tax imposed by this Act directly to

22 the Department, the Department (upon request therefor from such

23 purchaser) shall issue an appropriate receipt to such purchaser

24 showing that he has paid such tax to the Department. Such

25 receipt shall be sufficient to relieve the purchaser from

26 further liability for the tax to which such receipt may refer.

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1 A user who is liable to pay use tax directly to the

2 Department only occasionally and not on a frequently recurring

3 basis, and who is not required to file returns with the

4 Department as a retailer under Section 9 of this Act, or under

5 the "Retailers' Occupation Tax Act", or as a registrant with

6 the Department under the "Service Occupation Tax Act" or the

7 "Service Use Tax Act", need not register with the Department.

8 However, if such a user has a frequently recurring direct use

9 tax liability to pay to the Department, such user shall be

10 required to register with the Department on forms prescribed by

11 the Department and to obtain and display a certificate of

12 registration from the Department. In that event, all of the

13 provisions of Section 9 of this Act concerning the filing of

14 regular monthly, quarterly or annual tax returns and all of the

15 provisions of Section 2a of the "Retailers' Occupation Tax Act"

16 concerning the requirements for registrants to post bond or

17 other security with the Department, as the provisions of such

18 sections now exist or may hereafter be amended, shall apply to

19 such users to the same extent as if such provisions were

20 included herein.

21 (Source: P.A. 96-520, eff. 8-14-09; 96-1000, eff. 7-2-10;

22 96-1388, eff. 7-29-10.)

23 (35 ILCS 105/11) (from Ch. 120, par. 439.11)

24 Sec. 11. Every retailer required or authorized to collect

25 taxes hereunder and every person using in this State tangible

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1 personal property or taxable servicepurchased at retail from a

2 retailer on or after the effective date hereof shall keep such

3 records, receipts, invoices and other pertinent books,

4 documents, memoranda and papers as the Department shall

5 require, in such form as the Department shall require. The

6 Department may adopt rules that establish requirements,

7 including record forms and formats, for records required to be

8 kept and maintained by taxpayers. For purposes of this Section,

9 "records" means all data maintained by the taxpayer, including

10 data on paper, microfilm, microfiche or any type of

11 machine-sensible data compilation. For the purpose of

12 administering and enforcing the provisions hereof, the

13 Department, or any officer or employee of the Department

14 designated, in writing, by the Director thereof, may hold

15 investigations and hearings concerning any matters covered

16 herein and may examine any books, papers, records, documents or

17 memoranda of any retailer or purchaser bearing upon the sales

18 or purchases of tangible personal property, the privilege of

19 using which is taxed hereunder, and may require the attendance

20 of such person or any officer or employee of such person, or of

21 any person having knowledge of the facts, and may take

22 testimony and require proof for its information.

23 (Source: P.A. 88-480.)

24 Section 30-25. The Service Use Tax Act is amended by

25 changing Sections 2, 3-5, and 9 as follows:

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1 (35 ILCS 110/2) (from Ch. 120, par. 439.32)

2 Sec. 2. Definitions.

3 "Use" means the exercise by any person of any right or

4 power over tangible personal property incident to the ownership

5 of that property, but does not include the sale or use for

6 demonstration by him of that property in any form as tangible

7 personal property in the regular course of business. "Use" does

8 not mean the interim use of tangible personal property nor the

9 physical incorporation of tangible personal property, as an

10 ingredient or constituent, into other tangible personal

11 property, (a) which is sold in the regular course of business

12 or (b) which the person incorporating such ingredient or

13 constituent therein has undertaken at the time of such purchase

14 to cause to be transported in interstate commerce to

15 destinations outside the State of Illinois.

16 "Purchased from a serviceman" means the acquisition of the

17 ownership of, or title to, tangible personal property through a

18 sale of service.

19 "Purchaser" means any person who, through a sale of

20 service, acquires the ownership of, or title to, any tangible

21 personal property.

22 "Cost price" means the consideration paid by the serviceman

23 for a purchase valued in money, whether paid in money or

24 otherwise, including cash, credits and services, and shall be

25 determined without any deduction on account of the supplier's

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1 cost of the property sold or on account of any other expense

2 incurred by the supplier. When a serviceman contracts out part

3 or all of the services required in his sale of service, it

4 shall be presumed that the cost price to the serviceman of the

5 property transferred to him or her by his or her subcontractor

6 is equal to 50% of the subcontractor's charges to the

7 serviceman in the absence of proof of the consideration paid by

8 the subcontractor for the purchase of such property.

9 "Selling price" means the consideration for a sale valued

10 in money whether received in money or otherwise, including

11 cash, credits and service, and shall be determined without any

12 deduction on account of the serviceman's cost of the property

13 sold, the cost of materials used, labor or service cost or any

14 other expense whatsoever, but does not include interest or

15 finance charges which appear as separate items on the bill of

16 sale or sales contract nor charges that are added to prices by

17 sellers on account of the seller's duty to collect, from the

18 purchaser, the tax that is imposed by this Act.

19 "Department" means the Department of Revenue.

20 "Person" means any natural individual, firm, partnership,

21 association, joint stock company, joint venture, public or

22 private corporation, limited liability company, and any

23 receiver, executor, trustee, guardian or other representative

24 appointed by order of any court.

25 "Sale of service" means any transaction except:

26 (1) a retail sale of tangible personal property taxable

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1 under the Retailers' Occupation Tax Act or under the Use

2 Tax Act.

3 (2) a sale of tangible personal property for the

4 purpose of resale made in compliance with Section 2c of the

5 Retailers' Occupation Tax Act.

6 (3) except as hereinafter provided, a sale or transfer

7 of tangible personal property as an incident to the

8 rendering of service for or by any governmental body, or

9 for or by any corporation, society, association,

10 foundation or institution organized and operated

11 exclusively for charitable, religious or educational

12 purposes or any not-for-profit corporation, society,

13 association, foundation, institution or organization which

14 has no compensated officers or employees and which is

15 organized and operated primarily for the recreation of

16 persons 55 years of age or older. A limited liability

17 company may qualify for the exemption under this paragraph

18 only if the limited liability company is organized and

19 operated exclusively for educational purposes.

20 (4) a sale or transfer of tangible personal property as

21 an incident to the rendering of service for interstate

22 carriers for hire for use as rolling stock moving in

23 interstate commerce or by lessors under a lease of one year

24 or longer, executed or in effect at the time of purchase of

25 personal property, to interstate carriers for hire for use

26 as rolling stock moving in interstate commerce so long as

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1 so used by such interstate carriers for hire, and equipment

2 operated by a telecommunications provider, licensed as a

3 common carrier by the Federal Communications Commission,

4 which is permanently installed in or affixed to aircraft

5 moving in interstate commerce.

6 (4a) a sale or transfer of tangible personal property

7 as an incident to the rendering of service for owners,

8 lessors, or shippers of tangible personal property which is

9 utilized by interstate carriers for hire for use as rolling

10 stock moving in interstate commerce so long as so used by

11 interstate carriers for hire, and equipment operated by a

12 telecommunications provider, licensed as a common carrier

13 by the Federal Communications Commission, which is

14 permanently installed in or affixed to aircraft moving in

15 interstate commerce.

16 (4a-5) on and after July 1, 2003 and through June 30,

17 2004, a sale or transfer of a motor vehicle of the second

18 division with a gross vehicle weight in excess of 8,000

19 pounds as an incident to the rendering of service if that

20 motor vehicle is subject to the commercial distribution fee

21 imposed under Section 3-815.1 of the Illinois Vehicle Code.

22 Beginning on July 1, 2004 and through June 30, 2005, the

23 use in this State of motor vehicles of the second division:

24 (i) with a gross vehicle weight rating in excess of 8,000

25 pounds; (ii) that are subject to the commercial

26 distribution fee imposed under Section 3-815.1 of the

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1 Illinois Vehicle Code; and (iii) that are primarily used

2 for commercial purposes. Through June 30, 2005, this

3 exemption applies to repair and replacement parts added

4 after the initial purchase of such a motor vehicle if that

5 motor vehicle is used in a manner that would qualify for

6 the rolling stock exemption otherwise provided for in this

7 Act. For purposes of this paragraph, "used for commercial

8 purposes" means the transportation of persons or property

9 in furtherance of any commercial or industrial enterprise

10 whether for-hire or not.

11 (5) a sale or transfer of machinery and equipment used

12 primarily in the process of the manufacturing or

13 assembling, either in an existing, an expanded or a new

14 manufacturing facility, of tangible personal property for

15 wholesale or retail sale or lease, whether such sale or

16 lease is made directly by the manufacturer or by some other

17 person, whether the materials used in the process are owned

18 by the manufacturer or some other person, or whether such

19 sale or lease is made apart from or as an incident to the

20 seller's engaging in a service occupation and the

21 applicable tax is a Service Use Tax or Service Occupation

22 Tax, rather than Use Tax or Retailers' Occupation Tax. The

23 exemption provided by this paragraph (5) does not include

24 machinery and equipment used in (i) the generation of

25 electricity for wholesale or retail sale; (ii) the

26 generation or treatment of natural or artificial gas for

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1 wholesale or retail sale that is delivered to customers

2 through pipes, pipelines, or mains; or (iii) the treatment

3 of water for wholesale or retail sale that is delivered to

4 customers through pipes, pipelines, or mains. The

5 provisions of this amendatory Act of the 98th General

6 Assembly are declaratory of existing law as to the meaning

7 and scope of this exemption. The exemption under this

8 paragraph (5) is exempt from the provisions of Section

9 3-75.

10 (5a) the repairing, reconditioning or remodeling, for

11 a common carrier by rail, of tangible personal property

12 which belongs to such carrier for hire, and as to which

13 such carrier receives the physical possession of the

14 repaired, reconditioned or remodeled item of tangible

15 personal property in Illinois, and which such carrier

16 transports, or shares with another common carrier in the

17 transportation of such property, out of Illinois on a

18 standard uniform bill of lading showing the person who

19 repaired, reconditioned or remodeled the property to a

20 destination outside Illinois, for use outside Illinois.

21 (5b) a sale or transfer of tangible personal property

22 which is produced by the seller thereof on special order in

23 such a way as to have made the applicable tax the Service

24 Occupation Tax or the Service Use Tax, rather than the

25 Retailers' Occupation Tax or the Use Tax, for an interstate

26 carrier by rail which receives the physical possession of

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1 such property in Illinois, and which transports such

2 property, or shares with another common carrier in the

3 transportation of such property, out of Illinois on a

4 standard uniform bill of lading showing the seller of the

5 property as the shipper or consignor of such property to a

6 destination outside Illinois, for use outside Illinois.

7 (6) until July 1, 2003, a sale or transfer of

8 distillation machinery and equipment, sold as a unit or kit

9 and assembled or installed by the retailer, which machinery

10 and equipment is certified by the user to be used only for

11 the production of ethyl alcohol that will be used for

12 consumption as motor fuel or as a component of motor fuel

13 for the personal use of such user and not subject to sale

14 or resale.

15 (7) at the election of any serviceman not required to

16 be otherwise registered as a retailer under Section 2a of

17 the Retailers' Occupation Tax Act, made for each fiscal

18 year sales of service in which the aggregate annual cost

19 price of tangible personal property transferred as an

20 incident to the sales of service is less than 35%, or 75%

21 in the case of servicemen transferring prescription drugs

22 or servicemen engaged in graphic arts production, of the

23 aggregate annual total gross receipts from all sales of

24 service. The purchase of such tangible personal property by

25 the serviceman shall be subject to tax under the Retailers'

26 Occupation Tax Act and the Use Tax Act. However, if a

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1 primary serviceman who has made the election described in

2 this paragraph subcontracts service work to a secondary

3 serviceman who has also made the election described in this

4 paragraph, the primary serviceman does not incur a Use Tax

5 liability if the secondary serviceman (i) has paid or will

6 pay Use Tax on his or her cost price of any tangible

7 personal property transferred to the primary serviceman

8 and (ii) certifies that fact in writing to the primary

9 serviceman.

10 Tangible personal property transferred incident to the

11 completion of a maintenance agreement is exempt from the tax

12 imposed pursuant to this Act.

13 Exemption (5) also includes machinery and equipment used in

14 the general maintenance or repair of such exempt machinery and

15 equipment or for in-house manufacture of exempt machinery and

16 equipment. On and after July 1, 2017, exemption (5) also

17 includes production related tangible personal property, as

18 defined in Section 3-50 of the Use Tax Act. On and after July

19 1, 2017, exemption (5) also includes graphic arts machinery and

20 equipment, as defined in paragraph (5) of Section 3-5. The

21 machinery and equipment exemption does not include machinery

22 and equipment used in (i) the generation of electricity for

23 wholesale or retail sale; (ii) the generation or treatment of

24 natural or artificial gas for wholesale or retail sale that is

25 delivered to customers through pipes, pipelines, or mains; or

26 (iii) the treatment of water for wholesale or retail sale that

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1 is delivered to customers through pipes, pipelines, or mains.

2 The provisions of this amendatory Act of the 98th General

3 Assembly are declaratory of existing law as to the meaning and

4 scope of this exemption. For the purposes of exemption (5),

5 each of these terms shall have the following meanings: (1)

6 "manufacturing process" shall mean the production of any

7 article of tangible personal property, whether such article is

8 a finished product or an article for use in the process of

9 manufacturing or assembling a different article of tangible

10 personal property, by procedures commonly regarded as

11 manufacturing, processing, fabricating, or refining which

12 changes some existing material or materials into a material

13 with a different form, use or name. In relation to a recognized

14 integrated business composed of a series of operations which

15 collectively constitute manufacturing, or individually

16 constitute manufacturing operations, the manufacturing process

17 shall be deemed to commence with the first operation or stage

18 of production in the series, and shall not be deemed to end

19 until the completion of the final product in the last operation

20 or stage of production in the series; and further, for purposes

21 of exemption (5), photoprocessing is deemed to be a

22 manufacturing process of tangible personal property for

23 wholesale or retail sale; (2) "assembling process" shall mean

24 the production of any article of tangible personal property,

25 whether such article is a finished product or an article for

26 use in the process of manufacturing or assembling a different

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1 article of tangible personal property, by the combination of

2 existing materials in a manner commonly regarded as assembling

3 which results in a material of a different form, use or name;

4 (3) "machinery" shall mean major mechanical machines or major

5 components of such machines contributing to a manufacturing or

6 assembling process; and (4) "equipment" shall include any

7 independent device or tool separate from any machinery but

8 essential to an integrated manufacturing or assembly process;

9 including computers used primarily in a manufacturer's

10 computer assisted design, computer assisted manufacturing

11 (CAD/CAM) system; or any subunit or assembly comprising a

12 component of any machinery or auxiliary, adjunct or attachment

13 parts of machinery, such as tools, dies, jigs, fixtures,

14 patterns and molds; or any parts which require periodic

15 replacement in the course of normal operation; but shall not

16 include hand tools. Equipment includes chemicals or chemicals

17 acting as catalysts but only if the chemicals or chemicals

18 acting as catalysts effect a direct and immediate change upon a

19 product being manufactured or assembled for wholesale or retail

20 sale or lease. The purchaser of such machinery and equipment

21 who has an active resale registration number shall furnish such

22 number to the seller at the time of purchase. The user of such

23 machinery and equipment and tools without an active resale

24 registration number shall prepare a certificate of exemption

25 for each transaction stating facts establishing the exemption

26 for that transaction, which certificate shall be available to

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1 the Department for inspection or audit. The Department shall

2 prescribe the form of the certificate.

3 Any informal rulings, opinions or letters issued by the

4 Department in response to an inquiry or request for any opinion

5 from any person regarding the coverage and applicability of

6 exemption (5) to specific devices shall be published,

7 maintained as a public record, and made available for public

8 inspection and copying. If the informal ruling, opinion or

9 letter contains trade secrets or other confidential

10 information, where possible the Department shall delete such

11 information prior to publication. Whenever such informal

12 rulings, opinions, or letters contain any policy of general

13 applicability, the Department shall formulate and adopt such

14 policy as a rule in accordance with the provisions of the

15 Illinois Administrative Procedure Act.

16 On and after July 1, 1987, no entity otherwise eligible

17 under exemption (3) of this Section shall make tax free

18 purchases unless it has an active exemption identification

19 number issued by the Department.

20 The purchase, employment and transfer of such tangible

21 personal property as newsprint and ink for the primary purpose

22 of conveying news (with or without other information) is not a

23 purchase, use or sale of service or of tangible personal

24 property within the meaning of this Act.

25 "Serviceman" means any person who is engaged in the

26 occupation of making sales of service.

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1 "Sale at retail" means "sale at retail" as defined in the

2 Retailers' Occupation Tax Act.

3 "Supplier" means any person who makes sales of tangible

4 personal property to servicemen for the purpose of resale as an

5 incident to a sale of service.

6 "Serviceman maintaining a place of business in this State",

7 or any like term, means and includes any serviceman:

8 1. having or maintaining within this State, directly or

9 by a subsidiary, an office, distribution house, sales

10 house, warehouse or other place of business, or any agent

11 or other representative operating within this State under

12 the authority of the serviceman or its subsidiary,

13 irrespective of whether such place of business or agent or

14 other representative is located here permanently or

15 temporarily, or whether such serviceman or subsidiary is

16 licensed to do business in this State;

17 1.1. having a contract with a person located in this

18 State under which the person, for a commission or other

19 consideration based on the sale of service by the

20 serviceman, directly or indirectly refers potential

21 customers to the serviceman by providing to the potential

22 customers a promotional code or other mechanism that allows

23 the serviceman to track purchases referred by such persons.

24 Examples of mechanisms that allow the serviceman to track

25 purchases referred by such persons include but are not

26 limited to the use of a link on the person's Internet

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1 website, promotional codes distributed through the

2 person's hand-delivered or mailed material, and

3 promotional codes distributed by the person through radio

4 or other broadcast media. The provisions of this paragraph

5 1.1 shall apply only if the cumulative gross receipts from

6 sales of service by the serviceman to customers who are

7 referred to the serviceman by all persons in this State

8 under such contracts exceed $10,000 during the preceding 4

9 quarterly periods ending on the last day of March, June,

10 September, and December; a serviceman meeting the

11 requirements of this paragraph 1.1 shall be presumed to be

12 maintaining a place of business in this State but may rebut

13 this presumption by submitting proof that the referrals or

14 other activities pursued within this State by such persons

15 were not sufficient to meet the nexus standards of the

16 United States Constitution during the preceding 4

17 quarterly periods;

18 1.2. beginning July 1, 2011, having a contract with a

19 person located in this State under which:

20 A. the serviceman sells the same or substantially

21 similar line of services as the person located in this

22 State and does so using an identical or substantially

23 similar name, trade name, or trademark as the person

24 located in this State; and

25 B. the serviceman provides a commission or other

26 consideration to the person located in this State based

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1 upon the sale of services by the serviceman.

2 The provisions of this paragraph 1.2 shall apply only if

3 the cumulative gross receipts from sales of service by the

4 serviceman to customers in this State under all such

5 contracts exceed $10,000 during the preceding 4 quarterly

6 periods ending on the last day of March, June, September,

7 and December;

8 2. soliciting orders for tangible personal property by

9 means of a telecommunication or television shopping system

10 (which utilizes toll free numbers) which is intended by the

11 retailer to be broadcast by cable television or other means

12 of broadcasting, to consumers located in this State;

13 3. pursuant to a contract with a broadcaster or

14 publisher located in this State, soliciting orders for

15 tangible personal property by means of advertising which is

16 disseminated primarily to consumers located in this State

17 and only secondarily to bordering jurisdictions;

18 4. soliciting orders for tangible personal property by

19 mail if the solicitations are substantial and recurring and

20 if the retailer benefits from any banking, financing, debt

21 collection, telecommunication, or marketing activities

22 occurring in this State or benefits from the location in

23 this State of authorized installation, servicing, or

24 repair facilities;

25 5. being owned or controlled by the same interests

26 which own or control any retailer engaging in business in

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1 the same or similar line of business in this State;

2 6. having a franchisee or licensee operating under its

3 trade name if the franchisee or licensee is required to

4 collect the tax under this Section;

5 7. pursuant to a contract with a cable television

6 operator located in this State, soliciting orders for

7 tangible personal property by means of advertising which is

8 transmitted or distributed over a cable television system

9 in this State; or

10 8. engaging in activities in Illinois, which

11 activities in the state in which the supply business

12 engaging in such activities is located would constitute

13 maintaining a place of business in that state.

14 (Source: P.A. 98-583, eff. 1-1-14; 98-1089, eff. 1-1-15.)

15 (35 ILCS 110/3-5)

16 Sec. 3-5. Exemptions. Use of the following tangible

17 personal property is exempt from the tax imposed by this Act:

18 (1) Personal property purchased from a corporation,

19 society, association, foundation, institution, or

20 organization, other than a limited liability company, that is

21 organized and operated as a not-for-profit service enterprise

22 for the benefit of persons 65 years of age or older if the

23 personal property was not purchased by the enterprise for the

24 purpose of resale by the enterprise.

25 (2) Personal property purchased by a non-profit Illinois

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1 county fair association for use in conducting, operating, or

2 promoting the county fair.

3 (3) Personal property purchased by a not-for-profit arts or

4 cultural organization that establishes, by proof required by

5 the Department by rule, that it has received an exemption under

6 Section 501(c)(3) of the Internal Revenue Code and that is

7 organized and operated primarily for the presentation or

8 support of arts or cultural programming, activities, or

9 services. These organizations include, but are not limited to,

10 music and dramatic arts organizations such as symphony

11 orchestras and theatrical groups, arts and cultural service

12 organizations, local arts councils, visual arts organizations,

13 and media arts organizations. On and after the effective date

14 of this amendatory Act of the 92nd General Assembly, however,

15 an entity otherwise eligible for this exemption shall not make

16 tax-free purchases unless it has an active identification

17 number issued by the Department.

18 (4) Legal tender, currency, medallions, or gold or silver

19 coinage issued by the State of Illinois, the government of the

20 United States of America, or the government of any foreign

21 country, and bullion.

22 (5) Until July 1, 2003 and beginning again on September 1,

23 2004 through August 30, 2014, graphic arts machinery and

24 equipment, including repair and replacement parts, both new and

25 used, and including that manufactured on special order or

26 purchased for lease, certified by the purchaser to be used

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1 primarily for graphic arts production. Equipment includes

2 chemicals or chemicals acting as catalysts but only if the

3 chemicals or chemicals acting as catalysts effect a direct and

4 immediate change upon a graphic arts product.Beginning on July

5 1, 2017, graphic arts machinery and equipment is included in

6 the manufacturing and assembling machinery and equipment

7 exemption under Section 2 of this Act.

8 (6) Personal property purchased from a teacher-sponsored

9 student organization affiliated with an elementary or

10 secondary school located in Illinois.

11 (7) Farm machinery and equipment, both new and used,

12 including that manufactured on special order, certified by the

13 purchaser to be used primarily for production agriculture or

14 State or federal agricultural programs, including individual

15 replacement parts for the machinery and equipment, including

16 machinery and equipment purchased for lease, and including

17 implements of husbandry defined in Section 1-130 of the

18 Illinois Vehicle Code, farm machinery and agricultural

19 chemical and fertilizer spreaders, and nurse wagons required to

20 be registered under Section 3-809 of the Illinois Vehicle Code,

21 but excluding other motor vehicles required to be registered

22 under the Illinois Vehicle Code. Horticultural polyhouses or

23 hoop houses used for propagating, growing, or overwintering

24 plants shall be considered farm machinery and equipment under

25 this item (7). Agricultural chemical tender tanks and dry boxes

26 shall include units sold separately from a motor vehicle

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1 required to be licensed and units sold mounted on a motor

2 vehicle required to be licensed if the selling price of the

3 tender is separately stated.

4 Farm machinery and equipment shall include precision

5 farming equipment that is installed or purchased to be

6 installed on farm machinery and equipment including, but not

7 limited to, tractors, harvesters, sprayers, planters, seeders,

8 or spreaders. Precision farming equipment includes, but is not

9 limited to, soil testing sensors, computers, monitors,

10 software, global positioning and mapping systems, and other

11 such equipment.

12 Farm machinery and equipment also includes computers,

13 sensors, software, and related equipment used primarily in the

14 computer-assisted operation of production agriculture

15 facilities, equipment, and activities such as, but not limited

16 to, the collection, monitoring, and correlation of animal and

17 crop data for the purpose of formulating animal diets and

18 agricultural chemicals. This item (7) is exempt from the

19 provisions of Section 3-75.

20 (8) Until June 30, 2013, fuel and petroleum products sold

21 to or used by an air common carrier, certified by the carrier

22 to be used for consumption, shipment, or storage in the conduct

23 of its business as an air common carrier, for a flight destined

24 for or returning from a location or locations outside the

25 United States without regard to previous or subsequent domestic

26 stopovers.

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1 Beginning July 1, 2013, fuel and petroleum products sold to

2 or used by an air carrier, certified by the carrier to be used

3 for consumption, shipment, or storage in the conduct of its

4 business as an air common carrier, for a flight that (i) is

5 engaged in foreign trade or is engaged in trade between the

6 United States and any of its possessions and (ii) transports at

7 least one individual or package for hire from the city of

8 origination to the city of final destination on the same

9 aircraft, without regard to a change in the flight number of

10 that aircraft.

11 (9) Proceeds of mandatory service charges separately

12 stated on customers' bills for the purchase and consumption of

13 food and beverages acquired as an incident to the purchase of a

14 service from a serviceman, to the extent that the proceeds of

15 the service charge are in fact turned over as tips or as a

16 substitute for tips to the employees who participate directly

17 in preparing, serving, hosting or cleaning up the food or

18 beverage function with respect to which the service charge is

19 imposed.

20 (10) Until July 1, 2003, oil field exploration, drilling,

21 and production equipment, including (i) rigs and parts of rigs,

22 rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and

23 tubular goods, including casing and drill strings, (iii) pumps

24 and pump-jack units, (iv) storage tanks and flow lines, (v) any

25 individual replacement part for oil field exploration,

26 drilling, and production equipment, and (vi) machinery and

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1 equipment purchased for lease; but excluding motor vehicles

2 required to be registered under the Illinois Vehicle Code.

3 (11) Proceeds from the sale of photoprocessing machinery

4 and equipment, including repair and replacement parts, both new

5 and used, including that manufactured on special order,

6 certified by the purchaser to be used primarily for

7 photoprocessing, and including photoprocessing machinery and

8 equipment purchased for lease.

9 (12) Coal and aggregate exploration, mining, off-highway

10 hauling, processing, maintenance, and reclamation equipment,

11 including replacement parts and equipment, and including

12 equipment purchased for lease, but excluding motor vehicles

13 required to be registered under the Illinois Vehicle Code. The

14 changes made to this Section by Public Act 97-767 apply on and

15 after July 1, 2003, but no claim for credit or refund is

16 allowed on or after August 16, 2013 (the effective date of

17 Public Act 98-456) for such taxes paid during the period

18 beginning July 1, 2003 and ending on August 16, 2013 (the

19 effective date of Public Act 98-456).

20 (13) Semen used for artificial insemination of livestock

21 for direct agricultural production.

22 (14) Horses, or interests in horses, registered with and

23 meeting the requirements of any of the Arabian Horse Club

24 Registry of America, Appaloosa Horse Club, American Quarter

25 Horse Association, United States Trotting Association, or

26 Jockey Club, as appropriate, used for purposes of breeding or

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1 racing for prizes. This item (14) is exempt from the provisions

2 of Section 3-75, and the exemption provided for under this item

3 (14) applies for all periods beginning May 30, 1995, but no

4 claim for credit or refund is allowed on or after the effective

5 date of this amendatory Act of the 95th General Assembly for

6 such taxes paid during the period beginning May 30, 2000 and

7 ending on the effective date of this amendatory Act of the 95th

8 General Assembly.

9 (15) Computers and communications equipment utilized for

10 any hospital purpose and equipment used in the diagnosis,

11 analysis, or treatment of hospital patients purchased by a

12 lessor who leases the equipment, under a lease of one year or

13 longer executed or in effect at the time the lessor would

14 otherwise be subject to the tax imposed by this Act, to a

15 hospital that has been issued an active tax exemption

16 identification number by the Department under Section 1g of the

17 Retailers' Occupation Tax Act. If the equipment is leased in a

18 manner that does not qualify for this exemption or is used in

19 any other non-exempt manner, the lessor shall be liable for the

20 tax imposed under this Act or the Use Tax Act, as the case may

21 be, based on the fair market value of the property at the time

22 the non-qualifying use occurs. No lessor shall collect or

23 attempt to collect an amount (however designated) that purports

24 to reimburse that lessor for the tax imposed by this Act or the

25 Use Tax Act, as the case may be, if the tax has not been paid by

26 the lessor. If a lessor improperly collects any such amount

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1 from the lessee, the lessee shall have a legal right to claim a

2 refund of that amount from the lessor. If, however, that amount

3 is not refunded to the lessee for any reason, the lessor is

4 liable to pay that amount to the Department.

5 (16) Personal property purchased by a lessor who leases the

6 property, under a lease of one year or longer executed or in

7 effect at the time the lessor would otherwise be subject to the

8 tax imposed by this Act, to a governmental body that has been

9 issued an active tax exemption identification number by the

10 Department under Section 1g of the Retailers' Occupation Tax

11 Act. If the property is leased in a manner that does not

12 qualify for this exemption or is used in any other non-exempt

13 manner, the lessor shall be liable for the tax imposed under

14 this Act or the Use Tax Act, as the case may be, based on the

15 fair market value of the property at the time the

16 non-qualifying use occurs. No lessor shall collect or attempt

17 to collect an amount (however designated) that purports to

18 reimburse that lessor for the tax imposed by this Act or the

19 Use Tax Act, as the case may be, if the tax has not been paid by

20 the lessor. If a lessor improperly collects any such amount

21 from the lessee, the lessee shall have a legal right to claim a

22 refund of that amount from the lessor. If, however, that amount

23 is not refunded to the lessee for any reason, the lessor is

24 liable to pay that amount to the Department.

25 (17) Beginning with taxable years ending on or after

26 December 31, 1995 and ending with taxable years ending on or

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1 before December 31, 2004, personal property that is donated for

2 disaster relief to be used in a State or federally declared

3 disaster area in Illinois or bordering Illinois by a

4 manufacturer or retailer that is registered in this State to a

5 corporation, society, association, foundation, or institution

6 that has been issued a sales tax exemption identification

7 number by the Department that assists victims of the disaster

8 who reside within the declared disaster area.

9 (18) Beginning with taxable years ending on or after

10 December 31, 1995 and ending with taxable years ending on or

11 before December 31, 2004, personal property that is used in the

12 performance of infrastructure repairs in this State, including

13 but not limited to municipal roads and streets, access roads,

14 bridges, sidewalks, waste disposal systems, water and sewer

15 line extensions, water distribution and purification

16 facilities, storm water drainage and retention facilities, and

17 sewage treatment facilities, resulting from a State or

18 federally declared disaster in Illinois or bordering Illinois

19 when such repairs are initiated on facilities located in the

20 declared disaster area within 6 months after the disaster.

21 (19) Beginning July 1, 1999, game or game birds purchased

22 at a "game breeding and hunting preserve area" as that term is

23 used in the Wildlife Code. This paragraph is exempt from the

24 provisions of Section 3-75.

25 (20) A motor vehicle, as that term is defined in Section

26 1-146 of the Illinois Vehicle Code, that is donated to a

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1 corporation, limited liability company, society, association,

2 foundation, or institution that is determined by the Department

3 to be organized and operated exclusively for educational

4 purposes. For purposes of this exemption, "a corporation,

5 limited liability company, society, association, foundation,

6 or institution organized and operated exclusively for

7 educational purposes" means all tax-supported public schools,

8 private schools that offer systematic instruction in useful

9 branches of learning by methods common to public schools and

10 that compare favorably in their scope and intensity with the

11 course of study presented in tax-supported schools, and

12 vocational or technical schools or institutes organized and

13 operated exclusively to provide a course of study of not less

14 than 6 weeks duration and designed to prepare individuals to

15 follow a trade or to pursue a manual, technical, mechanical,

16 industrial, business, or commercial occupation.

17 (21) Beginning January 1, 2000, personal property,

18 including food, purchased through fundraising events for the

19 benefit of a public or private elementary or secondary school,

20 a group of those schools, or one or more school districts if

21 the events are sponsored by an entity recognized by the school

22 district that consists primarily of volunteers and includes

23 parents and teachers of the school children. This paragraph

24 does not apply to fundraising events (i) for the benefit of

25 private home instruction or (ii) for which the fundraising

26 entity purchases the personal property sold at the events from

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1 another individual or entity that sold the property for the

2 purpose of resale by the fundraising entity and that profits

3 from the sale to the fundraising entity. This paragraph is

4 exempt from the provisions of Section 3-75.

5 (22) Beginning January 1, 2000 and through December 31,

6 2001, new or used automatic vending machines that prepare and

7 serve hot food and beverages, including coffee, soup, and other

8 items, and replacement parts for these machines. Beginning

9 January 1, 2002 and through June 30, 2003, machines and parts

10 for machines used in commercial, coin-operated amusement and

11 vending business if a use or occupation tax is paid on the

12 gross receipts derived from the use of the commercial,

13 coin-operated amusement and vending machines. This paragraph

14 is exempt from the provisions of Section 3-75.

15 (23) Beginning August 23, 2001 and through June 30, 2016,

16 food for human consumption that is to be consumed off the

17 premises where it is sold (other than alcoholic beverages, soft

18 drinks, and food that has been prepared for immediate

19 consumption) and prescription and nonprescription medicines,

20 drugs, medical appliances, and insulin, urine testing

21 materials, syringes, and needles used by diabetics, for human

22 use, when purchased for use by a person receiving medical

23 assistance under Article V of the Illinois Public Aid Code who

24 resides in a licensed long-term care facility, as defined in

25 the Nursing Home Care Act, or in a licensed facility as defined

26 in the ID/DD Community Care Act, the MC/DD Act, or the

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1 Specialized Mental Health Rehabilitation Act of 2013.

2 (24) Beginning on the effective date of this amendatory Act

3 of the 92nd General Assembly, computers and communications

4 equipment utilized for any hospital purpose and equipment used

5 in the diagnosis, analysis, or treatment of hospital patients

6 purchased by a lessor who leases the equipment, under a lease

7 of one year or longer executed or in effect at the time the

8 lessor would otherwise be subject to the tax imposed by this

9 Act, to a hospital that has been issued an active tax exemption

10 identification number by the Department under Section 1g of the

11 Retailers' Occupation Tax Act. If the equipment is leased in a

12 manner that does not qualify for this exemption or is used in

13 any other nonexempt manner, the lessor shall be liable for the

14 tax imposed under this Act or the Use Tax Act, as the case may

15 be, based on the fair market value of the property at the time

16 the nonqualifying use occurs. No lessor shall collect or

17 attempt to collect an amount (however designated) that purports

18 to reimburse that lessor for the tax imposed by this Act or the

19 Use Tax Act, as the case may be, if the tax has not been paid by

20 the lessor. If a lessor improperly collects any such amount

21 from the lessee, the lessee shall have a legal right to claim a

22 refund of that amount from the lessor. If, however, that amount

23 is not refunded to the lessee for any reason, the lessor is

24 liable to pay that amount to the Department. This paragraph is

25 exempt from the provisions of Section 3-75.

26 (25) Beginning on the effective date of this amendatory Act

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1 of the 92nd General Assembly, personal property purchased by a

2 lessor who leases the property, under a lease of one year or

3 longer executed or in effect at the time the lessor would

4 otherwise be subject to the tax imposed by this Act, to a

5 governmental body that has been issued an active tax exemption

6 identification number by the Department under Section 1g of the

7 Retailers' Occupation Tax Act. If the property is leased in a

8 manner that does not qualify for this exemption or is used in

9 any other nonexempt manner, the lessor shall be liable for the

10 tax imposed under this Act or the Use Tax Act, as the case may

11 be, based on the fair market value of the property at the time

12 the nonqualifying use occurs. No lessor shall collect or

13 attempt to collect an amount (however designated) that purports

14 to reimburse that lessor for the tax imposed by this Act or the

15 Use Tax Act, as the case may be, if the tax has not been paid by

16 the lessor. If a lessor improperly collects any such amount

17 from the lessee, the lessee shall have a legal right to claim a

18 refund of that amount from the lessor. If, however, that amount

19 is not refunded to the lessee for any reason, the lessor is

20 liable to pay that amount to the Department. This paragraph is

21 exempt from the provisions of Section 3-75.

22 (26) Beginning January 1, 2008, tangible personal property

23 used in the construction or maintenance of a community water

24 supply, as defined under Section 3.145 of the Environmental

25 Protection Act, that is operated by a not-for-profit

26 corporation that holds a valid water supply permit issued under

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1 Title IV of the Environmental Protection Act. This paragraph is

2 exempt from the provisions of Section 3-75.

3 (27) Beginning January 1, 2010, materials, parts,

4 equipment, components, and furnishings incorporated into or

5 upon an aircraft as part of the modification, refurbishment,

6 completion, replacement, repair, or maintenance of the

7 aircraft. This exemption includes consumable supplies used in

8 the modification, refurbishment, completion, replacement,

9 repair, and maintenance of aircraft, but excludes any

10 materials, parts, equipment, components, and consumable

11 supplies used in the modification, replacement, repair, and

12 maintenance of aircraft engines or power plants, whether such

13 engines or power plants are installed or uninstalled upon any

14 such aircraft. "Consumable supplies" include, but are not

15 limited to, adhesive, tape, sandpaper, general purpose

16 lubricants, cleaning solution, latex gloves, and protective

17 films. This exemption applies only to the use of qualifying

18 tangible personal property transferred incident to the

19 modification, refurbishment, completion, replacement, repair,

20 or maintenance of aircraft by persons who (i) hold an Air

21 Agency Certificate and are empowered to operate an approved

22 repair station by the Federal Aviation Administration, (ii)

23 have a Class IV Rating, and (iii) conduct operations in

24 accordance with Part 145 of the Federal Aviation Regulations.

25 The exemption does not include aircraft operated by a

26 commercial air carrier providing scheduled passenger air

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1 service pursuant to authority issued under Part 121 or Part 129

2 of the Federal Aviation Regulations. The changes made to this

3 paragraph (27) by Public Act 98-534 are declarative of existing

4 law.

5 (28) Tangible personal property purchased by a

6 public-facilities corporation, as described in Section

7 11-65-10 of the Illinois Municipal Code, for purposes of

8 constructing or furnishing a municipal convention hall, but

9 only if the legal title to the municipal convention hall is

10 transferred to the municipality without any further

11 consideration by or on behalf of the municipality at the time

12 of the completion of the municipal convention hall or upon the

13 retirement or redemption of any bonds or other debt instruments

14 issued by the public-facilities corporation in connection with

15 the development of the municipal convention hall. This

16 exemption includes existing public-facilities corporations as

17 provided in Section 11-65-25 of the Illinois Municipal Code.

18 This paragraph is exempt from the provisions of Section 3-75.

19 (29) Beginning January 1, 2017, menstrual pads, tampons,

20 and menstrual cups.

21 (Source: P.A. 98-104, eff. 7-22-13; 98-422, eff. 8-16-13;

22 98-456, eff. 8-16-13; 98-534, eff. 8-23-13; 98-756, eff.

23 7-16-14; 99-180, eff. 7-29-15; 99-855, eff. 8-19-16.)

24 (35 ILCS 110/9) (from Ch. 120, par. 439.39)

25 Sec. 9. Each serviceman required or authorized to collect

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1 the tax herein imposed shall pay to the Department the amount

2 of such tax (except as otherwise provided) at the time when he

3 is required to file his return for the period during which such

4 tax was collected, less a discount of 2.1% prior to January 1,

5 1990 and 1.75% on and after January 1, 1990, or $5 per calendar

6 year, whichever is greater, which is allowed to reimburse the

7 serviceman for expenses incurred in collecting the tax, keeping

8 records, preparing and filing returns, remitting the tax and

9 supplying data to the Department on request. However, on and

10 after July 1, 2017, in no event shall a vendor discount under

11 this Act exceed $1,000 for any serviceman in any calendar

12 month. The Department may disallow the discount for servicemen

13 whose certificate of registration is revoked at the time the

14 return is filed, but only if the Department's decision to

15 revoke the certificate of registration has become final. A

16 serviceman need not remit that part of any tax collected by him

17 to the extent that he is required to pay and does pay the tax

18 imposed by the Service Occupation Tax Act with respect to his

19 sale of service involving the incidental transfer by him of the

20 same property.

21 Except as provided hereinafter in this Section, on or

22 before the twentieth day of each calendar month, such

23 serviceman shall file a return for the preceding calendar month

24 in accordance with reasonable Rules and Regulations to be

25 promulgated by the Department. Such return shall be filed on a

26 form prescribed by the Department and shall contain such

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1 information as the Department may reasonably require.

2 The Department may require returns to be filed on a

3 quarterly basis. If so required, a return for each calendar

4 quarter shall be filed on or before the twentieth day of the

5 calendar month following the end of such calendar quarter. The

6 taxpayer shall also file a return with the Department for each

7 of the first two months of each calendar quarter, on or before

8 the twentieth day of the following calendar month, stating:

9 1. The name of the seller;

10 2. The address of the principal place of business from

11 which he engages in business as a serviceman in this State;

12 3. The total amount of taxable receipts received by him

13 during the preceding calendar month, including receipts

14 from charge and time sales, but less all deductions allowed

15 by law;

16 4. The amount of credit provided in Section 2d of this

17 Act;

18 5. The amount of tax due;

19 5-5. The signature of the taxpayer; and

20 6. Such other reasonable information as the Department

21 may require.

22 If a taxpayer fails to sign a return within 30 days after

23 the proper notice and demand for signature by the Department,

24 the return shall be considered valid and any amount shown to be

25 due on the return shall be deemed assessed.

26 Beginning October 1, 1993, a taxpayer who has an average

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1 monthly tax liability of $150,000 or more shall make all

2 payments required by rules of the Department by electronic

3 funds transfer. Beginning October 1, 1994, a taxpayer who has

4 an average monthly tax liability of $100,000 or more shall make

5 all payments required by rules of the Department by electronic

6 funds transfer. Beginning October 1, 1995, a taxpayer who has

7 an average monthly tax liability of $50,000 or more shall make

8 all payments required by rules of the Department by electronic

9 funds transfer. Beginning October 1, 2000, a taxpayer who has

10 an annual tax liability of $200,000 or more shall make all

11 payments required by rules of the Department by electronic

12 funds transfer. The term "annual tax liability" shall be the

13 sum of the taxpayer's liabilities under this Act, and under all

14 other State and local occupation and use tax laws administered

15 by the Department, for the immediately preceding calendar year.

16 The term "average monthly tax liability" means the sum of the

17 taxpayer's liabilities under this Act, and under all other

18 State and local occupation and use tax laws administered by the

19 Department, for the immediately preceding calendar year

20 divided by 12. Beginning on October 1, 2002, a taxpayer who has

21 a tax liability in the amount set forth in subsection (b) of

22 Section 2505-210 of the Department of Revenue Law shall make

23 all payments required by rules of the Department by electronic

24 funds transfer.

25 Before August 1 of each year beginning in 1993, the

26 Department shall notify all taxpayers required to make payments

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1 by electronic funds transfer. All taxpayers required to make

2 payments by electronic funds transfer shall make those payments

3 for a minimum of one year beginning on October 1.

4 Any taxpayer not required to make payments by electronic

5 funds transfer may make payments by electronic funds transfer

6 with the permission of the Department.

7 All taxpayers required to make payment by electronic funds

8 transfer and any taxpayers authorized to voluntarily make

9 payments by electronic funds transfer shall make those payments

10 in the manner authorized by the Department.

11 The Department shall adopt such rules as are necessary to

12 effectuate a program of electronic funds transfer and the

13 requirements of this Section.

14 If the serviceman is otherwise required to file a monthly

15 return and if the serviceman's average monthly tax liability to

16 the Department does not exceed $200, the Department may

17 authorize his returns to be filed on a quarter annual basis,

18 with the return for January, February and March of a given year

19 being due by April 20 of such year; with the return for April,

20 May and June of a given year being due by July 20 of such year;

21 with the return for July, August and September of a given year

22 being due by October 20 of such year, and with the return for

23 October, November and December of a given year being due by

24 January 20 of the following year.

25 If the serviceman is otherwise required to file a monthly

26 or quarterly return and if the serviceman's average monthly tax

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1 liability to the Department does not exceed $50, the Department

2 may authorize his returns to be filed on an annual basis, with

3 the return for a given year being due by January 20 of the

4 following year.

5 Such quarter annual and annual returns, as to form and

6 substance, shall be subject to the same requirements as monthly

7 returns.

8 Notwithstanding any other provision in this Act concerning

9 the time within which a serviceman may file his return, in the

10 case of any serviceman who ceases to engage in a kind of

11 business which makes him responsible for filing returns under

12 this Act, such serviceman shall file a final return under this

13 Act with the Department not more than 1 month after

14 discontinuing such business.

15 Where a serviceman collects the tax with respect to the

16 selling price of property which he sells and the purchaser

17 thereafter returns such property and the serviceman refunds the

18 selling price thereof to the purchaser, such serviceman shall

19 also refund, to the purchaser, the tax so collected from the

20 purchaser. When filing his return for the period in which he

21 refunds such tax to the purchaser, the serviceman may deduct

22 the amount of the tax so refunded by him to the purchaser from

23 any other Service Use Tax, Service Occupation Tax, retailers'

24 occupation tax or use tax which such serviceman may be required

25 to pay or remit to the Department, as shown by such return,

26 provided that the amount of the tax to be deducted shall

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1 previously have been remitted to the Department by such

2 serviceman. If the serviceman shall not previously have

3 remitted the amount of such tax to the Department, he shall be

4 entitled to no deduction hereunder upon refunding such tax to

5 the purchaser.

6 Any serviceman filing a return hereunder shall also include

7 the total tax upon the selling price of tangible personal

8 property purchased for use by him as an incident to a sale of

9 service, and such serviceman shall remit the amount of such tax

10 to the Department when filing such return.

11 If experience indicates such action to be practicable, the

12 Department may prescribe and furnish a combination or joint

13 return which will enable servicemen, who are required to file

14 returns hereunder and also under the Service Occupation Tax

15 Act, to furnish all the return information required by both

16 Acts on the one form.

17 Where the serviceman has more than one business registered

18 with the Department under separate registration hereunder,

19 such serviceman shall not file each return that is due as a

20 single return covering all such registered businesses, but

21 shall file separate returns for each such registered business.

22 Beginning January 1, 1990, each month the Department shall

23 pay into the State and Local Tax Reform Fund, a special fund in

24 the State Treasury, the net revenue realized for the preceding

25 month from the 1% tax on sales of food for human consumption

26 which is to be consumed off the premises where it is sold

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1 (other than alcoholic beverages, soft drinks and food which has

2 been prepared for immediate consumption) and prescription and

3 nonprescription medicines, drugs, medical appliances, products

4 classified as Class III medical devices, by the United States

5 Food and Drug Administration that are used for cancer treatment

6 pursuant to a prescription, as well as any accessories and

7 components related to those devices, and insulin, urine testing

8 materials, syringes and needles used by diabetics.

9 Beginning January 1, 1990, each month the Department shall

10 pay into the State and Local Sales Tax Reform Fund 20% of the

11 net revenue realized for the preceding month from the 6.25%

12 general rate on transfers of tangible personal property, other

13 than tangible personal property which is purchased outside

14 Illinois at retail from a retailer and which is titled or

15 registered by an agency of this State's government.

16 Beginning August 1, 2000, each month the Department shall

17 pay into the State and Local Sales Tax Reform Fund 100% of the

18 net revenue realized for the preceding month from the 1.25%

19 rate on the selling price of motor fuel and gasohol.

20 Beginning October 1, 2009, each month the Department shall

21 pay into the Capital Projects Fund an amount that is equal to

22 an amount estimated by the Department to represent 80% of the

23 net revenue realized for the preceding month from the sale of

24 candy, grooming and hygiene products, and soft drinks that had

25 been taxed at a rate of 1% prior to September 1, 2009 but that

26 are now taxed at 6.25%.

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1 Beginning July 1, 2013, each month the Department shall pay

2 into the Underground Storage Tank Fund from the proceeds

3 collected under this Act, the Use Tax Act, the Service

4 Occupation Tax Act, and the Retailers' Occupation Tax Act an

5 amount equal to the average monthly deficit in the Underground

6 Storage Tank Fund during the prior year, as certified annually

7 by the Illinois Environmental Protection Agency, but the total

8 payment into the Underground Storage Tank Fund under this Act,

9 the Use Tax Act, the Service Occupation Tax Act, and the

10 Retailers' Occupation Tax Act shall not exceed $18,000,000 in

11 any State fiscal year. As used in this paragraph, the "average

12 monthly deficit" shall be equal to the difference between the

13 average monthly claims for payment by the fund and the average

14 monthly revenues deposited into the fund, excluding payments

15 made pursuant to this paragraph.

16 Beginning July 1, 2015, of the remainder of the moneys

17 received by the Department under the Use Tax Act, this Act, the

18 Service Occupation Tax Act, and the Retailers' Occupation Tax

19 Act, each month the Department shall deposit $500,000 into the

20 State Crime Laboratory Fund.

21 Of the remainder of the moneys received by the Department

22 pursuant to this Act, (a) 1.75% thereof shall be paid into the

23 Build Illinois Fund and (b) prior to July 1, 1989, 2.2% and on

24 and after July 1, 1989, 3.8% thereof shall be paid into the

25 Build Illinois Fund; provided, however, that if in any fiscal

26 year the sum of (1) the aggregate of 2.2% or 3.8%, as the case

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1 may be, of the moneys received by the Department and required

2 to be paid into the Build Illinois Fund pursuant to Section 3

3 of the Retailers' Occupation Tax Act, Section 9 of the Use Tax

4 Act, Section 9 of the Service Use Tax Act, and Section 9 of the

5 Service Occupation Tax Act, such Acts being hereinafter called

6 the "Tax Acts" and such aggregate of 2.2% or 3.8%, as the case

7 may be, of moneys being hereinafter called the "Tax Act

8 Amount", and (2) the amount transferred to the Build Illinois

9 Fund from the State and Local Sales Tax Reform Fund shall be

10 less than the Annual Specified Amount (as defined in Section 3

11 of the Retailers' Occupation Tax Act), an amount equal to the

12 difference shall be immediately paid into the Build Illinois

13 Fund from other moneys received by the Department pursuant to

14 the Tax Acts; and further provided, that if on the last

15 business day of any month the sum of (1) the Tax Act Amount

16 required to be deposited into the Build Illinois Bond Account

17 in the Build Illinois Fund during such month and (2) the amount

18 transferred during such month to the Build Illinois Fund from

19 the State and Local Sales Tax Reform Fund shall have been less

20 than 1/12 of the Annual Specified Amount, an amount equal to

21 the difference shall be immediately paid into the Build

22 Illinois Fund from other moneys received by the Department

23 pursuant to the Tax Acts; and, further provided, that in no

24 event shall the payments required under the preceding proviso

25 result in aggregate payments into the Build Illinois Fund

26 pursuant to this clause (b) for any fiscal year in excess of

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1 the greater of (i) the Tax Act Amount or (ii) the Annual

2 Specified Amount for such fiscal year; and, further provided,

3 that the amounts payable into the Build Illinois Fund under

4 this clause (b) shall be payable only until such time as the

5 aggregate amount on deposit under each trust indenture securing

6 Bonds issued and outstanding pursuant to the Build Illinois

7 Bond Act is sufficient, taking into account any future

8 investment income, to fully provide, in accordance with such

9 indenture, for the defeasance of or the payment of the

10 principal of, premium, if any, and interest on the Bonds

11 secured by such indenture and on any Bonds expected to be

12 issued thereafter and all fees and costs payable with respect

13 thereto, all as certified by the Director of the Bureau of the

14 Budget (now Governor's Office of Management and Budget). If on

15 the last business day of any month in which Bonds are

16 outstanding pursuant to the Build Illinois Bond Act, the

17 aggregate of the moneys deposited in the Build Illinois Bond

18 Account in the Build Illinois Fund in such month shall be less

19 than the amount required to be transferred in such month from

20 the Build Illinois Bond Account to the Build Illinois Bond

21 Retirement and Interest Fund pursuant to Section 13 of the

22 Build Illinois Bond Act, an amount equal to such deficiency

23 shall be immediately paid from other moneys received by the

24 Department pursuant to the Tax Acts to the Build Illinois Fund;

25 provided, however, that any amounts paid to the Build Illinois

26 Fund in any fiscal year pursuant to this sentence shall be

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1 deemed to constitute payments pursuant to clause (b) of the

2 preceding sentence and shall reduce the amount otherwise

3 payable for such fiscal year pursuant to clause (b) of the

4 preceding sentence. The moneys received by the Department

5 pursuant to this Act and required to be deposited into the

6 Build Illinois Fund are subject to the pledge, claim and charge

7 set forth in Section 12 of the Build Illinois Bond Act.

8 Subject to payment of amounts into the Build Illinois Fund

9 as provided in the preceding paragraph or in any amendment

10 thereto hereafter enacted, the following specified monthly

11 installment of the amount requested in the certificate of the

12 Chairman of the Metropolitan Pier and Exposition Authority

13 provided under Section 8.25f of the State Finance Act, but not

14 in excess of the sums designated as "Total Deposit", shall be

15 deposited in the aggregate from collections under Section 9 of

16 the Use Tax Act, Section 9 of the Service Use Tax Act, Section

17 9 of the Service Occupation Tax Act, and Section 3 of the

18 Retailers' Occupation Tax Act into the McCormick Place

19 Expansion Project Fund in the specified fiscal years.

20	`Fiscal Year`	`Total Deposit`
21	`1993`	`$0`
22	`1994`	`53,000,000`
23	`1995`	`58,000,000`
24	`1996`	`61,000,000`
25	`1997`	`64,000,000`

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1	`1998`	`68,000,000`
2	`1999`	`71,000,000`
3	`2000`	`75,000,000`
4	`2001`	`80,000,000`
5	`2002`	`93,000,000`
6	`2003`	`99,000,000`
7	`2004`	`103,000,000`
8	`2005`	`108,000,000`
9	`2006`	`113,000,000`
10	`2007`	`119,000,000`
11	`2008`	`126,000,000`
12	`2009`	`132,000,000`
13	`2010`	`139,000,000`
14	`2011`	`146,000,000`
15	`2012`	`153,000,000`
16	`2013`	`161,000,000`
17	`2014`	`170,000,000`
18	`2015`	`179,000,000`
19	`2016`	`189,000,000`
20	`2017`	`199,000,000`
21	`2018`	`210,000,000`
22	`2019`	`221,000,000`
23	`2020`	`233,000,000`
24	`2021`	`246,000,000`
25	`2022`	`260,000,000`
26	`2023`	`275,000,000`

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1	`2024`	`275,000,000`
2	`2025`	`275,000,000`
3	`2026`	`279,000,000`
4	`2027`	`292,000,000`
5	`2028`	`307,000,000`
6	`2029`	`322,000,000`
7	`2030`	`338,000,000`
8	`2031`	`350,000,000`
9	`2032`	`350,000,000`
10	`and`
11	`each fiscal year`
12	`thereafter that bonds`
13	`are outstanding under`
14	`Section 13.2 of the`
15	`Metropolitan Pier and`
16	`Exposition Authority Act,`
17	`but not after fiscal year 2060.`

18 Beginning July 20, 1993 and in each month of each fiscal

19 year thereafter, one-eighth of the amount requested in the

20 certificate of the Chairman of the Metropolitan Pier and

21 Exposition Authority for that fiscal year, less the amount

22 deposited into the McCormick Place Expansion Project Fund by

23 the State Treasurer in the respective month under subsection

24 (g) of Section 13 of the Metropolitan Pier and Exposition

25 Authority Act, plus cumulative deficiencies in the deposits

26 required under this Section for previous months and years,

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1 shall be deposited into the McCormick Place Expansion Project

2 Fund, until the full amount requested for the fiscal year, but

3 not in excess of the amount specified above as "Total Deposit",

4 has been deposited.

5 Subject to payment of amounts into the Build Illinois Fund

6 and the McCormick Place Expansion Project Fund pursuant to the

7 preceding paragraphs or in any amendments thereto hereafter

8 enacted, beginning July 1, 1993 and ending on September 30,

9 2013, the Department shall each month pay into the Illinois Tax

10 Increment Fund 0.27% of 80% of the net revenue realized for the

11 preceding month from the 6.25% general rate on the selling

12 price of tangible personal property.

13 Subject to payment of amounts into the Build Illinois Fund

14 and the McCormick Place Expansion Project Fund pursuant to the

15 preceding paragraphs or in any amendments thereto hereafter

16 enacted, beginning with the receipt of the first report of

17 taxes paid by an eligible business and continuing for a 25-year

18 period, the Department shall each month pay into the Energy

19 Infrastructure Fund 80% of the net revenue realized from the

20 6.25% general rate on the selling price of Illinois-mined coal

21 that was sold to an eligible business. For purposes of this

22 paragraph, the term "eligible business" means a new electric

23 generating facility certified pursuant to Section 605-332 of

24 the Department of Commerce and Economic Opportunity Law of the

25 Civil Administrative Code of Illinois.

26 Subject to payment of amounts into the Build Illinois Fund,

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1 the McCormick Place Expansion Project Fund, the Illinois Tax

2 Increment Fund, and the Energy Infrastructure Fund pursuant to

3 the preceding paragraphs or in any amendments to this Section

4 hereafter enacted, beginning on the first day of the first

5 calendar month to occur on or after the effective date of this

6 amendatory Act of the 98th General Assembly, each month, from

7 the collections made under Section 9 of the Use Tax Act,

8 Section 9 of the Service Use Tax Act, Section 9 of the Service

9 Occupation Tax Act, and Section 3 of the Retailers' Occupation

10 Tax Act, the Department shall pay into the Tax Compliance and

11 Administration Fund, to be used, subject to appropriation, to

12 fund additional auditors and compliance personnel at the

13 Department of Revenue, an amount equal to 1/12 of 5% of 80% of

14 the cash receipts collected during the preceding fiscal year by

15 the Audit Bureau of the Department under the Use Tax Act, the

16 Service Use Tax Act, the Service Occupation Tax Act, the

17 Retailers' Occupation Tax Act, and associated local occupation

18 and use taxes administered by the Department.

19 Of the remainder of the moneys received by the Department

20 pursuant to this Act, 75% thereof shall be paid into the

21 General Revenue Fund of the State Treasury and 25% shall be

22 reserved in a special account and used only for the transfer to

23 the Common School Fund as part of the monthly transfer from the

24 General Revenue Fund in accordance with Section 8a of the State

25 Finance Act.

26 As soon as possible after the first day of each month, upon

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1 certification of the Department of Revenue, the Comptroller

2 shall order transferred and the Treasurer shall transfer from

3 the General Revenue Fund to the Motor Fuel Tax Fund an amount

4 equal to 1.7% of 80% of the net revenue realized under this Act

5 for the second preceding month. Beginning April 1, 2000, this

6 transfer is no longer required and shall not be made.

7 Net revenue realized for a month shall be the revenue

8 collected by the State pursuant to this Act, less the amount

9 paid out during that month as refunds to taxpayers for

10 overpayment of liability.

11 (Source: P.A. 98-24, eff. 6-19-13; 98-109, eff. 7-25-13;

12 98-298, eff. 8-9-13; 98-496, eff. 1-1-14; 98-756, eff. 7-16-14;

13 98-1098, eff. 8-26-14; 99-352, eff. 8-12-15; 99-858, eff.

14 8-19-16.)

15 Section 30-30. The Service Occupation Tax Act is amended by

16 changing Sections 2, 3-5, and 9 as follows:

17 (35 ILCS 115/2) (from Ch. 120, par. 439.102)

18 Sec. 2. "Transfer" means any transfer of the title to

19 property or of the ownership of property whether or not the

20 transferor retains title as security for the payment of amounts

21 due him from the transferee.

22 "Cost Price" means the consideration paid by the serviceman

23 for a purchase valued in money, whether paid in money or

24 otherwise, including cash, credits and services, and shall be

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1 determined without any deduction on account of the supplier's

2 cost of the property sold or on account of any other expense

3 incurred by the supplier. When a serviceman contracts out part

4 or all of the services required in his sale of service, it

5 shall be presumed that the cost price to the serviceman of the

6 property transferred to him by his or her subcontractor is

7 equal to 50% of the subcontractor's charges to the serviceman

8 in the absence of proof of the consideration paid by the

9 subcontractor for the purchase of such property.

10 "Department" means the Department of Revenue.

11 "Person" means any natural individual, firm, partnership,

12 association, joint stock company, joint venture, public or

13 private corporation, limited liability company, and any

14 receiver, executor, trustee, guardian or other representative

15 appointed by order of any court.

16 "Sale of Service" means any transaction except:

17 (a) A retail sale of tangible personal property taxable

18 under the Retailers' Occupation Tax Act or under the Use Tax

19 Act.

20 (b) A sale of tangible personal property for the purpose of

21 resale made in compliance with Section 2c of the Retailers'

22 Occupation Tax Act.

23 (c) Except as hereinafter provided, a sale or transfer of

24 tangible personal property as an incident to the rendering of

25 service for or by any governmental body or for or by any

26 corporation, society, association, foundation or institution

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1 organized and operated exclusively for charitable, religious

2 or educational purposes or any not-for-profit corporation,

3 society, association, foundation, institution or organization

4 which has no compensated officers or employees and which is

5 organized and operated primarily for the recreation of persons

6 55 years of age or older. A limited liability company may

7 qualify for the exemption under this paragraph only if the

8 limited liability company is organized and operated

9 exclusively for educational purposes.

10 (d) A sale or transfer of tangible personal property as an

11 incident to the rendering of service for interstate carriers

12 for hire for use as rolling stock moving in interstate commerce

13 or lessors under leases of one year or longer, executed or in

14 effect at the time of purchase, to interstate carriers for hire

15 for use as rolling stock moving in interstate commerce, and

16 equipment operated by a telecommunications provider, licensed

17 as a common carrier by the Federal Communications Commission,

18 which is permanently installed in or affixed to aircraft moving

19 in interstate commerce.

20 (d-1) A sale or transfer of tangible personal property as

21 an incident to the rendering of service for owners, lessors or

22 shippers of tangible personal property which is utilized by

23 interstate carriers for hire for use as rolling stock moving in

24 interstate commerce, and equipment operated by a

25 telecommunications provider, licensed as a common carrier by

26 the Federal Communications Commission, which is permanently

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1 installed in or affixed to aircraft moving in interstate

2 commerce.

3 (d-1.1) On and after July 1, 2003 and through June 30,

4 2004, a sale or transfer of a motor vehicle of the second

5 division with a gross vehicle weight in excess of 8,000 pounds

6 as an incident to the rendering of service if that motor

7 vehicle is subject to the commercial distribution fee imposed

8 under Section 3-815.1 of the Illinois Vehicle Code. Beginning

9 on July 1, 2004 and through June 30, 2005, the use in this

10 State of motor vehicles of the second division: (i) with a

11 gross vehicle weight rating in excess of 8,000 pounds; (ii)

12 that are subject to the commercial distribution fee imposed

13 under Section 3-815.1 of the Illinois Vehicle Code; and (iii)

14 that are primarily used for commercial purposes. Through June

15 30, 2005, this exemption applies to repair and replacement

16 parts added after the initial purchase of such a motor vehicle

17 if that motor vehicle is used in a manner that would qualify

18 for the rolling stock exemption otherwise provided for in this

19 Act. For purposes of this paragraph, "used for commercial

20 purposes" means the transportation of persons or property in

21 furtherance of any commercial or industrial enterprise whether

22 for-hire or not.

23 (d-2) The repairing, reconditioning or remodeling, for a

24 common carrier by rail, of tangible personal property which

25 belongs to such carrier for hire, and as to which such carrier

26 receives the physical possession of the repaired,

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1 reconditioned or remodeled item of tangible personal property

2 in Illinois, and which such carrier transports, or shares with

3 another common carrier in the transportation of such property,

4 out of Illinois on a standard uniform bill of lading showing

5 the person who repaired, reconditioned or remodeled the

6 property as the shipper or consignor of such property to a

7 destination outside Illinois, for use outside Illinois.

8 (d-3) A sale or transfer of tangible personal property

9 which is produced by the seller thereof on special order in

10 such a way as to have made the applicable tax the Service

11 Occupation Tax or the Service Use Tax, rather than the

12 Retailers' Occupation Tax or the Use Tax, for an interstate

13 carrier by rail which receives the physical possession of such

14 property in Illinois, and which transports such property, or

15 shares with another common carrier in the transportation of

16 such property, out of Illinois on a standard uniform bill of

17 lading showing the seller of the property as the shipper or

18 consignor of such property to a destination outside Illinois,

19 for use outside Illinois.

20 (d-4) Until January 1, 1997, a sale, by a registered

21 serviceman paying tax under this Act to the Department, of

22 special order printed materials delivered outside Illinois and

23 which are not returned to this State, if delivery is made by

24 the seller or agent of the seller, including an agent who

25 causes the product to be delivered outside Illinois by a common

26 carrier or the U.S. postal service.

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1 (e) A sale or transfer of machinery and equipment used

2 primarily in the process of the manufacturing or assembling,

3 either in an existing, an expanded or a new manufacturing

4 facility, of tangible personal property for wholesale or retail

5 sale or lease, whether such sale or lease is made directly by

6 the manufacturer or by some other person, whether the materials

7 used in the process are owned by the manufacturer or some other

8 person, or whether such sale or lease is made apart from or as

9 an incident to the seller's engaging in a service occupation

10 and the applicable tax is a Service Occupation Tax or Service

11 Use Tax, rather than Retailers' Occupation Tax or Use Tax. The

12 exemption provided by this paragraph (e) does not include

13 machinery and equipment used in (i) the generation of

14 electricity for wholesale or retail sale; (ii) the generation

15 or treatment of natural or artificial gas for wholesale or

16 retail sale that is delivered to customers through pipes,

17 pipelines, or mains; or (iii) the treatment of water for

18 wholesale or retail sale that is delivered to customers through

19 pipes, pipelines, or mains. The provisions of this amendatory

20 Act of the 98th General Assembly are declaratory of existing

21 law as to the meaning and scope of this exemption. The

22 exemption under this subsection (e) is exempt from the

23 provisions of Section 3-75.

24 (f) Until July 1, 2003, the sale or transfer of

25 distillation machinery and equipment, sold as a unit or kit and

26 assembled or installed by the retailer, which machinery and

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1 equipment is certified by the user to be used only for the

2 production of ethyl alcohol that will be used for consumption

3 as motor fuel or as a component of motor fuel for the personal

4 use of such user and not subject to sale or resale.

5 (g) At the election of any serviceman not required to be

6 otherwise registered as a retailer under Section 2a of the

7 Retailers' Occupation Tax Act, made for each fiscal year sales

8 of service in which the aggregate annual cost price of tangible

9 personal property transferred as an incident to the sales of

10 service is less than 35% (75% in the case of servicemen

11 transferring prescription drugs or servicemen engaged in

12 graphic arts production) of the aggregate annual total gross

13 receipts from all sales of service. The purchase of such

14 tangible personal property by the serviceman shall be subject

15 to tax under the Retailers' Occupation Tax Act and the Use Tax

16 Act. However, if a primary serviceman who has made the election

17 described in this paragraph subcontracts service work to a

18 secondary serviceman who has also made the election described

19 in this paragraph, the primary serviceman does not incur a Use

20 Tax liability if the secondary serviceman (i) has paid or will

21 pay Use Tax on his or her cost price of any tangible personal

22 property transferred to the primary serviceman and (ii)

23 certifies that fact in writing to the primary serviceman.

24 Tangible personal property transferred incident to the

25 completion of a maintenance agreement is exempt from the tax

26 imposed pursuant to this Act.

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1 Exemption (e) also includes machinery and equipment used in

2 the general maintenance or repair of such exempt machinery and

3 equipment or for in-house manufacture of exempt machinery and

4 equipment.On and after July 1, 2017, exemption (e) also

5 includes production related tangible personal property, as

6 defined in Section 2-45 of the Retailers' Occupation Tax Act.

7 On and after July 1, 2017, exemption (e) also includes graphic

8 arts machinery and equipment, as defined in paragraph (5) of

9 Section 3-5. The machinery and equipment exemption does not

10 include machinery and equipment used in (i) the generation of

11 electricity for wholesale or retail sale; (ii) the generation

12 or treatment of natural or artificial gas for wholesale or

13 retail sale that is delivered to customers through pipes,

14 pipelines, or mains; or (iii) the treatment of water for

15 wholesale or retail sale that is delivered to customers through

16 pipes, pipelines, or mains. The provisions of this amendatory

17 Act of the 98th General Assembly are declaratory of existing

18 law as to the meaning and scope of this exemption. For the

19 purposes of exemption (e), each of these terms shall have the

20 following meanings: (1) "manufacturing process" shall mean the

21 production of any article of tangible personal property,

22 whether such article is a finished product or an article for

23 use in the process of manufacturing or assembling a different

24 article of tangible personal property, by procedures commonly

25 regarded as manufacturing, processing, fabricating, or

26 refining which changes some existing material or materials into

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1 a material with a different form, use or name. In relation to a

2 recognized integrated business composed of a series of

3 operations which collectively constitute manufacturing, or

4 individually constitute manufacturing operations, the

5 manufacturing process shall be deemed to commence with the

6 first operation or stage of production in the series, and shall

7 not be deemed to end until the completion of the final product

8 in the last operation or stage of production in the series; and

9 further for purposes of exemption (e), photoprocessing is

10 deemed to be a manufacturing process of tangible personal

11 property for wholesale or retail sale; (2) "assembling process"

12 shall mean the production of any article of tangible personal

13 property, whether such article is a finished product or an

14 article for use in the process of manufacturing or assembling a

15 different article of tangible personal property, by the

16 combination of existing materials in a manner commonly regarded

17 as assembling which results in a material of a different form,

18 use or name; (3) "machinery" shall mean major mechanical

19 machines or major components of such machines contributing to a

20 manufacturing or assembling process; and (4) "equipment" shall

21 include any independent device or tool separate from any

22 machinery but essential to an integrated manufacturing or

23 assembly process; including computers used primarily in a

24 manufacturer's computer assisted design, computer assisted

25 manufacturing (CAD/CAM) system; or any subunit or assembly

26 comprising a component of any machinery or auxiliary, adjunct

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1 or attachment parts of machinery, such as tools, dies, jigs,

2 fixtures, patterns and molds; or any parts which require

3 periodic replacement in the course of normal operation; but

4 shall not include hand tools. Equipment includes chemicals or

5 chemicals acting as catalysts but only if the chemicals or

6 chemicals acting as catalysts effect a direct and immediate

7 change upon a product being manufactured or assembled for

8 wholesale or retail sale or lease. The purchaser of such

9 machinery and equipment who has an active resale registration

10 number shall furnish such number to the seller at the time of

11 purchase. The purchaser of such machinery and equipment and

12 tools without an active resale registration number shall

13 furnish to the seller a certificate of exemption for each

14 transaction stating facts establishing the exemption for that

15 transaction, which certificate shall be available to the

16 Department for inspection or audit.

17 Except as provided in Section 2d of this Act, the rolling

18 stock exemption applies to rolling stock used by an interstate

19 carrier for hire, even just between points in Illinois, if such

20 rolling stock transports, for hire, persons whose journeys or

21 property whose shipments originate or terminate outside

22 Illinois.

23 Any informal rulings, opinions or letters issued by the

24 Department in response to an inquiry or request for any opinion

25 from any person regarding the coverage and applicability of

26 exemption (e) to specific devices shall be published,

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1 maintained as a public record, and made available for public

2 inspection and copying. If the informal ruling, opinion or

3 letter contains trade secrets or other confidential

4 information, where possible the Department shall delete such

5 information prior to publication. Whenever such informal

6 rulings, opinions, or letters contain any policy of general

7 applicability, the Department shall formulate and adopt such

8 policy as a rule in accordance with the provisions of the

9 Illinois Administrative Procedure Act.

10 On and after July 1, 1987, no entity otherwise eligible

11 under exemption (c) of this Section shall make tax free

12 purchases unless it has an active exemption identification

13 number issued by the Department.

14 "Serviceman" means any person who is engaged in the

15 occupation of making sales of service.

16 "Sale at Retail" means "sale at retail" as defined in the

17 Retailers' Occupation Tax Act.

18 "Supplier" means any person who makes sales of tangible

19 personal property to servicemen for the purpose of resale as an

20 incident to a sale of service.

21 (Source: P.A. 98-583, eff. 1-1-14.)

22 (35 ILCS 115/3-5)

23 Sec. 3-5. Exemptions. The following tangible personal

24 property is exempt from the tax imposed by this Act:

25 (1) Personal property sold by a corporation, society,

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1 association, foundation, institution, or organization, other

2 than a limited liability company, that is organized and

3 operated as a not-for-profit service enterprise for the benefit

4 of persons 65 years of age or older if the personal property

5 was not purchased by the enterprise for the purpose of resale

6 by the enterprise.

7 (2) Personal property purchased by a not-for-profit

8 Illinois county fair association for use in conducting,

9 operating, or promoting the county fair.

10 (3) Personal property purchased by any not-for-profit arts

11 or cultural organization that establishes, by proof required by

12 the Department by rule, that it has received an exemption under

13 Section 501(c)(3) of the Internal Revenue Code and that is

14 organized and operated primarily for the presentation or

15 support of arts or cultural programming, activities, or

16 services. These organizations include, but are not limited to,

17 music and dramatic arts organizations such as symphony

18 orchestras and theatrical groups, arts and cultural service

19 organizations, local arts councils, visual arts organizations,

20 and media arts organizations. On and after the effective date

21 of this amendatory Act of the 92nd General Assembly, however,

22 an entity otherwise eligible for this exemption shall not make

23 tax-free purchases unless it has an active identification

24 number issued by the Department.

25 (4) Legal tender, currency, medallions, or gold or silver

26 coinage issued by the State of Illinois, the government of the

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1 United States of America, or the government of any foreign

2 country, and bullion.

3 (5) Until July 1, 2003 and beginning again on September 1,

4 2004 through August 30, 2014, graphic arts machinery and

5 equipment, including repair and replacement parts, both new and

6 used, and including that manufactured on special order or

7 purchased for lease, certified by the purchaser to be used

8 primarily for graphic arts production. Equipment includes

9 chemicals or chemicals acting as catalysts but only if the

10 chemicals or chemicals acting as catalysts effect a direct and

11 immediate change upon a graphic arts product.Beginning on July

12 1, 2017, graphic arts machinery and equipment is included in

13 the manufacturing and assembling machinery and equipment

14 exemption under Section 2 of this Act.

15 (6) Personal property sold by a teacher-sponsored student

16 organization affiliated with an elementary or secondary school

17 located in Illinois.

18 (7) Farm machinery and equipment, both new and used,

19 including that manufactured on special order, certified by the

20 purchaser to be used primarily for production agriculture or

21 State or federal agricultural programs, including individual

22 replacement parts for the machinery and equipment, including

23 machinery and equipment purchased for lease, and including

24 implements of husbandry defined in Section 1-130 of the

25 Illinois Vehicle Code, farm machinery and agricultural

26 chemical and fertilizer spreaders, and nurse wagons required to

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1 be registered under Section 3-809 of the Illinois Vehicle Code,

2 but excluding other motor vehicles required to be registered

3 under the Illinois Vehicle Code. Horticultural polyhouses or

4 hoop houses used for propagating, growing, or overwintering

5 plants shall be considered farm machinery and equipment under

6 this item (7). Agricultural chemical tender tanks and dry boxes

7 shall include units sold separately from a motor vehicle

8 required to be licensed and units sold mounted on a motor

9 vehicle required to be licensed if the selling price of the

10 tender is separately stated.

11 Farm machinery and equipment shall include precision

12 farming equipment that is installed or purchased to be

13 installed on farm machinery and equipment including, but not

14 limited to, tractors, harvesters, sprayers, planters, seeders,

15 or spreaders. Precision farming equipment includes, but is not

16 limited to, soil testing sensors, computers, monitors,

17 software, global positioning and mapping systems, and other

18 such equipment.

19 Farm machinery and equipment also includes computers,

20 sensors, software, and related equipment used primarily in the

21 computer-assisted operation of production agriculture

22 facilities, equipment, and activities such as, but not limited

23 to, the collection, monitoring, and correlation of animal and

24 crop data for the purpose of formulating animal diets and

25 agricultural chemicals. This item (7) is exempt from the

26 provisions of Section 3-55.

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1 (8) Until June 30, 2013, fuel and petroleum products sold

2 to or used by an air common carrier, certified by the carrier

3 to be used for consumption, shipment, or storage in the conduct

4 of its business as an air common carrier, for a flight destined

5 for or returning from a location or locations outside the

6 United States without regard to previous or subsequent domestic

7 stopovers.

8 Beginning July 1, 2013, fuel and petroleum products sold to

9 or used by an air carrier, certified by the carrier to be used

10 for consumption, shipment, or storage in the conduct of its

11 business as an air common carrier, for a flight that (i) is

12 engaged in foreign trade or is engaged in trade between the

13 United States and any of its possessions and (ii) transports at

14 least one individual or package for hire from the city of

15 origination to the city of final destination on the same

16 aircraft, without regard to a change in the flight number of

17 that aircraft.

18 (9) Proceeds of mandatory service charges separately

19 stated on customers' bills for the purchase and consumption of

20 food and beverages, to the extent that the proceeds of the

21 service charge are in fact turned over as tips or as a

22 substitute for tips to the employees who participate directly

23 in preparing, serving, hosting or cleaning up the food or

24 beverage function with respect to which the service charge is

25 imposed.

26 (10) Until July 1, 2003, oil field exploration, drilling,

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1 and production equipment, including (i) rigs and parts of rigs,

2 rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and

3 tubular goods, including casing and drill strings, (iii) pumps

4 and pump-jack units, (iv) storage tanks and flow lines, (v) any

5 individual replacement part for oil field exploration,

6 drilling, and production equipment, and (vi) machinery and

7 equipment purchased for lease; but excluding motor vehicles

8 required to be registered under the Illinois Vehicle Code.

9 (11) Photoprocessing machinery and equipment, including

10 repair and replacement parts, both new and used, including that

11 manufactured on special order, certified by the purchaser to be

12 used primarily for photoprocessing, and including

13 photoprocessing machinery and equipment purchased for lease.

14 (12) Coal and aggregate exploration, mining, off-highway

15 hauling, processing, maintenance, and reclamation equipment,

16 including replacement parts and equipment, and including

17 equipment purchased for lease, but excluding motor vehicles

18 required to be registered under the Illinois Vehicle Code. The

19 changes made to this Section by Public Act 97-767 apply on and

20 after July 1, 2003, but no claim for credit or refund is

21 allowed on or after August 16, 2013 (the effective date of

22 Public Act 98-456) for such taxes paid during the period

23 beginning July 1, 2003 and ending on August 16, 2013 (the

24 effective date of Public Act 98-456).

25 (13) Beginning January 1, 1992 and through June 30, 2016,

26 food for human consumption that is to be consumed off the

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1 premises where it is sold (other than alcoholic beverages, soft

2 drinks and food that has been prepared for immediate

3 consumption) and prescription and non-prescription medicines,

4 drugs, medical appliances, and insulin, urine testing

5 materials, syringes, and needles used by diabetics, for human

6 use, when purchased for use by a person receiving medical

7 assistance under Article V of the Illinois Public Aid Code who

8 resides in a licensed long-term care facility, as defined in

9 the Nursing Home Care Act, or in a licensed facility as defined

10 in the ID/DD Community Care Act, the MC/DD Act, or the

11 Specialized Mental Health Rehabilitation Act of 2013.

12 (14) Semen used for artificial insemination of livestock

13 for direct agricultural production.

14 (15) Horses, or interests in horses, registered with and

15 meeting the requirements of any of the Arabian Horse Club

16 Registry of America, Appaloosa Horse Club, American Quarter

17 Horse Association, United States Trotting Association, or

18 Jockey Club, as appropriate, used for purposes of breeding or

19 racing for prizes. This item (15) is exempt from the provisions

20 of Section 3-55, and the exemption provided for under this item

21 (15) applies for all periods beginning May 30, 1995, but no

22 claim for credit or refund is allowed on or after January 1,

23 2008 (the effective date of Public Act 95-88) for such taxes

24 paid during the period beginning May 30, 2000 and ending on

25 January 1, 2008 (the effective date of Public Act 95-88).

26 (16) Computers and communications equipment utilized for

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1 any hospital purpose and equipment used in the diagnosis,

2 analysis, or treatment of hospital patients sold to a lessor

3 who leases the equipment, under a lease of one year or longer

4 executed or in effect at the time of the purchase, to a

5 hospital that has been issued an active tax exemption

6 identification number by the Department under Section 1g of the

7 Retailers' Occupation Tax Act.

8 (17) Personal property sold to a lessor who leases the

9 property, under a lease of one year or longer executed or in

10 effect at the time of the purchase, to a governmental body that

11 has been issued an active tax exemption identification number

12 by the Department under Section 1g of the Retailers' Occupation

13 Tax Act.

14 (18) Beginning with taxable years ending on or after

15 December 31, 1995 and ending with taxable years ending on or

16 before December 31, 2004, personal property that is donated for

17 disaster relief to be used in a State or federally declared

18 disaster area in Illinois or bordering Illinois by a

19 manufacturer or retailer that is registered in this State to a

20 corporation, society, association, foundation, or institution

21 that has been issued a sales tax exemption identification

22 number by the Department that assists victims of the disaster

23 who reside within the declared disaster area.

24 (19) Beginning with taxable years ending on or after

25 December 31, 1995 and ending with taxable years ending on or

26 before December 31, 2004, personal property that is used in the

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1 performance of infrastructure repairs in this State, including

2 but not limited to municipal roads and streets, access roads,

3 bridges, sidewalks, waste disposal systems, water and sewer

4 line extensions, water distribution and purification

5 facilities, storm water drainage and retention facilities, and

6 sewage treatment facilities, resulting from a State or

7 federally declared disaster in Illinois or bordering Illinois

8 when such repairs are initiated on facilities located in the

9 declared disaster area within 6 months after the disaster.

10 (20) Beginning July 1, 1999, game or game birds sold at a

11 "game breeding and hunting preserve area" as that term is used

12 in the Wildlife Code. This paragraph is exempt from the

13 provisions of Section 3-55.

14 (21) A motor vehicle, as that term is defined in Section

15 1-146 of the Illinois Vehicle Code, that is donated to a

16 corporation, limited liability company, society, association,

17 foundation, or institution that is determined by the Department

18 to be organized and operated exclusively for educational

19 purposes. For purposes of this exemption, "a corporation,

20 limited liability company, society, association, foundation,

21 or institution organized and operated exclusively for

22 educational purposes" means all tax-supported public schools,

23 private schools that offer systematic instruction in useful

24 branches of learning by methods common to public schools and

25 that compare favorably in their scope and intensity with the

26 course of study presented in tax-supported schools, and

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1 vocational or technical schools or institutes organized and

2 operated exclusively to provide a course of study of not less

3 than 6 weeks duration and designed to prepare individuals to

4 follow a trade or to pursue a manual, technical, mechanical,

5 industrial, business, or commercial occupation.

6 (22) Beginning January 1, 2000, personal property,

7 including food, purchased through fundraising events for the

8 benefit of a public or private elementary or secondary school,

9 a group of those schools, or one or more school districts if

10 the events are sponsored by an entity recognized by the school

11 district that consists primarily of volunteers and includes

12 parents and teachers of the school children. This paragraph

13 does not apply to fundraising events (i) for the benefit of

14 private home instruction or (ii) for which the fundraising

15 entity purchases the personal property sold at the events from

16 another individual or entity that sold the property for the

17 purpose of resale by the fundraising entity and that profits

18 from the sale to the fundraising entity. This paragraph is

19 exempt from the provisions of Section 3-55.

20 (23) Beginning January 1, 2000 and through December 31,

21 2001, new or used automatic vending machines that prepare and

22 serve hot food and beverages, including coffee, soup, and other

23 items, and replacement parts for these machines. Beginning

24 January 1, 2002 and through June 30, 2003, machines and parts

25 for machines used in commercial, coin-operated amusement and

26 vending business if a use or occupation tax is paid on the

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1 gross receipts derived from the use of the commercial,

2 coin-operated amusement and vending machines. This paragraph

3 is exempt from the provisions of Section 3-55.

4 (24) Beginning on the effective date of this amendatory Act

5 of the 92nd General Assembly, computers and communications

6 equipment utilized for any hospital purpose and equipment used

7 in the diagnosis, analysis, or treatment of hospital patients

8 sold to a lessor who leases the equipment, under a lease of one

9 year or longer executed or in effect at the time of the

10 purchase, to a hospital that has been issued an active tax

11 exemption identification number by the Department under

12 Section 1g of the Retailers' Occupation Tax Act. This paragraph

13 is exempt from the provisions of Section 3-55.

14 (25) Beginning on the effective date of this amendatory Act

15 of the 92nd General Assembly, personal property sold to a

16 lessor who leases the property, under a lease of one year or

17 longer executed or in effect at the time of the purchase, to a

18 governmental body that has been issued an active tax exemption

19 identification number by the Department under Section 1g of the

20 Retailers' Occupation Tax Act. This paragraph is exempt from

21 the provisions of Section 3-55.

22 (26) Beginning on January 1, 2002 and through June 30,

23 2016, tangible personal property purchased from an Illinois

24 retailer by a taxpayer engaged in centralized purchasing

25 activities in Illinois who will, upon receipt of the property

26 in Illinois, temporarily store the property in Illinois (i) for

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1 the purpose of subsequently transporting it outside this State

2 for use or consumption thereafter solely outside this State or

3 (ii) for the purpose of being processed, fabricated, or

4 manufactured into, attached to, or incorporated into other

5 tangible personal property to be transported outside this State

6 and thereafter used or consumed solely outside this State. The

7 Director of Revenue shall, pursuant to rules adopted in

8 accordance with the Illinois Administrative Procedure Act,

9 issue a permit to any taxpayer in good standing with the

10 Department who is eligible for the exemption under this

11 paragraph (26). The permit issued under this paragraph (26)

12 shall authorize the holder, to the extent and in the manner

13 specified in the rules adopted under this Act, to purchase

14 tangible personal property from a retailer exempt from the

15 taxes imposed by this Act. Taxpayers shall maintain all

16 necessary books and records to substantiate the use and

17 consumption of all such tangible personal property outside of

18 the State of Illinois.

19 (27) Beginning January 1, 2008, tangible personal property

20 used in the construction or maintenance of a community water

21 supply, as defined under Section 3.145 of the Environmental

22 Protection Act, that is operated by a not-for-profit

23 corporation that holds a valid water supply permit issued under

24 Title IV of the Environmental Protection Act. This paragraph is

25 exempt from the provisions of Section 3-55.

26 (28) Tangible personal property sold to a

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1 public-facilities corporation, as described in Section

2 11-65-10 of the Illinois Municipal Code, for purposes of

3 constructing or furnishing a municipal convention hall, but

4 only if the legal title to the municipal convention hall is

5 transferred to the municipality without any further

6 consideration by or on behalf of the municipality at the time

7 of the completion of the municipal convention hall or upon the

8 retirement or redemption of any bonds or other debt instruments

9 issued by the public-facilities corporation in connection with

10 the development of the municipal convention hall. This

11 exemption includes existing public-facilities corporations as

12 provided in Section 11-65-25 of the Illinois Municipal Code.

13 This paragraph is exempt from the provisions of Section 3-55.

14 (29) Beginning January 1, 2010, materials, parts,

15 equipment, components, and furnishings incorporated into or

16 upon an aircraft as part of the modification, refurbishment,

17 completion, replacement, repair, or maintenance of the

18 aircraft. This exemption includes consumable supplies used in

19 the modification, refurbishment, completion, replacement,

20 repair, and maintenance of aircraft, but excludes any

21 materials, parts, equipment, components, and consumable

22 supplies used in the modification, replacement, repair, and

23 maintenance of aircraft engines or power plants, whether such

24 engines or power plants are installed or uninstalled upon any

25 such aircraft. "Consumable supplies" include, but are not

26 limited to, adhesive, tape, sandpaper, general purpose

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1 lubricants, cleaning solution, latex gloves, and protective

2 films. This exemption applies only to the transfer of

3 qualifying tangible personal property incident to the

4 modification, refurbishment, completion, replacement, repair,

5 or maintenance of an aircraft by persons who (i) hold an Air

6 Agency Certificate and are empowered to operate an approved

7 repair station by the Federal Aviation Administration, (ii)

8 have a Class IV Rating, and (iii) conduct operations in

9 accordance with Part 145 of the Federal Aviation Regulations.

10 The exemption does not include aircraft operated by a

11 commercial air carrier providing scheduled passenger air

12 service pursuant to authority issued under Part 121 or Part 129

13 of the Federal Aviation Regulations. The changes made to this

14 paragraph (29) by Public Act 98-534 are declarative of existing

15 law.

16 (30) Beginning January 1, 2017, menstrual pads, tampons,

17 and menstrual cups.

18 (Source: P.A. 98-104, eff. 7-22-13; 98-422, eff. 8-16-13;

19 98-456, eff. 8-16-13; 98-534, eff. 8-23-13; 98-756, eff.

20 7-16-14; 99-180, eff. 7-29-15; 99-855, eff. 8-19-16.)

21 (35 ILCS 115/9) (from Ch. 120, par. 439.109)

22 Sec. 9. Each serviceman required or authorized to collect

23 the tax herein imposed shall pay to the Department the amount

24 of such tax at the time when he is required to file his return

25 for the period during which such tax was collectible, less a

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1 discount of 2.1% prior to January 1, 1990, and 1.75% on and

2 after January 1, 1990, or $5 per calendar year, whichever is

3 greater, which is allowed to reimburse the serviceman for

4 expenses incurred in collecting the tax, keeping records,

5 preparing and filing returns, remitting the tax and supplying

6 data to the Department on request.However, on and after July

7 1, 2017, in no event shall a vendor discount under this Act

8 exceed $1,000 for any serviceman in any calendar month. The

9 Department may disallow the discount for servicemen whose

10 certificate of registration is revoked at the time the return

11 is filed, but only if the Department's decision to revoke the

12 certificate of registration has become final.

13 Where such tangible personal property is sold under a

14 conditional sales contract, or under any other form of sale

15 wherein the payment of the principal sum, or a part thereof, is

16 extended beyond the close of the period for which the return is

17 filed, the serviceman, in collecting the tax may collect, for

18 each tax return period, only the tax applicable to the part of

19 the selling price actually received during such tax return

20 period.

21 Except as provided hereinafter in this Section, on or

22 before the twentieth day of each calendar month, such

23 serviceman shall file a return for the preceding calendar month

24 in accordance with reasonable rules and regulations to be

25 promulgated by the Department of Revenue. Such return shall be

26 filed on a form prescribed by the Department and shall contain

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1 such information as the Department may reasonably require.

2 The Department may require returns to be filed on a

3 quarterly basis. If so required, a return for each calendar

4 quarter shall be filed on or before the twentieth day of the

5 calendar month following the end of such calendar quarter. The

6 taxpayer shall also file a return with the Department for each

7 of the first two months of each calendar quarter, on or before

8 the twentieth day of the following calendar month, stating:

9 1. The name of the seller;

10 2. The address of the principal place of business from

11 which he engages in business as a serviceman in this State;

12 3. The total amount of taxable receipts received by him

13 during the preceding calendar month, including receipts

14 from charge and time sales, but less all deductions allowed

15 by law;

16 4. The amount of credit provided in Section 2d of this

17 Act;

18 5. The amount of tax due;

19 5-5. The signature of the taxpayer; and

20 6. Such other reasonable information as the Department

21 may require.

22 If a taxpayer fails to sign a return within 30 days after

23 the proper notice and demand for signature by the Department,

24 the return shall be considered valid and any amount shown to be

25 due on the return shall be deemed assessed.

26 Prior to October 1, 2003, and on and after September 1,

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1 2004 a serviceman may accept a Manufacturer's Purchase Credit

2 certification from a purchaser in satisfaction of Service Use

3 Tax as provided in Section 3-70 of the Service Use Tax Act if

4 the purchaser provides the appropriate documentation as

5 required by Section 3-70 of the Service Use Tax Act. A

6 Manufacturer's Purchase Credit certification, accepted prior

7 to October 1, 2003 or on or after September 1, 2004 by a

8 serviceman as provided in Section 3-70 of the Service Use Tax

9 Act, may be used by that serviceman to satisfy Service

10 Occupation Tax liability in the amount claimed in the

11 certification, not to exceed 6.25% of the receipts subject to

12 tax from a qualifying purchase. A Manufacturer's Purchase

13 Credit reported on any original or amended return filed under

14 this Act after October 20, 2003 for reporting periods prior to

15 September 1, 2004 shall be disallowed. Manufacturer's Purchase

16 Credit reported on annual returns due on or after January 1,

17 2005 will be disallowed for periods prior to September 1, 2004.

18 No Manufacturer's Purchase Credit may be used after September

19 30, 2003 through August 31, 2004 to satisfy any tax liability

20 imposed under this Act, including any audit liability.

21 If the serviceman's average monthly tax liability to the

22 Department does not exceed $200, the Department may authorize

23 his returns to be filed on a quarter annual basis, with the

24 return for January, February and March of a given year being

25 due by April 20 of such year; with the return for April, May

26 and June of a given year being due by July 20 of such year; with

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1 the return for July, August and September of a given year being

2 due by October 20 of such year, and with the return for

3 October, November and December of a given year being due by

4 January 20 of the following year.

5 If the serviceman's average monthly tax liability to the

6 Department does not exceed $50, the Department may authorize

7 his returns to be filed on an annual basis, with the return for

8 a given year being due by January 20 of the following year.

9 Such quarter annual and annual returns, as to form and

10 substance, shall be subject to the same requirements as monthly

11 returns.

12 Notwithstanding any other provision in this Act concerning

13 the time within which a serviceman may file his return, in the

14 case of any serviceman who ceases to engage in a kind of

15 business which makes him responsible for filing returns under

16 this Act, such serviceman shall file a final return under this

17 Act with the Department not more than 1 month after

18 discontinuing such business.

19 Beginning October 1, 1993, a taxpayer who has an average

20 monthly tax liability of $150,000 or more shall make all

21 payments required by rules of the Department by electronic

22 funds transfer. Beginning October 1, 1994, a taxpayer who has

23 an average monthly tax liability of $100,000 or more shall make

24 all payments required by rules of the Department by electronic

25 funds transfer. Beginning October 1, 1995, a taxpayer who has

26 an average monthly tax liability of $50,000 or more shall make

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1 all payments required by rules of the Department by electronic

2 funds transfer. Beginning October 1, 2000, a taxpayer who has

3 an annual tax liability of $200,000 or more shall make all

4 payments required by rules of the Department by electronic

5 funds transfer. The term "annual tax liability" shall be the

6 sum of the taxpayer's liabilities under this Act, and under all

7 other State and local occupation and use tax laws administered

8 by the Department, for the immediately preceding calendar year.

9 The term "average monthly tax liability" means the sum of the

10 taxpayer's liabilities under this Act, and under all other

11 State and local occupation and use tax laws administered by the

12 Department, for the immediately preceding calendar year

13 divided by 12. Beginning on October 1, 2002, a taxpayer who has

14 a tax liability in the amount set forth in subsection (b) of

15 Section 2505-210 of the Department of Revenue Law shall make

16 all payments required by rules of the Department by electronic

17 funds transfer.

18 Before August 1 of each year beginning in 1993, the

19 Department shall notify all taxpayers required to make payments

20 by electronic funds transfer. All taxpayers required to make

21 payments by electronic funds transfer shall make those payments

22 for a minimum of one year beginning on October 1.

23 Any taxpayer not required to make payments by electronic

24 funds transfer may make payments by electronic funds transfer

25 with the permission of the Department.

26 All taxpayers required to make payment by electronic funds

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1 transfer and any taxpayers authorized to voluntarily make

2 payments by electronic funds transfer shall make those payments

3 in the manner authorized by the Department.

4 The Department shall adopt such rules as are necessary to

5 effectuate a program of electronic funds transfer and the

6 requirements of this Section.

7 Where a serviceman collects the tax with respect to the

8 selling price of tangible personal property which he sells and

9 the purchaser thereafter returns such tangible personal

10 property and the serviceman refunds the selling price thereof

11 to the purchaser, such serviceman shall also refund, to the

12 purchaser, the tax so collected from the purchaser. When filing

13 his return for the period in which he refunds such tax to the

14 purchaser, the serviceman may deduct the amount of the tax so

15 refunded by him to the purchaser from any other Service

16 Occupation Tax, Service Use Tax, Retailers' Occupation Tax or

17 Use Tax which such serviceman may be required to pay or remit

18 to the Department, as shown by such return, provided that the

19 amount of the tax to be deducted shall previously have been

20 remitted to the Department by such serviceman. If the

21 serviceman shall not previously have remitted the amount of

22 such tax to the Department, he shall be entitled to no

23 deduction hereunder upon refunding such tax to the purchaser.

24 If experience indicates such action to be practicable, the

25 Department may prescribe and furnish a combination or joint

26 return which will enable servicemen, who are required to file

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1 returns hereunder and also under the Retailers' Occupation Tax

2 Act, the Use Tax Act or the Service Use Tax Act, to furnish all

3 the return information required by all said Acts on the one

4 form.

5 Where the serviceman has more than one business registered

6 with the Department under separate registrations hereunder,

7 such serviceman shall file separate returns for each registered

8 business.

9 Beginning January 1, 1990, each month the Department shall

10 pay into the Local Government Tax Fund the revenue realized for

11 the preceding month from the 1% tax on sales of food for human

12 consumption which is to be consumed off the premises where it

13 is sold (other than alcoholic beverages, soft drinks and food

14 which has been prepared for immediate consumption) and

15 prescription and nonprescription medicines, drugs, medical

16 appliances, products classified as Class III medical devices by

17 the United States Food and Drug Administration that are used

18 for cancer treatment pursuant to a prescription, as well as any

19 accessories and components related to those devices, and

20 insulin, urine testing materials, syringes and needles used by

21 diabetics.

22 Beginning January 1, 1990, each month the Department shall

23 pay into the County and Mass Transit District Fund 4% of the

24 revenue realized for the preceding month from the 6.25% general

25 rate.

26 Beginning August 1, 2000, each month the Department shall

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1 pay into the County and Mass Transit District Fund 20% of the

2 net revenue realized for the preceding month from the 1.25%

3 rate on the selling price of motor fuel and gasohol.

4 Beginning January 1, 1990, each month the Department shall

5 pay into the Local Government Tax Fund 16% of the revenue

6 realized for the preceding month from the 6.25% general rate on

7 transfers of tangible personal property.

8 Beginning August 1, 2000, each month the Department shall

9 pay into the Local Government Tax Fund 80% of the net revenue

10 realized for the preceding month from the 1.25% rate on the

11 selling price of motor fuel and gasohol.

12 Beginning October 1, 2009, each month the Department shall

13 pay into the Capital Projects Fund an amount that is equal to

14 an amount estimated by the Department to represent 80% of the

15 net revenue realized for the preceding month from the sale of

16 candy, grooming and hygiene products, and soft drinks that had

17 been taxed at a rate of 1% prior to September 1, 2009 but that

18 are now taxed at 6.25%.

19 Beginning July 1, 2013, each month the Department shall pay

20 into the Underground Storage Tank Fund from the proceeds

21 collected under this Act, the Use Tax Act, the Service Use Tax

22 Act, and the Retailers' Occupation Tax Act an amount equal to

23 the average monthly deficit in the Underground Storage Tank

24 Fund during the prior year, as certified annually by the

25 Illinois Environmental Protection Agency, but the total

26 payment into the Underground Storage Tank Fund under this Act,

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1 the Use Tax Act, the Service Use Tax Act, and the Retailers'

2 Occupation Tax Act shall not exceed $18,000,000 in any State

3 fiscal year. As used in this paragraph, the "average monthly

4 deficit" shall be equal to the difference between the average

5 monthly claims for payment by the fund and the average monthly

6 revenues deposited into the fund, excluding payments made

7 pursuant to this paragraph.

8 Beginning July 1, 2015, of the remainder of the moneys

9 received by the Department under the Use Tax Act, the Service

10 Use Tax Act, this Act, and the Retailers' Occupation Tax Act,

11 each month the Department shall deposit $500,000 into the State

12 Crime Laboratory Fund.

13 Of the remainder of the moneys received by the Department

14 pursuant to this Act, (a) 1.75% thereof shall be paid into the

15 Build Illinois Fund and (b) prior to July 1, 1989, 2.2% and on

16 and after July 1, 1989, 3.8% thereof shall be paid into the

17 Build Illinois Fund; provided, however, that if in any fiscal

18 year the sum of (1) the aggregate of 2.2% or 3.8%, as the case

19 may be, of the moneys received by the Department and required

20 to be paid into the Build Illinois Fund pursuant to Section 3

21 of the Retailers' Occupation Tax Act, Section 9 of the Use Tax

22 Act, Section 9 of the Service Use Tax Act, and Section 9 of the

23 Service Occupation Tax Act, such Acts being hereinafter called

24 the "Tax Acts" and such aggregate of 2.2% or 3.8%, as the case

25 may be, of moneys being hereinafter called the "Tax Act

26 Amount", and (2) the amount transferred to the Build Illinois

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1 Fund from the State and Local Sales Tax Reform Fund shall be

2 less than the Annual Specified Amount (as defined in Section 3

3 of the Retailers' Occupation Tax Act), an amount equal to the

4 difference shall be immediately paid into the Build Illinois

5 Fund from other moneys received by the Department pursuant to

6 the Tax Acts; and further provided, that if on the last

7 business day of any month the sum of (1) the Tax Act Amount

8 required to be deposited into the Build Illinois Account in the

9 Build Illinois Fund during such month and (2) the amount

10 transferred during such month to the Build Illinois Fund from

11 the State and Local Sales Tax Reform Fund shall have been less

12 than 1/12 of the Annual Specified Amount, an amount equal to

13 the difference shall be immediately paid into the Build

14 Illinois Fund from other moneys received by the Department

15 pursuant to the Tax Acts; and, further provided, that in no

16 event shall the payments required under the preceding proviso

17 result in aggregate payments into the Build Illinois Fund

18 pursuant to this clause (b) for any fiscal year in excess of

19 the greater of (i) the Tax Act Amount or (ii) the Annual

20 Specified Amount for such fiscal year; and, further provided,

21 that the amounts payable into the Build Illinois Fund under

22 this clause (b) shall be payable only until such time as the

23 aggregate amount on deposit under each trust indenture securing

24 Bonds issued and outstanding pursuant to the Build Illinois

25 Bond Act is sufficient, taking into account any future

26 investment income, to fully provide, in accordance with such

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1 indenture, for the defeasance of or the payment of the

2 principal of, premium, if any, and interest on the Bonds

3 secured by such indenture and on any Bonds expected to be

4 issued thereafter and all fees and costs payable with respect

5 thereto, all as certified by the Director of the Bureau of the

6 Budget (now Governor's Office of Management and Budget). If on

7 the last business day of any month in which Bonds are

8 outstanding pursuant to the Build Illinois Bond Act, the

9 aggregate of the moneys deposited in the Build Illinois Bond

10 Account in the Build Illinois Fund in such month shall be less

11 than the amount required to be transferred in such month from

12 the Build Illinois Bond Account to the Build Illinois Bond

13 Retirement and Interest Fund pursuant to Section 13 of the

14 Build Illinois Bond Act, an amount equal to such deficiency

15 shall be immediately paid from other moneys received by the

16 Department pursuant to the Tax Acts to the Build Illinois Fund;

17 provided, however, that any amounts paid to the Build Illinois

18 Fund in any fiscal year pursuant to this sentence shall be

19 deemed to constitute payments pursuant to clause (b) of the

20 preceding sentence and shall reduce the amount otherwise

21 payable for such fiscal year pursuant to clause (b) of the

22 preceding sentence. The moneys received by the Department

23 pursuant to this Act and required to be deposited into the

24 Build Illinois Fund are subject to the pledge, claim and charge

25 set forth in Section 12 of the Build Illinois Bond Act.

26 Subject to payment of amounts into the Build Illinois Fund

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1 as provided in the preceding paragraph or in any amendment

2 thereto hereafter enacted, the following specified monthly

3 installment of the amount requested in the certificate of the

4 Chairman of the Metropolitan Pier and Exposition Authority

5 provided under Section 8.25f of the State Finance Act, but not

6 in excess of the sums designated as "Total Deposit", shall be

7 deposited in the aggregate from collections under Section 9 of

8 the Use Tax Act, Section 9 of the Service Use Tax Act, Section

9 9 of the Service Occupation Tax Act, and Section 3 of the

10 Retailers' Occupation Tax Act into the McCormick Place

11 Expansion Project Fund in the specified fiscal years.

12	`Fiscal Year`	`Total Deposit`
13	`1993`	`$0`
14	`1994`	`53,000,000`
15	`1995`	`58,000,000`
16	`1996`	`61,000,000`
17	`1997`	`64,000,000`
18	`1998`	`68,000,000`
19	`1999`	`71,000,000`
20	`2000`	`75,000,000`
21	`2001`	`80,000,000`
22	`2002`	`93,000,000`
23	`2003`	`99,000,000`
24	`2004`	`103,000,000`
25	`2005`	`108,000,000`

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1	`2006`	`113,000,000`
2	`2007`	`119,000,000`
3	`2008`	`126,000,000`
4	`2009`	`132,000,000`
5	`2010`	`139,000,000`
6	`2011`	`146,000,000`
7	`2012`	`153,000,000`
8	`2013`	`161,000,000`
9	`2014`	`170,000,000`
10	`2015`	`179,000,000`
11	`2016`	`189,000,000`
12	`2017`	`199,000,000`
13	`2018`	`210,000,000`
14	`2019`	`221,000,000`
15	`2020`	`233,000,000`
16	`2021`	`246,000,000`
17	`2022`	`260,000,000`
18	`2023`	`275,000,000`
19	`2024`	`275,000,000`
20	`2025`	`275,000,000`
21	`2026`	`279,000,000`
22	`2027`	`292,000,000`
23	`2028`	`307,000,000`
24	`2029`	`322,000,000`
25	`2030`	`338,000,000`
26	`2031`	`350,000,000`

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1	`2032`	`350,000,000`
2	`and`
3	`each fiscal year`
4	`thereafter that bonds`
5	`are outstanding under`
6	`Section 13.2 of the`
7	`Metropolitan Pier and`
8	`Exposition Authority Act,`
9	`but not after fiscal year 2060.`

10 Beginning July 20, 1993 and in each month of each fiscal

11 year thereafter, one-eighth of the amount requested in the

12 certificate of the Chairman of the Metropolitan Pier and

13 Exposition Authority for that fiscal year, less the amount

14 deposited into the McCormick Place Expansion Project Fund by

15 the State Treasurer in the respective month under subsection

16 (g) of Section 13 of the Metropolitan Pier and Exposition

17 Authority Act, plus cumulative deficiencies in the deposits

18 required under this Section for previous months and years,

19 shall be deposited into the McCormick Place Expansion Project

20 Fund, until the full amount requested for the fiscal year, but

21 not in excess of the amount specified above as "Total Deposit",

22 has been deposited.

23 Subject to payment of amounts into the Build Illinois Fund

24 and the McCormick Place Expansion Project Fund pursuant to the

25 preceding paragraphs or in any amendments thereto hereafter

26 enacted, beginning July 1, 1993 and ending on September 30,

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1 2013, the Department shall each month pay into the Illinois Tax

2 Increment Fund 0.27% of 80% of the net revenue realized for the

3 preceding month from the 6.25% general rate on the selling

4 price of tangible personal property.

5 Subject to payment of amounts into the Build Illinois Fund

6 and the McCormick Place Expansion Project Fund pursuant to the

7 preceding paragraphs or in any amendments thereto hereafter

8 enacted, beginning with the receipt of the first report of

9 taxes paid by an eligible business and continuing for a 25-year

10 period, the Department shall each month pay into the Energy

11 Infrastructure Fund 80% of the net revenue realized from the

12 6.25% general rate on the selling price of Illinois-mined coal

13 that was sold to an eligible business. For purposes of this

14 paragraph, the term "eligible business" means a new electric

15 generating facility certified pursuant to Section 605-332 of

16 the Department of Commerce and Economic Opportunity Law of the

17 Civil Administrative Code of Illinois.

18 Subject to payment of amounts into the Build Illinois Fund,

19 the McCormick Place Expansion Project Fund, the Illinois Tax

20 Increment Fund, and the Energy Infrastructure Fund pursuant to

21 the preceding paragraphs or in any amendments to this Section

22 hereafter enacted, beginning on the first day of the first

23 calendar month to occur on or after the effective date of this

24 amendatory Act of the 98th General Assembly, each month, from

25 the collections made under Section 9 of the Use Tax Act,

26 Section 9 of the Service Use Tax Act, Section 9 of the Service

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1 Occupation Tax Act, and Section 3 of the Retailers' Occupation

2 Tax Act, the Department shall pay into the Tax Compliance and

3 Administration Fund, to be used, subject to appropriation, to

4 fund additional auditors and compliance personnel at the

5 Department of Revenue, an amount equal to 1/12 of 5% of 80% of

6 the cash receipts collected during the preceding fiscal year by

7 the Audit Bureau of the Department under the Use Tax Act, the

8 Service Use Tax Act, the Service Occupation Tax Act, the

9 Retailers' Occupation Tax Act, and associated local occupation

10 and use taxes administered by the Department.

11 Of the remainder of the moneys received by the Department

12 pursuant to this Act, 75% shall be paid into the General

13 Revenue Fund of the State Treasury and 25% shall be reserved in

14 a special account and used only for the transfer to the Common

15 School Fund as part of the monthly transfer from the General

16 Revenue Fund in accordance with Section 8a of the State Finance

17 Act.

18 The Department may, upon separate written notice to a

19 taxpayer, require the taxpayer to prepare and file with the

20 Department on a form prescribed by the Department within not

21 less than 60 days after receipt of the notice an annual

22 information return for the tax year specified in the notice.

23 Such annual return to the Department shall include a statement

24 of gross receipts as shown by the taxpayer's last Federal

25 income tax return. If the total receipts of the business as

26 reported in the Federal income tax return do not agree with the

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1 gross receipts reported to the Department of Revenue for the

2 same period, the taxpayer shall attach to his annual return a

3 schedule showing a reconciliation of the 2 amounts and the

4 reasons for the difference. The taxpayer's annual return to the

5 Department shall also disclose the cost of goods sold by the

6 taxpayer during the year covered by such return, opening and

7 closing inventories of such goods for such year, cost of goods

8 used from stock or taken from stock and given away by the

9 taxpayer during such year, pay roll information of the

10 taxpayer's business during such year and any additional

11 reasonable information which the Department deems would be

12 helpful in determining the accuracy of the monthly, quarterly

13 or annual returns filed by such taxpayer as hereinbefore

14 provided for in this Section.

15 If the annual information return required by this Section

16 is not filed when and as required, the taxpayer shall be liable

17 as follows:

18 (i) Until January 1, 1994, the taxpayer shall be liable

19 for a penalty equal to 1/6 of 1% of the tax due from such

20 taxpayer under this Act during the period to be covered by

21 the annual return for each month or fraction of a month

22 until such return is filed as required, the penalty to be

23 assessed and collected in the same manner as any other

24 penalty provided for in this Act.

25 (ii) On and after January 1, 1994, the taxpayer shall

26 be liable for a penalty as described in Section 3-4 of the

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1 Uniform Penalty and Interest Act.

2 The chief executive officer, proprietor, owner or highest

3 ranking manager shall sign the annual return to certify the

4 accuracy of the information contained therein. Any person who

5 willfully signs the annual return containing false or

6 inaccurate information shall be guilty of perjury and punished

7 accordingly. The annual return form prescribed by the

8 Department shall include a warning that the person signing the

9 return may be liable for perjury.

10 The foregoing portion of this Section concerning the filing

11 of an annual information return shall not apply to a serviceman

12 who is not required to file an income tax return with the

13 United States Government.

14 As soon as possible after the first day of each month, upon

15 certification of the Department of Revenue, the Comptroller

16 shall order transferred and the Treasurer shall transfer from

17 the General Revenue Fund to the Motor Fuel Tax Fund an amount

18 equal to 1.7% of 80% of the net revenue realized under this Act

19 for the second preceding month. Beginning April 1, 2000, this

20 transfer is no longer required and shall not be made.

21 Net revenue realized for a month shall be the revenue

22 collected by the State pursuant to this Act, less the amount

23 paid out during that month as refunds to taxpayers for

24 overpayment of liability.

25 For greater simplicity of administration, it shall be

26 permissible for manufacturers, importers and wholesalers whose

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1 products are sold by numerous servicemen in Illinois, and who

2 wish to do so, to assume the responsibility for accounting and

3 paying to the Department all tax accruing under this Act with

4 respect to such sales, if the servicemen who are affected do

5 not make written objection to the Department to this

6 arrangement.

7 (Source: P.A. 98-24, eff. 6-19-13; 98-109, eff. 7-25-13;

8 98-298, eff. 8-9-13; 98-496, eff. 1-1-14; 98-756, eff. 7-16-14;

9 98-1098, eff. 8-26-14; 99-352, eff. 8-12-15; 99-858, eff.

10 8-19-16.)

11 Section 30-35. The Retailers' Occupation Tax Act is amended

12 by changing Sections 1, 2, 2-5, 2-10, 2-10.5, 2-12, 2-45, 2-55,

13 2a, 2b, 2c, 3, 7, and 13 and by adding Section 1b as follows:

14 (35 ILCS 120/1) (from Ch. 120, par. 440)

15 Sec. 1. Definitions. "Sale at retail" means any transfer of

16 the ownership of or title to tangible personal property to a

17 purchaser or the performance of a taxable service for a

18 purchaser, for the purpose of use or consumption, and not for

19 the purpose of resale in any form as tangible personal property

20 or taxable service to the extent not first subjected to a use

21 for which it was purchased, for a valuable consideration:

22 Provided that the propertyor service purchased is deemed to be

23 purchased for the purpose of resale, despite first being used,

24 to the extent to which it is resold as an ingredient of an

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1 intentionally produced product or byproduct of manufacturing

2 or otherwise transferred to the purchaser of tangible personal

3 property or taxable service. For this purpose, slag produced as

4 an incident to manufacturing pig iron or steel and sold is

5 considered to be an intentionally produced byproduct of

6 manufacturing. Transactions whereby the possession of the

7 property is transferred but the seller retains the title as

8 security for payment of the selling price shall be deemed to be

9 sales.

10 "Sale at retail" shall be construed to include any transfer

11 of the ownership of or title to tangible personal property to a

12 purchaser or the performance of a taxable service for a

13 purchaser, for use or consumption by any other person to whom

14 such purchaser may transfer the tangible personal propertyor

15 taxable service without a valuable consideration, and to

16 include any transfer, whether made for or without a valuable

17 consideration, for resale in any form as tangible personal

18 property or taxable serviceunless made in compliance with

19 Section 2c of this Act.

20 Sales of tangible personal property, which property, to the

21 extent not first subjected to a use for which it was purchased,

22 as an ingredient or constituent, goes into and forms a part of

23 tangible personal property subsequently the subject of a "Sale

24 at retail", or transferred to a purchaser of a taxable service

25 that is a "sale at retail"are not sales at retail as defined

26 in this Act: Provided that the property purchased is deemed to

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1 be purchased for the purpose of resale, despite first being

2 used, to the extent to which it is resold as an ingredient of

3 an intentionally produced product or byproduct of

4 manufacturing.

5 "Sale at retail" shall be construed to include any Illinois

6 florist's sales transaction in which the purchase order is

7 received in Illinois by a florist and the sale is for use or

8 consumption, but the Illinois florist has a florist in another

9 state deliver the property to the purchaser or the purchaser's

10 donee in such other state.

11 Nonreusable tangible personal property that is used by

12 persons engaged in the business of operating a restaurant,

13 cafeteria, or drive-in is a sale for resale when it is

14 transferred to customers in the ordinary course of business as

15 part of the sale of food or beverages and is used to deliver,

16 package, or consume food or beverages, regardless of where

17 consumption of the food or beverages occurs. Examples of those

18 items include, but are not limited to nonreusable, paper and

19 plastic cups, plates, baskets, boxes, sleeves, buckets or other

20 containers, utensils, straws, placemats, napkins, doggie bags,

21 and wrapping or packaging materials that are transferred to

22 customers as part of the sale of food or beverages in the

23 ordinary course of business.

24 The purchase, employment and transfer of such tangible

25 personal property as newsprint and ink for the primary purpose

26 of conveying news (with or without other information) is not a

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1 purchase, use or sale of tangible personal property.

2 A person whose activities are organized and conducted

3 primarily as a not-for-profit service enterprise, and who

4 engages in selling tangible personal propertyor taxable

5 service at retail (whether to the public or merely to members

6 and their guests) is engaged in the business of selling

7 tangible personal propertyor taxable service at retail with

8 respect to such transactions, excepting only a person organized

9 and operated exclusively for charitable, religious or

10 educational purposes either (1), to the extent of sales by such

11 person to its members, students, patients or inmates of

12 tangible personal property or taxable serviceto be used

13 primarily for the purposes of such person, or (2), to the

14 extent of sales by such person of tangible personal propertyor

15 taxable servicewhich is not sold or offered for sale by

16 persons organized for profit. The selling of school books and

17 school supplies by schools at retail to students is not

18 "primarily for the purposes of" the school which does such

19 selling. The provisions of this paragraph shall not apply to

20 nor subject to taxation occasional dinners, socials or similar

21 activities of a person organized and operated exclusively for

22 charitable, religious or educational purposes, whether or not

23 such activities are open to the public.

24 A person who is the recipient of a grant or contract under

25 Title VII of the Older Americans Act of 1965 (P.L. 92-258) and

26 serves meals to participants in the federal Nutrition Program

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1 for the Elderly in return for contributions established in

2 amount by the individual participant pursuant to a schedule of

3 suggested fees as provided for in the federal Act is not

4 engaged in the business of selling tangible personal property

5 or taxable serviceat retail with respect to such transactions.

6 "Purchaser" means anyone who, through a sale at retail,

7 acquires the ownership of or title to tangible personal

8 property or taxable servicefor a valuable consideration.

9 "Reseller of motor fuel" means any person engaged in the

10 business of selling or delivering or transferring title of

11 motor fuel to another person other than for use or consumption.

12 No person shall act as a reseller of motor fuel within this

13 State without first being registered as a reseller pursuant to

14 Section 2c or a retailer pursuant to Section 2a.

15 "Selling price" or the "amount of sale" means the

16 consideration for a sale valued in money whether received in

17 money or otherwise, including cash, credits, property, other

18 than as hereinafter provided, and services, but not including

19 the value of or credit given for traded-in tangible personal

20 property where the item that is traded-in is of like kind and

21 character as that which is being sold, and shall be determined

22 without any deduction on account of the cost of the property

23 sold, the cost of materials used, labor or service cost or any

24 other expense whatsoever, but does not include charges that are

25 added to prices by sellers on account of the seller's tax

26 liability under this Act, or on account of the seller's duty to

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1 collect, from the purchaser, the tax that is imposed by the Use

2 Tax Act, or, except as otherwise provided with respect to any

3 cigarette tax imposed by a home rule unit, on account of the

4 seller's tax liability under any local occupation tax

5 administered by the Department, or, except as otherwise

6 provided with respect to any cigarette tax imposed by a home

7 rule unit on account of the seller's duty to collect, from the

8 purchasers, the tax that is imposed under any local use tax

9 administered by the Department. Effective December 1, 1985,

10 "selling price" shall include charges that are added to prices

11 by sellers on account of the seller's tax liability under the

12 Cigarette Tax Act, on account of the sellers' duty to collect,

13 from the purchaser, the tax imposed under the Cigarette Use Tax

14 Act, and on account of the seller's duty to collect, from the

15 purchaser, any cigarette tax imposed by a home rule unit.

16 Notwithstanding any law to the contrary, for any motor

17 vehicle, as defined in Section 1-146 of the Vehicle Code, that

18 is sold on or after January 1, 2015 for the purpose of leasing

19 the vehicle for a defined period that is longer than one year

20 and (1) is a motor vehicle of the second division that: (A) is

21 a self-contained motor vehicle designed or permanently

22 converted to provide living quarters for recreational,

23 camping, or travel use, with direct walk through access to the

24 living quarters from the driver's seat; (B) is of the van

25 configuration designed for the transportation of not less than

26 7 nor more than 16 passengers; or (C) has a gross vehicle

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1 weight rating of 8,000 pounds or less or (2) is a motor vehicle

2 of the first division, "selling price" or "amount of sale"

3 means the consideration received by the lessor pursuant to the

4 lease contract, including amounts due at lease signing and all

5 monthly or other regular payments charged over the term of the

6 lease. Also included in the selling price is any amount

7 received by the lessor from the lessee for the leased vehicle

8 that is not calculated at the time the lease is executed,

9 including, but not limited to, excess mileage charges and

10 charges for excess wear and tear. For sales that occur in

11 Illinois, with respect to any amount received by the lessor

12 from the lessee for the leased vehicle that is not calculated

13 at the time the lease is executed, the lessor who purchased the

14 motor vehicle does not incur the tax imposed by the Use Tax Act

15 on those amounts, and the retailer who makes the retail sale of

16 the motor vehicle to the lessor is not required to collect the

17 tax imposed by the Use Tax Act or to pay the tax imposed by this

18 Act on those amounts. However, the lessor who purchased the

19 motor vehicle assumes the liability for reporting and paying

20 the tax on those amounts directly to the Department in the same

21 form (Illinois Retailers' Occupation Tax, and local retailers'

22 occupation taxes, if applicable) in which the retailer would

23 have reported and paid such tax if the retailer had accounted

24 for the tax to the Department. For amounts received by the

25 lessor from the lessee that are not calculated at the time the

26 lease is executed, the lessor must file the return and pay the

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1 tax to the Department by the due date otherwise required by

2 this Act for returns other than transaction returns. If the

3 retailer is entitled under this Act to a discount for

4 collecting and remitting the tax imposed under this Act to the

5 Department with respect to the sale of the motor vehicle to the

6 lessor, then the right to the discount provided in this Act

7 shall be transferred to the lessor with respect to the tax paid

8 by the lessor for any amount received by the lessor from the

9 lessee for the leased vehicle that is not calculated at the

10 time the lease is executed; provided that the discount is only

11 allowed if the return is timely filed and for amounts timely

12 paid. The "selling price" of a motor vehicle that is sold on or

13 after January 1, 2015 for the purpose of leasing for a defined

14 period of longer than one year shall not be reduced by the

15 value of or credit given for traded-in tangible personal

16 property owned by the lessor, nor shall it be reduced by the

17 value of or credit given for traded-in tangible personal

18 property owned by the lessee, regardless of whether the

19 trade-in value thereof is assigned by the lessee to the lessor.

20 In the case of a motor vehicle that is sold for the purpose of

21 leasing for a defined period of longer than one year, the sale

22 occurs at the time of the delivery of the vehicle, regardless

23 of the due date of any lease payments. A lessor who incurs a

24 Retailers' Occupation Tax liability on the sale of a motor

25 vehicle coming off lease may not take a credit against that

26 liability for the Use Tax the lessor paid upon the purchase of

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1 the motor vehicle (or for any tax the lessor paid with respect

2 to any amount received by the lessor from the lessee for the

3 leased vehicle that was not calculated at the time the lease

4 was executed) if the selling price of the motor vehicle at the

5 time of purchase was calculated using the definition of

6 "selling price" as defined in this paragraph. Notwithstanding

7 any other provision of this Act to the contrary, lessors shall

8 file all returns and make all payments required under this

9 paragraph to the Department by electronic means in the manner

10 and form as required by the Department. This paragraph does not

11 apply to leases of motor vehicles for which, at the time the

12 lease is entered into, the term of the lease is not a defined

13 period, including leases with a defined initial period with the

14 option to continue the lease on a month-to-month or other basis

15 beyond the initial defined period.

16 The phrase "like kind and character" shall be liberally

17 construed (including but not limited to any form of motor

18 vehicle for any form of motor vehicle, or any kind of farm or

19 agricultural implement for any other kind of farm or

20 agricultural implement), while not including a kind of item

21 which, if sold at retail by that retailer, would be exempt from

22 retailers' occupation tax and use tax as an isolated or

23 occasional sale.

24 "Gross receipts" from the sales of tangible personal

25 property or taxable serviceat retail means the total selling

26 price or the amount of such sales, as hereinbefore defined. In

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1 the case of charge and time sales, the amount thereof shall be

2 included only as and when payments are received by the seller.

3 Receipts or other consideration derived by a seller from the

4 sale, transfer or assignment of accounts receivable to a wholly

5 owned subsidiary will not be deemed payments prior to the time

6 the purchaser makes payment on such accounts.

7 "Department" means the Department of Revenue.

8 "Person" means any natural individual, firm, partnership,

9 association, joint stock company, joint adventure, public or

10 private corporation, limited liability company, or a receiver,

11 executor, trustee, guardian or other representative appointed

12 by order of any court.

13 The isolated or occasional sale of tangible personal

14 property or taxable serviceat retail by a person who does not

15 hold himself out as being engaged (or who does not habitually

16 engage) in selling such tangible personal property or taxable

17 serviceat retail, or a sale through a bulk vending machine,

18 does not constitute engaging in a business of selling such

19 tangible personal property or taxable service at retail within

20 the meaning of this Act; provided that any person who is

21 engaged in a business which is not subject to the tax imposed

22 by this Act because of involving the sale of or a contract to

23 sell real estate or a construction contract to improve real

24 estate or a construction contract to engineer, install, and

25 maintain an integrated system of products, but who, in the

26 course of conducting such business, transfers tangible

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1 personal property to users or consumers in the finished form in

2 which it was purchased, and which does not become real estate

3 or was not engineered and installed, under any provision of a

4 construction contract or real estate sale or real estate sales

5 agreement entered into with some other person arising out of or

6 because of such nontaxable business, is engaged in the business

7 of selling tangible personal property at retail to the extent

8 of the value of the tangible personal property so transferred.

9 If, in such a transaction, a separate charge is made for the

10 tangible personal property so transferred, the value of such

11 property, for the purpose of this Act, shall be the amount so

12 separately charged, but not less than the cost of such property

13 to the transferor; if no separate charge is made, the value of

14 such property, for the purposes of this Act, is the cost to the

15 transferor of such tangible personal property. Construction

16 contracts for the improvement of real estate consisting of

17 engineering, installation, and maintenance of voice, data,

18 video, security, and all telecommunication systems do not

19 constitute engaging in a business of selling tangible personal

20 property or taxable serviceat retail within the meaning of

21 this Act if they are sold at one specified contract price.

22 A person who holds himself or herself out as being engaged

23 (or who habitually engages) in selling tangible personal

24 property or taxable serviceat retail is a person engaged in

25 the business of selling tangible personal property or taxable

26 serviceat retail hereunder with respect to such sales (and not

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1 primarily in a nontaxableservice occupation) notwithstanding

2 the fact that such person designs and produces such tangible

3 personal property or taxable service on special order for the

4 purchaser and in such a way as to render the propertyor

5 serviceof value only to such purchaser, if such tangible

6 personal property or taxable service so produced on special

7 order serves substantially the same function as stock or

8 standard items of tangible personal propertyor taxable service

9 that are sold at retail.

10 Persons who engage in the business of transferring tangible

11 personal propertyor taxable service upon the redemption of

12 trading stamps are engaged in the business of selling such

13 property or service at retail and shall be liable for and shall

14 pay the tax imposed by this Act on the basis of the retail

15 value of the propertyor service transferred upon redemption of

16 such stamps.

17 "Bulk vending machine" means a vending machine, containing

18 unsorted confections, nuts, toys, or other items designed

19 primarily to be used or played with by children which, when a

20 coin or coins of a denomination not larger than $0.50 are

21 inserted, are dispensed in equal portions, at random and

22 without selection by the customer.

23 (Source: P.A. 98-628, eff. 1-1-15; 98-1080, eff. 8-26-14.)

24 (35 ILCS 120/1b new)

25 Sec. 1b. Taxable service. Beginning January 1, 2018,

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1 "taxable service" has the meaning provided in Section 2a-2 of

2 the Use Tax Act.

3 (35 ILCS 120/2) (from Ch. 120, par. 441)

4 Sec. 2. Tax imposed. A tax is imposed upon persons engaged

5 in the business of selling at retailtaxable service or

6 tangible personal property, or both,including computer

7 software, and including photographs, negatives, and positives

8 that are the product of photoprocessing, but not including

9 products of photoprocessing produced for use in motion pictures

10 for public commercial exhibition. Beginning January 1, 2001,

11 prepaid telephone calling arrangements shall be considered

12 tangible personal property subject to the tax imposed under

13 this Act regardless of the form in which those arrangements may

14 be embodied, transmitted, or fixed by any method now known or

15 hereafter developed. Sales of (1) electricity delivered to

16 customers by wire; (2) natural or artificial gas that is

17 delivered to customers through pipes, pipelines, or mains; and

18 (3) water that is delivered to customers through pipes,

19 pipelines, or mains are not subject to tax under this Act. The

20 provisions of this amendatory Act of the 98th General Assembly

21 are declaratory of existing law as to the meaning and scope of

22 this Act.

23 (Source: P.A. 98-583, eff. 1-1-14.)

24 (35 ILCS 120/2-5)

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1 Sec. 2-5. Exemptions. Gross receipts from proceeds from the

2 sale of the following tangible personal propertyand taxable

3 servicesare exempt from the tax imposed by this Act:

4 (1) Farm chemicals.

5 (2) Farm machinery and equipment, both new and used,

6 including that manufactured on special order, certified by the

7 purchaser to be used primarily for production agriculture or

8 State or federal agricultural programs, including individual

9 replacement parts for the machinery and equipment, including

10 machinery and equipment purchased for lease, and including

11 implements of husbandry defined in Section 1-130 of the

12 Illinois Vehicle Code, farm machinery and agricultural

13 chemical and fertilizer spreaders, and nurse wagons required to

14 be registered under Section 3-809 of the Illinois Vehicle Code,

15 but excluding other motor vehicles required to be registered

16 under the Illinois Vehicle Code. Horticultural polyhouses or

17 hoop houses used for propagating, growing, or overwintering

18 plants shall be considered farm machinery and equipment under

19 this item (2). Agricultural chemical tender tanks and dry boxes

20 shall include units sold separately from a motor vehicle

21 required to be licensed and units sold mounted on a motor

22 vehicle required to be licensed, if the selling price of the

23 tender is separately stated.

24 Farm machinery and equipment shall include precision

25 farming equipment that is installed or purchased to be

26 installed on farm machinery and equipment including, but not

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1 limited to, tractors, harvesters, sprayers, planters, seeders,

2 or spreaders. Precision farming equipment includes, but is not

3 limited to, soil testing sensors, computers, monitors,

4 software, global positioning and mapping systems, and other

5 such equipment.

6 Farm machinery and equipment also includes computers,

7 sensors, software, and related equipment used primarily in the

8 computer-assisted operation of production agriculture

9 facilities, equipment, and activities such as, but not limited

10 to, the collection, monitoring, and correlation of animal and

11 crop data for the purpose of formulating animal diets and

12 agricultural chemicals. This item (2) is exempt from the

13 provisions of Section 2-70.

14 (3) Until July 1, 2003, distillation machinery and

15 equipment, sold as a unit or kit, assembled or installed by the

16 retailer, certified by the user to be used only for the

17 production of ethyl alcohol that will be used for consumption

18 as motor fuel or as a component of motor fuel for the personal

19 use of the user, and not subject to sale or resale.

20 (4) Until July 1, 2003 and beginning again September 1,

21 2004 through August 30, 2014, graphic arts machinery and

22 equipment, including repair and replacement parts, both new and

23 used, and including that manufactured on special order or

24 purchased for lease, certified by the purchaser to be used

25 primarily for graphic arts production. Equipment includes

26 chemicals or chemicals acting as catalysts but only if the

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1 chemicals or chemicals acting as catalysts effect a direct and

2 immediate change upon a graphic arts product.Beginning on July

3 1, 2017, graphic arts machinery and equipment is included in

4 the manufacturing and assembling machinery and equipment

5 exemption under paragraph (14).

6 (5) A motor vehicle that is used for automobile renting, as

7 defined in the Automobile Renting Occupation and Use Tax Act.

8 This paragraph is exempt from the provisions of Section 2-70.

9 (6) Personal property sold by a teacher-sponsored student

10 organization affiliated with an elementary or secondary school

11 located in Illinois.

12 (7) Until July 1, 2003, proceeds of that portion of the

13 selling price of a passenger car the sale of which is subject

14 to the Replacement Vehicle Tax.

15 (8) Personal property sold to an Illinois county fair

16 association for use in conducting, operating, or promoting the

17 county fair.

18 (9) Personal property sold to or taxable service performed

19 fora not-for-profit arts or cultural organization that

20 establishes, by proof required by the Department by rule, that

21 it has received an exemption under Section 501(c)(3) of the

22 Internal Revenue Code and that is organized and operated

23 primarily for the presentation or support of arts or cultural

24 programming, activities, or services. These organizations

25 include, but are not limited to, music and dramatic arts

26 organizations such as symphony orchestras and theatrical

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1 groups, arts and cultural service organizations, local arts

2 councils, visual arts organizations, and media arts

3 organizations. On and after the effective date of this

4 amendatory Act of the 92nd General Assembly, however, an entity

5 otherwise eligible for this exemption shall not make tax-free

6 purchases unless it has an active identification number issued

7 by the Department.

8 (10) Personal property sold or taxable service performed by

9 a corporation, society, association, foundation, institution,

10 or organization, other than a limited liability company, that

11 is organized and operated as a not-for-profit service

12 enterprise for the benefit of persons 65 years of age or older

13 if the personal property was not purchased by the enterprise

14 for the purpose of resale by the enterprise.

15 (11) Personal property or taxable service sold to a

16 governmental body, to a corporation, society, association,

17 foundation, or institution organized and operated exclusively

18 for charitable, religious, or educational purposes, or to a