Sen. Toi W. Hutchinson

Filed: 5/22/2017

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1 AMENDMENT TO SENATE BILL 9

2 AMENDMENT NO. ______. Amend Senate Bill 9 immediately above

3 the enacting clause, by inserting the following:

4 "WHEREAS, the changes made by this Act are made under

5 subsection (a) of Section 3 of Article IX of the Illinois

6 Constitution. If there are future changes made to subsection

7 (a) of Section 3 of Article IX of the Illinois Constitution,

8 then it may result in evaluating the taxes on income imposed by

9 this Act; therefore"; and

10 by replacing everything after the enacting clause with the

11 following:

12 "ARTICLE 5. BUDGET ECONOMIC STABILIZATION FUND ACT

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

14 Budget Economic Stabilization Fund Act.

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1 Section 5-5. Legislative intent.

2 The General Assembly finds that, in order to restore

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

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

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

6 tax structure, including the elimination or modification of

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

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

9 "Above-trend revenues" means general funds revenue

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

11 funds revenue collections.

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

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

14 Revenue Common School Special Account Fund.

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

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

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

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

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

20 other transfers and federal funds.

21 "Unpaid bills" means: pending vouchers approved for

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

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

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

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

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

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

3 Payment Act, by the Departments of Healthcare and Family

4 Services, Central Management Services, Human Services,

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

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

7 Fund, Common School Fund, Education Assistance Fund, Health

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

9 Relief Fund.

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

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

12 the Departments of Healthcare and Family Services, Central

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

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

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

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

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

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

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

20 31st.

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

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

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

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

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

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

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

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

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

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

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

8 the General Assembly from appropriating, additional moneys for

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

10 appropriations enacted are insufficient to meet the payment of

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

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

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

14 Revenue Fund, the amounts necessary for this payment.

15 Section 5-25. Transfers into the Budget Economic

16 Stabilization Fund.

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

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

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

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

21 the Budget Economic Stabilization Fund as an appropriation from

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

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

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

25 then this Section shall constitute a continuing appropriation

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

2 deposit.

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

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

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

6 collections estimated for the next fiscal year, transfers into

7 the Budget Economic Stabilization Fund are not required for

8 that fiscal year.

9 Section 5-30. Withdrawal from Budget Economic

10 Stabilization Fund.

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

12 fiscal year and within the limitations set forth in this

13 Section, the Comptroller and the Treasurer shall transfer the

14 amounts designated by the Governor from the Budget Economic

15 Stabilization Fund to general funds as specified by the

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

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

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

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

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

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

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

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

24 transferred may not exceed the limits set forth in subsection

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

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1 the Budget Economic Stabilization Fund to any of the general

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

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

4 general funds revenue collections as estimated at the time of

5 enactment of appropriations for the current fiscal year; the

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

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

8 transferred are to be spent within previously enacted

9 appropriations.

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

11 within a fiscal year, transfers or appropriations from the

12 Budget Economic Stabilization Fund for the current or next

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

14 (1) the General Assembly projects that general funds

15 revenue collections for the current or next fiscal year are

16 less than the general funds revenue collections as

17 estimated at the time of enactment of appropriations for

18 the current fiscal year for the preceding year;

19 (2) the General Assembly finds that general funds

20 revenue collections have remained stagnant or dropped

21 during 2 consecutive fiscal quarters within the preceding

22 12 months as compared to the corresponding 2 fiscal

23 quarters of the prior fiscal year; or

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

25 Illinois has remained stagnant or dropped over 2

26 consecutive quarters within the preceding 12 months, as

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1 published in the Federal Reserve Bank of Philadelphia's

2 publication entitled "State Coincident Indexes" or its

3 successor publication.

4 (c) Transfers or appropriations from the Budget Economic

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

6 lesser of:

7 (1) 50% of the Budget Economic Stabilization Fund's

8 balance;

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

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

11 revenue collections, as projected by the Commission on

12 Government Forecasting and Accountability to be received

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

14 revenue collections projection for the current fiscal year

15 presented to the General Assembly by the Commission on

16 Government Forecasting and Accountability; or

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

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

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

20 received in the next fiscal year as projected by the

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

22 collections projection for the current fiscal year as

23 projected by the Governor.

24 Section 5-35. Fund creation.

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

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

2 appropriated or transferred to that Fund as provided in Section

3 5-30 of this Act and as otherwise provided by law. All earnings

4 on Budget Economic Stabilization Fund investments shall be

5 deposited into that Fund.

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

7 special fund in the State Treasury consisting of moneys

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

9 25 of this Act and as otherwise provided by law. All earnings

10 on Bill Backlog Payment Fund investments shall be deposited

11 into that Fund.

12 ARTICLE 10. VIDEO SERVICE TAX MODERNIZATION

13 Section 10-1. Short title. This Act may be cited as the

14 Video Service Tax Modernization Act.

15 Section 10-5. Application. This Act applies to the

16 provision of direct-to-home satellite service, direct

17 broadcast satellite service, and digital audio-visual works on

18 or after the effective date of this Act.

19 This Act does not apply to: (1) satellite radio service or

20 subscription radio service whereby a digital radio signal is

21 broadcast without any corresponding or related video

22 programming or services; or (2) a satellite television

23 transmission of simulcast horse races broadcast from or

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1 received at locations operated by an organization licensee, an

2 inter-track wagering licensee, or an inter-track wagering

3 location licensee licensed under the Illinois Horse Racing Act

4 of 1975.

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

6 "Department" means the Department of Revenue.

7 "Digital audio-visual works" means a series of related

8 images that, when shown in succession, impart an impression of

9 motion, together with accompanying sounds, if any, sold to an

10 end user with rights of less than permanent use. "Digital

11 audio-visual works" does not include cable service provided by

12 a cable operator, as those terms are defined in 47 U.S.C. 522,

13 and does not include video service provided by a holder, as

14 those terms are defined in Article 21 of the Public Utilities

15 Act.

16 "Direct broadcast satellite service" means video services

17 transmitted or broadcast by satellite directly to the

18 subscriber's premises with the use of or accompanied by ground

19 receiving or distribution equipment, including, but not

20 limited to, infrastructure to provide Internet access used in

21 the transmission or broadcast of such video services, at the

22 subscriber's premises, but not in the uplink process to the

23 satellite, and includes, but is not limited to, the

24 retransmission of local broadcast television, the provision of

25 premium channels, other recurring monthly services, service

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1 and pay-per-view, video-on-demand, and other event-based

2 services.

3 "Direct-to-home satellite service" has the meaning given

4 to that term in Public Law No. 104-104, Title VI, Section

5 602(a), February 8, 1996, 110 Stat. 144 (reprinted at 47 U.S.C.

6 152).

7 "End user" means any person other than a person who

8 receives by contract a product transferred electronically for

9 further commercial broadcast, rebroadcast, transmission,

10 retransmission, licensing, relicensing, distribution,

11 redistribution, or exhibition of the product, in whole or in

12 part, to another person or persons.

13 "Gross revenue" means all consideration of any kind or

14 nature received by a provider, or an affiliate of the provider,

15 in connection with the provision of direct-to-home satellite

16 service, direct broadcast satellite service, or digital

17 audio-visual works to subscribers. "Gross revenue" does not

18 include:

19 (1) charges for the rental of equipment related to the

20 provision of direct-to-home satellite service, direct

21 broadcast satellite service, or digital audiovisual works;

22 (2) activation, installation, repair, or maintenance

23 charges or similar service charges related to the provision

24 of direct-to-home satellite service, direct broadcast

25 satellite service, or digital audio-visual works;

26 (3) service order charges, service termination

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1 charges, or any other administrative charges related to the

2 provision of direct-to-home satellite service, direct

3 broadcast satellite service, or digital audiovisual works;

4 (4) revenue not actually received, regardless of

5 whether it is billed, including, but not limited to, bad

6 debts;

7 (5) revenue received by an affiliate or other person in

8 exchange for supplying goods and services used by a

9 provider;

10 (6) the amount of any refunds, rebates, or discounts

11 made to subscribers, advertisers, or other persons;

12 (7) revenue from any service that is subject to tax

13 under the Service Occupation Tax Act, Retailers'

14 Occupation Tax Act, Service Use Tax Act, or Use Tax Act;

15 (8) the tax imposed by this Act or any other tax of

16 general applicability imposed on a provider or a purchaser

17 of direct-to-home satellite service, direct broadcast

18 satellite service, or digital audio-visual works by a

19 federal, State, or local governmental entity and required

20 to be collected by a person and remitted to the taxing

21 entity;

22 (9) late payment fees collected from subscribers;

23 (10) charges, other than those charges specifically

24 described in this Act, that are aggregated or bundled with

25 such specifically-described charges on a subscriber's

26 bill, if the provider can reasonably identify the charges

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1 in its books and records kept in the regular course of

2 business;

3 (11) revenue from advertising services; or

4 (12) charges that may not be taxed pursuant to the

5 federal Internet Tax Freedom Act.

6 "Permanent" means perpetual or for an indefinite or

7 unspecified length of time.

8 "Person" means a natural individual, firm, trust, estate,

9 partnership, association, joint stock company, joint venture,

10 corporation, or limited liability company, or a receiver,

11 trustee, guardian, or other representative appointed by order

12 of any court, and includes the federal and State governments,

13 including State universities created by statute, and

14 municipalities, counties, and other political subdivisions of

15 this State.

16 "Premises" means a residence or place of business of a

17 subscriber in this State.

18 "Provider" means a person who transmits, broadcasts,

19 sells, or distributes direct-to-home satellite service, direct

20 broadcast satellite service, or digital audio-visual works to

21 subscribers in the State.

22 "Subscriber" means a member of the general public who

23 receives direct-to-home satellite service, direct broadcast

24 satellite service, or digital audio-visual works from a

25 provider and does not further distribute the service in the

26 ordinary course of business.

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1 Section 10-15. Imposition of tax.

2 (a) A tax is imposed upon the act or privilege of providing

3 direct-to-home satellite service, direct broadcast satellite

4 service, or digital audio-visual works to a subscriber in this

5 State by any provider at the rate of 5% of the provider's gross

6 revenues derived from or attributable to that subscriber.

7 (b) For purposes of the tax imposed by subsection (a), a

8 subscriber is in this State if the subscriber's street address

9 representative of where the subscriber's use or access of the

10 direct-to-home satellite service, direct broadcast satellite

11 service, or digital audio visual work primarily occurs, which

12 must be the street address of the subscriber based on such

13 other information kept by the provider in the regular course of

14 its business.

15 (c) The tax imposed by subsection (a) may be passed through

16 to, and collected from, the provider's subscribers in Illinois.

17 To the extent allowed under federal or State law, a provider

18 may identify as a separate line item on each regular bill

19 issued to a subscriber the amount of the total bill assessed as

20 a tax under this Act.

21 (d) To prevent actual multi-state taxation upon the act or

22 privilege that is subject to taxation under this Act, any

23 taxpayer, upon proof that that taxpayer has paid a tax in

24 another state on such event, shall be allowed a credit against

25 the tax imposed in this Act to the extent of the amount of such

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1 tax properly due and paid in such other state. However, such

2 tax is not imposed on the act or privilege to the extent such

3 act or privilege may not, under the Constitution and statutes

4 of the United States, be made the subject of taxation by the

5 State.

6 Section 10-20. Remittances.

7 (a) On or before the twentieth day of each calendar month,

8 every provider of direct-to-home satellite service, direct

9 broadcast satellite service, or digital audio-visual works

10 that provides such service or services to a subscriber in this

11 State during the preceding calendar month shall file a return

12 with the Department, in a form prescribed by the Department,

13 stating:

14 (1) the name of the provider;

15 (2) the address of the provider's principal place of

16 business;

17 (3) the total amount of gross revenues received by the

18 provider during the preceding calendar month, quarter, or

19 year, as the case may be, from the provision of

20 direct-to-home satellite service, direct broadcast

21 satellite service, or digital audio-visual works during

22 that preceding calendar month, quarter, or year and upon

23 the basis of which the tax is imposed;

24 (4) the amount of tax due;

25 (5) the signature of the taxpayer; and

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1 (6) such other reasonable information as the

2 Department may require.

3 (b) If a taxpayer fails to sign a return within 30 days

4 after the proper notice and demand for signature by the

5 Department is received by the taxpayer, then the return shall

6 be considered valid and any amount shown to be due on the

7 return shall be deemed assessed.

8 (c) If the provider is otherwise required to file a monthly

9 return, and if the provider's average monthly tax liability to

10 the Department under this Act does not exceed $200, the

11 Department may authorize the provider's returns to be filed on

12 a quarter annual basis, with the return for January, February,

13 and March of a given year being due by April 20 of that year;

14 with the return for April, May, and June of a given year being

15 due by July 20 of that year; with the return for July, August,

16 and September of a given year being due by October 20 of that

17 year, and with the return for October, November, and December

18 of a given year being due by January 20 of the following year.

19 (d) If the provider is otherwise required to file a monthly

20 or quarterly return, and if the provider's average monthly tax

21 liability with the Department under this Act does not exceed

22 $50, the Department may authorize the provider's returns to be

23 filed on an annual basis, with the return for a given year

24 being due by January 20 of the following year.

25 (e) Those quarterly and annual returns shall be subject to

26 the same requirements as to form and substance as monthly

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1 returns.

2 (f) A taxpayer who has an annual tax liability in the

3 amount set forth in subsection (b) of Section 2505-210 of the

4 Department of Revenue Law shall make all payments required by

5 rules of the Department by electronic funds transfer.

6 Any taxpayer not required to make payments by electronic

7 funds transfer may make payments by electronic funds transfer

8 with the permission of the Department.

9 All taxpayers required to make payment by electronic funds

10 transfer and any taxpayers authorized to voluntarily make

11 payments by electronic funds transfer shall make those payments

12 in the manner authorized by the Department.

13 Section 10-25. Records.

14 (a) A provider on whom the tax is imposed by this Act shall

15 maintain the necessary records, and any other information

16 required by the Department, to determine the amount of the tax

17 that the provider is required to remit and any credit that the

18 provider is entitled to claim under this Act.

19 (b) The records shall be open at all times to inspection by

20 the Department.

21 Section 10-30. Rules. The Department is authorized to adopt

22 and enforce any reasonable rules and to prescribe such forms

23 relating to the administration and enforcement of this Act as

24 it may deem appropriate.

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1 Section 10-35. Incorporation of Retailers' Occupation Tax

2 Act and Uniform Penalty and Interest Act. All of the provisions

3 of Sections 4, 5, 5a, 5b, 5c, 5d, 5e, 5f, 5g, 5i, and 5j of the

4 Retailers' Occupation Tax Act, which are not inconsistent with

5 this Act, and the Uniform Penalty and Interest Act, shall

6 apply, as far as practicable, to the subject matter of this Act

7 to the same extent as if such provisions were included herein.

8 References in those incorporated Sections to taxpayers and to

9 persons engaged in the business of selling tangible personal

10 property at retail mean providers of direct-to-home satellite

11 service, direct broadcast satellite service, or digital

12 audio-visual works when used in this Act.

13 ARTICLE 15. ENTERTAINMENT TAX FAIRNESS ACT

14 Section 15-1. Short title. This Act may be cited as the

15 Entertainment Tax Fairness Act.

16 Section 15-5. Application. This Act applies to all

17 subscribers of entertainment in this State for the privilege to

18 witness, view, or otherwise enjoy the entertainment.

19 This Act does not apply to: (1) satellite radio service or

20 subscription radio service whereby a digital radio signal is

21 broadcast without any corresponding or related video

22 programming or services; or (2) a satellite television

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1 transmission of simulcast horse races broadcast from or

2 received at locations operated by an organization licensee, an

3 inter-track wagering licensee, or an inter-track wagering

4 location licensee licensed under the Illinois Horse Racing Act

5 of 1975.

6 Section 15-10. Definitions. As used in this Act:

7 "Cable service" has the meaning given to that term in item

8 (6) of 47 U.S.C. 522.

9 "Department" means the Department of Revenue.

10 "Digital audio-visual works service" means the

11 transmission of a series of related images that, when shown in

12 succession, impart an impression of motion, together with

13 accompanying sounds, if any, sold to an end user with rights of

14 less than permanent use. "Digital audio-visual works service"

15 does not include cable service or video service.

16 "Direct broadcast satellite service" means video services

17 transmitted or broadcast by satellite directly to the

18 subscriber's premises with the use of or accompanied by ground

19 receiving or distribution equipment, including, but not

20 limited to, infrastructure to provide Internet access used in

21 the transmission or broadcast of such video services, at the

22 subscriber's premises, but not in the uplink process to the

23 satellite, and includes, but is not limited to, the

24 retransmission of local broadcast television, the provision of

25 premium channels, other recurring monthly services, service

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1 and pay-per-view, video-on-demand, and other event-based

2 services.

3 "Direct-to-home satellite service" has the meaning given

4 to that term in Public Law No. 104-104, Title VI, Section

5 602(a), February 8, 1996, 110 Stat. 144 (reprinted at 47 U.S.C.

6 152).

7 "End user" means any person other than a person who

8 receives by contract a product transferred electronically for

9 further commercial broadcast, rebroadcast, transmission,

10 retransmission, licensing, relicensing, distribution,

11 redistribution, or exhibition of the product, in whole or in

12 part, to another person or persons.

13 "Entertainment" means any paid video programming whether

14 transmitted by cable service, direct-to-home satellite

15 service, direct broadcast satellite service, digital

16 audio-visual works service, or video service to a subscriber in

17 this State.

18 "Permanent" means perpetual or for an indefinite or

19 unspecified length of time.

20 "Provider" means a person who transmits, broadcasts,

21 sells, or distributes cable service, direct-to-home satellite

22 service, direct broadcast satellite service, digital

23 audio-visual works service, or video service to subscribers in

24 the State.

25 "Subscriber" means a member of the general public who

26 receives cable service, direct-to-home satellite service,

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1 direct broadcast satellite service, or digital audio-visual

2 works service, or video service from a provider and does not

3 further distribute the service in the ordinary course of

4 business.

5 "Video service" has the meaning given to that term in the

6 Cable and Video Competition Law of 2007 of the Public Utilities

7 Act.

8 Section 15-15. Imposition of tax.

9 (a) A tax is imposed upon the subscribers of entertainment

10 in this State at the rate of 1% of the charges paid for the

11 privilege to witness, view, or otherwise enjoy the

12 entertainment.

13 (b) For purposes of the tax imposed by subsection (a), a

14 subscriber is in this State if the subscriber's street address

15 is representative of where the subscriber's use or access of

16 the entertainment primarily occurs, which must be the street

17 address of the subscriber based on such other information kept

18 by the provider in the regular course of its business.

19 (c) The provider of the entertainment shall collect and

20 secure from each subscriber the tax imposed by this Act and

21 remit the tax to the Department as set forth in Section 15-20

22 of this Act.

23 Section 15-20. Remittances.

24 (a) On or before the twentieth day of each calendar month,

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1 every provider shall file a return with the Department, in a

2 form prescribed by the Department, stating:

3 (1) the name of the provider;

4 (2) the address of the provider's principal place of

5 business;

6 (3) the total amount of tax revenues collected by the

7 provider under this Act during the preceding calendar

8 month, quarter, or year, as the case may be, during that

9 preceding calendar month, quarter, or year and upon the

10 basis of which the tax is imposed;

11 (4) the amount of tax due;

12 (5) the signature of the provider; and

13 (6) such other reasonable information as the

14 Department may require.

15 (b) If a provider fails to sign a return within 30 days

16 after the proper notice and demand for signature by the

17 Department is received by the provider, then the return shall

18 be considered valid and any amount shown to be due on the

19 return shall be deemed assessed.

20 (c) If the provider is otherwise required to file a monthly

21 return, and if the amount collected by the provider under this

22 Act does not exceed $200, the Department may authorize the

23 provider's returns to be filed on a quarter annual basis, with

24 the return for January, February, and March of a given year

25 being due by April 20 of that year; with the return for April,

26 May, and June of a given year being due by July 20 of that year;

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1 with the return for July, August, and September of a given year

2 being due by October 20 of that 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 (d) If the provider is otherwise required to file a monthly

6 or quarterly return, and if the amount collected by the

7 provider under this Act does not exceed $50, the Department may

8 authorize the provider's returns to be filed on an annual

9 basis, with the return for a given year being due by January 20

10 of the following year.

11 (e) Those quarterly and annual returns shall be subject to

12 the same requirements as to form and substance as monthly

13 returns.

14 (f) A provider responsible for collecting and remitting the

15 amount set forth in subsection (b) of Section 2505-210 of the

16 Department of Revenue Law shall make all payments required by

17 rules of the Department by electronic funds transfer.

18 Any provider not required to make payments by electronic

19 funds transfer may make payments by electronic funds transfer

20 with the permission of the Department.

21 All providers required to make payment by electronic funds

22 transfer and any taxpayers authorized to voluntarily make

23 payments by electronic funds transfer shall make those payments

24 in the manner authorized by the Department.

25 Section 15-25. Records.

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1 (a) A provider subject to this Act shall maintain the

2 necessary records, and any other information required by the

3 Department, to determine the amount of the tax that the

4 provider is required to collect and remit and any credit that

5 the provider is entitled to claim under this Act.

6 (b) The records shall be open at all times to inspection by

7 the Department.

8 Section 15-30. Rules. The Department is authorized to adopt

9 and enforce any reasonable rules and to prescribe such forms

10 relating to the administration and enforcement of this Act as

11 it may deem appropriate.

12 Section 15-35. Incorporation of Retailers' Occupation Tax

13 Act and Uniform Penalty and Interest Act. All of the provisions

14 of Sections 4, 5, 5a, 5b, 5c, 5d, 5e, 5f, 5g, 5i, and 5j of the

15 Retailers' Occupation Tax Act, which are not inconsistent with

16 this Act, and the Uniform Penalty and Interest Act, shall

17 apply, as far as practicable, to the subject matter of this Act

18 to the same extent as if such provisions were included herein.

19 References in those incorporated Sections to taxpayers and to

20 persons engaged in the business of selling tangible personal

21 property at retail mean providers of direct-to-home satellite

22 service, direct broadcast satellite service, or digital

23 audio-visual works service when used in this Act.

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1 ARTICLE 30. AMENDATORY PROVISIONS

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

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

4 follows:

5 (30 ILCS 105/5.878 new)

6 Sec. 5.878. The Budget Economic Stabilization Fund.

7 (30 ILCS 105/5.879 new)

8 Sec. 5.879. The Bill Backlog Payment Fund.

9 (30 ILCS 105/6z-51)

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

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

12 State Treasury, shall consist of moneys appropriated or

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

14 otherwise provided by law. All earnings on Budget Stabilization

15 Fund investments shall be deposited into that Fund.

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

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

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

19 direct the State Treasurer to transfer moneys from the Budget

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

21 cash flow deficits resulting from timing variations between

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

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

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

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

4 2011 shall be repaid no later than July 15, 2011.

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

6 from the Budget Stabilization Fund only pursuant to specific

7 authorization by appropriation. Any moneys expended pursuant

8 to appropriation shall not be subject to repayment.

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

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

11 changing Sections 201, 203, 204, 208, 212, 222, 804, 901, and

12 1501 and by adding Section 225 as follows:

13 (35 ILCS 5/201) (from Ch. 120, par. 2-201)

14 Sec. 201. Tax Imposed.

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

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

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

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

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

20 privilege taxes imposed by this State or by any municipal

21 corporation or political subdivision thereof.

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

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

24 subsection (d-1):

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

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

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

4 year.

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

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

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

8 1/2% of the taxpayer's net income for the period prior to

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

10 3% of the taxpayer's net income for the period after June

11 30, 1989, as calculated under Section 202.3.

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

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

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

15 taxpayer's net income for the taxable year.

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

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

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

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

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

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

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

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

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

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

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

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LRB100 06347 HLH 26817 a

1 (5.1) In the case of an individual, trust, or estate,

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

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

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

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

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

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

8 (5.2) In the case of an individual, trust, or estate,

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

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

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

12 taxable year.

13 (5.3) In the case of an individual, trust, or estate,

14 for taxable years beginning prior to January 1, 2017

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

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

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

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

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

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

21 ~~2024~~, as calculated under Section 202.5.

22 (5.4) In the case of an individual, trust, or estate,

23 for taxable years beginning on or after January 1, 2017

24 ~~January 1, 2025~~, an amount equal to 4.95% ~~3.25%~~ of the

25 taxpayer's net income for the taxable year.

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

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

2 taxpayer's net income for the taxable year.

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

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

5 1989, an amount equal to the sum of (i) 4% of the

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

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

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

9 as calculated under Section 202.3.

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

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

12 1, 2011, an amount equal to 4.8% of the taxpayer's net

13 income for the taxable year.

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

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

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

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

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

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

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

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

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

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

24 net income for the taxable year.

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

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

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

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

3 1, 2015, as calculated under Section 202.5, and (ii) 5.25%

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

5 31, 2014, as calculated under Section 202.5.

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

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

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

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

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

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

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

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

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

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

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

17 2016 ~~December 31, 2024~~, as calculated under Section 202.5.

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

19 beginning on or after January 1, 2017 ~~January 1, 2025~~, an

20 amount equal to 7% ~~4.8%~~ of the taxpayer's net income for

21 the taxable year.

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

23 provisions of Section 201.5.

24 (c) Personal Property Tax Replacement Income Tax.

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

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

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1 Tax Replacement Income Tax measured by net income on every

2 corporation (including Subchapter S corporations), partnership

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

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

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

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

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

8 addition to all other occupation or privilege taxes imposed by

9 this State or by any municipal corporation or political

10 subdivision thereof.

11 (d) Additional Personal Property Tax Replacement Income

12 Tax Rates. The personal property tax replacement income tax

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

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

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

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

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

18 1, 1981, and thereafter, the rate of 2.85% specified in this

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

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

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

22 for the taxable year.

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

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

25 Illinois Insurance Code, whose state or country of domicile

26 imposes on insurers domiciled in Illinois a retaliatory tax

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1 (excluding any insurer whose premiums from reinsurance assumed

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

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

4 that for purposes of this determination premiums from

5 reinsurance do not include premiums from inter-affiliate

6 reinsurance arrangements), beginning with taxable years ending

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

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

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

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

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

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

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

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

15 and taxes measured by net income imposed by such foreign

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

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

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

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

20 a mutual insurer under common management.

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

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

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

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

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

26 credits allowed under this Act, plus

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

2 Illinois Insurance Code, the fire insurance company

3 tax imposed by Section 12 of the Fire Investigation

4 Act, and the fire department taxes imposed under

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

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

7 2003, or 1.75% for taxable years ending on or after

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

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

10 409 of the Illinois Insurance Code. This paragraph will in

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

12 and (d).

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

14 subsection shall be applied first against the rates imposed

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

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

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

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

19 subsection (d).

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

21 Section 250.

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

23 against the Personal Property Tax Replacement Income Tax for

24 investment in qualified property.

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

26 of the basis of qualified property placed in service during

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1 the taxable year, provided such property is placed in

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

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

4 property placed in service during the taxable year,

5 provided such property is placed in service on or after

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

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

8 year as determined by the taxpayer's employment records

9 filed with the Illinois Department of Employment Security.

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

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

12 which they file employment records with the Illinois

13 Department of Employment Security. The provisions added to

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

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

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

17 increase in base employment within Illinois over the

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

19 be limited to that percentage times a fraction, the

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

21 1%, but shall not exceed .5%. The investment credit shall

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

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

24 any credit for qualified property be allowed for any year

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

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

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

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

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

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

5 exceeds the original liability or the liability as later

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

7 the tax liability of the 5 taxable years following the

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

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

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

11 enterprise zone established pursuant to the Illinois

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

13 Department of Commerce and Community Affairs (now

14 Department of Commerce and Economic Opportunity) as

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

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

17 Community Affairs (now Department of Commerce and Economic

18 Opportunity) shall notify the Department of Revenue of all

19 such certifications immediately. For tax years ending

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

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

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

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

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

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

26 years following the excess credit years. The credit shall

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

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

3 that is available to offset a liability, earlier credit

4 shall be applied first.

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

6 which:

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

8 buildings and structural components of buildings and

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

10 improvements to real property that are not a structural

11 component of a building such as landscaping, sewer

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

13 other appurtenances;

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

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

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

17 eligible for the credit provided by this subsection

18 (e);

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

20 179(d) of the Internal Revenue Code;

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

22 primarily engaged in manufacturing, or in mining coal

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

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

25 Zone established pursuant to the River Edge

26 Redevelopment Zone Act; and

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

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

3 the credit provided by this subsection (e) or

4 subsection (f).

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

6 "manufacturing" means the material staging and production

7 of tangible personal property by procedures commonly

8 regarded as manufacturing, processing, fabrication, or

9 assembling which changes some existing material into new

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

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

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

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

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

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

16 services rendered in conjunction with the sale of tangible

17 personal property for use or consumption and not for

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

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

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

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

22 include the generation, transmission, or distribution of

23 electricity.

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

25 used to compute the depreciation deduction for federal

26 income tax purposes.

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

2 depreciation purposes is increased after it has been placed

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

4 increase shall be deemed property placed in service on the

5 date of such increase in basis.

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

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

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

9 be qualified property in the hands of the taxpayer within

10 48 months after being placed in service, or the situs of

11 any qualified property is moved outside Illinois within 48

12 months after being placed in service, the Personal Property

13 Tax Replacement Income Tax for such taxable year shall be

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

15 recomputing the investment credit which would have been

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

17 originally allowed by eliminating such property from such

18 computation and, (ii) subtracting such recomputed credit

19 from the amount of credit previously allowed. For the

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

21 qualified property resulting from a redetermination of the

22 purchase price shall be deemed a disposition of qualified

23 property to the extent of such reduction.

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

25 the basis of qualified property shall not include costs

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

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1 pursuant to a binding contract entered into on or before

2 December 31, 2018.

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

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

5 credits to which the partnership is entitled under this

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

7 credit allocated to him or her under this paragraph only

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

9 Section. If the partnership makes that election, those

10 credits shall be allocated among the partners in the

11 partnership in accordance with the rules set forth in

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

13 promulgated under that Section, and the allocated amount of

14 the credits shall be allowed to the partners for that

15 taxable year. The partnership shall make this election on

16 its Personal Property Tax Replacement Income Tax return for

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

18 shall be irrevocable.

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

20 a partner that qualifies its partnership for a subtraction

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

22 of Section 203 or a shareholder that qualifies a Subchapter

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

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

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

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

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1 the taxable year by the partnership or Subchapter S

2 corporation, determined in accordance with the

3 determination of income and distributive share of income

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

5 Revenue Code. This paragraph is exempt from the provisions

6 of Section 250.

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

8 Redevelopment Zone.

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

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

11 investment in qualified property which is placed in service

12 in an Enterprise Zone created pursuant to the Illinois

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

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

15 established pursuant to the River Edge Redevelopment Zone

16 Act. For partners, shareholders of Subchapter S

17 corporations, and owners of limited liability companies,

18 if the liability company is treated as a partnership for

19 purposes of federal and State income taxation, there shall

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

21 determined in accordance with the determination of income

22 and distributive share of income under Sections 702 and 704

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

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

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

26 property is placed in service in the Enterprise Zone or

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1 River Edge Redevelopment Zone and shall not be allowed to

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

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

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

5 31, 1985, the credit shall be allowed for the tax year in

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

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

8 whether it exceeds the original liability or the liability

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

10 applied to the tax liability of the 5 taxable years

11 following the excess credit year. The credit shall be

12 applied to the earliest year for which there is a

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

14 that is available to offset a liability, the credit

15 accruing first in time shall be applied first.

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 (f);

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

25 179(d) of the Internal Revenue Code;

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

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LRB100 06347 HLH 26817 a

1 Redevelopment Zone by the taxpayer; and

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

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

4 the credit provided by this subsection (f) or

5 subsection (e).

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

7 used to compute the depreciation deduction for federal

8 income tax purposes.

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

10 depreciation purposes is increased after it has been placed

11 in service in the Enterprise Zone or River Edge

12 Redevelopment Zone by the taxpayer, the amount of such

13 increase shall be deemed property placed in service on the

14 date of such increase in basis.

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

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

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

18 be qualified property in the hands of the taxpayer within

19 48 months after being placed in service, or the situs of

20 any qualified property is moved outside the Enterprise Zone

21 or River Edge Redevelopment Zone within 48 months after

22 being placed in service, the tax imposed under subsections

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

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

25 recomputing the investment credit which would have been

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

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1 originally allowed by eliminating such property from such

2 computation, and (ii) subtracting such recomputed credit

3 from the amount of credit previously allowed. For the

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

5 qualified property resulting from a redetermination of the

6 purchase price shall be deemed a disposition of qualified

7 property to the extent of such reduction.

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

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

10 service during the taxable year in a River Edge

11 Redevelopment Zone, provided such property is placed in

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

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

14 the preceding year as determined by the taxpayer's

15 employment records filed with the Illinois Department of

16 Employment Security. Taxpayers who are new to Illinois

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

18 employment for the first year in which they file employment

19 records with the Illinois Department of Employment

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

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

22 the additional credit shall be limited to that percentage

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

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

25 (g) (Blank).

26 (h) Investment credit; High Impact Business.

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

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

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

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

5 property which is placed in service by a Department of

6 Commerce and Economic Opportunity designated High Impact

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

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

9 minimum investments in qualified property set forth in

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

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

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

13 Enterprise Zone Act for entities designated as High Impact

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

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

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

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

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

19 credit applicable to such investments shall be taken in the

20 taxable year in which such investments have been completed.

21 The credit for additional investments beyond the minimum

22 investment by a designated high impact business authorized

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

24 Enterprise Zone Act shall be available only in the taxable

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

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

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

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

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

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

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

6 liability for that year, whether it exceeds the original

7 liability or the liability as later amended, such excess

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

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

10 credit shall be applied to the earliest year for which

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

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

13 credit accruing first in time shall be applied first.

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

15 88-670 restore changes made by Public Act 85-1182 and

16 reflect existing law.

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

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

19 buildings and structural components of buildings;

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

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

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

23 eligible for the credit provided by this subsection

24 (h);

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

26 179(d) of the Internal Revenue Code; and

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1 (D) is not eligible for the Enterprise Zone

2 Investment Credit provided by subsection (f) of this

3 Section.

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

5 used to compute the depreciation deduction for federal

6 income tax purposes.

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

8 depreciation purposes is increased after it has been placed

9 in service in a federally designated Foreign Trade Zone or

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

11 such increase shall be deemed property placed in service on

12 the date of such increase in basis.

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

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

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

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

17 property in the hands of the taxpayer within 48 months

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

19 qualified property is moved outside Illinois within 48

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

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

22 year shall be increased. Such increase shall be determined

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

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

25 was originally allowed by eliminating such property from

26 such computation, and (ii) subtracting such recomputed

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1 credit from the amount of credit previously allowed. For

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

3 basis of qualified property resulting from a

4 redetermination of the purchase price shall be deemed a

5 disposition of qualified property to the extent of such

6 reduction.

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

8 1996, if a taxpayer qualifies for the credit under this

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

10 the taxpayer relocates its entire facility in violation of

11 the explicit terms and length of the contract under Section

12 18-183 of the Property Tax Code, the tax imposed under

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

14 for the taxable year in which the taxpayer relocated its

15 facility by an amount equal to the amount of credit

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

17 (i) Credit for Personal Property Tax Replacement Income

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

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

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

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

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

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

24 allocable to Illinois and the denominator of which is Illinois

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

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

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

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

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

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

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

6 forward and applied to the tax liability imposed by subsections

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

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

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

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

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

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

13 earliest credit arising under this subsection shall be applied

14 first.

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

16 1986, the tax imposed by subsections (c) and (d) of this

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

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

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

20 recomputing the credit to take into account the reduced tax

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

22 reduced amount of credit has been carried to a different

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

24 year to reduce the amount of credit claimed.

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

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

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1 2003, a taxpayer shall be allowed a credit against the tax

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

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

4 the taxpayer in Illinois or Illinois residents employed outside

5 of Illinois by a taxpayer, for educational or vocational

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

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

8 computation of taxable income. The credit against the tax

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

10 training expenses. 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 (j) 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 Any credit allowed under this subsection which is unused in

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

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

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

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

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

24 year that is available to offset a liability the earliest

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

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

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1 after December 31, 2003.

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

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

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

5 2004~~, and ending prior to January 1, 2016,~~a taxpayer shall be

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

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

8 State. The credit allowed against the tax imposed by

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

10 qualifying expenditures for increasing research activities in

11 this State. For partners, shareholders of subchapter S

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

13 liability company is treated as a partnership for purposes of

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

15 credit under this subsection to be determined in accordance

16 with the determination of income and distributive share of

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

18 Internal Revenue Code.

19 For purposes of this subsection, "qualifying expenditures"

20 means the qualifying expenditures as defined for the federal

21 credit for increasing research activities which would be

22 allowable under Section 41 of the Internal Revenue Code and

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

24 increasing research activities in this State" means the excess

25 of qualifying expenditures for the taxable year in which

26 incurred over qualifying expenditures for the base period,

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

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

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

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

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

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

7 immediately preceding the taxable year for which the

8 determination is being made.

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

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

11 unused credit shown on its final completed return carried over

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

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

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

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

16 ending on or after December 31, 2003.

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

18 2 or more earlier years, that credit arising in the earliest

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

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

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

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

23 liability for the given year remains. Any remaining unused

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

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

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

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

2 credit is given was incurred.

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

4 91st General Assembly in construing this Section for taxable

5 years beginning before January 1, 1999.

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

7 Section 250.

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

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

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

11 2004, including, but not limited to, the period beginning on

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

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

14 in reliance on the continuation of the credit under this

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

16 (l) Environmental Remediation Tax Credit.

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

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

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

20 of this Section for certain amounts paid for unreimbursed

21 eligible remediation costs, as specified in this

22 subsection. For purposes of this Section, "unreimbursed

23 eligible remediation costs" means costs approved by the

24 Illinois Environmental Protection Agency ("Agency") under

25 Section 58.14 of the Environmental Protection Act that were

26 paid in performing environmental remediation at a site for

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1 which a No Further Remediation Letter was issued by the

2 Agency and recorded under Section 58.10 of the

3 Environmental Protection Act. The credit must be claimed

4 for the taxable year in which Agency approval of the

5 eligible remediation costs is granted. The credit is not

6 available to any taxpayer if the taxpayer or any related

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

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

9 that was identified and addressed by the remedial action

10 pursuant to the Site Remediation Program of the

11 Environmental Protection Act. After the Pollution Control

12 Board rules are adopted pursuant to the Illinois

13 Administrative Procedure Act for the administration and

14 enforcement of Section 58.9 of the Environmental

15 Protection Act, determinations as to credit availability

16 for purposes of this Section shall be made consistent with

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

18 includes a person whose tax attributes the taxpayer has

19 succeeded to under Section 381 of the Internal Revenue Code

20 and "related party" includes the persons disallowed a

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

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

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

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

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

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

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

2 contained in an enterprise zone as determined by the

3 Department of Commerce and Community Affairs (now

4 Department of Commerce and Economic Opportunity). The

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

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

7 shareholders of subchapter S corporations, there shall be

8 allowed a credit under this subsection to be determined in

9 accordance with the determination of income and

10 distributive share of income under Sections 702 and 704 and

11 subchapter S of the Internal Revenue Code.

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

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

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

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

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

17 unreimbursed eligible remediation costs in excess of the

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

19 This 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 (m) Education expense credit. Beginning with tax years

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

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

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

18 Section for qualified education expenses incurred on behalf of

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

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

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

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

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

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

25 credit under this subsection reduce the taxpayer's liability

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

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

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

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

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

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

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

7 provisions of Section 250 of this Act.

8 For purposes of this subsection:

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

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

11 21 at the close of the school year for which a credit is

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

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

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

15 this subsection.

16 "Qualified education expense" means the amount incurred on

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

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

19 enrolled during the regular school year.

20 "School" means any public or nonpublic elementary or

21 secondary school in Illinois that is in compliance with Title

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

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

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

25 attend any particular public or nonpublic school to qualify for

26 the credit under this Section.

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

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

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

4 (n) River Edge Redevelopment Zone site remediation tax

5 credit.

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

7 a taxpayer shall be allowed a credit against the tax

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

9 certain amounts paid for unreimbursed eligible remediation

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

11 this Section, "unreimbursed eligible remediation costs"

12 means costs approved by the Illinois Environmental

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

14 Environmental Protection Act that were paid in performing

15 environmental remediation at a site within a River Edge

16 Redevelopment Zone for which a No Further Remediation

17 Letter was issued by the Agency and recorded under Section

18 58.10 of the Environmental Protection Act. The credit must

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

20 the eligible remediation costs is granted. The credit is

21 not available to any taxpayer if the taxpayer or any

22 related party caused or contributed to, in any material

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

24 the site that was identified and addressed by the remedial

25 action pursuant to the Site Remediation Program of the

26 Environmental Protection Act. Determinations as to credit

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1 availability for purposes of this Section shall be made

2 consistent with rules adopted by the Pollution Control

3 Board pursuant to the Illinois Administrative Procedure

4 Act for the administration and enforcement of Section 58.9

5 of the Environmental Protection Act. For purposes of this

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

7 the taxpayer has succeeded to under Section 381 of the

8 Internal Revenue Code and "related party" includes the

9 persons disallowed a deduction for losses by paragraphs

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

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

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

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

14 unreimbursed eligible remediation costs in excess of

15 $100,000 per site.

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

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

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

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

20 credit shall be applied first to the earliest year for

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

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

23 offset a liability, the earliest credit arising under this

24 subsection shall be applied first. A credit allowed under

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

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

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

2 tax credit shall succeed to the unused credit and remaining

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

4 transfer, the assignor shall record the transfer in the

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

6 the Director of the Illinois Department of Revenue of the

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

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

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

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

11 eligible under the provisions of subsection (i).

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

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

14 Environmental Protection Act.

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

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

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

18 capital assets, depreciable business property, real property

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

20 an organization registrant under the Compassionate Use of

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

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

23 taxable year attributable to those sales and exchanges. The

24 surcharge imposed does not apply if:

25 (1) the medical cannabis cultivation center

26 registration, medical cannabis dispensary registration, or

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1 the property of a registration is transferred as a result

2 of any of the following:

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

4 adjustment initiated by or against the initial

5 registration or the substantial owners of the initial

6 registration;

7 (B) cancellation, revocation, or termination of

8 any registration by the Illinois Department of Public

9 Health;

10 (C) a determination by the Illinois Department of

11 Public Health that transfer of the registration is in

12 the best interests of Illinois qualifying patients as

13 defined by the Compassionate Use of Medical Cannabis

14 Pilot Program Act;

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

16 a registrant;

17 (E) the acquisition of a controlling interest in

18 the stock or substantially all of the assets of a

19 publicly traded company;

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

21 owned subsidiary; or

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

23 another person where both persons were initial owners

24 of the registration when the registration was issued;

25 or

26 (2) the cannabis cultivation center registration,

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1 medical cannabis dispensary registration, or the

2 controlling interest in a registrant's property is

3 transferred in a transaction to lineal descendants in which

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

5 transaction in accordance with Section 351 of the Internal

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

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

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

9 eff. 7-16-14.)

10 (35 ILCS 5/203) (from Ch. 120, par. 2-203)

11 Sec. 203. Base income defined.

12 (a) Individuals.

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

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

15 gross income for the taxable year as modified by paragraph

16 (2).

17 (2) Modifications. The adjusted gross income referred

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

19 sum of the 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 adjusted gross income, except

24 stock dividends of qualified public utilities

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

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1 Code;

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

3 this Act to the extent deducted from gross income in

4 the computation of adjusted gross income for the

5 taxable year;

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

7 the taxable year as a recovery or refund of real

8 property taxes paid with respect to the taxpayer's

9 principal residence under the Revenue Act of 1939 and

10 for which a deduction was previously taken under

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

12 1991, the retrospective application date of Article 4

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

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

15 the taxpayer's principal residence shall be that

16 portion of the total taxes for the entire property

17 which is attributable to such principal residence;

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

19 gain deduction allowable under the Internal Revenue

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

21 computation of adjusted gross income;

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

23 adjusted gross income, equal to the amount of money

24 withdrawn by the taxpayer in the taxable year from a

25 medical care savings account and the interest earned on

26 the account in the taxable year of a withdrawal

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

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

3 20 of the Medical Care Savings Account Act of 2000;

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

5 1997, an amount equal to any eligible remediation costs

6 that the individual deducted in computing adjusted

7 gross income and for which the individual claims a

8 credit under subsection (l) of Section 201;

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

10 amount equal to the bonus depreciation deduction taken

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

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

13 Internal Revenue Code;

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

15 or otherwise disposes of property for which the

16 taxpayer was required in any taxable year to make an

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

18 an amount equal to the aggregate amount of the

19 deductions taken in all taxable years under

20 subparagraph (Z) with respect to that property.

21 If the taxpayer continues to own property through

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

23 taxpayer may claim a depreciation deduction for

24 federal income tax purposes and for which the taxpayer

25 was allowed in any taxable year to make a subtraction

26 modification under subparagraph (Z), then an amount

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1 equal to that subtraction modification.

2 The taxpayer is required to make the addition

3 modification under this subparagraph only once with

4 respect to any one piece of property;

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

6 allowed as a deduction in computing base income for

7 interest paid, accrued, or incurred, directly or

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

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

10 member of the same unitary business group but for the

11 fact that foreign person's business activity outside

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

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. The addition modification

21 required by this subparagraph shall be reduced to the

22 extent that dividends were included in base income of

23 the unitary group for the same taxable year and

24 received by the taxpayer or by a member of the

25 taxpayer's unitary business group (including amounts

26 included in gross income under Sections 951 through 964

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1 of the Internal Revenue Code and amounts included in

2 gross income under Section 78 of the Internal Revenue

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

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

5 This paragraph shall not apply to the following:

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

7 incurred, directly or indirectly, to a person who

8 is subject in a foreign country or state, other

9 than a state which requires mandatory unitary

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

11 with respect to such interest; or

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

13 incurred, directly or indirectly, to a person if

14 the taxpayer can establish, based on a

15 preponderance of the evidence, both of the

16 following:

17 (a) the person, during the same taxable

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

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

20 (b) the transaction giving rise to the

21 interest expense between the taxpayer and the

22 person did not have as a principal purpose the

23 avoidance of Illinois income tax, and is paid

24 pursuant to a contract or agreement that

25 reflects an arm's-length interest rate and

26 terms; or

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1 (iii) the taxpayer can establish, based on

2 clear and convincing evidence, that the interest

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

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

5 terms and the principal purpose for the payment is

6 not federal or Illinois tax avoidance; or

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

8 incurred, directly or indirectly, to a person if

9 the taxpayer establishes by clear and convincing

10 evidence that the adjustments are unreasonable; or

11 if the taxpayer and the Director agree in writing

12 to the application or use of an alternative method

13 of apportionment under Section 304(f).

14 Nothing in this subsection shall preclude the

15 Director from making any other adjustment

16 otherwise allowed under Section 404 of this Act for

17 any tax year beginning after the effective date of

18 this amendment provided such adjustment is made

19 pursuant to regulation adopted by the Department

20 and such regulations provide methods and standards

21 by which the Department will utilize its authority

22 under Section 404 of this Act;

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

24 expenses and costs otherwise allowed as a deduction in

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

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

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

2 foreign person who would be a member of the same

3 unitary business group but for the fact that the

4 foreign person's business activity outside the United

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

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

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

8 the same unitary business group but for the fact that

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

10 from being included in the unitary business group

11 because he or she is ordinarily required to apportion

12 business income under different subsections of Section

13 304. The addition modification required by this

14 subparagraph shall be reduced to the extent that

15 dividends were included in base income of the unitary

16 group for the same taxable year and received by the

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

18 business group (including amounts included in gross

19 income under Sections 951 through 964 of the Internal

20 Revenue Code and amounts included in gross income under

21 Section 78 of the Internal Revenue Code) with respect

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

23 expenses and costs were directly or indirectly paid,

24 incurred, or accrued. The preceding sentence does not

25 apply to the extent that the same dividends caused a

26 reduction to the addition modification required under

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

2 subparagraph, the term "intangible expenses and costs"

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

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

5 maintenance or management, ownership, sale, exchange,

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

7 losses incurred, directly or indirectly, from

8 factoring transactions or discounting transactions;

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

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

11 costs. For purposes of this subparagraph, "intangible

12 property" includes patents, patent applications, trade

13 names, trademarks, service marks, copyrights, mask

14 works, trade secrets, and similar types of intangible

15 assets.

16 This paragraph shall not apply to the following:

17 (i) any item of intangible expenses or costs

18 paid, accrued, or incurred, directly or

19 indirectly, from a transaction with a person who is

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

21 state which requires mandatory unitary reporting,

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

23 to such item; or

24 (ii) any item of intangible expense or cost

25 paid, accrued, or incurred, directly or

26 indirectly, if the taxpayer can establish, based

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1 on a preponderance of the evidence, both of the

2 following:

3 (a) the person during the same taxable

4 year paid, accrued, or incurred, the

5 intangible expense or cost to a person that is

6 not a related member, and

7 (b) the transaction giving rise to the

8 intangible expense or cost between the

9 taxpayer and the person did not have as a

10 principal purpose the avoidance of Illinois

11 income tax, and is paid pursuant to a contract

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

13 or

14 (iii) any item of intangible expense or cost

15 paid, accrued, or incurred, directly or

16 indirectly, from a transaction with a person if the

17 taxpayer establishes by clear and convincing

18 evidence, that the adjustments are unreasonable;

19 or if the taxpayer and the Director agree in

20 writing to the application or use of an alternative

21 method of apportionment under Section 304(f);

22 Nothing in this subsection shall preclude the

23 Director from making any other adjustment

24 otherwise allowed under Section 404 of this Act for

25 any tax year beginning after the effective date of

26 this amendment provided such adjustment is made

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1 pursuant to regulation adopted by the Department

2 and such regulations provide methods and standards

3 by which the Department will utilize its authority

4 under Section 404 of this Act;

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

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

7 insurance premium expenses and costs otherwise allowed

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

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

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

11 business group but for the fact that the person is

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

13 included in the unitary business group because he or

14 she is ordinarily required to apportion business

15 income under different subsections of Section 304. The

16 addition modification required by this subparagraph

17 shall be reduced to the extent that dividends were

18 included in base income of the unitary group for the

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

20 member of the taxpayer's unitary business group

21 (including amounts included in gross income under

22 Sections 951 through 964 of the Internal Revenue Code

23 and amounts included in gross income under Section 78

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

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

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

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1 preceding sentence does not apply to the extent that

2 the same dividends caused a reduction to the addition

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

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

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

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

7 2006, in the case of a distribution from a qualified

8 tuition program under Section 529 of the Internal

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

10 College Savings Pool created under Section 16.5 of the

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

12 Illinois Prepaid Tuition Trust Fund, an amount equal to

13 the amount excluded from gross income under Section

14 529(c)(3)(B). For taxable years beginning on or after

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

16 qualified tuition program under Section 529 of the

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

18 from a College Savings Pool created under Section 16.5

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

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

21 distribution from a qualified tuition program under

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

23 adopts and determines that its offering materials

24 comply with the College Savings Plans Network's

25 disclosure principles and (II) has made reasonable

26 efforts to inform in-state residents of the existence

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1 of in-state qualified tuition programs by informing

2 Illinois residents directly and, where applicable, to

3 inform financial intermediaries distributing the

4 program to inform in-state residents of the existence

5 of in-state qualified tuition programs at least

6 annually, an amount equal to the amount excluded from

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

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

9 qualified tuition program has made reasonable efforts

10 if it makes disclosures (which may use the term

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

12 specifically refer to Illinois or its qualified

13 programs by name) (i) directly to prospective

14 participants in its offering materials or makes a

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

16 where applicable, to intermediaries selling the

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

18 out-of-state program distributes its offering

19 materials;

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

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

22 a qualified tuition program under Section 529 of the

23 Internal Revenue Code that is administered by the State

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

25 amount of moneys previously deducted from base income

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

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

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

3 withdrawal or refund of moneys from a qualified tuition

4 program under Section 529 of the Internal Revenue Code

5 administered by the State that is not used for

6 qualified expenses at an eligible education

7 institution, an amount equal to the contribution

8 component of the nonqualified withdrawal or refund

9 that was previously deducted from base income under

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

11 the withdrawal or refund did not result from the

12 beneficiary's death or disability;

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

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

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

16 Act;

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

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

19 allowed under Section 199 of the Internal Revenue Code

20 for the taxable year;

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

22 following amounts:

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

24 2001, any amount included in such total in respect of

25 any compensation (including but not limited to any

26 compensation paid or accrued to a serviceman while a

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

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

3 Forces of the United States and in respect of any

4 compensation paid or accrued to a resident who as a

5 governmental employee was a prisoner of war or missing

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

7 resident in 1971 or thereafter for annual training

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

9 United States Code as a member of the Illinois National

10 Guard or, beginning with taxable years ending on or

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

12 other state. For taxable years ending on or after

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

14 respect of any compensation (including but not limited

15 to any compensation paid or accrued to a serviceman

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

17 resident by reason of being a member of any component

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

19 of any compensation paid or accrued to a resident who

20 as a governmental employee was a prisoner of war or

21 missing in action, and in respect of any compensation

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

23 being a member of the Illinois National Guard or,

24 beginning with taxable years ending on or after

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

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

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1 exempt from the provisions of Section 250;

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

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

4 402(c), 403(a), 403(b), 406(a), 407(a), and 408 of the

5 Internal Revenue Code, or included in such total as

6 distributions under the provisions of any retirement

7 or disability plan for employees of any governmental

8 agency or unit, or retirement payments to retired

9 partners, which payments are excluded in computing net

10 earnings from self employment by Section 1402 of the

11 Internal Revenue Code and regulations adopted pursuant

12 thereto;

13 (G) The valuation limitation amount;

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

15 imposed by this Act which was refunded to the taxpayer

16 and included in such total for the taxable year;

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

18 total pursuant to the provisions of Section 111 of the

19 Internal Revenue Code as a recovery of items previously

20 deducted from adjusted gross income in the computation

21 of taxable income;

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

23 such total which were paid by a corporation which

24 conducts business operations in a River Edge

25 Redevelopment Zone or zones created under the River

26 Edge Redevelopment Zone Act, and conducts

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1 substantially all of its operations in a River Edge

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

3 exempt from the provisions of Section 250;

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

5 such total that were paid by a corporation that

6 conducts business operations in a federally designated

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

8 High Impact Business located in Illinois; provided

9 that dividends eligible for the deduction provided in

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

11 shall not be eligible for the deduction provided under

12 this subparagraph (K);

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

14 1983, an amount equal to all social security benefits

15 and railroad retirement benefits included in such

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

17 Revenue Code;

18 (M) With the exception of any amounts subtracted

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

20 all amounts disallowed as deductions by (i) Sections

21 171(a) (2), and 265(2) of the Internal Revenue Code,

22 and all amounts of expenses allocable to interest and

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

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

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

26 265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue

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

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

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

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

5 under Section 87 of the Internal Revenue Code; the

6 provisions of this subparagraph are exempt from the

7 provisions of Section 250;

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

9 total which are exempt from taxation by this State

10 either by reason of its statutes or Constitution or by

11 reason of the Constitution, treaties or statutes of the

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

13 statute of this State that exempts income derived from

14 bonds or other obligations from the tax imposed under

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

16 of bond premium amortization;

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

18 job training project established pursuant to the Tax

19 Increment Allocation Redevelopment Act;

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

21 used to compute the federal income tax credit for

22 restoration of substantial amounts held under claim of

23 right for the taxable year pursuant to Section 1341 of

24 the Internal Revenue Code or of any itemized deduction

25 taken from adjusted gross income in the computation of

26 taxable income for restoration of substantial amounts

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1 held under claim of right for the taxable year;

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

3 total, received by the taxpayer as an acceleration in

4 the payment of life, endowment or annuity benefits in

5 advance of the time they would otherwise be payable as

6 an indemnity for a terminal illness;

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

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

9 (S) An amount, to the extent included in adjusted

10 gross income, equal to the amount of a contribution

11 made in the taxable year on behalf of the taxpayer to a

12 medical care savings account established under the

13 Medical Care Savings Account Act or the Medical Care

14 Savings Account Act of 2000 to the extent the

15 contribution is accepted by the account administrator

16 as provided in that Act;

17 (T) An amount, to the extent included in adjusted

18 gross income, equal to the amount of interest earned in

19 the taxable year on a medical care savings account

20 established under the Medical Care Savings Account Act

21 or the Medical Care Savings Account Act of 2000 on

22 behalf of the taxpayer, other than interest added

23 pursuant to item (D-5) of this paragraph (2);

24 (U) For one taxable year beginning on or after

25 January 1, 1994, an amount equal to the total amount of

26 tax imposed and paid under subsections (a) and (b) of

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1 Section 201 of this Act on grant amounts received by

2 the taxpayer under the Nursing Home Grant Assistance

3 Act during the taxpayer's taxable years 1992 and 1993;

4 (V) Beginning with tax years ending on or after

5 December 31, 1995 and ending with tax years ending on

6 or before December 31, 2004, an amount equal to the

7 amount paid by a taxpayer who is a self-employed

8 taxpayer, a partner of a partnership, or a shareholder

9 in a Subchapter S corporation for health insurance or

10 long-term care insurance for that taxpayer or that

11 taxpayer's spouse or dependents, to the extent that the

12 amount paid for that health insurance or long-term care

13 insurance may be deducted under Section 213 of the

14 Internal Revenue Code, has not been deducted on the

15 federal income tax return of the taxpayer, and does not

16 exceed the taxable income attributable to that

17 taxpayer's income, self-employment income, or

18 Subchapter S corporation income; except that no

19 deduction shall be allowed under this item (V) if the

20 taxpayer is eligible to participate in any health

21 insurance or long-term care insurance plan of an

22 employer of the taxpayer or the taxpayer's spouse. The

23 amount of the health insurance and long-term care

24 insurance subtracted under this item (V) shall be

25 determined by multiplying total health insurance and

26 long-term care insurance premiums paid by the taxpayer

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1 times a number that represents the fractional

2 percentage of eligible medical expenses under Section

3 213 of the Internal Revenue Code of 1986 not actually

4 deducted on the taxpayer's federal income tax return;

5 (W) For taxable years beginning on or after January

6 1, 1998, all amounts included in the taxpayer's federal

7 gross income in the taxable year from amounts converted

8 from a regular IRA to a Roth IRA. This paragraph is

9 exempt from the provisions of Section 250;

10 (X) For taxable year 1999 and thereafter, an amount

11 equal to the amount of any (i) distributions, to the

12 extent includible in gross income for federal income

13 tax purposes, made to the taxpayer because of his or

14 her status as a victim of persecution for racial or

15 religious reasons by Nazi Germany or any other Axis

16 regime or as an heir of the victim and (ii) items of

17 income, to the extent includible in gross income for

18 federal income tax purposes, attributable to, derived

19 from or in any way related to assets stolen from,

20 hidden from, or otherwise lost to a victim of

21 persecution for racial or religious reasons by Nazi

22 Germany or any other Axis regime immediately prior to,

23 during, and immediately after World War II, including,

24 but not limited to, interest on the proceeds receivable

25 as insurance under policies issued to a victim of

26 persecution for racial or religious reasons by Nazi

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1 Germany or any other Axis regime by European insurance

2 companies immediately prior to and during World War II;

3 provided, however, this subtraction from federal

4 adjusted gross income does not apply to assets acquired

5 with such assets or with the proceeds from the sale of

6 such assets; provided, further, this paragraph shall

7 only apply to a taxpayer who was the first recipient of

8 such assets after their recovery and who is a victim of

9 persecution for racial or religious reasons by Nazi

10 Germany or any other Axis regime or as an heir of the

11 victim. The amount of and the eligibility for any

12 public assistance, benefit, or similar entitlement is

13 not affected by the inclusion of items (i) and (ii) of

14 this paragraph in gross income for federal income tax

15 purposes. This paragraph is exempt from the provisions

16 of Section 250;

17 (Y) For taxable years beginning on or after January

18 1, 2002 and ending on or before December 31, 2004,

19 moneys contributed in the taxable year to a College

20 Savings Pool account under Section 16.5 of the State

21 Treasurer Act, except that amounts excluded from gross

22 income under Section 529(c)(3)(C)(i) of the Internal

23 Revenue Code shall not be considered moneys

24 contributed under this subparagraph (Y). For taxable

25 years beginning on or after January 1, 2005, a maximum

26 of $10,000 contributed in the taxable year to (i) a

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1 College Savings Pool account under Section 16.5 of the

2 State Treasurer Act or (ii) the Illinois Prepaid

3 Tuition Trust Fund, except that amounts excluded from

4 gross income under Section 529(c)(3)(C)(i) of the

5 Internal Revenue Code shall not be considered moneys

6 contributed under this subparagraph (Y). For purposes

7 of this subparagraph, contributions made by an

8 employer on behalf of an employee, or matching

9 contributions made by an employee, shall be treated as

10 made by the employee. This subparagraph (Y) is exempt

11 from the provisions of Section 250;

12 (Z) For taxable years 2001 and thereafter, for the

13 taxable year in which the bonus depreciation deduction

14 is taken on the taxpayer's federal income tax return

15 under subsection (k) of Section 168 of the Internal

16 Revenue Code and for each applicable taxable year

17 thereafter, an amount equal to "x", where:

18 (1) "y" equals the amount of the depreciation

19 deduction taken for the taxable year on the

20 taxpayer's federal income tax return on property

21 for which the bonus depreciation deduction was

22 taken in any year under subsection (k) of Section

23 168 of the Internal Revenue Code, but not including

24 the bonus depreciation deduction;

25 (2) for taxable years ending on or before

26 December 31, 2005, "x" equals "y" multiplied by 30

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1 and then divided by 70 (or "y" multiplied by

2 0.429); and

3 (3) for taxable years ending after December

4 31, 2005:

5 (i) for property on which a bonus

6 depreciation deduction of 30% of the adjusted

7 basis was taken, "x" equals "y" multiplied by

8 30 and then divided by 70 (or "y" multiplied by

9 0.429); and

10 (ii) for property on which a bonus

11 depreciation deduction of 50% of the adjusted

12 basis was taken, "x" equals "y" multiplied by

13 1.0.

14 The aggregate amount deducted under this

15 subparagraph in all taxable years for any one piece of

16 property may not exceed the amount of the bonus

17 depreciation deduction taken on that property on the

18 taxpayer's federal income tax return under subsection

19 (k) of Section 168 of the Internal Revenue Code. This

20 subparagraph (Z) is exempt from the provisions of

21 Section 250;

22 (AA) If the taxpayer sells, transfers, abandons,

23 or otherwise disposes of property for which the

24 taxpayer was required in any taxable year to make an

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

26 an amount equal to that addition modification.

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1 If the taxpayer continues to own property through

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

3 taxpayer may claim a depreciation deduction for

4 federal income tax purposes and for which the taxpayer

5 was required in any taxable year to make an addition

6 modification under subparagraph (D-15), then an amount

7 equal to that addition modification.

8 The taxpayer is allowed to take the deduction under

9 this subparagraph only once with respect to any one

10 piece of property.

11 This subparagraph (AA) is exempt from the

12 provisions of Section 250;

13 (BB) Any amount included in adjusted gross income,

14 other than salary, received by a driver in a

15 ridesharing arrangement using a motor vehicle;

16 (CC) The amount of (i) any interest income (net of

17 the deductions allocable thereto) taken into account

18 for the taxable year with respect to a transaction with

19 a taxpayer that is required to make an addition

20 modification with respect to such transaction under

21 Section 203(a)(2)(D-17), 203(b)(2)(E-12),

22 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed

23 the amount of that addition modification, and (ii) any

24 income from intangible property (net of the deductions

25 allocable thereto) taken into account for the taxable

26 year with respect to a transaction with a taxpayer that

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1 is required to make an addition modification with

2 respect to such transaction under Section

3 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or

4 203(d)(2)(D-8), but not to exceed the amount of that

5 addition modification. This subparagraph (CC) is

6 exempt from the provisions of Section 250;

7 (DD) An amount equal to the interest income taken

8 into account for the taxable year (net of the

9 deductions allocable thereto) with respect to

10 transactions with (i) a foreign person who would be a

11 member of the taxpayer's unitary business group but for

12 the fact that the foreign person's business activity

13 outside the United States is 80% or more of that

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

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

16 who would be a member of the same unitary business

17 group but for the fact that the person is prohibited

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

19 unitary business group because he or she is ordinarily

20 required to apportion business income under different

21 subsections of Section 304, but not to exceed the

22 addition modification required to be made for the same

23 taxable year under Section 203(a)(2)(D-17) for

24 interest paid, accrued, or incurred, directly or

25 indirectly, to the same person. This subparagraph (DD)

26 is exempt from the provisions of Section 250;

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1 (EE) An amount equal to the income from intangible

2 property taken into account for the taxable year (net

3 of the deductions allocable thereto) with respect to

4 transactions with (i) a foreign person who would be a

5 member of the taxpayer's unitary business group but for

6 the fact that the foreign person's business activity

7 outside the United States is 80% or more of that

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

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

10 who would be a member of the same unitary business

11 group but for the fact that the person is prohibited

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

13 unitary business group because he or she is ordinarily

14 required to apportion business income under different

15 subsections of Section 304, but not to exceed the

16 addition modification required to be made for the same

17 taxable year under Section 203(a)(2)(D-18) for

18 intangible expenses and costs paid, accrued, or

19 incurred, directly or indirectly, to the same foreign

20 person. This subparagraph (EE) is exempt from the

21 provisions of Section 250;

22 (FF) An amount equal to any amount awarded to the

23 taxpayer during the taxable year by the Court of Claims

24 under subsection (c) of Section 8 of the Court of

25 Claims Act for time unjustly served in a State prison.

26 This subparagraph (FF) is exempt from the provisions of

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1 Section 250; and

2 (GG) For taxable years ending on or after December

3 31, 2011, in the case of a taxpayer who was required to

4 add back any insurance premiums under Section

5 203(a)(2)(D-19), such taxpayer may elect to subtract

6 that part of a reimbursement received from the

7 insurance company equal to the amount of the expense or

8 loss (including expenses incurred by the insurance

9 company) that would have been taken into account as a

10 deduction for federal income tax purposes if the

11 expense or loss had been uninsured. If a taxpayer makes

12 the election provided for by this subparagraph (GG),

13 the insurer to which the premiums were paid must add

14 back to income the amount subtracted by the taxpayer

15 pursuant to this subparagraph (GG). This subparagraph

16 (GG) is exempt from the provisions of Section 250.

17 (b) Corporations.

18 (1) In general. In the case of a corporation, base

19 income means an amount equal to the taxpayer's taxable

20 income for the taxable year as modified by paragraph (2).

21 (2) Modifications. The taxable income referred to in

22 paragraph (1) shall be modified by adding thereto the sum

23 of the following amounts:

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

25 to the taxpayer as interest and all distributions

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1 received from regulated investment companies during

2 the taxable year to the extent excluded from gross

3 income in the computation of taxable income;

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

5 this Act to the extent deducted from gross income in

6 the computation of taxable income for the taxable year;

7 (C) In the case of a regulated investment company,

8 an amount equal to the excess of (i) the net long-term

9 capital gain for the taxable year, over (ii) the amount

10 of the capital gain dividends designated as such in

11 accordance with Section 852(b)(3)(C) of the Internal

12 Revenue Code and any amount designated under Section

13 852(b)(3)(D) of the Internal Revenue Code,

14 attributable to the taxable year (this amendatory Act

15 of 1995 (Public Act 89-89) is declarative of existing

16 law and is not a new enactment);

17 (D) The amount of any net operating loss deduction

18 taken in arriving at taxable income, other than a net

19 operating loss carried forward from a taxable year

20 ending prior to December 31, 1986;

21 (E) For taxable years in which a net operating loss

22 carryback or carryforward from a taxable year ending

23 prior to December 31, 1986 is an element of taxable

24 income under paragraph (1) of subsection (e) or

25 subparagraph (E) of paragraph (2) of subsection (e),

26 the amount by which addition modifications other than

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1 those provided by this subparagraph (E) exceeded

2 subtraction modifications in such earlier taxable

3 year, with the following limitations applied in the

4 order that they are listed:

5 (i) the addition modification relating to the

6 net operating loss carried back or forward to the

7 taxable year from any taxable year ending prior to

8 December 31, 1986 shall be reduced by the amount of

9 addition modification under this subparagraph (E)

10 which related to that net operating loss and which

11 was taken into account in calculating the base

12 income of an earlier taxable year, and

13 (ii) the addition modification relating to the

14 net operating loss carried back or forward to the

15 taxable year from any taxable year ending prior to

16 December 31, 1986 shall not exceed the amount of

17 such carryback or carryforward;

18 For taxable years in which there is a net operating

19 loss carryback or carryforward from more than one other

20 taxable year ending prior to December 31, 1986, the

21 addition modification provided in this subparagraph

22 (E) shall be the sum of the amounts computed

23 independently under the preceding provisions of this

24 subparagraph (E) for each such taxable year;

25 (E-5) For taxable years ending after December 31,

26 1997, an amount equal to any eligible remediation costs

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1 that the corporation deducted in computing adjusted

2 gross income and for which the corporation claims a

3 credit under subsection (l) of Section 201;

4 (E-10) For taxable years 2001 and thereafter, an

5 amount equal to the bonus depreciation deduction taken

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

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

8 Internal Revenue Code;

9 (E-11) If the taxpayer sells, transfers, abandons,

10 or otherwise disposes of property for which the

11 taxpayer was required in any taxable year to make an

12 addition modification under subparagraph (E-10), then

13 an amount equal to the aggregate amount of the

14 deductions taken in all taxable years under

15 subparagraph (T) with respect to that property.

16 If the taxpayer continues to own property through

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

18 taxpayer may claim a depreciation deduction for

19 federal income tax purposes and for which the taxpayer

20 was allowed in any taxable year to make a subtraction

21 modification under subparagraph (T), then an amount

22 equal to that subtraction modification.

23 The taxpayer is required to make the addition

24 modification under this subparagraph only once with

25 respect to any one piece of property;

26 (E-12) An amount equal to the amount otherwise

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1 allowed as a deduction in computing base income for

2 interest paid, accrued, or incurred, directly or

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

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

5 member of the same unitary business group but for the

6 fact the foreign person's business activity outside

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

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

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

10 who would be a member of the same unitary business

11 group but for the fact that the person is prohibited

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

13 unitary business group because he or she is ordinarily

14 required to apportion business income under different

15 subsections of Section 304. The addition modification

16 required by this subparagraph shall be reduced to the

17 extent that dividends were included in base income of

18 the unitary group for the same taxable year and

19 received by the taxpayer or by a member of the

20 taxpayer's unitary business group (including amounts

21 included in gross income pursuant to Sections 951

22 through 964 of the Internal Revenue Code and amounts

23 included in gross income under Section 78 of the

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

25 same person to whom the interest was paid, accrued, or

26 incurred.

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1 This paragraph shall not apply to the following:

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

3 incurred, directly or indirectly, to a person who

4 is subject in a foreign country or state, other

5 than a state which requires mandatory unitary

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

7 with respect to such interest; or

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

9 incurred, directly or indirectly, to a person if

10 the taxpayer can establish, based on a

11 preponderance of the evidence, both of the

12 following:

13 (a) the person, during the same taxable

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

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

16 (b) the transaction giving rise to the

17 interest expense between the taxpayer and the

18 person did not have as a principal purpose the

19 avoidance of Illinois income tax, and is paid

20 pursuant to a contract or agreement that

21 reflects an arm's-length interest rate and

22 terms; or

23 (iii) the taxpayer can establish, based on

24 clear and convincing evidence, that the interest

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

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

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1 terms and the principal purpose for the payment is

2 not federal or Illinois tax avoidance; or

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

4 incurred, directly or indirectly, to a person if

5 the taxpayer establishes by clear and convincing

6 evidence that the adjustments are unreasonable; or

7 if the taxpayer and the Director agree in writing

8 to the application or use of an alternative method

9 of apportionment under Section 304(f).

10 Nothing in this subsection shall preclude the

11 Director from making any other adjustment

12 otherwise allowed under Section 404 of this Act for

13 any tax year beginning after the effective date of

14 this amendment provided such adjustment is made

15 pursuant to regulation adopted by the Department

16 and such regulations provide methods and standards

17 by which the Department will utilize its authority

18 under Section 404 of this Act;

19 (E-13) An amount equal to the amount of intangible

20 expenses and costs otherwise allowed as a deduction in

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

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

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

24 foreign person who would be a member of the same

25 unitary business group but for the fact that the

26 foreign person's business activity outside the United

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

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

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

4 the same unitary business group but for the fact that

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

6 from being included in the unitary business group

7 because he or she is ordinarily required to apportion

8 business income under different subsections of Section

9 304. The addition modification required by this

10 subparagraph shall be reduced to the extent that

11 dividends were included in base income of the unitary

12 group for the same taxable year and received by the

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

14 business group (including amounts included in gross

15 income pursuant to Sections 951 through 964 of the

16 Internal Revenue Code and amounts included in gross

17 income under Section 78 of the Internal Revenue Code)

18 with respect to the stock of the same person to whom

19 the intangible expenses and costs were directly or

20 indirectly paid, incurred, or accrued. The preceding

21 sentence shall not apply to the extent that the same

22 dividends caused a reduction to the addition

23 modification required under Section 203(b)(2)(E-12) of

24 this Act. As used in this subparagraph, the term

25 "intangible expenses and costs" includes (1) expenses,

26 losses, and costs for, or related to, the direct or

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1 indirect acquisition, use, maintenance or management,

2 ownership, sale, exchange, or any other disposition of

3 intangible property; (2) losses incurred, directly or

4 indirectly, from factoring transactions or discounting

5 transactions; (3) royalty, patent, technical, and

6 copyright fees; (4) licensing fees; and (5) other

7 similar expenses and costs. For purposes of this

8 subparagraph, "intangible property" includes patents,

9 patent applications, trade names, trademarks, service

10 marks, copyrights, mask works, trade secrets, and

11 similar types of intangible assets.

12 This paragraph shall not apply to the following:

13 (i) any item of intangible expenses or costs

14 paid, accrued, or incurred, directly or

15 indirectly, from a transaction with a person who is

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

17 state which requires mandatory unitary reporting,

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

19 to such item; or

20 (ii) any item of intangible expense or cost

21 paid, accrued, or incurred, directly or

22 indirectly, if the taxpayer can establish, based

23 on a preponderance of the evidence, both of the

24 following:

25 (a) the person during the same taxable

26 year paid, accrued, or incurred, the

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1 intangible expense or cost to a person that is

2 not a related member, and

3 (b) the transaction giving rise to the

4 intangible expense or cost between the

5 taxpayer and the person did not have as a

6 principal purpose the avoidance of Illinois

7 income tax, and is paid pursuant to a contract

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

9 or

10 (iii) any item of intangible expense or cost

11 paid, accrued, or incurred, directly or

12 indirectly, from a transaction with a person if the

13 taxpayer establishes by clear and convincing

14 evidence, that the adjustments are unreasonable;

15 or if the taxpayer and the Director agree in

16 writing to the application or use of an alternative

17 method of apportionment under Section 304(f);

18 Nothing in this subsection shall preclude the

19 Director from making any other adjustment

20 otherwise allowed under Section 404 of this Act for

21 any tax year beginning after the effective date of

22 this amendment provided such adjustment is made

23 pursuant to regulation adopted by the Department

24 and such regulations provide methods and standards

25 by which the Department will utilize its authority

26 under Section 404 of this Act;

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1 (E-14) For taxable years ending on or after

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

3 insurance premium expenses and costs otherwise allowed

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

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

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

7 business group but for the fact that the person is

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

9 included in the unitary business group because he or

10 she is ordinarily required to apportion business

11 income under different subsections of Section 304. The

12 addition modification required by this subparagraph

13 shall be reduced to the extent that dividends were

14 included in base income of the unitary group for the

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

16 member of the taxpayer's unitary business group

17 (including amounts included in gross income under

18 Sections 951 through 964 of the Internal Revenue Code

19 and amounts included in gross income under Section 78

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

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

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

23 preceding sentence does not apply to the extent that

24 the same dividends caused a reduction to the addition

25 modification required under Section 203(b)(2)(E-12) or

26 Section 203(b)(2)(E-13) of this Act;

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1 (E-15) For taxable years beginning after December

2 31, 2008, any deduction for dividends paid by a captive

3 real estate investment trust that is allowed to a real

4 estate investment trust under Section 857(b)(2)(B) of

5 the Internal Revenue Code for dividends paid;

6 (E-16) An amount equal to the credit allowable to

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

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

9 Act;

10 (E-17) For taxable years beginning on or after

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

12 allowed under Section 199 of the Internal Revenue Code

13 for the taxable year;

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

15 following amounts:

16 (F) An amount equal to the amount of any tax

17 imposed by this Act which was refunded to the taxpayer

18 and included in such total for the taxable year;

19 (G) An amount equal to any amount included in such

20 total under Section 78 of the Internal Revenue Code;

21 (H) In the case of a regulated investment company,

22 an amount equal to the amount of exempt interest

23 dividends as defined in subsection (b) (5) of Section

24 852 of the Internal Revenue Code, paid to shareholders

25 for the taxable year;

26 (I) With the exception of any amounts subtracted

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1 under subparagraph (J), an amount equal to the sum of

2 all amounts disallowed as deductions by (i) Sections

3 171(a) (2), and 265(a)(2) and amounts disallowed as

4 interest expense by Section 291(a)(3) of the Internal

5 Revenue Code, and all amounts of expenses allocable to

6 interest and disallowed as deductions by Section

7 265(a)(1) of the Internal Revenue Code; and (ii) for

8 taxable years ending on or after August 13, 1999,

9 Sections 171(a)(2), 265, 280C, 291(a)(3), and

10 832(b)(5)(B)(i) of the Internal Revenue Code, plus,

11 for tax years ending on or after December 31, 2011,

12 amounts disallowed as deductions by Section 45G(e)(3)

13 of the Internal Revenue Code and, for taxable years

14 ending on or after December 31, 2008, any amount

15 included in gross income under Section 87 of the

16 Internal Revenue Code and the policyholders' share of

17 tax-exempt interest of a life insurance company under

18 Section 807(a)(2)(B) of the Internal Revenue Code (in

19 the case of a life insurance company with gross income

20 from a decrease in reserves for the tax year) or

21 Section 807(b)(1)(B) of the Internal Revenue Code (in

22 the case of a life insurance company allowed a

23 deduction for an increase in reserves for the tax

24 year); the provisions of this subparagraph are exempt

25 from the provisions of Section 250;

26 (J) An amount equal to all amounts included in such

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1 total which are exempt from taxation by this State

2 either by reason of its statutes or Constitution or by

3 reason of the Constitution, treaties or statutes of the

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

5 statute of this State that exempts income derived from

6 bonds or other obligations from the tax imposed under

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

8 of bond premium amortization;

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

10 such total which were paid by a corporation which

11 conducts business operations in a River Edge

12 Redevelopment Zone or zones created under the River

13 Edge Redevelopment Zone Act and conducts substantially

14 all of its operations in a River Edge Redevelopment

15 Zone or zones. This subparagraph (K) is exempt from the

16 provisions of Section 250;

17 (L) An amount equal to those dividends included in

18 such total that were paid by a corporation that

19 conducts business operations in a federally designated

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

21 High Impact Business located in Illinois; provided

22 that dividends eligible for the deduction provided in

23 subparagraph (K) of paragraph 2 of this subsection

24 shall not be eligible for the deduction provided under

25 this subparagraph (L);

26 (M) For any taxpayer that is a financial

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1 organization within the meaning of Section 304(c) of

2 this Act, an amount included in such total as interest

3 income from a loan or loans made by such taxpayer to a

4 borrower, to the extent that such a loan is secured by

5 property which is eligible for the River Edge

6 Redevelopment Zone Investment Credit. To determine the

7 portion of a loan or loans that is secured by property

8 eligible for a Section 201(f) investment credit to the

9 borrower, the entire principal amount of the loan or

10 loans between the taxpayer and the borrower should be

11 divided into the basis of the Section 201(f) investment

12 credit property which secures the loan or loans, using

13 for this purpose the original basis of such property on

14 the date that it was placed in service in the River

15 Edge Redevelopment Zone. The subtraction modification

16 available to taxpayer in any year under this subsection

17 shall be that portion of the total interest paid by the

18 borrower with respect to such loan attributable to the

19 eligible property as calculated under the previous

20 sentence. This subparagraph (M) is exempt from the

21 provisions of Section 250;

22 (M-1) For any taxpayer that is a financial

23 organization within the meaning of Section 304(c) of

24 this Act, an amount included in such total as interest

25 income from a loan or loans made by such taxpayer to a

26 borrower, to the extent that such a loan is secured by

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1 property which is eligible for the High Impact Business

2 Investment Credit. To determine the portion of a loan

3 or loans that is secured by property eligible for a

4 Section 201(h) investment credit to the borrower, the

5 entire principal amount of the loan or loans between

6 the taxpayer and the borrower should be divided into

7 the basis of the Section 201(h) investment credit

8 property which secures the loan or loans, using for

9 this purpose the original basis of such property on the

10 date that it was placed in service in a federally

11 designated Foreign Trade Zone or Sub-Zone located in

12 Illinois. No taxpayer that is eligible for the

13 deduction provided in subparagraph (M) of paragraph

14 (2) of this subsection shall be eligible for the

15 deduction provided under this subparagraph (M-1). The

16 subtraction modification available to taxpayers in any

17 year under this subsection shall be that portion of the

18 total interest paid by the borrower with respect to

19 such loan attributable to the eligible property as

20 calculated under the previous sentence;

21 (N) Two times any contribution made during the

22 taxable year to a designated zone organization to the

23 extent that the contribution (i) qualifies as a

24 charitable contribution under subsection (c) of

25 Section 170 of the Internal Revenue Code and (ii) must,

26 by its terms, be used for a project approved by the

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1 Department of Commerce and Economic Opportunity under

2 Section 11 of the Illinois Enterprise Zone Act or under

3 Section 10-10 of the River Edge Redevelopment Zone Act.

4 This subparagraph (N) is exempt from the provisions of

5 Section 250;

6 (O) An amount equal to: (i) 85% for taxable years

7 ending on or before December 31, 1992, or, a percentage

8 equal to the percentage allowable under Section

9 243(a)(1) of the Internal Revenue Code of 1986 for

10 taxable years ending after December 31, 1992, of the

11 amount by which dividends included in taxable income

12 and received from a corporation that is not created or

13 organized under the laws of the United States or any

14 state or political subdivision thereof, including, for

15 taxable years ending on or after December 31, 1988,

16 dividends received or deemed received or paid or deemed

17 paid under Sections 951 through 965 of the Internal

18 Revenue Code, exceed the amount of the modification

19 provided under subparagraph (G) of paragraph (2) of

20 this subsection (b) which is related to such dividends,

21 and including, for taxable years ending on or after

22 December 31, 2008, dividends received from a captive

23 real estate investment trust; plus (ii) 100% of the

24 amount by which dividends, included in taxable income

25 and received, including, for taxable years ending on or

26 after December 31, 1988, dividends received or deemed

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1 received or paid or deemed paid under Sections 951

2 through 964 of the Internal Revenue Code and including,

3 for taxable years ending on or after December 31, 2008,

4 dividends received from a captive real estate

5 investment trust, from any such corporation specified

6 in clause (i) that would but for the provisions of

7 Section 1504 (b) (3) of the Internal Revenue Code be

8 treated as a member of the affiliated group which

9 includes the dividend recipient, exceed the amount of

10 the modification provided under subparagraph (G) of

11 paragraph (2) of this subsection (b) which is related

12 to such dividends. This subparagraph (O) is exempt from

13 the provisions of Section 250 of this Act;

14 (P) An amount equal to any contribution made to a

15 job training project established pursuant to the Tax

16 Increment Allocation Redevelopment Act;

17 (Q) An amount equal to the amount of the deduction

18 used to compute the federal income tax credit for

19 restoration of substantial amounts held under claim of

20 right for the taxable year pursuant to Section 1341 of

21 the Internal Revenue Code;

22 (R) On and after July 20, 1999, in the case of an

23 attorney-in-fact with respect to whom an interinsurer

24 or a reciprocal insurer has made the election under

25 Section 835 of the Internal Revenue Code, 26 U.S.C.

26 835, an amount equal to the excess, if any, of the

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1 amounts paid or incurred by that interinsurer or

2 reciprocal insurer in the taxable year to the

3 attorney-in-fact over the deduction allowed to that

4 interinsurer or reciprocal insurer with respect to the

5 attorney-in-fact under Section 835(b) of the Internal

6 Revenue Code for the taxable year; the provisions of

7 this subparagraph are exempt from the provisions of

8 Section 250;

9 (S) For taxable years ending on or after December

10 31, 1997, in the case of a Subchapter S corporation, an

11 amount equal to all amounts of income allocable to a

12 shareholder subject to the Personal Property Tax

13 Replacement Income Tax imposed by subsections (c) and

14 (d) of Section 201 of this Act, including amounts

15 allocable to organizations exempt from federal income

16 tax by reason of Section 501(a) of the Internal Revenue

17 Code. This subparagraph (S) is exempt from the

18 provisions of Section 250;

19 (T) 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 (T) is exempt from the provisions of

2 Section 250;

3 (U) 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 (E-10), 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 (E-10), 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 (U) is exempt from the

19 provisions of Section 250;

20 (V) 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, (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, and (iii) any insurance premium

10 income (net of deductions allocable thereto) taken

11 into account for the taxable year with respect to a

12 transaction with a taxpayer that is required to make an

13 addition modification with respect to such transaction

14 under Section 203(a)(2)(D-19), Section

15 203(b)(2)(E-14), Section 203(c)(2)(G-14), or Section

16 203(d)(2)(D-9), but not to exceed the amount of that

17 addition modification. This subparagraph (V) is exempt

18 from the provisions of Section 250;

19 (W) An amount equal to the interest income taken

20 into account for the taxable year (net of the

21 deductions allocable thereto) with respect to

22 transactions with (i) a foreign person who would be a

23 member of the taxpayer's unitary business group but for

24 the fact that the foreign person's business activity

25 outside the United States is 80% or more of that

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

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

2 who would be a member of the same unitary business

3 group but for the fact that the person is prohibited

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

5 unitary business group because he or she is ordinarily

6 required to apportion business income under different

7 subsections of Section 304, but not to exceed the

8 addition modification required to be made for the same

9 taxable year under Section 203(b)(2)(E-12) for

10 interest paid, accrued, or incurred, directly or

11 indirectly, to the same person. This subparagraph (W)

12 is exempt from the provisions of Section 250;

13 (X) An amount equal to the income from intangible

14 property taken into account for the taxable year (net

15 of the deductions allocable thereto) with respect to

16 transactions with (i) a foreign person who would be a

17 member of the taxpayer's unitary business group but for

18 the fact that the foreign person's business activity

19 outside the United States is 80% or more of that

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

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

22 who would be a member of the same unitary business

23 group but for the fact that the person is prohibited

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

25 unitary business group because he or she is ordinarily

26 required to apportion business income under different

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1 subsections of Section 304, but not to exceed the

2 addition modification required to be made for the same

3 taxable year under Section 203(b)(2)(E-13) for

4 intangible expenses and costs paid, accrued, or

5 incurred, directly or indirectly, to the same foreign

6 person. This subparagraph (X) is exempt from the

7 provisions of Section 250;

8 (Y) For taxable years ending on or after December

9 31, 2011, in the case of a taxpayer who was required to

10 add back any insurance premiums under Section

11 203(b)(2)(E-14), such taxpayer may elect to subtract

12 that part of a reimbursement received from the

13 insurance company equal to the amount of the expense or

14 loss (including expenses incurred by the insurance

15 company) that would have been taken into account as a

16 deduction for federal income tax purposes if the

17 expense or loss had been uninsured. If a taxpayer makes

18 the election provided for by this subparagraph (Y), the

19 insurer to which the premiums were paid must add back

20 to income the amount subtracted by the taxpayer

21 pursuant to this subparagraph (Y). This subparagraph

22 (Y) is exempt from the provisions of Section 250; and

23 (Z) The difference between the nondeductible

24 controlled foreign corporation dividends under Section

25 965(e)(3) of the Internal Revenue Code over the taxable

26 income of the taxpayer, computed without regard to

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1 Section 965(e)(2)(A) of the Internal Revenue Code, and

2 without regard to any net operating loss deduction.

3 This subparagraph (Z) is exempt from the provisions of

4 Section 250.

5 (3) Special rule. For purposes of paragraph (2) (A),

6 "gross income" in the case of a life insurance company, for

7 tax years ending on and after December 31, 1994, and prior

8 to December 31, 2011, shall mean the gross investment

9 income for the taxable year and, for tax years ending on or

10 after December 31, 2011, shall mean all amounts included in

11 life insurance gross income under Section 803(a)(3) of the

12 Internal Revenue Code.

13 (c) Trusts and estates.

14 (1) In general. In the case of a trust or estate, base

15 income means an amount equal to the taxpayer's taxable

16 income for the taxable year as modified by paragraph (2).

17 (2) Modifications. Subject to the provisions of

18 paragraph (3), the taxable income referred to in paragraph

19 (1) shall be modified by adding thereto the sum of the

20 following amounts:

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

22 to the taxpayer as interest or dividends during the

23 taxable year to the extent excluded from gross income

24 in the computation of taxable income;

25 (B) In the case of (i) an estate, $600; (ii) a

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1 trust which, under its governing instrument, is

2 required to distribute all of its income currently,

3 $300; and (iii) any other trust, $100, but in each such

4 case, only to the extent such amount was deducted in

5 the computation of taxable income;

6 (C) An amount equal to the amount of tax imposed by

7 this Act to the extent deducted from gross income in

8 the computation of taxable income for the taxable year;

9 (D) The amount of any net operating loss deduction

10 taken in arriving at taxable income, other than a net

11 operating loss carried forward from a taxable year

12 ending prior to December 31, 1986;

13 (E) For taxable years in which a net operating loss

14 carryback or carryforward from a taxable year ending

15 prior to December 31, 1986 is an element of taxable

16 income under paragraph (1) of subsection (e) or

17 subparagraph (E) of paragraph (2) of subsection (e),

18 the amount by which addition modifications other than

19 those provided by this subparagraph (E) exceeded

20 subtraction modifications in such taxable year, with

21 the following limitations applied in the order that

22 they are listed:

23 (i) the addition modification relating to the

24 net operating loss carried back or forward to the

25 taxable year from any taxable year ending prior to

26 December 31, 1986 shall be reduced by the amount of

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1 addition modification under this subparagraph (E)

2 which related to that net operating loss and which

3 was taken into account in calculating the base

4 income of an earlier taxable year, and

5 (ii) the addition modification relating to the

6 net operating loss carried back or forward to the

7 taxable year from any taxable year ending prior to

8 December 31, 1986 shall not exceed the amount of

9 such carryback or carryforward;

10 For taxable years in which there is a net operating

11 loss carryback or carryforward from more than one other

12 taxable year ending prior to December 31, 1986, the

13 addition modification provided in this subparagraph

14 (E) shall be the sum of the amounts computed

15 independently under the preceding provisions of this

16 subparagraph (E) for each such taxable year;

17 (F) For taxable years ending on or after January 1,

18 1989, an amount equal to the tax deducted pursuant to

19 Section 164 of the Internal Revenue Code if the trust

20 or estate is claiming the same tax for purposes of the

21 Illinois foreign tax credit under Section 601 of this

22 Act;

23 (G) An amount equal to the amount of the capital

24 gain deduction allowable under the Internal Revenue

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

26 computation of taxable income;

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1 (G-5) For taxable years ending after December 31,

2 1997, an amount equal to any eligible remediation costs

3 that the trust or estate deducted in computing adjusted

4 gross income and for which the trust or estate claims a

5 credit under subsection (l) of Section 201;

6 (G-10) For taxable years 2001 and thereafter, an

7 amount equal to the bonus depreciation deduction taken

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

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

10 Internal Revenue Code; and

11 (G-11) If the taxpayer sells, transfers, abandons,

12 or otherwise disposes of property for which the

13 taxpayer was required in any taxable year to make an

14 addition modification under subparagraph (G-10), then

15 an amount equal to the aggregate amount of the

16 deductions taken in all taxable years under

17 subparagraph (R) with respect to that property.

18 If the taxpayer continues to own property through

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

20 taxpayer may claim a depreciation deduction for

21 federal income tax purposes and for which the taxpayer

22 was allowed in any taxable year to make a subtraction

23 modification under subparagraph (R), then an amount

24 equal to that subtraction modification.

25 The taxpayer is required to make the addition

26 modification under this subparagraph only once with

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1 respect to any one piece of property;

2 (G-12) An amount equal to the amount otherwise

3 allowed as a deduction in computing base income for

4 interest paid, accrued, or incurred, directly or

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

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

7 member of the same unitary business group but for the

8 fact that the foreign person's business activity

9 outside the United States is 80% or more of the foreign

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

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

12 who would be a member of the same unitary business

13 group but for the fact that the person is prohibited

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

15 unitary business group because he or she is ordinarily

16 required to apportion business income under different

17 subsections of Section 304. The addition modification

18 required by this subparagraph shall be reduced to the

19 extent that dividends were included in base income of

20 the unitary group for the same taxable year and

21 received by the taxpayer or by a member of the

22 taxpayer's unitary business group (including amounts

23 included in gross income pursuant to Sections 951

24 through 964 of the Internal Revenue Code and amounts

25 included in gross income under Section 78 of the

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

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1 same person to whom the interest was paid, accrued, or

2 incurred.

3 This paragraph shall not apply to the following:

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

5 incurred, directly or indirectly, to a person who

6 is subject in a foreign country or state, other

7 than a state which requires mandatory unitary

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

9 with respect to such interest; or

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

11 incurred, directly or indirectly, to a person if

12 the taxpayer can establish, based on a

13 preponderance of the evidence, both of the

14 following:

15 (a) the person, during the same taxable

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

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

18 (b) the transaction giving rise to the

19 interest expense between the taxpayer and the

20 person did not have as a principal purpose the

21 avoidance of Illinois income tax, and is paid

22 pursuant to a contract or agreement that

23 reflects an arm's-length interest rate and

24 terms; or

25 (iii) the taxpayer can establish, based on

26 clear and convincing evidence, that the interest

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

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

3 terms and the principal purpose for the payment is

4 not federal or Illinois tax avoidance; or

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

6 incurred, directly or indirectly, to a person if

7 the taxpayer establishes by clear and convincing

8 evidence that the adjustments are unreasonable; or

9 if the taxpayer and the Director agree in writing

10 to the application or use of an alternative method

11 of apportionment under Section 304(f).

12 Nothing in this subsection shall preclude the

13 Director from making any other adjustment

14 otherwise allowed under Section 404 of this Act for

15 any tax year beginning after the effective date of

16 this amendment provided such adjustment is made

17 pursuant to regulation adopted by the Department

18 and such regulations provide methods and standards

19 by which the Department will utilize its authority

20 under Section 404 of this Act;

21 (G-13) An amount equal to the amount of intangible

22 expenses and costs otherwise allowed as a deduction in

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

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

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

26 foreign person who would be a member of the same

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1 unitary business group but for the fact that the

2 foreign person's business activity outside the United

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

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

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

6 the same unitary business group but for the fact that

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

8 from being included in the unitary business group

9 because he or she is ordinarily required to apportion

10 business income under different subsections of Section

11 304. The addition modification required by this

12 subparagraph shall be reduced to the extent that

13 dividends were included in base income of the unitary

14 group for the same taxable year and received by the

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

16 business group (including amounts included in gross

17 income pursuant to Sections 951 through 964 of the

18 Internal Revenue Code and amounts included in gross

19 income under Section 78 of the Internal Revenue Code)

20 with respect to the stock of the same person to whom

21 the intangible expenses and costs were directly or

22 indirectly paid, incurred, or accrued. The preceding

23 sentence shall not apply to the extent that the same

24 dividends caused a reduction to the addition

25 modification required under Section 203(c)(2)(G-12) of

26 this Act. As used in this subparagraph, the term

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1 "intangible expenses and costs" includes: (1)

2 expenses, losses, and costs for or related to the

3 direct or indirect acquisition, use, maintenance or

4 management, ownership, sale, exchange, or any other

5 disposition of intangible property; (2) losses

6 incurred, directly or indirectly, from factoring

7 transactions or discounting transactions; (3) royalty,

8 patent, technical, and copyright fees; (4) licensing

9 fees; and (5) other similar expenses and costs. For

10 purposes of this subparagraph, "intangible property"

11 includes patents, patent applications, trade names,

12 trademarks, service marks, copyrights, mask works,

13 trade secrets, and similar types of intangible assets.

14 This paragraph shall not apply to the following:

15 (i) any item of intangible expenses or costs

16 paid, accrued, or incurred, directly or

17 indirectly, from a transaction with a person who is

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

19 state which requires mandatory unitary reporting,

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

21 to such item; or

22 (ii) any item of intangible expense or cost

23 paid, accrued, or incurred, directly or

24 indirectly, if the taxpayer can establish, based

25 on a preponderance of the evidence, both of the

26 following:

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1 (a) the person during the same taxable

2 year paid, accrued, or incurred, the

3 intangible expense or cost to a person that is

4 not a related member, and

5 (b) the transaction giving rise to the

6 intangible expense or cost between the

7 taxpayer and the person did not have as a

8 principal purpose the avoidance of Illinois

9 income tax, and is paid pursuant to a contract

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

11 or

12 (iii) any item of intangible expense or cost

13 paid, accrued, or incurred, directly or

14 indirectly, from a transaction with a person if the

15 taxpayer establishes by clear and convincing

16 evidence, that the adjustments are unreasonable;

17 or if the taxpayer and the Director agree in

18 writing to the application or use of an alternative

19 method of apportionment under Section 304(f);

20 Nothing in this subsection shall preclude the

21 Director from making any other adjustment

22 otherwise allowed under Section 404 of this Act for

23 any tax year beginning after the effective date of

24 this amendment provided such adjustment is made

25 pursuant to regulation adopted by the Department

26 and such regulations provide methods and standards

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1 by which the Department will utilize its authority

2 under Section 404 of this Act;

3 (G-14) For taxable years ending on or after

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

5 insurance premium expenses and costs otherwise allowed

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

7 paid, accrued, or incurred, directly or indirectly, to

8 a person who would be a member of the same unitary

9 business group but for the fact that the person is

10 prohibited under Section 1501(a)(27) from being

11 included in the unitary business group because he or

12 she is ordinarily required to apportion business

13 income under different subsections of Section 304. The

14 addition modification required by this subparagraph

15 shall be reduced to the extent that dividends were

16 included in base income of the unitary group for the

17 same taxable year and received by the taxpayer or by a

18 member of the taxpayer's unitary business group

19 (including amounts included in gross income under

20 Sections 951 through 964 of the Internal Revenue Code

21 and amounts included in gross income under Section 78

22 of the Internal Revenue Code) with respect to the stock

23 of the same person to whom the premiums and costs were

24 directly or indirectly paid, incurred, or accrued. The

25 preceding sentence does not apply to the extent that

26 the same dividends caused a reduction to the addition

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1 modification required under Section 203(c)(2)(G-12) or

2 Section 203(c)(2)(G-13) of this Act;

3 (G-15) An amount equal to the credit allowable to

4 the taxpayer under Section 218(a) of this Act,

5 determined without regard to Section 218(c) of this

6 Act;

7 (G-16) For taxable years beginning on or after

8 January 1, 2017, an amount equal to the deduction

9 allowed under Section 199 of the Internal Revenue Code

10 for the taxable year;

11 and by deducting from the total so obtained the sum of the

12 following amounts:

13 (H) An amount equal to all amounts included in such

14 total pursuant to the provisions of Sections 402(a),

15 402(c), 403(a), 403(b), 406(a), 407(a) and 408 of the

16 Internal Revenue Code or included in such total as

17 distributions under the provisions of any retirement

18 or disability plan for employees of any governmental

19 agency or unit, or retirement payments to retired

20 partners, which payments are excluded in computing net

21 earnings from self employment by Section 1402 of the

22 Internal Revenue Code and regulations adopted pursuant

23 thereto;

24 (I) The valuation limitation amount;

25 (J) An amount equal to the amount of any tax

26 imposed by this Act which was refunded to the taxpayer

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1 and included in such total for the taxable year;

2 (K) An amount equal to all amounts included in

3 taxable income as modified by subparagraphs (A), (B),

4 (C), (D), (E), (F) and (G) which are exempt from

5 taxation by this State either by reason of its statutes

6 or Constitution or by reason of the Constitution,

7 treaties or statutes of the United States; provided

8 that, in the case of any statute of this State that

9 exempts income derived from bonds or other obligations

10 from the tax imposed under this Act, the amount

11 exempted shall be the interest net of bond premium

12 amortization;

13 (L) With the exception of any amounts subtracted

14 under subparagraph (K), an amount equal to the sum of

15 all amounts disallowed as deductions by (i) Sections

16 171(a) (2) and 265(a)(2) of the Internal Revenue Code,

17 and all amounts of expenses allocable to interest and

18 disallowed as deductions by Section 265(1) of the

19 Internal Revenue Code; and (ii) for taxable years

20 ending on or after August 13, 1999, Sections 171(a)(2),

21 265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue

22 Code, plus, (iii) for taxable years ending on or after

23 December 31, 2011, Section 45G(e)(3) of the Internal

24 Revenue Code and, for taxable years ending on or after

25 December 31, 2008, any amount included in gross income

26 under Section 87 of the Internal Revenue Code; the

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1 provisions of this subparagraph are exempt from the

2 provisions of Section 250;

3 (M) An amount equal to those dividends included in

4 such total which were paid by a corporation which

5 conducts business operations in a River Edge

6 Redevelopment Zone or zones created under the River

7 Edge Redevelopment Zone Act and conducts substantially

8 all of its operations in a River Edge Redevelopment

9 Zone or zones. This subparagraph (M) is exempt from the

10 provisions of Section 250;

11 (N) An amount equal to any contribution made to a

12 job training project established pursuant to the Tax

13 Increment Allocation Redevelopment Act;

14 (O) An amount equal to those dividends included in

15 such total that were paid by a corporation that

16 conducts business operations in a federally designated

17 Foreign Trade Zone or Sub-Zone and that is designated a

18 High Impact Business located in Illinois; provided

19 that dividends eligible for the deduction provided in

20 subparagraph (M) of paragraph (2) of this subsection

21 shall not be eligible for the deduction provided under

22 this subparagraph (O);

23 (P) An amount equal to the amount of the deduction

24 used to compute the federal income tax credit for

25 restoration of substantial amounts held under claim of

26 right for the taxable year pursuant to Section 1341 of

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1 the Internal Revenue Code;

2 (Q) For taxable year 1999 and thereafter, an amount

3 equal to the amount of any (i) distributions, to the

4 extent includible in gross income for federal income

5 tax purposes, made to the taxpayer because of his or

6 her status as a victim of persecution for racial or

7 religious reasons by Nazi Germany or any other Axis

8 regime or as an heir of the victim and (ii) items of

9 income, to the extent includible in gross income for

10 federal income tax purposes, attributable to, derived

11 from or in any way related to assets stolen from,

12 hidden from, or otherwise lost to a victim of

13 persecution for racial or religious reasons by Nazi

14 Germany or any other Axis regime immediately prior to,

15 during, and immediately after World War II, including,

16 but not limited to, interest on the proceeds receivable

17 as insurance under policies issued to a victim of

18 persecution for racial or religious reasons by Nazi

19 Germany or any other Axis regime by European insurance

20 companies immediately prior to and during World War II;

21 provided, however, this subtraction from federal

22 adjusted gross income does not apply to assets acquired

23 with such assets or with the proceeds from the sale of

24 such assets; provided, further, this paragraph shall

25 only apply to a taxpayer who was the first recipient of

26 such assets after their recovery and who is a victim of

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1 persecution for racial or religious reasons by Nazi

2 Germany or any other Axis regime or as an heir of the

3 victim. The amount of and the eligibility for any

4 public assistance, benefit, or similar entitlement is

5 not affected by the inclusion of items (i) and (ii) of

6 this paragraph in gross income for federal income tax

7 purposes. This paragraph is exempt from the provisions

8 of Section 250;

9 (R) For taxable years 2001 and thereafter, for the

10 taxable year in which the bonus depreciation deduction

11 is taken on the taxpayer's federal income tax return

12 under subsection (k) of Section 168 of the Internal

13 Revenue Code and for each applicable taxable year

14 thereafter, an amount equal to "x", where:

15 (1) "y" equals the amount of the depreciation

16 deduction taken for the taxable year on the

17 taxpayer's federal income tax return on property

18 for which the bonus depreciation deduction was

19 taken in any year under subsection (k) of Section

20 168 of the Internal Revenue Code, but not including

21 the bonus depreciation deduction;

22 (2) for taxable years ending on or before

23 December 31, 2005, "x" equals "y" multiplied by 30

24 and then divided by 70 (or "y" multiplied by

25 0.429); and

26 (3) for taxable years ending after December

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1 31, 2005:

2 (i) for property on which a bonus

3 depreciation deduction of 30% of the adjusted

4 basis was taken, "x" equals "y" multiplied by

5 30 and then divided by 70 (or "y" multiplied by

6 0.429); and

7 (ii) for property on which a bonus

8 depreciation deduction of 50% of the adjusted

9 basis was taken, "x" equals "y" multiplied by

10 1.0.

11 The aggregate amount deducted under this

12 subparagraph in all taxable years for any one piece of

13 property may not exceed the amount of the bonus

14 depreciation deduction taken on that property on the

15 taxpayer's federal income tax return under subsection

16 (k) of Section 168 of the Internal Revenue Code. This

17 subparagraph (R) is exempt from the provisions of

18 Section 250;

19 (S) If the taxpayer sells, transfers, abandons, or

20 otherwise disposes of property for which the taxpayer

21 was required in any taxable year to make an addition

22 modification under subparagraph (G-10), then an amount

23 equal to that addition modification.

24 If the taxpayer continues to own property through

25 the last day of the last tax year for which the

26 taxpayer may claim a depreciation deduction for

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1 federal income tax purposes and for which the taxpayer

2 was required in any taxable year to make an addition

3 modification under subparagraph (G-10), then an amount

4 equal to that addition modification.

5 The taxpayer is allowed to take the deduction under

6 this subparagraph only once with respect to any one

7 piece of property.

8 This subparagraph (S) is exempt from the

9 provisions of Section 250;

10 (T) The amount of (i) any interest income (net of

11 the deductions allocable thereto) taken into account

12 for the taxable year with respect to a transaction with

13 a taxpayer that is required to make an addition

14 modification with respect to such transaction under

15 Section 203(a)(2)(D-17), 203(b)(2)(E-12),

16 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed

17 the amount of such addition modification and (ii) any

18 income from intangible property (net of the deductions

19 allocable thereto) taken into account for the taxable

20 year with respect to a transaction with a taxpayer that

21 is required to make an addition modification with

22 respect to such transaction under Section

23 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or

24 203(d)(2)(D-8), but not to exceed the amount of such

25 addition modification. This subparagraph (T) is exempt

26 from the provisions of Section 250;

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1 (U) An amount equal to the interest income taken

2 into account for the taxable year (net of the

3 deductions allocable thereto) with respect to

4 transactions with (i) a foreign person who would be a

5 member of the taxpayer's unitary business group but for

6 the fact the foreign person's business activity

7 outside the United States is 80% or more of that

8 person's total business activity and (ii) for taxable

9 years ending on or after December 31, 2008, to a person

10 who would be a member of the same unitary business

11 group but for the fact that the person is prohibited

12 under Section 1501(a)(27) from being included in the

13 unitary business group because he or she is ordinarily

14 required to apportion business income under different

15 subsections of Section 304, but not to exceed the

16 addition modification required to be made for the same

17 taxable year under Section 203(c)(2)(G-12) for

18 interest paid, accrued, or incurred, directly or

19 indirectly, to the same person. This subparagraph (U)

20 is exempt from the provisions of Section 250;

21 (V) An amount equal to the income from intangible

22 property taken into account for the taxable year (net

23 of the deductions allocable thereto) with respect to

24 transactions with (i) a foreign person who would be a

25 member of the taxpayer's unitary business group but for

26 the fact that the foreign person's business activity

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1 outside the United States is 80% or more of that

2 person's total business activity and (ii) for taxable

3 years ending on or after December 31, 2008, to a person

4 who would be a member of the same unitary business

5 group but for the fact that the person is prohibited

6 under Section 1501(a)(27) from being included in the

7 unitary business group because he or she is ordinarily

8 required to apportion business income under different

9 subsections of Section 304, but not to exceed the

10 addition modification required to be made for the same

11 taxable year under Section 203(c)(2)(G-13) for

12 intangible expenses and costs paid, accrued, or

13 incurred, directly or indirectly, to the same foreign

14 person. This subparagraph (V) is exempt from the

15 provisions of Section 250;

16 (W) in the case of an estate, an amount equal to

17 all amounts included in such total pursuant to the

18 provisions of Section 111 of the Internal Revenue Code

19 as a recovery of items previously deducted by the

20 decedent from adjusted gross income in the computation

21 of taxable income. This subparagraph (W) is exempt from

22 Section 250;

23 (X) an amount equal to the refund included in such

24 total of any tax deducted for federal income tax

25 purposes, to the extent that deduction was added back

26 under subparagraph (F). This subparagraph (X) is

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1 exempt from the provisions of Section 250; and

2 (Y) For taxable years ending on or after December

3 31, 2011, in the case of a taxpayer who was required to

4 add back any insurance premiums under Section

5 203(c)(2)(G-14), such taxpayer may elect to subtract

6 that part of a reimbursement received from the

7 insurance company equal to the amount of the expense or

8 loss (including expenses incurred by the insurance

9 company) that would have been taken into account as a

10 deduction for federal income tax purposes if the

11 expense or loss had been uninsured. If a taxpayer makes

12 the election provided for by this subparagraph (Y), the

13 insurer to which the premiums were paid must add back

14 to income the amount subtracted by the taxpayer

15 pursuant to this subparagraph (Y). This subparagraph

16 (Y) is exempt from the provisions of Section 250.

17 (3) Limitation. The amount of any modification

18 otherwise required under this subsection shall, under

19 regulations prescribed by the Department, be adjusted by

20 any amounts included therein which were properly paid,

21 credited, or required to be distributed, or permanently set

22 aside for charitable purposes pursuant to Internal Revenue

23 Code Section 642(c) during the taxable year.

24 (d) Partnerships.

25 (1) In general. In the case of a partnership, base

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1 income means an amount equal to the taxpayer's taxable

2 income for the taxable year as modified by paragraph (2).

3 (2) Modifications. The taxable income referred to in

4 paragraph (1) shall be modified by adding thereto the sum

5 of the following amounts:

6 (A) An amount equal to all amounts paid or accrued

7 to the taxpayer as interest or dividends during the

8 taxable year to the extent excluded from gross income

9 in the computation of taxable income;

10 (B) An amount equal to the amount of tax imposed by

11 this Act to the extent deducted from gross income for

12 the taxable year;

13 (C) The amount of deductions allowed to the

14 partnership pursuant to Section 707 (c) of the Internal

15 Revenue Code in calculating its taxable income;

16 (D) An amount equal to the amount of the capital

17 gain deduction allowable under the Internal Revenue

18 Code, to the extent deducted from gross income in the

19 computation of taxable income;

20 (D-5) For taxable years 2001 and thereafter, an

21 amount equal to the bonus depreciation deduction taken

22 on the taxpayer's federal income tax return for the

23 taxable year under subsection (k) of Section 168 of the

24 Internal Revenue Code;

25 (D-6) If the taxpayer sells, transfers, abandons,

26 or otherwise disposes of property for which the

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1 taxpayer was required in any taxable year to make an

2 addition modification under subparagraph (D-5), then

3 an amount equal to the aggregate amount of the

4 deductions taken in all taxable years under

5 subparagraph (O) with respect to that property.

6 If the taxpayer continues to own property through

7 the last day of the last tax year for which the

8 taxpayer may claim a depreciation deduction for

9 federal income tax purposes and for which the taxpayer

10 was allowed in any taxable year to make a subtraction

11 modification under subparagraph (O), then an amount

12 equal to that subtraction modification.

13 The taxpayer is required to make the addition

14 modification under this subparagraph only once with

15 respect to any one piece of property;

16 (D-7) An amount equal to the amount otherwise

17 allowed as a deduction in computing base income for

18 interest paid, accrued, or incurred, directly or

19 indirectly, (i) for taxable years ending on or after

20 December 31, 2004, to a foreign person who would be a

21 member of the same unitary business group but for the

22 fact the foreign person's business activity outside

23 the United States is 80% or more of the foreign

24 person's total business activity and (ii) for taxable

25 years ending on or after December 31, 2008, to a person

26 who would be a member of the same unitary business

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1 group but for the fact that the person is prohibited

2 under Section 1501(a)(27) from being included in the

3 unitary business group because he or she is ordinarily

4 required to apportion business income under different

5 subsections of Section 304. The addition modification

6 required by this subparagraph shall be reduced to the

7 extent that dividends were included in base income of

8 the unitary group for the same taxable year and

9 received by the taxpayer or by a member of the

10 taxpayer's unitary business group (including amounts

11 included in gross income pursuant to Sections 951

12 through 964 of the Internal Revenue Code and amounts

13 included in gross income under Section 78 of the

14 Internal Revenue Code) with respect to the stock of the

15 same person to whom the interest was paid, accrued, or

16 incurred.

17 This paragraph shall not apply to the following:

18 (i) an item of interest paid, accrued, or

19 incurred, directly or indirectly, to a person who

20 is subject in a foreign country or state, other

21 than a state which requires mandatory unitary

22 reporting, to a tax on or measured by net income

23 with respect to such interest; or

24 (ii) an item of interest paid, accrued, or

25 incurred, directly or indirectly, to a person if

26 the taxpayer can establish, based on a

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1 preponderance of the evidence, both of the

2 following:

3 (a) the person, during the same taxable

4 year, paid, accrued, or incurred, the interest

5 to a person that is not a related member, and

6 (b) the transaction giving rise to the

7 interest expense between the taxpayer and the

8 person did not have as a principal purpose the

9 avoidance of Illinois income tax, and is paid

10 pursuant to a contract or agreement that

11 reflects an arm's-length interest rate and

12 terms; or

13 (iii) the taxpayer can establish, based on

14 clear and convincing evidence, that the interest

15 paid, accrued, or incurred relates to a contract or

16 agreement entered into at arm's-length rates and

17 terms and the principal purpose for the payment is

18 not federal or Illinois tax avoidance; or

19 (iv) an item of interest paid, accrued, or

20 incurred, directly or indirectly, to a person if

21 the taxpayer establishes by clear and convincing

22 evidence that the adjustments are unreasonable; or

23 if the taxpayer and the Director agree in writing

24 to the application or use of an alternative method

25 of apportionment under Section 304(f).

26 Nothing in this subsection shall preclude the

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1 Director from making any other adjustment

2 otherwise allowed under Section 404 of this Act for

3 any tax year beginning after the effective date of

4 this amendment provided such adjustment is made

5 pursuant to regulation adopted by the Department

6 and such regulations provide methods and standards

7 by which the Department will utilize its authority

8 under Section 404 of this Act; and

9 (D-8) An amount equal to the amount of intangible

10 expenses and costs otherwise allowed as a deduction in

11 computing base income, and that were paid, accrued, or

12 incurred, directly or indirectly, (i) for taxable

13 years ending on or after December 31, 2004, to a

14 foreign person who would be a member of the same

15 unitary business group but for the fact that the

16 foreign person's business activity outside the United

17 States is 80% or more of that person's total business

18 activity and (ii) for taxable years ending on or after

19 December 31, 2008, to a person who would be a member of

20 the same unitary business group but for the fact that

21 the person is prohibited under Section 1501(a)(27)

22 from being included in the unitary business group

23 because he or she is ordinarily required to apportion

24 business income under different subsections of Section

25 304. The addition modification required by this

26 subparagraph shall be reduced to the extent that

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1 dividends were included in base income of the unitary

2 group for the same taxable year and received by the

3 taxpayer or by a member of the taxpayer's unitary

4 business group (including amounts included in gross

5 income pursuant to Sections 951 through 964 of the

6 Internal Revenue Code and amounts included in gross

7 income under Section 78 of the Internal Revenue Code)

8 with respect to the stock of the same person to whom

9 the intangible expenses and costs were directly or

10 indirectly paid, incurred or accrued. The preceding

11 sentence shall not apply to the extent that the same

12 dividends caused a reduction to the addition

13 modification required under Section 203(d)(2)(D-7) of

14 this Act. As used in this subparagraph, the term

15 "intangible expenses and costs" includes (1) expenses,

16 losses, and costs for, or related to, the direct or

17 indirect acquisition, use, maintenance or management,

18 ownership, sale, exchange, or any other disposition of

19 intangible property; (2) losses incurred, directly or

20 indirectly, from factoring transactions or discounting

21 transactions; (3) royalty, patent, technical, and

22 copyright fees; (4) licensing fees; and (5) other

23 similar expenses and costs. For purposes of this

24 subparagraph, "intangible property" includes patents,

25 patent applications, trade names, trademarks, service

26 marks, copyrights, mask works, trade secrets, and

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1 similar types of intangible assets;

2 This paragraph shall not apply to the following:

3 (i) any item of intangible expenses or costs

4 paid, accrued, or incurred, directly or

5 indirectly, from a transaction with a person who is

6 subject in a foreign country or state, other than a

7 state which requires mandatory unitary reporting,

8 to a tax on or measured by net income with respect

9 to such item; or

10 (ii) any item of intangible expense or cost

11 paid, accrued, or incurred, directly or

12 indirectly, if the taxpayer can establish, based

13 on a preponderance of the evidence, both of the

14 following:

15 (a) the person during the same taxable

16 year paid, accrued, or incurred, the

17 intangible expense or cost to a person that is

18 not a related member, and

19 (b) the transaction giving rise to the

20 intangible expense or cost between the

21 taxpayer and the person did not have as a

22 principal purpose the avoidance of Illinois

23 income tax, and is paid pursuant to a contract

24 or agreement that reflects arm's-length terms;

25 or

26 (iii) any item of intangible expense or cost

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1 paid, accrued, or incurred, directly or

2 indirectly, from a transaction with a person if the

3 taxpayer establishes by clear and convincing

4 evidence, that the adjustments are unreasonable;

5 or if the taxpayer and the Director agree in

6 writing to the application or use of an alternative

7 method of apportionment under Section 304(f);

8 Nothing in this subsection shall preclude the

9 Director from making any other adjustment

10 otherwise allowed under Section 404 of this Act for

11 any tax year beginning after the effective date of

12 this amendment provided such adjustment is made

13 pursuant to regulation adopted by the Department

14 and such regulations provide methods and standards

15 by which the Department will utilize its authority

16 under Section 404 of this Act;

17 (D-9) For taxable years ending on or after December

18 31, 2008, an amount equal to the amount of insurance

19 premium expenses and costs otherwise allowed as a

20 deduction in computing base income, and that were paid,

21 accrued, or incurred, directly or indirectly, to a

22 person who would be a member of the same unitary

23 business group but for the fact that the person is

24 prohibited under Section 1501(a)(27) from being

25 included in the unitary business group because he or

26 she is ordinarily required to apportion business

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1 income under different subsections of Section 304. The

2 addition modification required by this subparagraph

3 shall be reduced to the extent that dividends were

4 included in base income of the unitary group for the

5 same taxable year and received by the taxpayer or by a

6 member of the taxpayer's unitary business group

7 (including amounts included in gross income under

8 Sections 951 through 964 of the Internal Revenue Code

9 and amounts included in gross income under Section 78

10 of the Internal Revenue Code) with respect to the stock

11 of the same person to whom the premiums and costs were

12 directly or indirectly paid, incurred, or accrued. The

13 preceding sentence does not apply to the extent that

14 the same dividends caused a reduction to the addition

15 modification required under Section 203(d)(2)(D-7) or

16 Section 203(d)(2)(D-8) of this Act;

17 (D-10) An amount equal to the credit allowable to

18 the taxpayer under Section 218(a) of this Act,

19 determined without regard to Section 218(c) of this

20 Act;

21 (D-11) For taxable years beginning on or after

22 January 1, 2017, an amount equal to the deduction

23 allowed under Section 199 of the Internal Revenue Code

24 for the taxable year;

25 and by deducting from the total so obtained the following

26 amounts:

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1 (E) The valuation limitation amount;

2 (F) An amount equal to the amount of any tax

3 imposed by this Act which was refunded to the taxpayer

4 and included in such total for the taxable year;

5 (G) An amount equal to all amounts included in

6 taxable income as modified by subparagraphs (A), (B),

7 (C) and (D) which are exempt from taxation by this

8 State either by reason of its statutes or Constitution

9 or by reason of the Constitution, treaties or statutes

10 of the United States; provided that, in the case of any

11 statute of this State that exempts income derived from

12 bonds or other obligations from the tax imposed under

13 this Act, the amount exempted shall be the interest net

14 of bond premium amortization;

15 (H) Any income of the partnership which

16 constitutes personal service income as defined in

17 Section 1348 (b) (1) of the Internal Revenue Code (as

18 in effect December 31, 1981) or a reasonable allowance

19 for compensation paid or accrued for services rendered

20 by partners to the partnership, whichever is greater;

21 this subparagraph (H) is exempt from the provisions of

22 Section 250;

23 (I) An amount equal to all amounts of income

24 distributable to an entity subject to the Personal

25 Property Tax Replacement Income Tax imposed by

26 subsections (c) and (d) of Section 201 of this Act

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1 including amounts distributable to organizations

2 exempt from federal income tax by reason of Section

3 501(a) of the Internal Revenue Code; this subparagraph

4 (I) is exempt from the provisions of Section 250;

5 (J) With the exception of any amounts subtracted

6 under subparagraph (G), an amount equal to the sum of

7 all amounts disallowed as deductions by (i) Sections

8 171(a) (2), and 265(2) of the Internal Revenue Code,

9 and all amounts of expenses allocable to interest and

10 disallowed as deductions by Section 265(1) of the

11 Internal Revenue Code; and (ii) for taxable years

12 ending on or after August 13, 1999, Sections 171(a)(2),

13 265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue

14 Code, plus, (iii) for taxable years ending on or after

15 December 31, 2011, Section 45G(e)(3) of the Internal

16 Revenue Code and, for taxable years ending on or after

17 December 31, 2008, any amount included in gross income

18 under Section 87 of the Internal Revenue Code; the

19 provisions of this subparagraph are exempt from the

20 provisions of Section 250;

21 (K) 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 substantially

26 all of its operations from a River Edge Redevelopment

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1 Zone or zones. This subparagraph (K) is exempt from the

2 provisions of Section 250;

3 (L) An amount equal to any contribution made to a

4 job training project established pursuant to the Real

5 Property Tax Increment Allocation Redevelopment Act;

6 (M) An amount equal to those dividends included in

7 such total that were paid by a corporation that

8 conducts business operations in a federally designated

9 Foreign Trade Zone or Sub-Zone and that is designated a

10 High Impact Business located in Illinois; provided

11 that dividends eligible for the deduction provided in

12 subparagraph (K) of paragraph (2) of this subsection

13 shall not be eligible for the deduction provided under

14 this subparagraph (M);

15 (N) An amount equal to the amount of the deduction

16 used to compute the federal income tax credit for

17 restoration of substantial amounts held under claim of

18 right for the taxable year pursuant to Section 1341 of

19 the Internal Revenue Code;

20 (O) For taxable years 2001 and thereafter, for the

21 taxable year in which the bonus depreciation deduction

22 is taken on the taxpayer's federal income tax return

23 under subsection (k) of Section 168 of the Internal

24 Revenue Code and for each applicable taxable year

25 thereafter, an amount equal to "x", where:

26 (1) "y" equals the amount of the depreciation

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1 deduction taken for the taxable year on the

2 taxpayer's federal income tax return on property

3 for which the bonus depreciation deduction was

4 taken in any year under subsection (k) of Section

5 168 of the Internal Revenue Code, but not including

6 the bonus depreciation deduction;

7 (2) for taxable years ending on or before

8 December 31, 2005, "x" equals "y" multiplied by 30

9 and then divided by 70 (or "y" multiplied by

10 0.429); and

11 (3) for taxable years ending after December

12 31, 2005:

13 (i) for property on which a bonus

14 depreciation deduction of 30% of the adjusted

15 basis was taken, "x" equals "y" multiplied by

16 30 and then divided by 70 (or "y" multiplied by

17 0.429); and

18 (ii) for property on which a bonus

19 depreciation deduction of 50% of the adjusted

20 basis was taken, "x" equals "y" multiplied by

21 1.0.

22 The aggregate amount deducted under this

23 subparagraph in all taxable years for any one piece of

24 property may not exceed the amount of the bonus

25 depreciation deduction taken on that property on the

26 taxpayer's federal income tax return under subsection

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1 (k) of Section 168 of the Internal Revenue Code. This

2 subparagraph (O) is exempt from the provisions of

3 Section 250;

4 (P) If the taxpayer sells, transfers, abandons, or

5 otherwise disposes of property for which the taxpayer

6 was required in any taxable year to make an addition

7 modification under subparagraph (D-5), then an amount

8 equal to that addition modification.

9 If the taxpayer continues to own property through

10 the last day of the last tax year for which the

11 taxpayer may claim a depreciation deduction for

12 federal income tax purposes and for which the taxpayer

13 was required in any taxable year to make an addition

14 modification under subparagraph (D-5), then an amount

15 equal to that addition modification.

16 The taxpayer is allowed to take the deduction under

17 this subparagraph only once with respect to any one

18 piece of property.

19 This subparagraph (P) is exempt from the

20 provisions of Section 250;

21 (Q) The amount of (i) any interest income (net of

22 the deductions allocable thereto) taken into account

23 for the taxable year with respect to a transaction with

24 a taxpayer that is required to make an addition

25 modification with respect to such transaction under

26 Section 203(a)(2)(D-17), 203(b)(2)(E-12),

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1 203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed

2 the amount of such addition modification and (ii) any

3 income from intangible property (net of the deductions

4 allocable thereto) taken into account for the taxable

5 year with respect to a transaction with a taxpayer that

6 is required to make an addition modification with

7 respect to such transaction under Section

8 203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or

9 203(d)(2)(D-8), but not to exceed the amount of such

10 addition modification. This subparagraph (Q) is exempt

11 from Section 250;

12 (R) An amount equal to the interest income taken

13 into account for the taxable year (net of the

14 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(d)(2)(D-7) for interest

3 paid, accrued, or incurred, directly or indirectly, to

4 the same person. This subparagraph (R) is exempt from

5 Section 250;

6 (S) An amount equal to the income from intangible

7 property taken into account for the taxable year (net

8 of the 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(d)(2)(D-8) for

23 intangible expenses and costs paid, accrued, or

24 incurred, directly or indirectly, to the same person.

25 This subparagraph (S) is exempt from Section 250; and

26 (T) For taxable years ending on or after December

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1 31, 2011, in the case of a taxpayer who was required to

2 add back any insurance premiums under Section

3 203(d)(2)(D-9), such taxpayer may elect to subtract

4 that part of a reimbursement received from the

5 insurance company equal to the amount of the expense or

6 loss (including expenses incurred by the insurance

7 company) that would have been taken into account as a

8 deduction for federal income tax purposes if the

9 expense or loss had been uninsured. If a taxpayer makes

10 the election provided for by this subparagraph (T), the

11 insurer to which the premiums were paid must add back

12 to income the amount subtracted by the taxpayer

13 pursuant to this subparagraph (T). This subparagraph

14 (T) is exempt from the provisions of Section 250.

15 (e) Gross income; adjusted gross income; taxable income.

16 (1) In general. Subject to the provisions of paragraph

17 (2) and subsection (b) (3), for purposes of this Section

18 and Section 803(e), a taxpayer's gross income, adjusted

19 gross income, or taxable income for the taxable year shall

20 mean the amount of gross income, adjusted gross income or

21 taxable income properly reportable for federal income tax

22 purposes for the taxable year under the provisions of the

23 Internal Revenue Code. Taxable income may be less than

24 zero. However, for taxable years ending on or after

25 December 31, 1986, net operating loss carryforwards from

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1 taxable years ending prior to December 31, 1986, may not

2 exceed the sum of federal taxable income for the taxable

3 year before net operating loss deduction, plus the excess

4 of addition modifications over subtraction modifications

5 for the taxable year. For taxable years ending prior to

6 December 31, 1986, taxable income may never be an amount in

7 excess of the net operating loss for the taxable year as

8 defined in subsections (c) and (d) of Section 172 of the

9 Internal Revenue Code, provided that when taxable income of

10 a corporation (other than a Subchapter S corporation),

11 trust, or estate is less than zero and addition

12 modifications, other than those provided by subparagraph

13 (E) of paragraph (2) of subsection (b) for corporations or

14 subparagraph (E) of paragraph (2) of subsection (c) for

15 trusts and estates, exceed subtraction modifications, an

16 addition modification must be made under those

17 subparagraphs for any other taxable year to which the

18 taxable income less than zero (net operating loss) is

19 applied under Section 172 of the Internal Revenue Code or

20 under subparagraph (E) of paragraph (2) of this subsection

21 (e) applied in conjunction with Section 172 of the Internal

22 Revenue Code.

23 (2) Special rule. For purposes of paragraph (1) of this

24 subsection, the taxable income properly reportable for

25 federal income tax purposes shall mean:

26 (A) Certain life insurance companies. In the case

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1 of a life insurance company subject to the tax imposed

2 by Section 801 of the Internal Revenue Code, life

3 insurance company taxable income, plus the amount of

4 distribution from pre-1984 policyholder surplus

5 accounts as calculated under Section 815a of the

6 Internal Revenue Code;

7 (B) Certain other insurance companies. In the case

8 of mutual insurance companies subject to the tax

9 imposed by Section 831 of the Internal Revenue Code,

10 insurance company taxable income;

11 (C) Regulated investment companies. In the case of

12 a regulated investment company subject to the tax

13 imposed by Section 852 of the Internal Revenue Code,

14 investment company taxable income;

15 (D) Real estate investment trusts. In the case of a

16 real estate investment trust subject to the tax imposed

17 by Section 857 of the Internal Revenue Code, real

18 estate investment trust taxable income;

19 (E) Consolidated corporations. In the case of a

20 corporation which is a member of an affiliated group of

21 corporations filing a consolidated income tax return

22 for the taxable year for federal income tax purposes,

23 taxable income determined as if such corporation had

24 filed a separate return for federal income tax purposes

25 for the taxable year and each preceding taxable year

26 for which it was a member of an affiliated group. For

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1 purposes of this subparagraph, the taxpayer's separate

2 taxable income shall be determined as if the election

3 provided by Section 243(b) (2) of the Internal Revenue

4 Code had been in effect for all such years;

5 (F) Cooperatives. In the case of a cooperative

6 corporation or association, the taxable income of such

7 organization determined in accordance with the

8 provisions of Section 1381 through 1388 of the Internal

9 Revenue Code, but without regard to the prohibition

10 against offsetting losses from patronage activities

11 against income from nonpatronage activities; except

12 that a cooperative corporation or association may make

13 an election to follow its federal income tax treatment

14 of patronage losses and nonpatronage losses. In the

15 event such election is made, such losses shall be

16 computed and carried over in a manner consistent with

17 subsection (a) of Section 207 of this Act and

18 apportioned by the apportionment factor reported by

19 the cooperative on its Illinois income tax return filed

20 for the taxable year in which the losses are incurred.

21 The election shall be effective for all taxable years

22 with original returns due on or after the date of the

23 election. In addition, the cooperative may file an

24 amended return or returns, as allowed under this Act,

25 to provide that the election shall be effective for

26 losses incurred or carried forward for taxable years

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1 occurring prior to the date of the election. Once made,

2 the election may only be revoked upon approval of the

3 Director. The Department shall adopt rules setting

4 forth requirements for documenting the elections and

5 any resulting Illinois net loss and the standards to be

6 used by the Director in evaluating requests to revoke

7 elections. Public Act 96-932 is declaratory of

8 existing law;

9 (G) Subchapter S corporations. In the case of: (i)

10 a Subchapter S corporation for which there is in effect

11 an election for the taxable year under Section 1362 of

12 the Internal Revenue Code, the taxable income of such

13 corporation determined in accordance with Section

14 1363(b) of the Internal Revenue Code, except that

15 taxable income shall take into account those items

16 which are required by Section 1363(b)(1) of the

17 Internal Revenue Code to be separately stated; and (ii)

18 a Subchapter S corporation for which there is in effect

19 a federal election to opt out of the provisions of the

20 Subchapter S Revision Act of 1982 and have applied

21 instead the prior federal Subchapter S rules as in

22 effect on July 1, 1982, the taxable income of such

23 corporation determined in accordance with the federal

24 Subchapter S rules as in effect on July 1, 1982; and

25 (H) Partnerships. In the case of a partnership,

26 taxable income determined in accordance with Section

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1 703 of the Internal Revenue Code, except that taxable

2 income shall take into account those items which are

3 required by Section 703(a)(1) to be separately stated

4 but which would be taken into account by an individual

5 in calculating his taxable income.

6 (3) Recapture of business expenses on disposition of

7 asset or business. Notwithstanding any other law to the

8 contrary, if in prior years income from an asset or

9 business has been classified as business income and in a

10 later year is demonstrated to be non-business income, then

11 all expenses, without limitation, deducted in such later

12 year and in the 2 immediately preceding taxable years

13 related to that asset or business that generated the

14 non-business income shall be added back and recaptured as

15 business income in the year of the disposition of the asset

16 or business. Such amount shall be apportioned to Illinois

17 using the greater of the apportionment fraction computed

18 for the business under Section 304 of this Act for the

19 taxable year or the average of the apportionment fractions

20 computed for the business under Section 304 of this Act for

21 the taxable year and for the 2 immediately preceding

22 taxable years.

23 (f) Valuation limitation amount.

24 (1) In general. The valuation limitation amount

25 referred to in subsections (a) (2) (G), (c) (2) (I) and

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1 (d)(2) (E) is an amount equal to:

2 (A) The sum of the pre-August 1, 1969 appreciation

3 amounts (to the extent consisting of gain reportable

4 under the provisions of Section 1245 or 1250 of the

5 Internal Revenue Code) for all property in respect of

6 which such gain was reported for the taxable year; plus

7 (B) The lesser of (i) the sum of the pre-August 1,

8 1969 appreciation amounts (to the extent consisting of

9 capital gain) for all property in respect of which such

10 gain was reported for federal income tax purposes for

11 the taxable year, or (ii) the net capital gain for the

12 taxable year, reduced in either case by any amount of

13 such gain included in the amount determined under

14 subsection (a) (2) (F) or (c) (2) (H).

15 (2) Pre-August 1, 1969 appreciation amount.

16 (A) If the fair market value of property referred

17 to in paragraph (1) was readily ascertainable on August

18 1, 1969, the pre-August 1, 1969 appreciation amount for

19 such property is the lesser of (i) the excess of such

20 fair market value over the taxpayer's basis (for

21 determining gain) for such property on that date

22 (determined under the Internal Revenue Code as in

23 effect on that date), or (ii) the total gain realized

24 and reportable for federal income tax purposes in

25 respect of the sale, exchange or other disposition of

26 such property.

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1 (B) If the fair market value of property referred

2 to in paragraph (1) was not readily ascertainable on

3 August 1, 1969, the pre-August 1, 1969 appreciation

4 amount for such property is that amount which bears the

5 same ratio to the total gain reported in respect of the

6 property for federal income tax purposes for the

7 taxable year, as the number of full calendar months in

8 that part of the taxpayer's holding period for the

9 property ending July 31, 1969 bears to the number of

10 full calendar months in the taxpayer's entire holding

11 period for the property.

12 (C) The Department shall prescribe such

13 regulations as may be necessary to carry out the

14 purposes of this paragraph.

15 (g) Double deductions. Unless specifically provided

16 otherwise, nothing in this Section shall permit the same item

17 to be deducted more than once.

18 (h) Legislative intention. Except as expressly provided by

19 this Section there shall be no modifications or limitations on

20 the amounts of income, gain, loss or deduction taken into

21 account in determining gross income, adjusted gross income or

22 taxable income for federal income tax purposes for the taxable

23 year, or in the amount of such items entering into the

24 computation of base income and net income under this Act for

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1 such taxable year, whether in respect of property values as of

2 August 1, 1969 or otherwise.

3 (Source: P.A. 96-45, eff. 7-15-09; 96-120, eff. 8-4-09; 96-198,

4 eff. 8-10-09; 96-328, eff. 8-11-09; 96-520, eff. 8-14-09;

5 96-835, eff. 12-16-09; 96-932, eff. 1-1-11; 96-935, eff.

6 6-21-10; 96-1214, eff. 7-22-10; 97-333, eff. 8-12-11; 97-507,

7 eff. 8-23-11; 97-905, eff. 8-7-12.)

8 (35 ILCS 5/204) (from Ch. 120, par. 2-204)

9 Sec. 204. Standard Exemption.

10 (a) Allowance of exemption. In computing net income under

11 this Act, there shall be allowed as an exemption the sum of the

12 amounts determined under subsections (b), (c) and (d),

13 multiplied by a fraction the numerator of which is the amount

14 of the taxpayer's base income allocable to this State for the

15 taxable year and the denominator of which is the taxpayer's

16 total base income for the taxable year.

17 (b) Basic amount. For the purpose of subsection (a) of this

18 Section, except as provided by subsection (a) of Section 205

19 and in this subsection, each taxpayer shall be allowed a basic

20 amount of $1000, except that for corporations the basic amount

21 shall be zero for tax years ending on or after December 31,

22 2003, and for individuals the basic amount shall be:

23 (1) for taxable years ending on or after December 31,

24 1998 and prior to December 31, 1999, $1,300;

25 (2) for taxable years ending on or after December 31,

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1 1999 and prior to December 31, 2000, $1,650;

2 (3) for taxable years ending on or after December 31,

3 2000 and prior to December 31, 2012, $2,000;

4 (4) for taxable years ending on or after December 31,

5 2012 and prior to December 31, 2013, $2,050;

6 (5) for taxable years ending on or after December 31,

7 2013, $2,050 plus the cost-of-living adjustment under

8 subsection (d-5).

9 For taxable years ending on or after December 31, 1992, a

10 taxpayer whose Illinois base income exceeds the basic amount

11 and who is claimed as a dependent on another person's tax

12 return under the Internal Revenue Code shall not be allowed any

13 basic amount under this subsection.

14 (c) Additional amount for individuals. In the case of an

15 individual taxpayer, there shall be allowed for the purpose of

16 subsection (a), in addition to the basic amount provided by

17 subsection (b), an additional exemption equal to the basic

18 amount for each exemption in excess of one allowable to such

19 individual taxpayer for the taxable year under Section 151 of

20 the Internal Revenue Code.

21 (d) Additional exemptions for an individual taxpayer and

22 his or her spouse. In the case of an individual taxpayer and

23 his or her spouse, he or she shall each be allowed additional

24 exemptions as follows:

25 (1) Additional exemption for taxpayer or spouse 65

26 years of age or older.

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1 (A) For taxpayer. An additional exemption of

2 $1,000 for the taxpayer if he or she has attained the

3 age of 65 before the end of the taxable year.

4 (B) For spouse when a joint return is not filed. An

5 additional exemption of $1,000 for the spouse of the

6 taxpayer if a joint return is not made by the taxpayer

7 and his spouse, and if the spouse has attained the age

8 of 65 before the end of such taxable year, and, for the

9 calendar year in which the taxable year of the taxpayer

10 begins, has no gross income and is not the dependent of

11 another taxpayer.

12 (2) Additional exemption for blindness of taxpayer or

13 spouse.

14 (A) For taxpayer. An additional exemption of

15 $1,000 for the taxpayer if he or she is blind at the

16 end of the taxable year.

17 (B) For spouse when a joint return is not filed. An

18 additional exemption of $1,000 for the spouse of the

19 taxpayer if a separate return is made by the taxpayer,

20 and if the spouse is blind and, for the calendar year

21 in which the taxable year of the taxpayer begins, has

22 no gross income and is not the dependent of another

23 taxpayer. For purposes of this paragraph, the

24 determination of whether the spouse is blind shall be

25 made as of the end of the taxable year of the taxpayer;

26 except that if the spouse dies during such taxable year

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1 such determination shall be made as of the time of such

2 death.

3 (C) Blindness defined. For purposes of this

4 subsection, an individual is blind only if his or her

5 central visual acuity does not exceed 20/200 in the

6 better eye with correcting lenses, or if his or her

7 visual acuity is greater than 20/200 but is accompanied

8 by a limitation in the fields of vision such that the

9 widest diameter of the visual fields subtends an angle

10 no greater than 20 degrees.

11 (d-5) Cost-of-living adjustment. For purposes of item (5)

12 of subsection (b), the cost-of-living adjustment for any

13 calendar year and for taxable years ending prior to the end of

14 the subsequent calendar year is equal to $2,050 times the

15 percentage (if any) by which:

16 (1) the Consumer Price Index for the preceding calendar

17 year, exceeds

18 (2) the Consumer Price Index for the calendar year

19 2011.

20 The Consumer Price Index for any calendar year is the

21 average of the Consumer Price Index as of the close of the

22 12-month period ending on August 31 of that calendar year.

23 The term "Consumer Price Index" means the last Consumer

24 Price Index for All Urban Consumers published by the United

25 States Department of Labor or any successor agency.

26 If any cost-of-living adjustment is not a multiple of $25,

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1 that adjustment shall be rounded to the next lowest multiple of

2 $25.

3 (e) Cross reference. See Article 3 for the manner of

4 determining base income allocable to this State.

5 (f) Application of Section 250. Section 250 does not apply

6 to the amendments to this Section made by Public Act 90-613.

7 (g) Notwithstanding any other provision of law, for taxable

8 years beginning on or after January 1, 2018, no taxpayer may

9 claim an exemption under this Section if the taxpayer's

10 adjusted gross income for the taxable year exceeds (i)

11 $500,000, in the case of spouses filing a joint federal tax

12 return or (ii) $250,000, in the case of all other taxpayers.

13 (Source: P.A. 97-507, eff. 8-23-11; 97-652, eff. 6-1-12.)

14 (35 ILCS 5/208) (from Ch. 120, par. 2-208)

15 Sec. 208. Tax credit for residential real property taxes.

16 Beginning with tax years ending on or after December 31, 1991,

17 every individual taxpayer shall be entitled to a tax credit

18 equal to 5% of real property taxes paid by such taxpayer during

19 the taxable year on the principal residence of the taxpayer. In

20 the case of multi-unit or multi-use structures and farm

21 dwellings, the taxes on the taxpayer's principal residence

22 shall be that portion of the total taxes which is attributable

23 to such principal residence.Notwithstanding any other

24 provision of law, for taxable years beginning on or after

25 January 1, 2018, no taxpayer may claim a credit under this

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1 Section if the taxpayer's adjusted gross income for the taxable

2 year exceeds (i) $500,000, in the case of spouses filing a

3 joint federal tax return, or (ii) $250,000, in the case of all

4 other taxpayers.

5 (Source: P.A. 87-17.)

6 (35 ILCS 5/212)

7 Sec. 212. Earned income tax credit.

8 (a) With respect to the federal earned income tax credit

9 allowed for the taxable year under Section 32 of the federal

10 Internal Revenue Code, 26 U.S.C. 32, each individual taxpayer

11 is entitled to a credit against the tax imposed by subsections

12 (a) and (b) of Section 201 in an amount equal to (i) 5% of the

13 federal tax credit for each taxable year beginning on or after

14 January 1, 2000 and ending prior to December 31, 2012, (ii)

15 7.5% of the federal tax credit for each taxable year beginning

16 on or after January 1, 2012 and ending prior to December 31,

17 2013, ~~and~~ (iii) 10% of the federal tax credit for each taxable

18 year beginning on or after January 1, 2013 and beginning prior

19 to January 1, 2017, and (iv) 15% of the federal tax credit for

20 each taxable year beginning on or after January 1, 2017.

21 For a non-resident or part-year resident, the amount of the

22 credit under this Section shall be in proportion to the amount

23 of income attributable to this State.

24 (b) For taxable years beginning before January 1, 2003, in

25 no event shall a credit under this Section reduce the

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1 taxpayer's liability to less than zero. For each taxable year

2 beginning on or after January 1, 2003, if the amount of the

3 credit exceeds the income tax liability for the applicable tax

4 year, then the excess credit shall be refunded to the taxpayer.

5 The amount of a refund shall not be included in the taxpayer's

6 income or resources for the purposes of determining eligibility

7 or benefit level in any means-tested benefit program

8 administered by a governmental entity unless required by

9 federal law.

10 (c) This Section is exempt from the provisions of Section

11 250.

12 (Source: P.A. 97-652, eff. 6-1-12.)

13 (35 ILCS 5/222)

14 Sec. 222. Live theater production credit.

15 (a) For tax years beginning on or after January 1, 2012 and

16 beginning prior to January 1, 2027, a taxpayer who has received

17 a tax credit award under the Live Theater Production Tax Credit

18 Act is entitled to a credit against the taxes imposed under

19 subsections (a) and (b) of Section 201 of this Act in an amount

20 determined under that Act by the Department of Commerce and

21 Economic Opportunity.

22 (b) If the taxpayer is a partnership, limited liability

23 partnership, limited liability company, or Subchapter S

24 corporation, the tax credit award is allowed to the partners,

25 unit holders, or shareholders in accordance with the

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1 determination of income and distributive share of income under

2 Sections 702 and 704 and Subchapter S of the Internal Revenue

3 Code.

4 (c) A sale, assignment, or transfer of the tax credit award

5 may be made by the taxpayer earning the credit within one year

6 after the credit is awarded in accordance with rules adopted by

7 the Department of Commerce and Economic Opportunity.

8 (d) The Department of Revenue, in cooperation with the

9 Department of Commerce and Economic Opportunity, shall adopt

10 rules to enforce and administer the provisions of this Section.

11 (e) The tax credit award may not be carried back. If the

12 amount of the credit exceeds the tax liability for the year,

13 the excess may be carried forward and applied to the tax

14 liability of the 5 tax years following the excess credit year.

15 The tax credit award shall be applied to the earliest year for

16 which there is a tax liability. If there are credits from more

17 than one tax year that are available to offset liability, the

18 earlier credit shall be applied first. In no event may a credit

19 under this Section reduce the taxpayer's liability to less than

20 zero.

21 (Source: P.A. 97-636, eff. 6-1-12.)

22 (35 ILCS 5/225 new)

23 Sec. 225. Credit for instructional materials and supplies.

24 For taxable years beginning on and after January 1, 2017, a

25 taxpayer shall be allowed a credit in the amount paid by the

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1 taxpayer during the taxable year for instructional materials

2 and supplies with respect to classroom based instruction in a

3 qualified school, or $250, whichever is less, provided that the

4 taxpayer is a teacher, instructor, counselor, principal, or

5 aide in a qualified school for at least 900 hours during a

6 school year.

7 The credit may not be carried back and may not reduce the

8 taxpayer's liability to less than zero. If the amount of the

9 credit exceeds the tax liability for the year, the excess may

10 be carried forward and applied to the tax liability of the 5

11 taxable years following the excess credit year. The tax credit

12 shall be applied to the earliest year for which there is a tax

13 liability. If there are credits for more than one year that are

14 available to offset a liability, the earlier credit shall be

15 applied first.

16 For purposes of this Section, the term "materials and

17 supplies" means amounts paid for instructional materials or

18 supplies that are designated for classroom use in any qualified

19 school. For purposes of this Section, the term "qualified

20 school" means a public school or non-public school located in

21 Illinois.

22 This Section is exempt from the provisions of Section 250.

23 (35 ILCS 5/804) (from Ch. 120, par. 8-804)

24 Sec. 804. Failure to Pay Estimated Tax.

25 (a) In general. In case of any underpayment of estimated

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1 tax by a taxpayer, except as provided in subsection (d) or (e),

2 the taxpayer shall be liable to a penalty in an amount

3 determined at the rate prescribed by Section 3-3 of the Uniform

4 Penalty and Interest Act upon the amount of the underpayment

5 (determined under subsection (b)) for each required

6 installment.

7 (b) Amount of underpayment. For purposes of subsection (a),

8 the amount of the underpayment shall be the excess of:

9 (1) the amount of the installment which would be

10 required to be paid under subsection (c), over

11 (2) the amount, if any, of the installment paid on or

12 before the last date prescribed for payment.

13 (c) Amount of Required Installments.

14 (1) Amount.

15 (A) In General. Except as provided in paragraphs

16 (2) and (3), the amount of any required installment

17 shall be 25% of the required annual payment.

18 (B) Required Annual Payment. For purposes of

19 subparagraph (A), the term "required annual payment"

20 means the lesser of:

21 (i) 90% of the tax shown on the return for the

22 taxable year, or if no return is filed, 90% of the

23 tax for such year;

24 (ii) for installments due prior to February 1,

25 2011, and after January 31, 2012, 100% of the tax

26 shown on the return of the taxpayer for the

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1 preceding taxable year if a return showing a

2 liability for tax was filed by the taxpayer for the

3 preceding taxable year and such preceding year was

4 a taxable year of 12 months; or

5 (iii) for installments due after January 31,

6 2011, and prior to February 1, 2012, 150% of the

7 tax shown on the return of the taxpayer for the

8 preceding taxable year if a return showing a

9 liability for tax was filed by the taxpayer for the

10 preceding taxable year and such preceding year was

11 a taxable year of 12 months.

12 (2) Lower Required Installment where Annualized Income

13 Installment is Less Than Amount Determined Under Paragraph

14 (1).

15 (A) In General. In the case of any required

16 installment if a taxpayer establishes that the

17 annualized income installment is less than the amount

18 determined under paragraph (1),

19 (i) the amount of such required installment

20 shall be the annualized income installment, and

21 (ii) any reduction in a required installment

22 resulting from the application of this

23 subparagraph shall be recaptured by increasing the

24 amount of the next required installment determined

25 under paragraph (1) by the amount of such

26 reduction, and by increasing subsequent required

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1 installments to the extent that the reduction has

2 not previously been recaptured under this clause.

3 (B) Determination of Annualized Income

4 Installment. In the case of any required installment,

5 the annualized income installment is the excess, if

6 any, of:

7 (i) an amount equal to the applicable

8 percentage of the tax for the taxable year computed

9 by placing on an annualized basis the net income

10 for months in the taxable year ending before the

11 due date for the installment, over

12 (ii) the aggregate amount of any prior

13 required installments for the taxable year.

14 (C) Applicable Percentage.

15	`In the case of the following`	`The applicable`
16	`required installments:`	`percentage is:`
17	`1st` ...............................	`22.5%`
18	`2nd` ...............................	`45%`
19	`3rd` ...............................	`67.5%`
20	`4th` ...............................	`90%`

21 (D) Annualized Net Income; Individuals. For

22 individuals, net income shall be placed on an

23 annualized basis by:

24 (i) multiplying by 12, or in the case of a

25 taxable year of less than 12 months, by the number

26 of months in the taxable year, the net income

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1 computed without regard to the standard exemption

2 for the months in the taxable year ending before

3 the month in which the installment is required to

4 be paid;

5 (ii) dividing the resulting amount by the

6 number of months in the taxable year ending before

7 the month in which such installment date falls; and

8 (iii) deducting from such amount the standard

9 exemption allowable for the taxable year, such

10 standard exemption being determined as of the last

11 date prescribed for payment of the installment.

12 (E) Annualized Net Income; Corporations. For

13 corporations, net income shall be placed on an

14 annualized basis by multiplying by 12 the taxable

15 income

16 (i) for the first 3 months of the taxable year,

17 in the case of the installment required to be paid

18 in the 4th month,

19 (ii) for the first 3 months or for the first 5

20 months of the taxable year, in the case of the

21 installment required to be paid in the 6th month,

22 (iii) for the first 6 months or for the first 8

23 months of the taxable year, in the case of the

24 installment required to be paid in the 9th month,

25 and

26 (iv) for the first 9 months or for the first 11

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1 months of the taxable year, in the case of the

2 installment required to be paid in the 12th month

3 of the taxable year,

4 then dividing the resulting amount by the number of

5 months in the taxable year (3, 5, 6, 8, 9, or 11 as the

6 case may be).

7 (3) Notwithstanding any other provision of this

8 subsection (c), in the case of a federally regulated

9 exchange that elects to apportion its income under Section

10 304(c-1) of this Act, the amount of each required

11 installment due prior to June 30 of the first taxable year

12 to which the election applies shall be 25% of the tax that

13 would have been shown on the return for that taxable year

14 if the taxpayer had not made such election.

15 (d) Exceptions. Notwithstanding the provisions of the

16 preceding subsections, the penalty imposed by subsection (a)

17 shall not be imposed if the taxpayer was not required to file

18 an Illinois income tax return for the preceding taxable year,

19 or, for individuals, if the taxpayer had no tax liability for

20 the preceding taxable year and such year was a taxable year of

21 12 months. The penalty imposed by subsection (a) shall also not

22 be imposed on any underpayments of estimated tax due before the

23 effective date of this amendatory Act of 1998 which

24 underpayments are solely attributable to the change in

25 apportionment from subsection (a) to subsection (h) of Section

26 304. The provisions of this amendatory Act of 1998 apply to tax

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1 years ending on or after December 31, 1998.

2 (e) The penalty imposed for underpayment of estimated tax

3 by subsection (a) of this Section shall not be imposed to the

4 extent that the Director or his or her designate determines,

5 pursuant to Section 3-8 of the Uniform Penalty and Interest Act

6 that the penalty should not be imposed.

7 (f) Definition of tax. For purposes of subsections (b) and

8 (c), the term "tax" means the excess of the tax imposed under

9 Article 2 of this Act, over the amounts credited against such

10 tax under Sections 601(b) (3) and (4).

11 (g) Application of Section in case of tax withheld under

12 Article 7. For purposes of applying this Section:

13 (1) tax withheld from compensation for the taxable year

14 shall be deemed a payment of estimated tax, and an equal

15 part of such amount shall be deemed paid on each

16 installment date for such taxable year, unless the taxpayer

17 establishes the dates on which all amounts were actually

18 withheld, in which case the amounts so withheld shall be

19 deemed payments of estimated tax on the dates on which such

20 amounts were actually withheld;

21 (2) amounts timely paid by a partnership, Subchapter S

22 corporation, or trust on behalf of a partner, shareholder,

23 or beneficiary pursuant to subsection (f) of Section 502 or

24 Section 709.5 and claimed as a payment of estimated tax

25 shall be deemed a payment of estimated tax made on the last

26 day of the taxable year of the partnership, Subchapter S

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1 corporation, or trust for which the income from the

2 withholding is made was computed; and

3 (3) all other amounts pursuant to Article 7 shall be

4 deemed a payment of estimated tax on the date the payment

5 is made to the taxpayer of the amount from which the tax is

6 withheld.

7 (g-5) Amounts withheld under the State Salary and Annuity

8 Withholding Act. An individual who has amounts withheld under

9 paragraph (10) of Section 4 of the State Salary and Annuity

10 Withholding Act may elect to have those amounts treated as

11 payments of estimated tax made on the dates on which those

12 amounts are actually withheld.

13 (g-10) Notwithstanding any other provision of law, no

14 penalty shall apply with respect to an underpayment of

15 estimated tax for the first, second, or third quarter of any

16 taxable year beginning on or after January 1, 2017 and

17 beginning prior to January 1, 2018 if (i) the underpayment was

18 due to the changes made by this amendatory Act of the 100th

19 General Assembly, (ii) the payment was otherwise timely made,

20 and (iii) the balance due is included with the taxpayer's

21 estimated tax payment for the fourth quarter.

22 (i) Short taxable year. The application of this Section to

23 taxable years of less than 12 months shall be in accordance

24 with regulations prescribed by the Department.

25 The changes in this Section made by Public Act 84-127 shall

26 apply to taxable years ending on or after January 1, 1986.

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1 (Source: P.A. 96-1496, eff. 1-13-11; 97-507, eff. 8-23-11;

2 97-636, eff. 6-1-12.)

3 (35 ILCS 5/901) (from Ch. 120, par. 9-901)

4 Sec. 901. Collection authority.

5 (a) In general.

6 The Department shall collect the taxes imposed by this Act.

7 The Department shall collect certified past due child support

8 amounts under Section 2505-650 of the Department of Revenue Law

9 (20 ILCS 2505/2505-650). Except as provided in subsections (c),

10 (e), (f), (g), and (h) of this Section, money collected

11 pursuant to subsections (a) and (b) of Section 201 of this Act

12 shall be paid into the General Revenue Fund in the State

13 treasury; money collected pursuant to subsections (c) and (d)

14 of Section 201 of this Act shall be paid into the Personal

15 Property Tax Replacement Fund, a special fund in the State

16 Treasury; and money collected under Section 2505-650 of the

17 Department of Revenue Law (20 ILCS 2505/2505-650) shall be paid

18 into the Child Support Enforcement Trust Fund, a special fund

19 outside the State Treasury, or to the State Disbursement Unit

20 established under Section 10-26 of the Illinois Public Aid

21 Code, as directed by the Department of Healthcare and Family

22 Services.

23 (b) Local Government Distributive Fund.

24 Beginning August 1, 1969, and continuing through June 30,

25 1994, the Treasurer shall transfer each month from the General

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1 Revenue Fund to a special fund in the State treasury, to be

2 known as the "Local Government Distributive Fund", an amount

3 equal to 1/12 of the net revenue realized from the tax imposed

4 by subsections (a) and (b) of Section 201 of this Act during

5 the preceding month. Beginning July 1, 1994, and continuing

6 through June 30, 1995, the Treasurer shall transfer each month

7 from the General Revenue Fund to the Local Government

8 Distributive Fund an amount equal to 1/11 of the net revenue

9 realized from the tax imposed by subsections (a) and (b) of

10 Section 201 of this Act during the preceding month. Beginning

11 July 1, 1995 and continuing through January 31, 2011, the

12 Treasurer shall transfer each month from the General Revenue

13 Fund to the Local Government Distributive Fund an amount equal

14 to the net of (i) 1/10 of the net revenue realized from the tax

15 imposed by subsections (a) and (b) of Section 201 of the

16 Illinois Income Tax Act during the preceding month (ii) minus,

17 beginning July 1, 2003 and ending June 30, 2004, $6,666,666,

18 and beginning July 1, 2004, zero. Beginning February 1, 2011,

19 and continuing through January 31, 2015, the Treasurer shall

20 transfer each month from the General Revenue Fund to the Local

21 Government Distributive Fund an amount equal to the sum of (i)

22 6% (10% of the ratio of the 3% individual income tax rate prior

23 to 2011 to the 5% individual income tax rate after 2010) of the

24 net revenue realized from the tax imposed by subsections (a)

25 and (b) of Section 201 of this Act upon individuals, trusts,

26 and estates during the preceding month and (ii) 6.86% (10% of

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1 the ratio of the 4.8% corporate income tax rate prior to 2011

2 to the 7% corporate income tax rate after 2010) of the net

3 revenue realized from the tax imposed by subsections (a) and

4 (b) of Section 201 of this Act upon corporations during the

5 preceding month. Beginning February 1, 2015 and continuing

6 through January 31, 2017 ~~January 31, 2025~~, the Treasurer shall

7 transfer each month from the General Revenue Fund to the Local

8 Government Distributive Fund an amount equal to the sum of (i)

9 8% (10% of the ratio of the 3% individual income tax rate prior

10 to 2011 to the 3.75% individual income tax rate after 2014) of

11 the net revenue realized from the tax imposed by subsections

12 (a) and (b) of Section 201 of this Act upon individuals,

13 trusts, and estates during the preceding month and (ii) 9.14%

14 (10% of the ratio of the 4.8% corporate income tax rate prior

15 to 2011 to the 5.25% corporate income tax rate after 2014) of

16 the net revenue realized from the tax imposed by subsections

17 (a) and (b) of Section 201 of this Act upon corporations during

18 the preceding month. Beginning February 1, 2017 ~~February 1,~~

19 ~~2025~~, the Treasurer shall transfer each month from the General

20 Revenue Fund to the Local Government Distributive Fund an

21 amount equal to the sum of (i) 6.06% ~~9.23%~~ (10% of the ratio of

22 the 3% individual income tax rate prior to 2011 to the 4.95%

23 ~~3.25%~~ individual income tax rate beginning in 2017 ~~after 2024~~)

24 of the net revenue realized from the tax imposed by subsections

25 (a) and (b) of Section 201 of this Act upon individuals,

26 trusts, and estates during the preceding month and (ii) 6.86%

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1 (10% of the ratio of the 4.8% corporate income tax rate prior

2 to 2011 to the 7% corporate income tax rate beginning in 2017)

3 ~~10%~~ of the net revenue realized from the tax imposed by

4 subsections (a) and (b) of Section 201 of this Act upon

5 corporations during the preceding month. Net revenue realized

6 for a month shall be defined as the revenue from the tax

7 imposed by subsections (a) and (b) of Section 201 of this Act

8 which is deposited in the General Revenue Fund, the Education

9 Assistance Fund, the Income Tax Surcharge Local Government

10 Distributive Fund, the Fund for the Advancement of Education,

11 and the Commitment to Human Services Fund during the month

12 minus the amount paid out of the General Revenue Fund in State

13 warrants during that same month as refunds to taxpayers for

14 overpayment of liability under the tax imposed by subsections

15 (a) and (b) of Section 201 of this Act.

16 Beginning on August 26, 2014 (the effective date of Public

17 Act 98-1052), the Comptroller shall perform the transfers

18 required by this subsection (b) no later than 60 days after he

19 or she receives the certification from the Treasurer as

20 provided in Section 1 of the State Revenue Sharing Act.

21 (c) Deposits Into Income Tax Refund Fund.

22 (1) Beginning on January 1, 1989 and thereafter, the

23 Department shall deposit a percentage of the amounts

24 collected pursuant to subsections (a) and (b)(1), (2), and

25 (3), of Section 201 of this Act into a fund in the State

26 treasury known as the Income Tax Refund Fund. The

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1 Department shall deposit 6% of such amounts during the

2 period beginning January 1, 1989 and ending on June 30,

3 1989. Beginning with State fiscal year 1990 and for each

4 fiscal year thereafter, the percentage deposited into the

5 Income Tax Refund Fund during a fiscal year shall be the

6 Annual Percentage. For fiscal years 1999 through 2001, the

7 Annual Percentage shall be 7.1%. For fiscal year 2003, the

8 Annual Percentage shall be 8%. For fiscal year 2004, the

9 Annual Percentage shall be 11.7%. Upon the effective date

10 of this amendatory Act of the 93rd General Assembly, the

11 Annual Percentage shall be 10% for fiscal year 2005. For

12 fiscal year 2006, the Annual Percentage shall be 9.75%. For

13 fiscal year 2007, the Annual Percentage shall be 9.75%. For

14 fiscal year 2008, the Annual Percentage shall be 7.75%. For

15 fiscal year 2009, the Annual Percentage shall be 9.75%. For

16 fiscal year 2010, the Annual Percentage shall be 9.75%. For

17 fiscal year 2011, the Annual Percentage shall be 8.75%. For

18 fiscal year 2012, the Annual Percentage shall be 8.75%. For

19 fiscal year 2013, the Annual Percentage shall be 9.75%. For

20 fiscal year 2014, the Annual Percentage shall be 9.5%. For

21 fiscal year 2015, the Annual Percentage shall be 10%. For

22 all other fiscal years, the Annual Percentage shall be

23 calculated as a fraction, the numerator of which shall be

24 the amount of refunds approved for payment by the

25 Department during the preceding fiscal year as a result of

26 overpayment of tax liability under subsections (a) and

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1 (b)(1), (2), and (3) of Section 201 of this Act plus the

2 amount of such refunds remaining approved but unpaid at the

3 end of the preceding fiscal year, minus the amounts

4 transferred into the Income Tax Refund Fund from the

5 Tobacco Settlement Recovery Fund, and the denominator of

6 which shall be the amounts which will be collected pursuant

7 to subsections (a) and (b)(1), (2), and (3) of Section 201

8 of this Act during the preceding fiscal year; except that

9 in State fiscal year 2002, the Annual Percentage shall in

10 no event exceed 7.6%. The Director of Revenue shall certify

11 the Annual Percentage to the Comptroller on the last

12 business day of the fiscal year immediately preceding the

13 fiscal year for which it is to be effective.

14 (2) Beginning on January 1, 1989 and thereafter, the

15 Department shall deposit a percentage of the amounts

16 collected pursuant to subsections (a) and (b)(6), (7), and

17 (8), (c) and (d) of Section 201 of this Act into a fund in

18 the State treasury known as the Income Tax Refund Fund. The

19 Department shall deposit 18% of such amounts during the

20 period beginning January 1, 1989 and ending on June 30,

21 1989. Beginning with State fiscal year 1990 and for each

22 fiscal year thereafter, the percentage deposited into the

23 Income Tax Refund Fund during a fiscal year shall be the

24 Annual Percentage. For fiscal years 1999, 2000, and 2001,

25 the Annual Percentage shall be 19%. For fiscal year 2003,

26 the Annual Percentage shall be 27%. For fiscal year 2004,

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1 the Annual Percentage shall be 32%. Upon the effective date

2 of this amendatory Act of the 93rd General Assembly, the

3 Annual Percentage shall be 24% for fiscal year 2005. For

4 fiscal year 2006, the Annual Percentage shall be 20%. For

5 fiscal year 2007, the Annual Percentage shall be 17.5%. For

6 fiscal year 2008, the Annual Percentage shall be 15.5%. For

7 fiscal year 2009, the Annual Percentage shall be 17.5%. For

8 fiscal year 2010, the Annual Percentage shall be 17.5%. For

9 fiscal year 2011, the Annual Percentage shall be 17.5%. For

10 fiscal year 2012, the Annual Percentage shall be 17.5%. For

11 fiscal year 2013, the Annual Percentage shall be 14%. For

12 fiscal year 2014, the Annual Percentage shall be 13.4%. For

13 fiscal year 2015, the Annual Percentage shall be 14%. For

14 all other fiscal years, the Annual Percentage shall be

15 calculated as a fraction, the numerator of which shall be

16 the amount of refunds approved for payment by the

17 Department during the preceding fiscal year as a result of

18 overpayment of tax liability under subsections (a) and

19 (b)(6), (7), and (8), (c) and (d) of Section 201 of this

20 Act plus the amount of such refunds remaining approved but

21 unpaid at the end of the preceding fiscal year, and the

22 denominator of which shall be the amounts which will be

23 collected pursuant to subsections (a) and (b)(6), (7), and

24 (8), (c) and (d) of Section 201 of this Act during the

25 preceding fiscal year; except that in State fiscal year

26 2002, the Annual Percentage shall in no event exceed 23%.

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1 The Director of Revenue shall certify the Annual Percentage

2 to the Comptroller on the last business day of the fiscal

3 year immediately preceding the fiscal year for which it is

4 to be effective.

5 (3) The Comptroller shall order transferred and the

6 Treasurer shall transfer from the Tobacco Settlement

7 Recovery Fund to the Income Tax Refund Fund (i) $35,000,000

8 in January, 2001, (ii) $35,000,000 in January, 2002, and

9 (iii) $35,000,000 in January, 2003.

10 (d) Expenditures from Income Tax Refund Fund.

11 (1) Beginning January 1, 1989, money in the Income Tax

12 Refund Fund shall be expended exclusively for the purpose

13 of paying refunds resulting from overpayment of tax

14 liability under Section 201 of this Act, for paying rebates

15 under Section 208.1 in the event that the amounts in the

16 Homeowners' Tax Relief Fund are insufficient for that

17 purpose, and for making transfers pursuant to this

18 subsection (d).

19 (2) The Director shall order payment of refunds

20 resulting from overpayment of tax liability under Section

21 201 of this Act from the Income Tax Refund Fund only to the

22 extent that amounts collected pursuant to Section 201 of

23 this Act and transfers pursuant to this subsection (d) and

24 item (3) of subsection (c) have been deposited and retained

25 in the Fund.

26 (3) As soon as possible after the end of each fiscal

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1 year, the Director shall order transferred and the State

2 Treasurer and State Comptroller shall transfer from the

3 Income Tax Refund Fund to the Personal Property Tax

4 Replacement Fund an amount, certified by the Director to

5 the Comptroller, equal to the excess of the amount

6 collected pursuant to subsections (c) and (d) of Section

7 201 of this Act deposited into the Income Tax Refund Fund

8 during the fiscal year over the amount of refunds resulting

9 from overpayment of tax liability under subsections (c) and

10 (d) of Section 201 of this Act paid from the Income Tax

11 Refund Fund during the fiscal year.

12 (4) As soon as possible after the end of each fiscal

13 year, the Director shall order transferred and the State

14 Treasurer and State Comptroller shall transfer from the

15 Personal Property Tax Replacement Fund to the Income Tax

16 Refund Fund an amount, certified by the Director to the

17 Comptroller, equal to the excess of the amount of refunds

18 resulting from overpayment of tax liability under

19 subsections (c) and (d) of Section 201 of this Act paid

20 from the Income Tax Refund Fund during the fiscal year over

21 the amount collected pursuant to subsections (c) and (d) of

22 Section 201 of this Act deposited into the Income Tax

23 Refund Fund during the fiscal year.

24 (4.5) As soon as possible after the end of fiscal year

25 1999 and of each fiscal year thereafter, the Director shall

26 order transferred and the State Treasurer and State

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1 Comptroller shall transfer from the Income Tax Refund Fund

2 to the General Revenue Fund any surplus remaining in the

3 Income Tax Refund Fund as of the end of such fiscal year;

4 excluding for fiscal years 2000, 2001, and 2002 amounts

5 attributable to transfers under item (3) of subsection (c)

6 less refunds resulting from the earned income tax credit.

7 (5) This Act shall constitute an irrevocable and

8 continuing appropriation from the Income Tax Refund Fund

9 for the purpose of paying refunds upon the order of the

10 Director in accordance with the provisions of this Section.

11 (e) Deposits into the Education Assistance Fund and the

12 Income Tax Surcharge Local Government Distributive Fund.

13 On July 1, 1991, and thereafter, of the amounts collected

14 pursuant to subsections (a) and (b) of Section 201 of this Act,

15 minus deposits into the Income Tax Refund Fund, the Department

16 shall deposit 7.3% into the Education Assistance Fund in the

17 State Treasury. Beginning July 1, 1991, and continuing through

18 January 31, 1993, of the amounts collected pursuant to

19 subsections (a) and (b) of Section 201 of the Illinois Income

20 Tax Act, minus deposits into the Income Tax Refund Fund, the

21 Department shall deposit 3.0% into the Income Tax Surcharge

22 Local Government Distributive Fund in the State Treasury.

23 Beginning February 1, 1993 and continuing through June 30,

24 1993, of the amounts collected pursuant to subsections (a) and

25 (b) of Section 201 of the Illinois Income Tax Act, minus

26 deposits into the Income Tax Refund Fund, the Department shall

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1 deposit 4.4% into the Income Tax Surcharge Local Government

2 Distributive Fund in the State Treasury. Beginning July 1,

3 1993, and continuing through June 30, 1994, of the amounts

4 collected under subsections (a) and (b) of Section 201 of this

5 Act, minus deposits into the Income Tax Refund Fund, the

6 Department shall deposit 1.475% into the Income Tax Surcharge

7 Local Government Distributive Fund in the State Treasury.

8 (f) Deposits into the Fund for the Advancement of

9 Education. Beginning February 1, 2015, the Department shall

10 deposit the following portions of the revenue realized from the

11 tax imposed upon individuals, trusts, and estates by

12 subsections (a) and (b) of Section 201 of this Act during the

13 preceding month, minus deposits into the Income Tax Refund

14 Fund, into the Fund for the Advancement of Education:

15 (1) beginning February 1, 2015, and prior to February

16 1, 2025, 1/30; and

17 (2) beginning February 1, 2025, 1/26.

18 If the rate of tax imposed by subsection (a) and (b) of

19 Section 201 is reduced pursuant to Section 201.5 of this Act,

20 the Department shall not make the deposits required by this

21 subsection (f) on or after the effective date of the reduction.

22 (g) Deposits into the Commitment to Human Services Fund.

23 Beginning February 1, 2015, the Department shall deposit the

24 following portions of the revenue realized from the tax imposed

25 upon individuals, trusts, and estates by subsections (a) and

26 (b) of Section 201 of this Act during the preceding month,

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1 minus deposits into the Income Tax Refund Fund, into the

2 Commitment to Human Services Fund:

3 (1) beginning February 1, 2015, and prior to February

4 1, 2025, 1/30; and

5 (2) beginning February 1, 2025, 1/26.

6 If the rate of tax imposed by subsection (a) and (b) of

7 Section 201 is reduced pursuant to Section 201.5 of this Act,

8 the Department shall not make the deposits required by this

9 subsection (g) on or after the effective date of the reduction.

10 (h) Deposits into the Tax Compliance and Administration

11 Fund. Beginning on the first day of the first calendar month to

12 occur on or after August 26, 2014 (the effective date of Public

13 Act 98-1098), each month the Department shall pay into the Tax

14 Compliance and Administration Fund, to be used, subject to

15 appropriation, to fund additional auditors and compliance

16 personnel at the Department, an amount equal to 1/12 of 5% of

17 the cash receipts collected during the preceding fiscal year by

18 the Audit Bureau of the Department from the tax imposed by

19 subsections (a), (b), (c), and (d) of Section 201 of this Act,

20 net of deposits into the Income Tax Refund Fund made from those

21 cash receipts.

22 (Source: P.A. 98-24, eff. 6-19-13; 98-674, eff. 6-30-14;

23 98-1052, eff. 8-26-14; 98-1098, eff. 8-26-14; 99-78, eff.

24 7-20-15.)

25 (35 ILCS 5/1501) (from Ch. 120, par. 15-1501)

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1 Sec. 1501. Definitions.

2 (a) In general. When used in this Act, where not otherwise

3 distinctly expressed or manifestly incompatible with the

4 intent thereof:

5 (1) Business income. The term "business income" means

6 all income that may be treated as apportionable business

7 income under the Constitution of the United States.

8 Business income is net of the deductions allocable thereto.

9 Such term does not include compensation or the deductions

10 allocable thereto. For each taxable year beginning on or

11 after January 1, 2003, a taxpayer may elect to treat all

12 income other than compensation as business income. This

13 election shall be made in accordance with rules adopted by

14 the Department and, once made, shall be irrevocable.

15 (1.5) Captive real estate investment trust:

16 (A) The term "captive real estate investment

17 trust" means a corporation, trust, or association:

18 (i) that is considered a real estate

19 investment trust for the taxable year under

20 Section 856 of the Internal Revenue Code;

21 (ii) the certificates of beneficial interest

22 or shares of which are not regularly traded on an

23 established securities market; and

24 (iii) of which more than 50% of the voting

25 power or value of the beneficial interest or

26 shares, at any time during the last half of the

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1 taxable year, is owned or controlled, directly,

2 indirectly, or constructively, by a single

3 corporation.

4 (B) The term "captive real estate investment

5 trust" does not include:

6 (i) a real estate investment trust of which

7 more than 50% of the voting power or value of the

8 beneficial interest or shares is owned or

9 controlled, directly, indirectly, or

10 constructively, by:

11 (a) a real estate investment trust, other

12 than a captive real estate investment trust;

13 (b) a person who is exempt from taxation

14 under Section 501 of the Internal Revenue Code,

15 and who is not required to treat income

16 received from the real estate investment trust

17 as unrelated business taxable income under

18 Section 512 of the Internal Revenue Code;

19 (c) a listed Australian property trust, if

20 no more than 50% of the voting power or value

21 of the beneficial interest or shares of that

22 trust, at any time during the last half of the

23 taxable year, is owned or controlled, directly

24 or indirectly, by a single person;

25 (d) an entity organized as a trust,

26 provided a listed Australian property trust

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1 described in subparagraph (c) owns or

2 controls, directly or indirectly, or

3 constructively, 75% or more of the voting power

4 or value of the beneficial interests or shares

5 of such entity; or

6 (e) an entity that is organized outside of

7 the laws of the United States and that

8 satisfies all of the following criteria:

9 (1) at least 75% of the entity's total

10 asset value at the close of its taxable

11 year is represented by real estate assets

12 (as defined in Section 856(c)(5)(B) of the

13 Internal Revenue Code, thereby including

14 shares or certificates of beneficial

15 interest in any real estate investment

16 trust), cash and cash equivalents, and

17 U.S. Government securities;

18 (2) the entity is not subject to tax on

19 amounts that are distributed to its

20 beneficial owners or is exempt from

21 entity-level taxation;

22 (3) the entity distributes at least

23 85% of its taxable income (as computed in

24 the jurisdiction in which it is organized)

25 to the holders of its shares or

26 certificates of beneficial interest on an

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1 annual basis;

2 (4) either (i) the shares or

3 beneficial interests of the entity are

4 regularly traded on an established

5 securities market or (ii) not more than 10%

6 of the voting power or value in the entity

7 is held, directly, indirectly, or

8 constructively, by a single entity or

9 individual; and

10 (5) the entity is organized in a

11 country that has entered into a tax treaty

12 with the United States; or

13 (ii) during its first taxable year for which it

14 elects to be treated as a real estate investment

15 trust under Section 856(c)(1) of the Internal

16 Revenue Code, a real estate investment trust the

17 certificates of beneficial interest or shares of

18 which are not regularly traded on an established

19 securities market, but only if the certificates of

20 beneficial interest or shares of the real estate

21 investment trust are regularly traded on an

22 established securities market prior to the earlier

23 of the due date (including extensions) for filing

24 its return under this Act for that first taxable

25 year or the date it actually files that return.

26 (C) For the purposes of this subsection (1.5), the

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1 constructive ownership rules prescribed under Section

2 318(a) of the Internal Revenue Code, as modified by

3 Section 856(d)(5) of the Internal Revenue Code, apply

4 in determining the ownership of stock, assets, or net

5 profits of any person.

6 (D) For the purposes of this item (1.5), for

7 taxable years ending on or after August 16, 2007, the

8 voting power or value of the beneficial interest or

9 shares of a real estate investment trust does not

10 include any voting power or value of beneficial

11 interest or shares in a real estate investment trust

12 held directly or indirectly in a segregated asset

13 account by a life insurance company (as described in

14 Section 817 of the Internal Revenue Code) to the extent

15 such voting power or value is for the benefit of

16 entities or persons who are either immune from taxation

17 or exempt from taxation under subtitle A of the

18 Internal Revenue Code.

19 (2) Commercial domicile. The term "commercial

20 domicile" means the principal place from which the trade or

21 business of the taxpayer is directed or managed.

22 (3) Compensation. The term "compensation" means wages,

23 salaries, commissions and any other form of remuneration

24 paid to employees for personal services.

25 (4) Corporation. The term "corporation" includes

26 associations, joint-stock companies, insurance companies

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1 and cooperatives. Any entity, including a limited

2 liability company formed under the Illinois Limited

3 Liability Company Act, shall be treated as a corporation if

4 it is so classified for federal income tax purposes.

5 (5) Department. The term "Department" means the

6 Department of Revenue of this State.

7 (6) Director. The term "Director" means the Director of

8 Revenue of this State.

9 (7) Fiduciary. The term "fiduciary" means a guardian,

10 trustee, executor, administrator, receiver, or any person

11 acting in any fiduciary capacity for any person.

12 (8) Financial organization.

13 (A) The term "financial organization" means any

14 bank, bank holding company, trust company, savings

15 bank, industrial bank, land bank, safe deposit

16 company, private banker, savings and loan association,

17 building and loan association, credit union, currency

18 exchange, cooperative bank, small loan company, sales

19 finance company, investment company, or any person

20 which is owned by a bank or bank holding company. For

21 the purpose of this Section a "person" will include

22 only those persons which a bank holding company may

23 acquire and hold an interest in, directly or

24 indirectly, under the provisions of the Bank Holding

25 Company Act of 1956 (12 U.S.C. 1841, et seq.), except

26 where interests in any person must be disposed of

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1 within certain required time limits under the Bank

2 Holding Company Act of 1956.

3 (B) For purposes of subparagraph (A) of this

4 paragraph, the term "bank" includes (i) any entity that

5 is regulated by the Comptroller of the Currency under

6 the National Bank Act, or by the Federal Reserve Board,

7 or by the Federal Deposit Insurance Corporation and

8 (ii) any federally or State chartered bank operating as

9 a credit card bank.

10 (C) For purposes of subparagraph (A) of this

11 paragraph, the term "sales finance company" has the

12 meaning provided in the following item (i) or (ii):

13 (i) A person primarily engaged in one or more

14 of the following businesses: the business of

15 purchasing customer receivables, the business of

16 making loans upon the security of customer

17 receivables, the business of making loans for the

18 express purpose of funding purchases of tangible

19 personal property or services by the borrower, or

20 the business of finance leasing. For purposes of

21 this item (i), "customer receivable" means:

22 (a) a retail installment contract or

23 retail charge agreement within the meaning of

24 the Sales Finance Agency Act, the Retail

25 Installment Sales Act, or the Motor Vehicle

26 Retail Installment Sales Act;

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1 (b) an installment, charge, credit, or

2 similar contract or agreement arising from the

3 sale of tangible personal property or services

4 in a transaction involving a deferred payment

5 price payable in one or more installments

6 subsequent to the sale; or

7 (c) the outstanding balance of a contract

8 or agreement described in provisions (a) or (b)

9 of this item (i).

10 A customer receivable need not provide for

11 payment of interest on deferred payments. A sales

12 finance company may purchase a customer receivable

13 from, or make a loan secured by a customer

14 receivable to, the seller in the original

15 transaction or to a person who purchased the

16 customer receivable directly or indirectly from

17 that seller.

18 (ii) A corporation meeting each of the

19 following criteria:

20 (a) the corporation must be a member of an

21 "affiliated group" within the meaning of

22 Section 1504(a) of the Internal Revenue Code,

23 determined without regard to Section 1504(b)

24 of the Internal Revenue Code;

25 (b) more than 50% of the gross income of

26 the corporation for the taxable year must be

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1 interest income derived from qualifying loans.

2 A "qualifying loan" is a loan made to a member

3 of the corporation's affiliated group that

4 originates customer receivables (within the

5 meaning of item (i)) or to whom customer

6 receivables originated by a member of the

7 affiliated group have been transferred, to the

8 extent the average outstanding balance of

9 loans from that corporation to members of its

10 affiliated group during the taxable year do not

11 exceed the limitation amount for that

12 corporation. The "limitation amount" for a

13 corporation is the average outstanding

14 balances during the taxable year of customer

15 receivables (within the meaning of item (i))

16 originated by all members of the affiliated

17 group. If the average outstanding balances of

18 the loans made by a corporation to members of

19 its affiliated group exceed the limitation

20 amount, the interest income of that

21 corporation from qualifying loans shall be

22 equal to its interest income from loans to

23 members of its affiliated groups times a

24 fraction equal to the limitation amount

25 divided by the average outstanding balances of

26 the loans made by that corporation to members

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1 of its affiliated group;

2 (c) the total of all shareholder's equity

3 (including, without limitation, paid-in

4 capital on common and preferred stock and

5 retained earnings) of the corporation plus the

6 total of all of its loans, advances, and other

7 obligations payable or owed to members of its

8 affiliated group may not exceed 20% of the

9 total assets of the corporation at any time

10 during the tax year; and

11 (d) more than 50% of all interest-bearing

12 obligations of the affiliated group payable to

13 persons outside the group determined in

14 accordance with generally accepted accounting

15 principles must be obligations of the

16 corporation.

17 This amendatory Act of the 91st General Assembly is

18 declaratory of existing law.

19 (D) Subparagraphs (B) and (C) of this paragraph are

20 declaratory of existing law and apply retroactively,

21 for all tax years beginning on or before December 31,

22 1996, to all original returns, to all amended returns

23 filed no later than 30 days after the effective date of

24 this amendatory Act of 1996, and to all notices issued

25 on or before the effective date of this amendatory Act

26 of 1996 under subsection (a) of Section 903, subsection

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1 (a) of Section 904, subsection (e) of Section 909, or

2 Section 912. A taxpayer that is a "financial

3 organization" that engages in any transaction with an

4 affiliate shall be a "financial organization" for all

5 purposes of this Act.

6 (E) For all tax years beginning on or before

7 December 31, 1996, a taxpayer that falls within the

8 definition of a "financial organization" under

9 subparagraphs (B) or (C) of this paragraph, but who

10 does not fall within the definition of a "financial

11 organization" under the Proposed Regulations issued by

12 the Department of Revenue on July 19, 1996, may

13 irrevocably elect to apply the Proposed Regulations

14 for all of those years as though the Proposed

15 Regulations had been lawfully promulgated, adopted,

16 and in effect for all of those years. For purposes of

17 applying subparagraphs (B) or (C) of this paragraph to

18 all of those years, the election allowed by this

19 subparagraph applies only to the taxpayer making the

20 election and to those members of the taxpayer's unitary

21 business group who are ordinarily required to

22 apportion business income under the same subsection of

23 Section 304 of this Act as the taxpayer making the

24 election. No election allowed by this subparagraph

25 shall be made under a claim filed under subsection (d)

26 of Section 909 more than 30 days after the effective

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1 date of this amendatory Act of 1996.

2 (F) Finance Leases. For purposes of this

3 subsection, a finance lease shall be treated as a loan

4 or other extension of credit, rather than as a lease,

5 regardless of how the transaction is characterized for

6 any other purpose, including the purposes of any

7 regulatory agency to which the lessor is subject. A

8 finance lease is any transaction in the form of a lease

9 in which the lessee is treated as the owner of the

10 leased asset entitled to any deduction for

11 depreciation allowed under Section 167 of the Internal

12 Revenue Code.

13 (9) Fiscal year. The term "fiscal year" means an

14 accounting period of 12 months ending on the last day of

15 any month other than December.

16 (9.5) Fixed place of business. The term "fixed place of

17 business" has the same meaning as that term is given in

18 Section 864 of the Internal Revenue Code and the related

19 Treasury regulations.

20 (10) Includes and including. The terms "includes" and

21 "including" when used in a definition contained in this Act

22 shall not be deemed to exclude other things otherwise

23 within the meaning of the term defined.

24 (11) Internal Revenue Code. The term "Internal Revenue

25 Code" means the United States Internal Revenue Code of 1954

26 or any successor law or laws relating to federal income

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1 taxes in effect for the taxable year.

2 (11.5) Investment partnership.

3 (A) The term "investment partnership" means any

4 entity that is treated as a partnership for federal

5 income tax purposes that meets the following

6 requirements:

7 (i) no less than 90% of the partnership's cost

8 of its total assets consists of qualifying

9 investment securities, deposits at banks or other

10 financial institutions, and office space and

11 equipment reasonably necessary to carry on its

12 activities as an investment partnership;

13 (ii) no less than 90% of its gross income

14 consists of interest, dividends, and gains from

15 the sale or exchange of qualifying investment

16 securities; and

17 (iii) the partnership is not a dealer in

18 qualifying investment securities.

19 (B) For purposes of this paragraph (11.5), the term

20 "qualifying investment securities" includes all of the

21 following:

22 (i) common stock, including preferred or debt

23 securities convertible into common stock, and

24 preferred stock;

25 (ii) bonds, debentures, and other debt

26 securities;

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1 (iii) foreign and domestic currency deposits

2 secured by federal, state, or local governmental

3 agencies;

4 (iv) mortgage or asset-backed securities

5 secured by federal, state, or local governmental

6 agencies;

7 (v) repurchase agreements and loan

8 participations;

9 (vi) foreign currency exchange contracts and

10 forward and futures contracts on foreign

11 currencies;

12 (vii) stock and bond index securities and

13 futures contracts and other similar financial

14 securities and futures contracts on those

15 securities;

16 (viii) options for the purchase or sale of any

17 of the securities, currencies, contracts, or

18 financial instruments described in items (i) to

19 (vii), inclusive;

20 (ix) regulated futures contracts;

21 (x) commodities (not described in Section

22 1221(a)(1) of the Internal Revenue Code) or

23 futures, forwards, and options with respect to

24 such commodities, provided, however, that any item

25 of a physical commodity to which title is actually

26 acquired in the partnership's capacity as a dealer

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1 in such commodity shall not be a qualifying

2 investment security;

3 (xi) derivatives; and

4 (xii) a partnership interest in another

5 partnership that is an investment partnership.

6 (12) Mathematical error. The term "mathematical error"

7 includes the following types of errors, omissions, or

8 defects in a return filed by a taxpayer which prevents

9 acceptance of the return as filed for processing:

10 (A) arithmetic errors or incorrect computations on

11 the return or supporting schedules;

12 (B) entries on the wrong lines;

13 (C) omission of required supporting forms or

14 schedules or the omission of the information in whole

15 or in part called for thereon; and

16 (D) an attempt to claim, exclude, deduct, or

17 improperly report, in a manner directly contrary to the

18 provisions of the Act and regulations thereunder any

19 item of income, exemption, deduction, or credit.

20 (13) Nonbusiness income. The term "nonbusiness income"

21 means all income other than business income or

22 compensation.

23 (14) Nonresident. The term "nonresident" means a

24 person who is not a resident.

25 (15) Paid, incurred and accrued. The terms "paid",

26 "incurred" and "accrued" shall be construed according to

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1 the method of accounting upon the basis of which the

2 person's base income is computed under this Act.

3 (16) Partnership and partner. The term "partnership"

4 includes a syndicate, group, pool, joint venture or other

5 unincorporated organization, through or by means of which

6 any business, financial operation, or venture is carried

7 on, and which is not, within the meaning of this Act, a

8 trust or estate or a corporation; and the term "partner"

9 includes a member in such syndicate, group, pool, joint

10 venture or organization.

11 The term "partnership" includes any entity, including

12 a limited liability company formed under the Illinois

13 Limited Liability Company Act, classified as a partnership

14 for federal income tax purposes.

15 The term "partnership" does not include a syndicate,

16 group, pool, joint venture, or other unincorporated

17 organization established for the sole purpose of playing

18 the Illinois State Lottery.

19 (17) Part-year resident. The term "part-year resident"

20 means an individual who became a resident during the

21 taxable year or ceased to be a resident during the taxable

22 year. Under Section 1501(a)(20)(A)(i) residence commences

23 with presence in this State for other than a temporary or

24 transitory purpose and ceases with absence from this State

25 for other than a temporary or transitory purpose. Under

26 Section 1501(a)(20)(A)(ii) residence commences with the

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1 establishment of domicile in this State and ceases with the

2 establishment of domicile in another State.

3 (18) Person. The term "person" shall be construed to

4 mean and include an individual, a trust, estate,

5 partnership, association, firm, company, corporation,

6 limited liability company, or fiduciary. For purposes of

7 Section 1301 and 1302 of this Act, a "person" means (i) an

8 individual, (ii) a corporation, (iii) an officer, agent, or

9 employee of a corporation, (iv) a member, agent or employee

10 of a partnership, or (v) a member, manager, employee,

11 officer, director, or agent of a limited liability company

12 who in such capacity commits an offense specified in

13 Section 1301 and 1302.

14 (18A) Records. The term "records" includes all data

15 maintained by the taxpayer, whether on paper, microfilm,

16 microfiche, or any type of machine-sensible data

17 compilation.

18 (19) Regulations. The term "regulations" includes

19 rules promulgated and forms prescribed by the Department.

20 (20) Resident. The term "resident" means:

21 (A) an individual (i) who is in this State for

22 other than a temporary or transitory purpose during the

23 taxable year; or (ii) who is domiciled in this State

24 but is absent from the State for a temporary or

25 transitory purpose during the taxable year;

26 (B) The estate of a decedent who at his or her

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1 death was domiciled in this State;

2 (C) A trust created by a will of a decedent who at

3 his death was domiciled in this State; and

4 (D) An irrevocable trust, the grantor of which was

5 domiciled in this State at the time such trust became

6 irrevocable. For purpose of this subparagraph, a trust

7 shall be considered irrevocable to the extent that the

8 grantor is not treated as the owner thereof under

9 Sections 671 through 678 of the Internal Revenue Code.

10 (21) Sales. The term "sales" means all gross receipts

11 of the taxpayer not allocated under Sections 301, 302 and

12 303.

13 (22) State. The term "state" when applied to a

14 jurisdiction other than this State means any state of the

15 United States, the District of Columbia, the Commonwealth

16 of Puerto Rico, any Territory or Possession of the United

17 States, and any foreign country, or any political

18 subdivision of any of the foregoing. For purposes of the

19 foreign tax credit under Section 601, the term "state"

20 means any state of the United States, the District of

21 Columbia, the Commonwealth of Puerto Rico, and any

22 territory or possession of the United States, or any

23 political subdivision of any of the foregoing, effective

24 for tax years ending on or after December 31, 1989.

25 (23) Taxable year. The term "taxable year" means the

26 calendar year, or the fiscal year ending during such

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1 calendar year, upon the basis of which the base income is

2 computed under this Act. "Taxable year" means, in the case

3 of a return made for a fractional part of a year under the

4 provisions of this Act, the period for which such return is

5 made.

6 (24) Taxpayer. The term "taxpayer" means any person

7 subject to the tax imposed by this Act.

8 (25) International banking facility. The term

9 international banking facility shall have the same meaning

10 as is set forth in the Illinois Banking Act or as is set

11 forth in the laws of the United States or regulations of

12 the Board of Governors of the Federal Reserve System.

13 (26) Income Tax Return Preparer.

14 (A) The term "income tax return preparer" means any

15 person who prepares for compensation, or who employs

16 one or more persons to prepare for compensation, any

17 return of tax imposed by this Act or any claim for

18 refund of tax imposed by this Act. The preparation of a

19 substantial portion of a return or claim for refund

20 shall be treated as the preparation of that return or

21 claim for refund.

22 (B) A person is not an income tax return preparer

23 if all he or she does is

24 (i) furnish typing, reproducing, or other

25 mechanical assistance;

26 (ii) prepare returns or claims for refunds for

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1 the employer by whom he or she is regularly and

2 continuously employed;

3 (iii) prepare as a fiduciary returns or claims

4 for refunds for any person; or

5 (iv) prepare claims for refunds for a taxpayer

6 in response to any notice of deficiency issued to

7 that taxpayer or in response to any waiver of

8 restriction after the commencement of an audit of

9 that taxpayer or of another taxpayer if a

10 determination in the audit of the other taxpayer

11 directly or indirectly affects the tax liability

12 of the taxpayer whose claims he or she is

13 preparing.

14 (27) Unitary business group.

15 (A) The term "unitary business group" means a group

16 of persons related through common ownership whose

17 business activities are integrated with, dependent

18 upon and contribute to each other. The group will not

19 include those members whose business activity outside

20 the United States is 80% or more of any such member's

21 total business activity; for purposes of this

22 paragraph and clause (a)(3)(B)(ii) of Section 304,

23 business activity within the United States shall be

24 measured by means of the factors ordinarily applicable

25 under subsections (a), (b), (c), (d), or (h) of Section

26 304 except that, in the case of members ordinarily

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1 required to apportion business income by means of the 3

2 factor formula of property, payroll and sales

3 specified in subsection (a) of Section 304, including

4 the formula as weighted in subsection (h) of Section

5 304, such members shall not use the sales factor in the

6 computation and the results of the property and payroll

7 factor computations of subsection (a) of Section 304

8 shall be divided by 2 (by one if either the property or

9 payroll factor has a denominator of zero). The

10 computation required by the preceding sentence shall,

11 in each case, involve the division of the member's

12 property, payroll, or revenue miles in the United

13 States, insurance premiums on property or risk in the

14 United States, or financial organization business

15 income from sources within the United States, as the

16 case may be, by the respective worldwide figures for

17 such items. Common ownership in the case of

18 corporations is the direct or indirect control or

19 ownership of more than 50% of the outstanding voting

20 stock of the persons carrying on unitary business

21 activity. Unitary business activity can ordinarily be

22 illustrated where the activities of the members are:

23 (1) in the same general line (such as manufacturing,

24 wholesaling, retailing of tangible personal property,

25 insurance, transportation or finance); or (2) are

26 steps in a vertically structured enterprise or process

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1 (such as the steps involved in the production of

2 natural resources, which might include exploration,

3 mining, refining, and marketing); and, in either

4 instance, the members are functionally integrated

5 through the exercise of strong centralized management

6 (where, for example, authority over such matters as

7 purchasing, financing, tax compliance, product line,

8 personnel, marketing and capital investment is not

9 left to each member).

10 (B) In no event, for taxable years beginning prior

11 to January 1, 2017, and excepting any unitary business

12 group that apportions business income under Section

13 304(b) of this Act and is subject to the insurance

14 premium tax imposed under the Illinois Insurance Code,

15 shall any unitary business group include members which

16 are ordinarily required to apportion business income

17 under different subsections of Section 304 except that

18 for tax years ending on or after December 31, 1987 this

19 prohibition shall not apply to a holding company that

20 would otherwise be a member of a unitary business group

21 with taxpayers that apportion business income under

22 any of subsections (b), (c), (c-1), or (d) of Section

23 304. If a unitary business group would, but for the

24 preceding sentence, include members that are

25 ordinarily required to apportion business income under

26 different subsections of Section 304, then for each

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1 subsection of Section 304 for which there are two or

2 more members, there shall be a separate unitary

3 business group composed of such members. For purposes

4 of the preceding two sentences, a member is "ordinarily

5 required to apportion business income" under a

6 particular subsection of Section 304 if it would be

7 required to use the apportionment method prescribed by

8 such subsection except for the fact that it derives

9 business income solely from Illinois. As used in this

10 paragraph, the phrase "United States" means ~~only~~ the 50

11 states and the District of Columbia and ~~, but~~ does not

12 include any territory or possession of the United

13 States, but, for taxable years ending on or after

14 December 31, 2017, does include ~~or~~ any area over which

15 the United States has asserted jurisdiction or claimed

16 exclusive rights with respect to the exploration for or

17 exploitation of natural resources.

18 (C) Holding companies.

19 (i) For purposes of this subparagraph, a

20 "holding company" is a corporation (other than a

21 corporation that is a financial organization under

22 paragraph (8) of this subsection (a) of Section

23 1501 because it is a bank holding company under the

24 provisions of the Bank Holding Company Act of 1956

25 (12 U.S.C. 1841, et seq.) or because it is owned by

26 a bank or a bank holding company) that owns a

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1 controlling interest in one or more other

2 taxpayers ("controlled taxpayers"); that, during

3 the period that includes the taxable year and the 2

4 immediately preceding taxable years or, if the

5 corporation was formed during the current or

6 immediately preceding taxable year, the taxable

7 years in which the corporation has been in

8 existence, derived substantially all its gross

9 income from dividends, interest, rents, royalties,

10 fees or other charges received from controlled

11 taxpayers for the provision of services, and gains

12 on the sale or other disposition of interests in

13 controlled taxpayers or in property leased or

14 licensed to controlled taxpayers or used by the

15 taxpayer in providing services to controlled

16 taxpayers; and that incurs no substantial expenses

17 other than expenses (including interest and other

18 costs of borrowing) incurred in connection with

19 the acquisition and holding of interests in

20 controlled taxpayers and in the provision of

21 services to controlled taxpayers or in the leasing

22 or licensing of property to controlled taxpayers.

23 (ii) The income of a holding company which is a

24 member of more than one unitary business group

25 shall be included in each unitary business group of

26 which it is a member on a pro rata basis, by

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1 including in each unitary business group that

2 portion of the base income of the holding company

3 that bears the same proportion to the total base

4 income of the holding company as the gross receipts

5 of the unitary business group bears to the combined

6 gross receipts of all unitary business groups (in

7 both cases without regard to the holding company)

8 or on any other reasonable basis, consistently

9 applied.

10 (iii) A holding company shall apportion its

11 business income under the subsection of Section

12 304 used by the other members of its unitary

13 business group. The apportionment factors of a

14 holding company which would be a member of more

15 than one unitary business group shall be included

16 with the apportionment factors of each unitary

17 business group of which it is a member on a pro

18 rata basis using the same method used in clause

19 (ii).

20 (iv) The provisions of this subparagraph (C)

21 are intended to clarify existing law.

22 (D) If including the base income and factors of a

23 holding company in more than one unitary business group

24 under subparagraph (C) does not fairly reflect the

25 degree of integration between the holding company and

26 one or more of the unitary business groups, the

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1 dependence of the holding company and one or more of

2 the unitary business groups upon each other, or the

3 contributions between the holding company and one or

4 more of the unitary business groups, the holding

5 company may petition the Director, under the

6 procedures provided under Section 304(f), for

7 permission to include all base income and factors of

8 the holding company only with members of a unitary

9 business group apportioning their business income

10 under one subsection of subsections (a), (b), (c), or

11 (d) of Section 304. If the petition is granted, the

12 holding company shall be included in a unitary business

13 group only with persons apportioning their business

14 income under the selected subsection of Section 304

15 until the Director grants a petition of the holding

16 company either to be included in more than one unitary

17 business group under subparagraph (C) or to include its

18 base income and factors only with members of a unitary

19 business group apportioning their business income

20 under a different subsection of Section 304.

21 (E) If the unitary business group members'

22 accounting periods differ, the common parent's

23 accounting period or, if there is no common parent, the

24 accounting period of the member that is expected to

25 have, on a recurring basis, the greatest Illinois

26 income tax liability must be used to determine whether

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1 to use the apportionment method provided in subsection

2 (a) or subsection (h) of Section 304. The prohibition

3 against membership in a unitary business group for

4 taxpayers ordinarily required to apportion income

5 under different subsections of Section 304 does not

6 apply to taxpayers required to apportion income under

7 subsection (a) and subsection (h) of Section 304. The

8 provisions of this amendatory Act of 1998 apply to tax

9 years ending on or after December 31, 1998.

10 (28) Subchapter S corporation. The term "Subchapter S

11 corporation" means a corporation for which there is in

12 effect an election under Section 1362 of the Internal

13 Revenue Code, or for which there is a federal election to

14 opt out of the provisions of the Subchapter S Revision Act

15 of 1982 and have applied instead the prior federal

16 Subchapter S rules as in effect on July 1, 1982.

17 (30) Foreign person. The term "foreign person" means

18 any person who is a nonresident alien individual and any

19 nonindividual entity, regardless of where created or

20 organized, whose business activity outside the United

21 States is 80% or more of the entity's total business

22 activity.

23 (b) Other definitions.

24 (1) Words denoting number, gender, and so forth, when

25 used in this Act, where not otherwise distinctly expressed

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1 or manifestly incompatible with the intent thereof:

2 (A) Words importing the singular include and apply

3 to several persons, parties or things;

4 (B) Words importing the plural include the

5 singular; and

6 (C) Words importing the masculine gender include

7 the feminine as well.

8 (2) "Company" or "association" as including successors

9 and assigns. The word "company" or "association", when used

10 in reference to a corporation, shall be deemed to embrace

11 the words "successors and assigns of such company or

12 association", and in like manner as if these last-named

13 words, or words of similar import, were expressed.

14 (3) Other terms. Any term used in any Section of this

15 Act with respect to the application of, or in connection

16 with, the provisions of any other Section of this Act shall

17 have the same meaning as in such other Section.

18 (Source: P.A. 99-213, eff. 7-31-15.)

19 Section 30-15. The Film Production Services Tax Credit Act

20 of 2008 is amended by changing Section 42 as follows:

21 (35 ILCS 16/42)

22 Sec. 42. Sunset of credits. The application of credits

23 awarded pursuant to this Act shall be limited by a reasonable

24 and appropriate sunset date. A taxpayer shall not be entitled

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1 to take a credit awarded pursuant to this Act for tax years

2 beginning on or after January 1, 2027 ~~10 years after the~~

3 ~~effective date of this amendatory Act of the 97th General~~

4 ~~Assembly. After the initial 10-year sunset, the General~~

5 ~~Assembly may extend the sunset date by 5-year intervals~~.

6 (Source: P.A. 97-2, eff. 5-6-11; 97-3, eff. 5-6-11.)

7 Section 30-20. The Use Tax Act is amended by changing

8 Sections 2, 3, 3-5, 3-10, 3-10.5, 3-45, 3-50, 3-55, 3-65, 3-75,

9 3a, 4, 5, 6, 7, 8, 9, 10, and 11 and by adding Section 2a-2 as

10 follows:

11 (35 ILCS 105/2) (from Ch. 120, par. 439.2)

12 Sec. 2. Definitions.

13 "Use" means the exercise by any person of any right or

14 power over tangible personal property incident to the ownership

15 of that property or the exercise by any person of any right or

16 power over, or the enjoyment of, a taxable service, except that

17 it does not include the sale of such property or taxable

18 servicein any form as tangible personal propertyor a taxable

19 servicein the regular course of business to the extent that

20 such property or taxable service is not first subjected to a

21 use for which it was purchased, and does not include the use of

22 such property or taxable serviceby its owner for demonstration

23 purposes: Provided that the property or service purchased is

24 deemed to be purchased for the purpose of resale, despite first

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1 being used, to the extent to which it is resold as an

2 ingredient of an intentionally produced product or by-product

3 of manufacturing or is otherwise transferred to the purchaser

4 of tangible personal property or taxable service. "Use" does

5 not mean the demonstration use or interim use of tangible

6 personal property or a taxable service by a retailer before he

7 sells that tangible personal propertyor taxable service. For

8 watercraft or aircraft, if the period of demonstration use or

9 interim use by the retailer exceeds 18 months, the retailer

10 shall pay on the retailers' original cost price the tax imposed

11 by this Act, and no credit for that tax is permitted if the

12 watercraft or aircraft is subsequently sold by the retailer.

13 "Use" does not mean the physical incorporation of tangible

14 personal property, to the extent not first subjected to a use

15 for which it was purchased, as an ingredient or constituent,

16 into other tangible personal property (a) which is sold in the

17 regular course of business or (b) which the person

18 incorporating such ingredient or constituent therein has

19 undertaken at the time of such purchase to cause to be

20 transported in interstate commerce to destinations outside the

21 State of Illinois: Provided that the property purchased is

22 deemed to be purchased for the purpose of resale, despite first

23 being used, to the extent to which it is resold as an

24 ingredient of an intentionally produced product or by-product

25 of manufacturing.

26 "Watercraft" means a Class 2, Class 3, or Class 4

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1 watercraft as defined in Section 3-2 of the Boat Registration

2 and Safety Act, a personal watercraft, or any boat equipped

3 with an inboard motor.

4 "Purchase at retail" means the acquisition of the ownership

5 of or title to tangible personal propertyor the acquisition of

6 a taxable service through a sale at retail.

7 "Purchaser" means anyone who, through a sale at retail,

8 acquires a taxable service orthe ownership of tangible

9 personal property for a valuable consideration.

10 "Sale at retail" means any transfer of the ownership of or

11 title to tangible personal property to a purchaseror the

12 performance of a taxable service for a purchaser, for the

13 purpose of use, and not for the purpose of resale in any form

14 as tangible personal property or taxable serviceto the extent

15 not first subjected to a use for which it was purchased, for a

16 valuable consideration: Provided that the property purchased

17 is deemed to be purchased for the purpose of resale, despite

18 first being used, to the extent to which it is resold as an

19 ingredient of an intentionally produced product or by-product

20 of manufacturing. For this purpose, slag produced as an

21 incident to manufacturing pig iron or steel and sold is

22 considered to be an intentionally produced by-product of

23 manufacturing. "Sale at retail" includes any such transfer made

24 for resale unless made in compliance with Section 2c of the

25 Retailers' Occupation Tax Act, as incorporated by reference

26 into Section 12 of this Act. Transactions whereby the

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1 possession of the property is transferred but the seller

2 retains the title as security for payment of the selling price

3 are sales.

4 "Sale at retail" shall also be construed to include any

5 Illinois florist's sales transaction in which the purchase

6 order is received in Illinois by a florist and the sale is for

7 use or consumption, but the Illinois florist has a florist in

8 another state deliver the property to the purchaser or the

9 purchaser's donee in such other state.

10 Nonreusable tangible personal property that is used by

11 persons engaged in the business of operating a restaurant,

12 cafeteria, or drive-in is a sale for resale when it is

13 transferred to customers in the ordinary course of business as

14 part of the sale of food or beverages and is used to deliver,

15 package, or consume food or beverages, regardless of where

16 consumption of the food or beverages occurs. Examples of those

17 items include, but are not limited to nonreusable, paper and

18 plastic cups, plates, baskets, boxes, sleeves, buckets or other

19 containers, utensils, straws, placemats, napkins, doggie bags,

20 and wrapping or packaging materials that are transferred to

21 customers as part of the sale of food or beverages in the

22 ordinary course of business.

23 The purchase, employment and transfer of such tangible

24 personal property as newsprint and ink for the primary purpose

25 of conveying news (with or without other information) is not a

26 purchase, use or sale of tangible personal property.

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1 "Selling price" means the consideration for a sale valued

2 in money whether received in money or otherwise, including

3 cash, credits, property other than as hereinafter provided, and

4 services, but not including the value of or credit given for

5 traded-in tangible personal property where the item that is

6 traded-in is of like kind and character as that which is being

7 sold, and shall be determined without any deduction on account

8 of the cost of the property sold, the cost of materials used,

9 labor or service cost or any other expense whatsoever, but does

10 not include interest or finance charges which appear as

11 separate items on the bill of sale or sales contract nor

12 charges that are added to prices by sellers on account of the

13 seller's tax liability under the "Retailers' Occupation Tax

14 Act", or on account of the seller's duty to collect, from the

15 purchaser, the tax that is imposed by this Act, or, except as

16 otherwise provided with respect to any cigarette tax imposed by

17 a home rule unit, on account of the seller's tax liability

18 under any local occupation tax administered by the Department,

19 or, except as otherwise provided with respect to any cigarette

20 tax imposed by a home rule unit on account of the seller's duty

21 to collect, from the purchasers, the tax that is imposed under

22 any local use tax administered by the Department. Effective

23 December 1, 1985, "selling price" shall include charges that

24 are added to prices by sellers on account of the seller's tax

25 liability under the Cigarette Tax Act, on account of the

26 seller's duty to collect, from the purchaser, the tax imposed

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1 under the Cigarette Use Tax Act, and on account of the seller's

2 duty to collect, from the purchaser, any cigarette tax imposed

3 by a home rule unit.

4 Notwithstanding any law to the contrary, for any motor

5 vehicle, as defined in Section 1-146 of the Vehicle Code, that

6 is sold on or after January 1, 2015 for the purpose of leasing

7 the vehicle for a defined period that is longer than one year

8 and (1) is a motor vehicle of the second division that: (A) is

9 a self-contained motor vehicle designed or permanently

10 converted to provide living quarters for recreational,

11 camping, or travel use, with direct walk through access to the

12 living quarters from the driver's seat; (B) is of the van

13 configuration designed for the transportation of not less than

14 7 nor more than 16 passengers; or (C) has a gross vehicle

15 weight rating of 8,000 pounds or less or (2) is a motor vehicle

16 of the first division, "selling price" or "amount of sale"

17 means the consideration received by the lessor pursuant to the

18 lease contract, including amounts due at lease signing and all

19 monthly or other regular payments charged over the term of the

20 lease. Also included in the selling price is any amount

21 received by the lessor from the lessee for the leased vehicle

22 that is not calculated at the time the lease is executed,

23 including, but not limited to, excess mileage charges and

24 charges for excess wear and tear. For sales that occur in

25 Illinois, with respect to any amount received by the lessor

26 from the lessee for the leased vehicle that is not calculated

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1 at the time the lease is executed, the lessor who purchased the

2 motor vehicle does not incur the tax imposed by the Use Tax Act

3 on those amounts, and the retailer who makes the retail sale of

4 the motor vehicle to the lessor is not required to collect the

5 tax imposed by this Act or to pay the tax imposed by the

6 Retailers' Occupation Tax Act on those amounts. However, the

7 lessor who purchased the motor vehicle assumes the liability

8 for reporting and paying the tax on those amounts directly to

9 the Department in the same form (Illinois Retailers' Occupation

10 Tax, and local retailers' occupation taxes, if applicable) in

11 which the retailer would have reported and paid such tax if the

12 retailer had accounted for the tax to the Department. For

13 amounts received by the lessor from the lessee that are not

14 calculated at the time the lease is executed, the lessor must

15 file the return and pay the tax to the Department by the due

16 date otherwise required by this Act for returns other than

17 transaction returns. If the retailer is entitled under this Act

18 to a discount for collecting and remitting the tax imposed

19 under this Act to the Department with respect to the sale of

20 the motor vehicle to the lessor, then the right to the discount

21 provided in this Act shall be transferred to the lessor with

22 respect to the tax paid by the lessor for any amount received

23 by the lessor from the lessee for the leased vehicle that is

24 not calculated at the time the lease is executed; provided that

25 the discount is only allowed if the return is timely filed and

26 for amounts timely paid. The "selling price" of a motor vehicle

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1 that is sold on or after January 1, 2015 for the purpose of

2 leasing for a defined period of longer than one year shall not

3 be reduced by the value of or credit given for traded-in

4 tangible personal property owned by the lessor, nor shall it be

5 reduced by the value of or credit given for traded-in tangible

6 personal property owned by the lessee, regardless of whether

7 the trade-in value thereof is assigned by the lessee to the

8 lessor. In the case of a motor vehicle that is sold for the

9 purpose of leasing for a defined period of longer than one

10 year, the sale occurs at the time of the delivery of the

11 vehicle, regardless of the due date of any lease payments. A

12 lessor who incurs a Retailers' Occupation Tax liability on the

13 sale of a motor vehicle coming off lease may not take a credit

14 against that liability for the Use Tax the lessor paid upon the

15 purchase of the motor vehicle (or for any tax the lessor paid

16 with respect to any amount received by the lessor from the

17 lessee for the leased vehicle that was not calculated at the

18 time the lease was executed) if the selling price of the motor

19 vehicle at the time of purchase was calculated using the

20 definition of "selling price" as defined in this paragraph.

21 Notwithstanding any other provision of this Act to the

22 contrary, lessors shall file all returns and make all payments

23 required under this paragraph to the Department by electronic

24 means in the manner and form as required by the Department.

25 This paragraph does not apply to leases of motor vehicles for

26 which, at the time the lease is entered into, the term of the

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1 lease is not a defined period, including leases with a defined

2 initial period with the option to continue the lease on a

3 month-to-month or other basis beyond the initial defined

4 period.

5 The phrase "like kind and character" shall be liberally

6 construed (including but not limited to any form of motor

7 vehicle for any form of motor vehicle, or any kind of farm or

8 agricultural implement for any other kind of farm or

9 agricultural implement), while not including a kind of item

10 which, if sold at retail by that retailer, would be exempt from

11 retailers' occupation tax and use tax as an isolated or

12 occasional sale.

13 "Department" means the Department of Revenue.

14 "Person" means any natural individual, firm, partnership,

15 association, joint stock company, joint adventure, public or

16 private corporation, limited liability company, or a receiver,

17 executor, trustee, guardian or other representative appointed

18 by order of any court.

19 "Retailer" means and includes every person engaged in the

20 business of making sales at retail as defined in this Section.

21 A person who holds himself or herself out as being engaged

22 (or who habitually engages) in selling tangible personal

23 property or taxable servicesat retail is a retailer hereunder

24 with respect to such sales (and not primarily in a nontaxable

25 service occupation) notwithstanding the fact that such person

26 designs and produces such tangible personal propertyor taxable

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1 serviceon special order for the purchaser and in such a way as

2 to render the property or service of value only to such

3 purchaser, if such tangible personal propertyor taxable

4 serviceso produced on special order serves substantially the

5 same function as stock or standard items of tangible personal

6 property or taxable service that are sold at retail.

7 A person whose activities are organized and conducted

8 primarily as a not-for-profit service enterprise, and who

9 engages in selling tangible personal propertyor taxable

10 services at retail (whether to the public or merely to members

11 and their guests) is a retailer with respect to such

12 transactions, excepting only a person organized and operated

13 exclusively for charitable, religious or educational purposes

14 either (1), to the extent of sales by such person to its

15 members, students, patients or inmates of tangible personal

16 property to be used primarily for the purposes of such person,

17 or (2), to the extent of sales by such person of tangible

18 personal property or taxable services which are ~~is~~not sold or

19 offered for sale by persons organized for profit. The selling

20 of school books and school supplies by schools at retail to

21 students is not "primarily for the purposes of" the school

22 which does such selling. This paragraph does not apply to nor

23 subject to taxation occasional dinners, social or similar

24 activities of a person organized and operated exclusively for

25 charitable, religious or educational purposes, whether or not

26 such activities are open to the public.

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1 A person who is the recipient of a grant or contract under

2 Title VII of the Older Americans Act of 1965 (P.L. 92-258) and

3 serves meals to participants in the federal Nutrition Program

4 for the Elderly in return for contributions established in

5 amount by the individual participant pursuant to a schedule of

6 suggested fees as provided for in the federal Act is not a

7 retailer under this Act with respect to such transactions.

8 Persons who engage in the business of transferring tangible

9 personal propertyor taxable services upon the redemption of

10 trading stamps are retailers hereunder when engaged in such

11 business.

12 The isolated or occasional sale of tangible personal

13 property or taxable servicesat retail by a person who does not

14 hold himself out as being engaged (or who does not habitually

15 engage) in selling such tangible personal property or taxable

16 servicesat retail or a sale through a bulk vending machine

17 does not make such person a retailer hereunder. However, any

18 person who is engaged in a business which is not subject to the

19 tax imposed by the "Retailers' Occupation Tax Act" because of

20 involving the sale of or a contract to sell real estate or a

21 construction contract to improve real estate, but who, in the

22 course of conducting such business, transfers tangible

23 personal property to users or consumers in the finished form in

24 which it was purchased, and which does not become real estate,

25 under any provision of a construction contract or real estate

26 sale or real estate sales agreement entered into with some

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1 other person arising out of or because of such nontaxable

2 business, is a retailer to the extent of the value of the

3 tangible personal property so transferred. If, in such

4 transaction, a separate charge is made for the tangible

5 personal property so transferred, the value of such property,

6 for the purposes of this Act, is the amount so separately

7 charged, but not less than the cost of such property to the

8 transferor; if no separate charge is made, the value of such

9 property, for the purposes of this Act, is the cost to the

10 transferor of such tangible personal property.

11 "Retailer maintaining a place of business in this State",

12 or any like term, means and includes any of the following

13 retailers:

14 1. A retailer having or maintaining within this State,

15 directly or by a subsidiary, an office, distribution house,

16 sales house, warehouse or other place of business, or any

17 agent or other representative operating within this State

18 under the authority of the retailer or its subsidiary,

19 irrespective of whether such place of business or agent or

20 other representative is located here permanently or

21 temporarily, or whether such retailer or subsidiary is

22 licensed to do business in this State. However, the

23 ownership of property that is located at the premises of a

24 printer with which the retailer has contracted for printing

25 and that consists of the final printed product, property

26 that becomes a part of the final printed product, or copy

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1 from which the printed product is produced shall not result

2 in the retailer being deemed to have or maintain an office,

3 distribution house, sales house, warehouse, or other place

4 of business within this State.

5 1.1. A retailer having a contract with a person located

6 in this State under which the person, for a commission or

7 other consideration based upon the sale of tangible

8 personal property or taxable services by the retailer,

9 directly or indirectly refers potential customers to the

10 retailer by providing to the potential customers a

11 promotional code or other mechanism that allows the

12 retailer to track purchases referred by such persons.

13 Examples of mechanisms that allow the retailer to track

14 purchases referred by such persons include but are not

15 limited to the use of a link on the person's Internet

16 website, promotional codes distributed through the

17 person's hand-delivered or mailed material, and

18 promotional codes distributed by the person through radio

19 or other broadcast media. The provisions of this paragraph

20 1.1 shall apply only if the cumulative gross receipts from

21 sales of tangible personal property or taxable service by

22 the retailer to customers who are referred to the retailer

23 by all persons in this State under such contracts exceed

24 $10,000 during the preceding 4 quarterly periods ending on

25 the last day of March, June, September, and December. A

26 retailer meeting the requirements of this paragraph 1.1

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1 shall be presumed to be maintaining a place of business in

2 this State but may rebut this presumption by submitting

3 proof that the referrals or other activities pursued within

4 this State by such persons were not sufficient to meet the

5 nexus standards of the United States Constitution during

6 the preceding 4 quarterly periods.

7 1.2. Beginning July 1, 2011, a retailer having a

8 contract with a person located in this State under which:

9 A. the retailer sells the same or substantially

10 similar line of products or taxable services as the

11 person located in this State and does so using an

12 identical or substantially similar name, trade name,

13 or trademark as the person located in this State; and

14 B. the retailer provides a commission or other

15 consideration to the person located in this State based

16 upon the sale of tangible personal property or taxable

17 service by the retailer.

18 The provisions of this paragraph 1.2 shall apply only if

19 the cumulative gross receipts from sales of tangible

20 personal property or taxable service by the retailer to

21 customers in this State under all such contracts exceed

22 $10,000 during the preceding 4 quarterly periods ending on

23 the last day of March, June, September, and December.

24 2. A retailer soliciting orders for tangible personal

25 property or taxable serviceby means of a telecommunication

26 or television shopping system (which utilizes toll free

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1 numbers) which is intended by the retailer to be broadcast

2 by cable television or other means of broadcasting, to

3 consumers located in this State.

4 3. A retailer, pursuant to a contract with a

5 broadcaster or publisher located in this State, soliciting

6 orders for tangible personal property or taxable serviceby

7 means of advertising which is disseminated primarily to

8 consumers located in this State and only secondarily to

9 bordering jurisdictions.

10 4. A retailer soliciting orders for tangible personal

11 property or taxable serviceby mail if the solicitations

12 are substantial and recurring and if the retailer benefits

13 from any banking, financing, debt collection,

14 telecommunication, or marketing activities occurring in

15 this State or benefits from the location in this State of

16 authorized installation, servicing, or repair facilities.

17 5. A retailer that is owned or controlled by the same

18 interests that own or control any retailer engaging in

19 business in the same or similar line of business in this

20 State.

21 6. A retailer having a franchisee or licensee operating

22 under its trade name if the franchisee or licensee is

23 required to collect the tax under this Section.

24 7. A retailer, pursuant to a contract with a cable

25 television operator located in this State, soliciting

26 orders for tangible personal property or taxable serviceby

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1 means of advertising which is transmitted or distributed

2 over a cable television system in this State.

3 8. A retailer engaging in activities in Illinois, which

4 activities in the state in which the retail business

5 engaging in such activities is located would constitute

6 maintaining a place of business in that state.

7 "Bulk vending machine" means a vending machine, containing

8 unsorted confections, nuts, toys, or other items designed

9 primarily to be used or played with by children which, when a

10 coin or coins of a denomination not larger than $0.50 are

11 inserted, are dispensed in equal portions, at random and

12 without selection by the customer.

13 (Source: P.A. 98-628, eff. 1-1-15; 98-1080, eff. 8-26-14;

14 98-1089, eff. 1-1-15; 99-78, eff. 7-20-15.)

15 (35 ILCS 105/2a-2 new)

16 Sec. 2a-2. Taxable services. Beginning January 1, 2018,

17 "taxable service" means any of the following services:

18 (1) Providing space for storage.

19 (A) "Storage" means the retaining or keeping of

20 tangible personal property in this State for any

21 purpose. For purposes of this Section, tangible

22 personal property, does not include "grain" as defined

23 in the Public Grain Warehouse and Warehouse Receipts

24 Act.

25 (B) "Space for storage" means (i) secure areas,

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1 such as rooms, units, compartments or containers,

2 whether accessible from outside or from within a

3 building, that are designated for the use of a

4 purchaser, where the purchaser can store and retrieve

5 property, including self-storage units, mini-storage

6 units, and areas by any other name; (ii) any parking

7 lot, ramp, or parking garage for a vehicle, whether the

8 vehicle is parked by the operator of the vehicle or by

9 an attendant; (iii) any aircraft parking area, ramp, or

10 hanger; (iv) any boat slip, dock, or dry dock; (v) any

11 recreational vehicle parking area or garage; and (vi)

12 any other areas for storage or parking of tangible

13 personal property.

14 (C) "Self-storage or mini-storage" includes

15 storage lockers or storage units in apartment

16 complexes (if the locker or unit is utilized at the

17 tenant's option and includes payment of a fee in

18 addition to apartment rental), and in amusement parks,

19 water parks, recreational facilities, and other

20 locations where lockers are rented for self-storage.

21 (2) 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 (3) Private detective, private alarm, and private

26 security service for which the provider of the service is

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1 required to be licensed pursuant to the Private Detective,

2 Private Alarm, Private Security, Fingerprint Vendor, and

3 Locksmith Act of 2004, or would be required to be so

4 licensed in performing those services in this State.

5 (4) Structural pest control services. "Structural pest

6 control services" means use of any device or the

7 application of any substance to prevent, repel, mitigate,

8 curb, control, or eradicate any structural pest in, on,

9 under, or around a structure, or within a part of, or

10 materials used in building, a structure; the use of any

11 pesticide, including insecticides, fungicides and other

12 wood treatment products, attractants, repellents,

13 rodenticides, fumigants, or mechanical devices for

14 preventing, controlling, eradicating, identifying,

15 mitigating, diminishing, or curbing insects, vermin, rats,

16 mice, or other pests in, on, under, or around a structure,

17 or within a part of, or materials used in building, a

18 structure; vault fumigation and fumigation of box cars,

19 trucks, ships, airplanes, docks, warehouses, and common

20 carriers or soliciting to perform any of the foregoing

21 functions.

22 (5) Personal care services, including skin care, the

23 application of cosmetics, manicuring, pedicuring, hair

24 removal, tattooing, body piercing, tanning, and other

25 similar services. "Personal care services" does not

26 include massage therapy or personal care services provided

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1 by or on the order of a licensed physician, licensed

2 chiropractor, physician assistant, advanced practice

3 nurse, registered nurse, or licensed practical nurse, or

4 the cutting, coloring, or styling of an individual's hair.

5 (35 ILCS 105/3) (from Ch. 120, par. 439.3)

6 Sec. 3. Tax imposed. A tax is imposed upon the privilege of

7 using in this Statea taxable service or tangible personal

8 property purchased at retail from a retailer, including

9 computer software, and including photographs, negatives, and

10 positives that are the product of photoprocessing, but not

11 including products of photoprocessing produced for use in

12 motion pictures for commercial exhibition. Beginning January

13 1, 2001, prepaid telephone calling arrangements shall be

14 considered tangible personal property subject to the tax

15 imposed under this Act regardless of the form in which those

16 arrangements may be embodied, transmitted, or fixed by any

17 method now known or hereafter developed. Purchases of (1)

18 electricity delivered to customers by wire; (2) natural or

19 artificial gas that is delivered to customers through pipes,

20 pipelines, or mains; and (3) water that is delivered to

21 customers through pipes, pipelines, or mains are not subject to

22 tax under this Act. The provisions of this amendatory Act of

23 the 98th General Assembly are declaratory of existing law as to

24 the meaning and scope of this Act.

25 (Source: P.A. 98-583, eff. 1-1-14.)

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1 (35 ILCS 105/3-5)

2 Sec. 3-5. Exemptions. Use of the following tangible

3 personal property or taxable serviceis exempt from the tax

4 imposed by this Act:

5 (1) Personal property or taxable services purchased from a

6 corporation, society, association, foundation, institution, or

7 organization, other than a limited liability company, that is

8 organized and operated as a not-for-profit service enterprise

9 for the benefit of persons 65 years of age or older if the

10 personal property or taxable servicewas not purchased by the

11 enterprise for the purpose of resale by the enterprise.

12 (2) Personal property or taxable service purchased by a

13 not-for-profit Illinois county fair association for use in

14 conducting, operating, or promoting the county fair.

15 (3) Personal property or taxable services purchased by a

16 not-for-profit arts or cultural organization that establishes,

17 by proof required by the Department by rule, that it has

18 received an exemption under Section 501(c)(3) of the Internal

19 Revenue Code and that is organized and operated primarily for

20 the presentation or support of arts or cultural programming,

21 activities, or services. These organizations include, but are

22 not limited to, music and dramatic arts organizations such as

23 symphony orchestras and theatrical groups, arts and cultural

24 service organizations, local arts councils, visual arts

25 organizations, and media arts organizations. On and after the

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1 effective date of this amendatory Act of the 92nd General

2 Assembly, however, an entity otherwise eligible for this

3 exemption shall not make tax-free purchases unless it has an

4 active identification number issued by the Department.

5 (4) Personal property or taxable services purchased by a

6 governmental body, by a corporation, society, association,

7 foundation, or institution organized and operated exclusively

8 for charitable, religious, or educational purposes, or by a

9 not-for-profit corporation, society, association, foundation,

10 institution, or organization that has no compensated officers

11 or employees and that is organized and operated primarily for

12 the recreation of persons 55 years of age or older. A limited

13 liability company may qualify for the exemption under this

14 paragraph only if the limited liability company is organized

15 and operated exclusively for educational purposes. On and after

16 July 1, 1987, however, no entity otherwise eligible for this

17 exemption shall make tax-free purchases unless it has an active

18 exemption identification number issued by the Department.

19 (5) Until July 1, 2003, a passenger car that is a

20 replacement vehicle to the extent that the purchase price of

21 the car is subject to the Replacement Vehicle Tax.

22 (6) 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,

26 certified by the purchaser to be used primarily for graphic

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1 arts production, and including machinery and equipment

2 purchased for lease. Equipment includes chemicals or chemicals

3 acting as catalysts but only if the chemicals or chemicals

4 acting as catalysts effect a direct and immediate change upon a

5 graphic arts product. Beginning on July 1, 2017, graphic arts

6 machinery and equipment is included in the manufacturing and

7 assembling machinery and equipment exemption under paragraph

8 (18).

9 (7) Farm chemicals.

10 (8) Legal tender, currency, medallions, or gold or silver

11 coinage issued by the State of Illinois, the government of the

12 United States of America, or the government of any foreign

13 country, and bullion.

14 (9) Personal property purchased from a teacher-sponsored

15 student organization affiliated with an elementary or

16 secondary school located in Illinois.

17 (10) A motor vehicle that is used for automobile renting,

18 as defined in the Automobile Renting Occupation and Use Tax

19 Act.

20 (11) Farm machinery and equipment, both new and used,

21 including that manufactured on special order, certified by the

22 purchaser to be used primarily for production agriculture or

23 State or federal agricultural programs, including individual

24 replacement parts for the machinery and equipment, including

25 machinery and equipment purchased for lease, and including

26 implements of husbandry defined in Section 1-130 of the

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1 Illinois Vehicle Code, farm machinery and agricultural

2 chemical and fertilizer spreaders, and nurse wagons required to

3 be registered under Section 3-809 of the Illinois Vehicle Code,

4 but excluding other motor vehicles required to be registered

5 under the Illinois Vehicle Code. Horticultural polyhouses or

6 hoop houses used for propagating, growing, or overwintering

7 plants shall be considered farm machinery and equipment under

8 this item (11). Agricultural chemical tender tanks and dry

9 boxes shall include units sold separately from a motor vehicle

10 required to be licensed and units sold mounted on a motor

11 vehicle required to be licensed if the selling price of the

12 tender is separately stated.

13 Farm machinery and equipment shall include precision

14 farming equipment that is installed or purchased to be

15 installed on farm machinery and equipment including, but not

16 limited to, tractors, harvesters, sprayers, planters, seeders,

17 or spreaders. Precision farming equipment includes, but is not

18 limited to, soil testing sensors, computers, monitors,

19 software, global positioning and mapping systems, and other

20 such equipment.

21 Farm machinery and equipment also includes computers,

22 sensors, software, and related equipment used primarily in the

23 computer-assisted operation of production agriculture

24 facilities, equipment, and activities such as, but not limited

25 to, the collection, monitoring, and correlation of animal and

26 crop data for the purpose of formulating animal diets and

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1 agricultural chemicals. This item (11) is exempt from the

2 provisions of Section 3-90.

3 (12) Until June 30, 2013, fuel and petroleum products sold

4 to or used by an air common carrier, certified by the carrier

5 to be used for consumption, shipment, or storage in the conduct

6 of its business as an air common carrier, for a flight destined

7 for or returning from a location or locations outside the

8 United States without regard to previous or subsequent domestic

9 stopovers.

10 Beginning July 1, 2013, fuel and petroleum products sold to

11 or used by an air carrier, certified by the carrier to be used

12 for consumption, shipment, or storage in the conduct of its

13 business as an air common carrier, for a flight that (i) is

14 engaged in foreign trade or is engaged in trade between the

15 United States and any of its possessions and (ii) transports at

16 least one individual or package for hire from the city of

17 origination to the city of final destination on the same

18 aircraft, without regard to a change in the flight number of

19 that aircraft.

20 (13) Proceeds of mandatory service charges separately

21 stated on customers' bills for the purchase and consumption of

22 food and beveragesor taxable services purchased at retail from

23 a retailer, to the extent that the proceeds of the service

24 charge are in fact turned over as tips or as a substitute for

25 tips to the employees who participate directly in preparing,

26 serving, hosting or cleaning up the food or beverage function

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1 with respect to which the service charge is imposed.

2 (14) Until July 1, 2003, oil field exploration, drilling,

3 and production equipment, including (i) rigs and parts of rigs,

4 rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and

5 tubular goods, including casing and drill strings, (iii) pumps

6 and pump-jack units, (iv) storage tanks and flow lines, (v) any

7 individual replacement part for oil field exploration,

8 drilling, and production equipment, and (vi) machinery and

9 equipment purchased for lease; but excluding motor vehicles

10 required to be registered under the Illinois Vehicle Code.

11 (15) Photoprocessing machinery and equipment, including

12 repair and replacement parts, both new and used, including that

13 manufactured on special order, certified by the purchaser to be

14 used primarily for photoprocessing, and including

15 photoprocessing machinery and equipment purchased for lease.

16 (16) Coal and aggregate exploration, mining, off-highway

17 hauling, processing, maintenance, and reclamation equipment,

18 including replacement parts and equipment, and including

19 equipment purchased for lease, but excluding motor vehicles

20 required to be registered under the Illinois Vehicle Code. The

21 changes made to this Section by Public Act 97-767 apply on and

22 after July 1, 2003, but no claim for credit or refund is

23 allowed on or after August 16, 2013 (the effective date of

24 Public Act 98-456) for such taxes paid during the period

25 beginning July 1, 2003 and ending on August 16, 2013 (the

26 effective date of Public Act 98-456).

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1 (17) Until July 1, 2003, distillation machinery and

2 equipment, sold as a unit or kit, assembled or installed by the

3 retailer, certified by the user to be used only for the

4 production of ethyl alcohol that will be used for consumption

5 as motor fuel or as a component of motor fuel for the personal

6 use of the user, and not subject to sale or resale.

7 (18) Manufacturing and assembling machinery and equipment

8 used primarily in the process of manufacturing or assembling

9 tangible personal property for wholesale or retail sale or

10 lease, whether that sale or lease is made directly by the

11 manufacturer or by some other person, whether the materials

12 used in the process are owned by the manufacturer or some other

13 person, or whether that sale or lease is made apart from or as

14 an incident to the seller's engaging in the service occupation

15 of producing machines, tools, dies, jigs, patterns, gauges, or

16 other similar items of no commercial value on special order for

17 a particular purchaser. The exemption provided by this

18 paragraph (18) does not include machinery and equipment used in

19 (i) the generation of electricity for wholesale or retail sale;

20 (ii) the generation or treatment of natural or artificial gas

21 for wholesale or retail sale that is delivered to customers

22 through pipes, pipelines, or mains; or (iii) the treatment of

23 water for wholesale or retail sale that is delivered to

24 customers through pipes, pipelines, or mains. The provisions of

25 Public Act 98-583 are declaratory of existing law as to the

26 meaning and scope of this exemption. Beginning on July 1, 2017,

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1 the exemption provided by this paragraph (18) includes, but is

2 not limited to, graphic arts machinery and equipment, as

3 defined in paragraph (6) of this Section. Beginning on July 1,

4 2017, the exemption provided by this paragraph (18) includes,

5 but is not limited to, production related tangible personal

6 property, as defined in Section 3-50 of this Act. The exemption

7 provided by this paragraph (18) is exempt from the provisions

8 of Section 3-90.

9 (19) Personal property delivered to a purchaser or

10 purchaser's donee inside Illinois when the purchase order for

11 that personal property was received by a florist located

12 outside Illinois who has a florist located inside Illinois

13 deliver the personal property.

14 (20) Semen used for artificial insemination of livestock

15 for direct agricultural production.

16 (21) Horses, or interests in horses, registered with and

17 meeting the requirements of any of the Arabian Horse Club

18 Registry of America, Appaloosa Horse Club, American Quarter

19 Horse Association, United States Trotting Association, or

20 Jockey Club, as appropriate, used for purposes of breeding or

21 racing for prizes. This item (21) is exempt from the provisions

22 of Section 3-90, and the exemption provided for under this item

23 (21) applies for all periods beginning May 30, 1995, but no

24 claim for credit or refund is allowed on or after January 1,

25 2008 for such taxes paid during the period beginning May 30,

26 2000 and ending on January 1, 2008.

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1 (22) Computers and communications equipment utilized for

2 any hospital purpose and equipment used in the diagnosis,

3 analysis, or treatment of hospital patients purchased by a

4 lessor who leases the equipment, under a lease of one year or

5 longer executed or in effect at the time the lessor would

6 otherwise be subject to the tax imposed by this Act, to a

7 hospital that has been issued an active tax exemption

8 identification number by the Department under Section 1g of the

9 Retailers' Occupation Tax Act. If the equipment is leased in a

10 manner that does not qualify for this exemption or is used in

11 any other non-exempt manner, the lessor shall be liable for the

12 tax imposed under this Act or the Service Use Tax Act, as the

13 case may be, based on the fair market value of the property at

14 the time the non-qualifying use occurs. No lessor shall collect

15 or attempt to collect an amount (however designated) that

16 purports to reimburse that lessor for the tax imposed by this

17 Act or the Service Use Tax Act, as the case may be, if the tax

18 has not been paid by the lessor. If a lessor improperly

19 collects any such amount from the lessee, the lessee shall have

20 a legal right to claim a refund of that amount from the lessor.

21 If, however, that amount is not refunded to the lessee for any

22 reason, the lessor is liable to pay that amount to the

23 Department.

24 (23) Personal property purchased by a lessor who leases the

25 property, under a lease of one year or longer executed or in

26 effect at the time the lessor would otherwise be subject to the

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1 tax imposed by this Act, to a governmental body that has been

2 issued an active sales tax exemption identification number by

3 the Department under Section 1g of the Retailers' Occupation

4 Tax Act. If the property is leased in a manner that does not

5 qualify for this exemption or used in any other non-exempt

6 manner, the lessor shall be liable for the tax imposed under

7 this Act or the Service Use Tax Act, as the case may be, based

8 on the fair market value of the property at the time the

9 non-qualifying use occurs. No lessor shall collect or attempt

10 to collect an amount (however designated) that purports to

11 reimburse that lessor for the tax imposed by this Act or the

12 Service Use Tax Act, as the case may be, if the tax has not been

13 paid by the lessor. If a lessor improperly collects any such

14 amount from the lessee, the lessee shall have a legal right to

15 claim a refund of that amount from the lessor. If, however,

16 that amount is not refunded to the lessee for any reason, the

17 lessor is liable to pay that amount to the Department.

18 (24) Beginning with taxable years ending on or after

19 December 31, 1995 and ending with taxable years ending on or

20 before December 31, 2004, personal property that is donated for

21 disaster relief to be used in a State or federally declared

22 disaster area in Illinois or bordering Illinois by a

23 manufacturer or retailer that is registered in this State to a

24 corporation, society, association, foundation, or institution

25 that has been issued a sales tax exemption identification

26 number by the Department that assists victims of the disaster

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1 who reside within the declared disaster area.

2 (25) 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 used in the

5 performance of infrastructure repairs in this State, including

6 but not limited to municipal roads and streets, access roads,

7 bridges, sidewalks, waste disposal systems, water and sewer

8 line extensions, water distribution and purification

9 facilities, storm water drainage and retention facilities, and

10 sewage treatment facilities, resulting from a State or

11 federally declared disaster in Illinois or bordering Illinois

12 when such repairs are initiated on facilities located in the

13 declared disaster area within 6 months after the disaster.

14 (26) Beginning July 1, 1999, game or game birds purchased

15 at a "game breeding and hunting preserve area" as that term is

16 used in the Wildlife Code. This paragraph is exempt from the

17 provisions of Section 3-90.

18 (27) A motor vehicle, as that term is defined in Section

19 1-146 of the Illinois Vehicle Code, that is donated to a

20 corporation, limited liability company, society, association,

21 foundation, or institution that is determined by the Department

22 to be organized and operated exclusively for educational

23 purposes. For purposes of this exemption, "a corporation,

24 limited liability company, society, association, foundation,

25 or institution organized and operated exclusively for

26 educational purposes" means all tax-supported public schools,

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1 private schools that offer systematic instruction in useful

2 branches of learning by methods common to public schools and

3 that compare favorably in their scope and intensity with the

4 course of study presented in tax-supported schools, and

5 vocational or technical schools or institutes organized and

6 operated exclusively to provide a course of study of not less

7 than 6 weeks duration and designed to prepare individuals to

8 follow a trade or to pursue a manual, technical, mechanical,

9 industrial, business, or commercial occupation.

10 (28) Beginning January 1, 2000, personal property,

11 including food, purchased through fundraising events for the

12 benefit of a public or private elementary or secondary school,

13 a group of those schools, or one or more school districts if

14 the events are sponsored by an entity recognized by the school

15 district that consists primarily of volunteers and includes

16 parents and teachers of the school children. This paragraph

17 does not apply to fundraising events (i) for the benefit of

18 private home instruction or (ii) for which the fundraising

19 entity purchases the personal property sold at the events from

20 another individual or entity that sold the property for the

21 purpose of resale by the fundraising entity and that profits

22 from the sale to the fundraising entity. This paragraph is

23 exempt from the provisions of Section 3-90.

24 (29) Beginning January 1, 2000 and through December 31,

25 2001, new or used automatic vending machines that prepare and

26 serve hot food and beverages, including coffee, soup, and other

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1 items, and replacement parts for these machines. Beginning

2 January 1, 2002 and through June 30, 2003, machines and parts

3 for machines used in commercial, coin-operated amusement and

4 vending business if a use or occupation tax is paid on the

5 gross receipts derived from the use of the commercial,

6 coin-operated amusement and vending machines. This paragraph

7 is exempt from the provisions of Section 3-90.

8 (30) Beginning January 1, 2001 and through June 30, 2016,

9 food for human consumption that is to be consumed off the

10 premises where it is sold (other than alcoholic beverages, soft

11 drinks, and food that has been prepared for immediate

12 consumption) and prescription and nonprescription medicines,

13 drugs, medical appliances, and insulin, urine testing

14 materials, syringes, and needles used by diabetics, for human

15 use, when purchased for use by a person receiving medical

16 assistance under Article V of the Illinois Public Aid Code who

17 resides in a licensed long-term care facility, as defined in

18 the Nursing Home Care Act, or in a licensed facility as defined

19 in the ID/DD Community Care Act, the MC/DD Act, or the

20 Specialized Mental Health Rehabilitation Act of 2013.

21 (31) Beginning on the effective date of this amendatory Act

22 of the 92nd General Assembly, computers and communications

23 equipment utilized for any hospital purpose and equipment used

24 in the diagnosis, analysis, or treatment of hospital patients

25 purchased by a lessor who leases the equipment, under a lease

26 of one year or longer executed or in effect at the time the

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1 lessor would otherwise be subject to the tax imposed by this

2 Act, to a hospital that has been issued an active tax exemption

3 identification number by the Department under Section 1g of the

4 Retailers' Occupation Tax Act. If the equipment is leased in a

5 manner that does not qualify for this exemption or is used in

6 any other nonexempt manner, the lessor shall be liable for the

7 tax imposed under this Act or the Service Use Tax Act, as the

8 case may be, based on the fair market value of the property at

9 the time the nonqualifying use occurs. No lessor shall collect

10 or attempt to collect an amount (however designated) that

11 purports to reimburse that lessor for the tax imposed by this

12 Act or the Service Use Tax Act, as the case may be, if the tax

13 has not been paid by the lessor. If a lessor improperly

14 collects any such amount from the lessee, the lessee shall have

15 a legal right to claim a refund of that amount from the lessor.

16 If, however, that amount is not refunded to the lessee for any

17 reason, the lessor is liable to pay that amount to the

18 Department. This paragraph is exempt from the provisions of

19 Section 3-90.

20 (32) Beginning on the effective date of this amendatory Act

21 of the 92nd General Assembly, personal property purchased by a

22 lessor who leases the property, under a lease of one year or

23 longer executed or in effect at the time the lessor would

24 otherwise be subject to the tax imposed by this Act, to a

25 governmental body that has been issued an active sales tax

26 exemption identification number by the Department under

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1 Section 1g of the Retailers' Occupation Tax Act. If the

2 property is leased in a manner that does not qualify for this

3 exemption or used in any other nonexempt manner, the lessor

4 shall be liable for the tax imposed under this Act or the

5 Service Use Tax Act, as the case may be, based on the fair

6 market value of the property at the time the nonqualifying use

7 occurs. No lessor shall collect or attempt to collect an amount

8 (however designated) that purports to reimburse that lessor for

9 the tax imposed by this Act or the Service Use Tax Act, as the

10 case may be, if the tax has not been paid by the lessor. If a

11 lessor improperly collects any such amount from the lessee, the

12 lessee shall have a legal right to claim a refund of that

13 amount from the lessor. If, however, that amount is not

14 refunded to the lessee for any reason, the lessor is liable to

15 pay that amount to the Department. This paragraph is exempt

16 from the provisions of Section 3-90.

17 (33) On and after July 1, 2003 and through June 30, 2004,

18 the use in this State of motor vehicles of the second division

19 with a gross vehicle weight in excess of 8,000 pounds and that

20 are subject to the commercial distribution fee imposed under

21 Section 3-815.1 of the Illinois Vehicle Code. Beginning on July

22 1, 2004 and through June 30, 2005, the use in this State of

23 motor vehicles of the second division: (i) with a gross vehicle

24 weight rating in excess of 8,000 pounds; (ii) that are subject

25 to the commercial distribution fee imposed under Section

26 3-815.1 of the Illinois Vehicle Code; and (iii) that are

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1 primarily used for commercial purposes. Through June 30, 2005,

2 this exemption applies to repair and replacement parts added

3 after the initial purchase of such a motor vehicle if that

4 motor vehicle is used in a manner that would qualify for the

5 rolling stock exemption otherwise provided for in this Act. For

6 purposes of this paragraph, the term "used for commercial

7 purposes" means the transportation of persons or property in

8 furtherance of any commercial or industrial enterprise,

9 whether for-hire or not.

10 (34) Beginning January 1, 2008, tangible personal property

11 used in the construction or maintenance of a community water

12 supply, as defined under Section 3.145 of the Environmental

13 Protection Act, that is operated by a not-for-profit

14 corporation that holds a valid water supply permit issued under

15 Title IV of the Environmental Protection Act. This paragraph is

16 exempt from the provisions of Section 3-90.

17 (35) Beginning January 1, 2010, materials, parts,

18 equipment, components, and furnishings incorporated into or

19 upon an aircraft as part of the modification, refurbishment,

20 completion, replacement, repair, or maintenance of the

21 aircraft. This exemption includes consumable supplies used in

22 the modification, refurbishment, completion, replacement,

23 repair, and maintenance of aircraft, but excludes any

24 materials, parts, equipment, components, and consumable

25 supplies used in the modification, replacement, repair, and

26 maintenance of aircraft engines or power plants, whether such

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1 engines or power plants are installed or uninstalled upon any

2 such aircraft. "Consumable supplies" include, but are not

3 limited to, adhesive, tape, sandpaper, general purpose

4 lubricants, cleaning solution, latex gloves, and protective

5 films. This exemption applies only to the use of qualifying

6 tangible personal property by persons who modify, refurbish,

7 complete, repair, replace, or maintain aircraft and who (i)

8 hold an Air Agency Certificate and are empowered to operate an

9 approved repair station by the Federal Aviation

10 Administration, (ii) have a Class IV Rating, and (iii) conduct

11 operations in accordance with Part 145 of the Federal Aviation

12 Regulations. The exemption does not include aircraft operated

13 by a commercial air carrier providing scheduled passenger air

14 service pursuant to authority issued under Part 121 or Part 129

15 of the Federal Aviation Regulations. The changes made to this

16 paragraph (35) by Public Act 98-534 are declarative of existing

17 law.

18 (36) Tangible personal property purchased by a

19 public-facilities corporation, as described in Section

20 11-65-10 of the Illinois Municipal Code, for purposes of

21 constructing or furnishing a municipal convention hall, but

22 only if the legal title to the municipal convention hall is

23 transferred to the municipality without any further

24 consideration by or on behalf of the municipality at the time

25 of the completion of the municipal convention hall or upon the

26 retirement or redemption of any bonds or other debt instruments

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1 issued by the public-facilities corporation in connection with

2 the development of the municipal convention hall. This

3 exemption includes existing public-facilities corporations as

4 provided in Section 11-65-25 of the Illinois Municipal Code.

5 This paragraph is exempt from the provisions of Section 3-90.

6 (37) Beginning January 1, 2017, menstrual pads, tampons,

7 and menstrual cups.

8 (38) Beginning January 1, 2018, taxable services performed

9 on or to tangible personal property the sale of which is exempt

10 from taxation under this Act. This paragraph is exempt from the

11 provisions of Section 2-70.

12 (39) Beginning January 1, 2018, taxable services performed

13 in a transaction that would be exempt from taxation under this

14 Act if it involved solely the sale of tangible personal

15 property. Such exemption could be due to the nature of the

16 seller or of the service provider, the purchaser or service

17 recipient, or other features of the transaction, including but

18 not limited to the location or sale-for-resale nature of the

19 transaction. Any such exemption applies to transactions

20 involving solely the sale of tangible personal property, solely

21 the performance of taxable service, or some combination

22 thereof. This paragraph is exempt from the provisions of

23 Section 2-70.

24 (40) Beginning January 1, 2018, taxable services performed

25 for or provided to businesses making purchases of service for

26 the benefit of or in furtherance of the business. This

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1 paragraph is exempt from the provisions of Section 2-70.

2 (Source: P.A. 98-104, eff. 7-22-13; 98-422, eff. 8-16-13;

3 98-456, eff. 8-16-13; 98-534, eff. 8-23-13; 98-574, eff.

4 1-1-14; 98-583, eff. 1-1-14; 98-756, eff. 7-16-14; 99-180, eff.

5 7-29-15; 99-855, eff. 8-19-16.)

6 (35 ILCS 105/3-10)

7 Sec. 3-10. Rate of tax. Unless otherwise provided in this

8 Section, the tax imposed by this Act is at the rate of 6.25% of

9 either the selling price or the fair market value, if any, of

10 the tangible personal property. Beginning on July 1, 2017, the

11 tax is also imposed at the rate of 6.25% of either the selling

12 price or the fair market value, if any, of taxable services. In

13 all cases where propertyor service functionally used or

14 consumed is the same as the property or servicethat was

15 purchased at retail, then the tax is imposed on the selling

16 price of the propertyor taxable service. In all cases where

17 property functionally used or consumed is a by-product or waste

18 product that has been refined, manufactured, or produced from

19 property purchased at retail, then the tax is imposed on the

20 lower of the fair market value, if any, of the specific

21 property so used in this State or on the selling price of the

22 property purchased at retail. For purposes of this Section

23 "fair market value" means the price at which property or

24 servicewould change hands between a willing buyer and a

25 willing seller, neither being under any compulsion to buy or

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1 sell and both having reasonable knowledge of the relevant

2 facts. The fair market value shall be established by Illinois

3 sales by the taxpayer of the same propertyor service as that

4 functionally used or consumed, or if there are no such sales by

5 the taxpayer, then comparable sales or purchases of propertyor

6 service of like kind and character in Illinois.

7 Beginning on July 1, 2000 and through December 31, 2000,

8 with respect to motor fuel, as defined in Section 1.1 of the

9 Motor Fuel Tax Law, and gasohol, as defined in Section 3-40 of

10 the Use Tax Act, the tax is imposed at the rate of 1.25%.

11 Beginning on August 6, 2010 through August 15, 2010, with

12 respect to sales tax holiday items as defined in Section 3-6 of

13 this Act, the tax is imposed at the rate of 1.25%.

14 With respect to gasohol, the tax imposed by this Act

15 applies to (i) 70% of the proceeds of sales made on or after

16 January 1, 1990, and before July 1, 2003, (ii) 80% of the

17 proceeds of sales made on or after July 1, 2003 and on or

18 before December 31, 2018, and (iii) 100% of the proceeds of

19 sales made thereafter. If, at any time, however, the tax under

20 this Act on sales of gasohol is imposed at the rate of 1.25%,

21 then the tax imposed by this Act applies to 100% of the

22 proceeds of sales of gasohol made during that time.

23 With respect to majority blended ethanol fuel, the tax

24 imposed by this Act does not apply to the proceeds of sales

25 made on or after July 1, 2003 and on or before December 31,

26 2018 but applies to 100% of the proceeds of sales made

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1 thereafter.

2 With respect to biodiesel blends with no less than 1% and

3 no more than 10% biodiesel, the tax imposed by this Act applies

4 to (i) 80% of the proceeds of sales made on or after July 1,

5 2003 and on or before December 31, 2018 and (ii) 100% of the

6 proceeds of sales made thereafter. If, at any time, however,

7 the tax under this Act on sales of biodiesel blends with no

8 less than 1% and no more than 10% biodiesel is imposed at the

9 rate of 1.25%, then the tax imposed by this Act applies to 100%

10 of the proceeds of sales of biodiesel blends with no less than

11 1% and no more than 10% biodiesel made during that time.

12 With respect to 100% biodiesel and biodiesel blends with

13 more than 10% but no more than 99% biodiesel, the tax imposed

14 by this Act does not apply to the proceeds of sales made on or

15 after July 1, 2003 and on or before December 31, 2018 but

16 applies to 100% of the proceeds of sales made thereafter.

17 With respect to food for human consumption that is to be

18 consumed off the premises where it is sold (other than

19 alcoholic beverages, soft drinks, and food that has been

20 prepared for immediate consumption) and prescription and

21 nonprescription medicines, drugs, medical appliances, products

22 classified as Class III medical devices by the United States

23 Food and Drug Administration that are used for cancer treatment

24 pursuant to a prescription, as well as any accessories and

25 components related to those devices, modifications to a motor

26 vehicle for the purpose of rendering it usable by a person with

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1 a disability, and insulin, urine testing materials, syringes,

2 and needles used by diabetics, for human use, the tax is

3 imposed at the rate of 1%. For the purposes of this Section,

4 until September 1, 2009: the term "soft drinks" means any

5 complete, finished, ready-to-use, non-alcoholic drink, whether

6 carbonated or not, including but not limited to soda water,

7 cola, fruit juice, vegetable juice, carbonated water, and all

8 other preparations commonly known as soft drinks of whatever

9 kind or description that are contained in any closed or sealed

10 bottle, can, carton, or container, regardless of size; but

11 "soft drinks" does not include coffee, tea, non-carbonated

12 water, infant formula, milk or milk products as defined in the

13 Grade A Pasteurized Milk and Milk Products Act, or drinks

14 containing 50% or more natural fruit or vegetable juice.

15 Notwithstanding any other provisions of this Act,

16 beginning September 1, 2009, "soft drinks" means non-alcoholic

17 beverages that contain natural or artificial sweeteners. "Soft

18 drinks" do not include beverages that contain milk or milk

19 products, soy, rice or similar milk substitutes, or greater

20 than 50% of vegetable or fruit juice by volume.

21 Until August 1, 2009, and notwithstanding any other

22 provisions of this Act, "food for human consumption that is to

23 be consumed off the premises where it is sold" includes all

24 food sold through a vending machine, except soft drinks and

25 food products that are dispensed hot from a vending machine,

26 regardless of the location of the vending machine. Beginning

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1 August 1, 2009, and notwithstanding any other provisions of

2 this Act, "food for human consumption that is to be consumed

3 off the premises where it is sold" includes all food sold

4 through a vending machine, except soft drinks, candy, and food

5 products that are dispensed hot from a vending machine,

6 regardless of the location of the vending machine.

7 Notwithstanding any other provisions of this Act,

8 beginning September 1, 2009, "food for human consumption that

9 is to be consumed off the premises where it is sold" does not

10 include candy. For purposes of this Section, "candy" means a

11 preparation of sugar, honey, or other natural or artificial

12 sweeteners in combination with chocolate, fruits, nuts or other

13 ingredients or flavorings in the form of bars, drops, or

14 pieces. "Candy" does not include any preparation that contains

15 flour or requires refrigeration.

16 Notwithstanding any other provisions of this Act,

17 beginning September 1, 2009, "nonprescription medicines and

18 drugs" does not include grooming and hygiene products. For

19 purposes of this Section, "grooming and hygiene products"

20 includes, but is not limited to, soaps and cleaning solutions,

21 shampoo, toothpaste, mouthwash, antiperspirants, and sun tan

22 lotions and screens, unless those products are available by

23 prescription only, regardless of whether the products meet the

24 definition of "over-the-counter-drugs". For the purposes of

25 this paragraph, "over-the-counter-drug" means a drug for human

26 use that contains a label that identifies the product as a drug

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1 as required by 21 C.F.R. � 201.66. The "over-the-counter-drug"

2 label includes:

3 (A) A "Drug Facts" panel; or

4 (B) A statement of the "active ingredient(s)" with a

5 list of those ingredients contained in the compound,

6 substance or preparation.

7 Beginning on the effective date of this amendatory Act of

8 the 98th General Assembly, "prescription and nonprescription

9 medicines and drugs" includes medical cannabis purchased from a

10 registered dispensing organization under the Compassionate Use

11 of Medical Cannabis Pilot Program Act.

12 If the property that is purchased at retail from a retailer

13 is acquired outside Illinois and used outside Illinois before

14 being brought to Illinois for use here and is taxable under

15 this Act, the "selling price" on which the tax is computed

16 shall be reduced by an amount that represents a reasonable

17 allowance for depreciation for the period of prior out-of-state

18 use.

19 (Source: P.A. 98-122, eff. 1-1-14; 99-143, eff. 7-27-15;

20 99-858, eff. 8-19-16.)

21 (35 ILCS 105/3-10.5)

22 Sec. 3-10.5. Direct payment of retailers' occupation tax

23 and applicable local retailers' occupation tax by purchaser;

24 purchaser relieved of paying use tax and local retailers'

25 occupation tax reimbursement liabilities to retailer.

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1 (a) A retailer who makes a retail sale of tangible personal

2 property or taxable serviceto a purchaser who provides the

3 retailer with a copy of the purchaser's valid Direct Pay Permit

4 issued under Section 2-10.5 of the Retailers' Occupation Tax

5 Act is not required under Section 3-45 of this Act to collect

6 the tax imposed by this Act on that sale.

7 (b) A purchaser who makes a purchase from a retailer who

8 would otherwise incur retailers' occupation tax liability on

9 the transaction and who provides the retailer with a copy of a

10 valid Direct Pay Permit issued under Section 2-10.5 of the

11 Retailers' Occupation Tax Act does not incur the tax imposed by

12 this Act on the purchase. The purchaser assumes the retailer's

13 obligation to pay the retailers' occupation tax directly to the

14 Department, including all local retailers' occupation tax

15 liabilities applicable to that retail sale.

16 (c) A purchaser who makes a purchase from a retailer who

17 would not incur retailers' occupation tax liability on the

18 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 incurs the tax imposed by this

21 Act on the purchase. If, on any transaction, the retailer is

22 entitled under this Act to a discount for collecting and

23 remitting the tax imposed under this Act to the Department, the

24 right to the discount provided in Section 9 of this Act shall

25 be transferred to the Permit holder. If the retailer would not

26 be entitled to a discount as provided in Section 9 of this Act,

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1 then the Permit holder is not entitled to a discount.

2 (Source: P.A. 92-484, eff. 8-23-01.)

3 (35 ILCS 105/3-45) (from Ch. 120, par. 439.3-45)

4 Sec. 3-45. Collection. The tax imposed by this Act shall be

5 collected from the purchaser by a retailer maintaining a place

6 of business in this State or a retailer authorized by the

7 Department under Section 6 of this Act, and shall be remitted

8 to the Department as provided in Section 9 of this Act, except

9 as provided in Section 3-10.5 of this Act.

10 The tax imposed by this Act that is not paid to a retailer

11 under this Section shall be paid to the Department directly by

12 any person using the property within this State as provided in

13 Section 10 of this Act.

14 Retailers shall collect the tax from users by adding the

15 tax to the selling price of tangible personal propertyor

16 taxable service, when sold for use, in the manner prescribed by

17 the Department. The Department may adopt and promulgate

18 reasonable rules and regulations for the adding of the tax by

19 retailers to selling prices by prescribing bracket systems for

20 the purpose of enabling the retailers to add and collect, as

21 far as practicable, the amount of the tax.

22 If a seller collects use tax measured by receipts that are

23 not subject to use tax, or if a seller, in collecting use tax

24 measured by receipts that are subject to tax under this Act,

25 collects more from the purchaser than the required amount of

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1 the use tax on the transaction, the purchaser shall have a

2 legal right to claim a refund of that amount from the seller.

3 If, however, that amount is not refunded to the purchaser for

4 any reason, the seller is liable to pay that amount to the

5 Department. This paragraph does not apply to an amount

6 collected by the seller as use tax on receipts that are subject

7 to tax under this Act as long as the collection is made in

8 compliance with the tax collection brackets prescribed by the

9 Department in its rules and regulations.

10 (Source: P.A. 91-51, eff. 6-30-99; 92-484, eff. 8-23-01.)

11 (35 ILCS 105/3-50) (from Ch. 120, par. 439.3-50)

12 Sec. 3-50. Manufacturing and assembly exemption. The

13 manufacturing and assembling machinery and equipment exemption

14 includes machinery and equipment that replaces machinery and

15 equipment in an existing manufacturing facility as well as

16 machinery and equipment that are for use in an expanded or new

17 manufacturing facility. The machinery and equipment exemption

18 also includes machinery and equipment used in the general

19 maintenance or repair of exempt machinery and equipment or for

20 in-house manufacture of exempt machinery and equipment.

21 Beginning on July 1, 2017, the manufacturing and assembling

22 machinery and equipment exemption also includes graphic arts

23 machinery and equipment, as defined in paragraph (6) of Section

24 3-5. Beginning on July 1, 2017, the manufacturing and

25 assembling machinery and equipment exemption also includes

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1 production related tangible personal property, as defined in

2 this Section. The machinery and equipment exemption does not

3 include machinery and equipment used in (i) the generation of

4 electricity for wholesale or retail sale; (ii) the generation

5 or treatment of natural or artificial gas for wholesale or

6 retail sale that is delivered to customers through pipes,

7 pipelines, or mains; or (iii) the treatment of water for

8 wholesale or retail sale that is delivered to customers through

9 pipes, pipelines, or mains. The provisions of this amendatory

10 Act of the 98th General Assembly are declaratory of existing

11 law as to the meaning and scope of this exemption. For the

12 purposes of this exemption, terms have the following meanings:

13 (1) "Manufacturing process" means the production of an

14 article of tangible personal property, whether the article

15 is a finished product or an article for use in the process

16 of manufacturing or assembling a different article of

17 tangible personal property, by a procedure commonly

18 regarded as manufacturing, processing, fabricating, or

19 refining that changes some existing material into a

20 material with a different form, use, or name. In relation

21 to a recognized integrated business composed of a series of

22 operations that collectively constitute manufacturing, or

23 individually constitute manufacturing operations, the

24 manufacturing process commences with the first operation

25 or stage of production in the series and does not end until

26 the completion of the final product in the last operation

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1 or stage of production in the series. For purposes of this

2 exemption, photoprocessing is a manufacturing process of

3 tangible personal property for wholesale or retail sale.

4 (2) "Assembling process" means the production of an

5 article of tangible personal property, whether the article

6 is a finished product or an article for use in the process

7 of manufacturing or assembling a different article of

8 tangible personal property, by the combination of existing

9 materials in a manner commonly regarded as assembling that

10 results in an article or material of a different form, use,

11 or name.

12 (3) "Machinery" means major mechanical machines or

13 major components of those machines contributing to a

14 manufacturing or assembling process.

15 (4) "Equipment" includes an independent device or tool

16 separate from machinery but essential to an integrated

17 manufacturing or assembly process; including computers

18 used primarily in a manufacturer's computer assisted

19 design, computer assisted manufacturing (CAD/CAM) system;

20 any subunit or assembly comprising a component of any

21 machinery or auxiliary, adjunct, or attachment parts of

22 machinery, such as tools, dies, jigs, fixtures, patterns,

23 and molds; and any parts that require periodic replacement

24 in the course of normal operation; but does not include

25 hand tools. Equipment includes chemicals or chemicals

26 acting as catalysts but only if the chemicals or chemicals

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1 acting as catalysts effect a direct and immediate change

2 upon a product being manufactured or assembled for

3 wholesale or retail sale or lease.

4 (5) "Production related tangible personal property"

5 means all tangible personal property that is used or

6 consumed by the purchaser in a manufacturing facility in

7 which a manufacturing process takes place and includes,

8 without limitation, tangible personal property that is

9 purchased for incorporation into real estate within a

10 manufacturing facility and tangible personal property that

11 is used or consumed in activities such as research and

12 development, preproduction material handling, receiving,

13 quality control, inventory control, storage, staging, and

14 packaging for shipping and transportation purposes.

15 "Production related tangible personal property" does not

16 include (i) tangible personal property that is used, within

17 or without a manufacturing facility, in sales, purchasing,

18 accounting, fiscal management, marketing, personnel

19 recruitment or selection, or landscaping or (ii) tangible

20 personal property that is required to be titled or

21 registered with a department, agency, or unit of federal,

22 State, or local government.

23 The manufacturing and assembling machinery and equipment

24 exemption includes production related tangible personal

25 property that is purchased (i) on or after July 1, 2007 and on

26 or before June 30, 2008 or (ii) on and after July 1, 2017. The

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1 exemption for production related tangible personal property

2 purchased on or after July 1, 2007 and on or before June 30,

3 2008 is subject to both of the following limitations:

4 (1) The maximum amount of the exemption for any one

5 taxpayer may not exceed 5% of the purchase price of

6 production related tangible personal property that is

7 purchased on or after July 1, 2007 and on or before June

8 30, 2008. A credit under Section 3-85 of this Act may not

9 be earned by the purchase of production related tangible

10 personal property for which an exemption is received under

11 this Section.

12 (2) The maximum aggregate amount of the exemptions for

13 production related tangible personal property awarded

14 under this Act and the Retailers' Occupation Tax Act to all

15 taxpayers may not exceed $10,000,000. If the claims for the

16 exemption exceed $10,000,000, then the Department shall

17 reduce the amount of the exemption to each taxpayer on a

18 pro rata basis.

19 The Department may adopt rules to implement and administer the

20 exemption for production related tangible personal property.

21 The manufacturing and assembling machinery and equipment

22 exemption includes the sale of materials to a purchaser who

23 produces exempted types of machinery, equipment, or tools and

24 who rents or leases that machinery, equipment, or tools to a

25 manufacturer of tangible personal property. This exemption

26 also includes the sale of materials to a purchaser who

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1 manufactures those materials into an exempted type of

2 machinery, equipment, or tools that the purchaser uses himself

3 or herself in the manufacturing of tangible personal property.

4 This exemption includes the sale of exempted types of machinery

5 or equipment to a purchaser who is not the manufacturer, but

6 who rents or leases the use of the property to a manufacturer.

7 The purchaser of the machinery and equipment who has an active

8 resale registration number shall furnish that number to the

9 seller at the time of purchase. A user of the machinery,

10 equipment, or tools without an active resale registration

11 number shall prepare a certificate of exemption for each

12 transaction stating facts establishing the exemption for that

13 transaction, and that certificate shall be available to the

14 Department for inspection or audit. The Department shall

15 prescribe the form of the certificate. Informal rulings,

16 opinions, or letters issued by the Department in response to an

17 inquiry or request for an opinion from any person regarding the

18 coverage and applicability of this exemption to specific

19 devices shall be published, maintained as a public record, and

20 made available for public inspection and copying. If the

21 informal ruling, opinion, or letter contains trade secrets or

22 other confidential information, where possible, the Department

23 shall delete that information before publication. Whenever

24 informal rulings, opinions, or letters contain a policy of

25 general applicability, the Department shall formulate and

26 adopt that policy as a rule in accordance with the Illinois

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1 Administrative Procedure Act.

2 The manufacturing and assembling machinery and equipment

3 exemption, including the addition of production related

4 tangible personal property, is exempt from the provisions of

5 Section 3-90.

6 (Source: P.A. 98-583, eff. 1-1-14.)

7 (35 ILCS 105/3-55) (from Ch. 120, par. 439.3-55)

8 Sec. 3-55. Multistate exemption. To prevent actual or

9 likely multistate taxation, the tax imposed by this Act does

10 not apply to the use of tangible personal property in this

11 State under the following circumstances:

12 (a) The use, in this State, of tangible personal property

13 acquired outside this State by a nonresident individual and

14 brought into this State by the individual for his or her own

15 use while temporarily within this State or while passing

16 through this State.

17 (b) The use, in this State, of tangible personal property

18 by an interstate carrier for hire as rolling stock moving in

19 interstate commerce or by lessors under a lease of one year or

20 longer executed or in effect at the time of purchase of

21 tangible personal property by interstate carriers for-hire for

22 use as rolling stock moving in interstate commerce as long as

23 so used by the interstate carriers for-hire, and equipment

24 operated by a telecommunications provider, licensed as a common

25 carrier by the Federal Communications Commission, which is

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1 permanently installed in or affixed to aircraft moving in

2 interstate commerce.

3 (c) The use, in this State, by owners, lessors, or shippers

4 of tangible personal property that is utilized by interstate

5 carriers for hire for use as rolling stock moving in interstate

6 commerce as long as so used by the interstate carriers for

7 hire, and equipment operated by a telecommunications provider,

8 licensed as a common carrier by the Federal Communications

9 Commission, which is permanently installed in or affixed to

10 aircraft moving in interstate commerce.

11 (d) The use, in this State, of tangible personal property

12 or taxable servicethat is acquired outside this State and

13 caused to be brought into or performed inthis State by a

14 person who has already paid a tax in another State in respect

15 to the sale, purchase, or use of that property, to the extent

16 of the amount of the tax properly due and paid in the other

17 State.

18 (e) The temporary storage, in this State, of tangible

19 personal property that is acquired outside this State and that,

20 after being brought into this State and stored here

21 temporarily, is used solely outside this State or is physically

22 attached to or incorporated into other tangible personal

23 property that is used solely outside this State, or is altered

24 by converting, fabricating, manufacturing, printing,

25 processing, or shaping, and, as altered, is used solely outside

26 this State.

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1 (f) The temporary storage in this State of building

2 materials and fixtures that are acquired either in this State

3 or outside this State by an Illinois registered combination

4 retailer and construction contractor, and that the purchaser

5 thereafter uses outside this State by incorporating that

6 property into real estate located outside this State.

7 (g) The use or purchase of tangible personal property by a

8 common carrier by rail or motor that receives the physical

9 possession of the property in Illinois, and that transports the

10 property, or shares with another common carrier in the

11 transportation of the property, out of Illinois on a standard

12 uniform bill of lading showing the seller of the property as

13 the shipper or consignor of the property to a destination

14 outside Illinois, for use outside Illinois.

15 (h) Except as provided in subsection (h-1), the use, in

16 this State, of a motor vehicle that was sold in this State to a

17 nonresident, even though the motor vehicle is delivered to the

18 nonresident in this State, if the motor vehicle is not to be

19 titled in this State, and if a drive-away permit is issued to

20 the motor vehicle as provided in Section 3-603 of the Illinois

21 Vehicle Code or if the nonresident purchaser has vehicle

22 registration plates to transfer to the motor vehicle upon

23 returning to his or her home state. The issuance of the

24 drive-away permit or having the out-of-state registration

25 plates to be transferred shall be prima facie evidence that the

26 motor vehicle will not be titled in this State.

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1 (h-1) The exemption under subsection (h) does not apply if

2 the state in which the motor vehicle will be titled does not

3 allow a reciprocal exemption for the use in that state of a

4 motor vehicle sold and delivered in that state to an Illinois

5 resident but titled in Illinois. The tax collected under this

6 Act on the sale of a motor vehicle in this State to a resident

7 of another state that does not allow a reciprocal exemption

8 shall be imposed at a rate equal to the state's rate of tax on

9 taxable property in the state in which the purchaser is a

10 resident, except that the tax shall not exceed the tax that

11 would otherwise be imposed under this Act. At the time of the

12 sale, the purchaser shall execute a statement, signed under

13 penalty of perjury, of his or her intent to title the vehicle

14 in the state in which the purchaser is a resident within 30

15 days after the sale and of the fact of the payment to the State

16 of Illinois of tax in an amount equivalent to the state's rate

17 of tax on taxable property in his or her state of residence and

18 shall submit the statement to the appropriate tax collection

19 agency in his or her state of residence. In addition, the

20 retailer must retain a signed copy of the statement in his or

21 her records. Nothing in this subsection shall be construed to

22 require the removal of the vehicle from this state following

23 the filing of an intent to title the vehicle in the purchaser's

24 state of residence if the purchaser titles the vehicle in his

25 or her state of residence within 30 days after the date of

26 sale. The tax collected under this Act in accordance with this

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1 subsection (h-1) shall be proportionately distributed as if the

2 tax were collected at the 6.25% general rate imposed under this

3 Act.

4 (h-2) The following exemptions apply with respect to

5 certain aircraft:

6 (1) Beginning on July 1, 2007, no tax is imposed under

7 this Act on the purchase of an aircraft, as defined in

8 Section 3 of the Illinois Aeronautics Act, if all of the

9 following conditions are met:

10 (A) the aircraft leaves this State within 15 days

11 after the later of either the issuance of the final

12 billing for the purchase of the aircraft or the

13 authorized approval for return to service, completion

14 of the maintenance record entry, and completion of the

15 test flight and ground test for inspection, as required

16 by 14 C.F.R. 91.407;

17 (B) the aircraft is not based or registered in this

18 State after the purchase of the aircraft; and

19 (C) the purchaser provides the Department with a

20 signed and dated certification, on a form prescribed by

21 the Department, certifying that the requirements of

22 this item (1) are met. The certificate must also

23 include the name and address of the purchaser, the

24 address of the location where the aircraft is to be

25 titled or registered, the address of the primary

26 physical location of the aircraft, and other

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1 information that the Department may reasonably

2 require.

3 (2) Beginning on July 1, 2007, no tax is imposed under

4 this Act on the use of an aircraft, as defined in Section 3

5 of the Illinois Aeronautics Act, that is temporarily

6 located in this State for the purpose of a prepurchase

7 evaluation if all of the following conditions are met:

8 (A) the aircraft is not based or registered in this

9 State after the prepurchase evaluation; and

10 (B) the purchaser provides the Department with a

11 signed and dated certification, on a form prescribed by

12 the Department, certifying that the requirements of

13 this item (2) are met. The certificate must also

14 include the name and address of the purchaser, the

15 address of the location where the aircraft is to be

16 titled or registered, the address of the primary

17 physical location of the aircraft, and other

18 information that the Department may reasonably

19 require.

20 (3) Beginning on July 1, 2007, no tax is imposed under

21 this Act on the use of an aircraft, as defined in Section 3

22 of the Illinois Aeronautics Act, that is temporarily

23 located in this State for the purpose of a post-sale

24 customization if all of the following conditions are met:

25 (A) the aircraft leaves this State within 15 days

26 after the authorized approval for return to service,

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1 completion of the maintenance record entry, and

2 completion of the test flight and ground test for

3 inspection, as required by 14 C.F.R. 91.407;

4 (B) the aircraft is not based or registered in this

5 State either before or after the post-sale

6 customization; and

7 (C) the purchaser provides the Department with a

8 signed and dated certification, on a form prescribed by

9 the Department, certifying that the requirements of

10 this item (3) are met. The certificate must also

11 include the name and address of the purchaser, the

12 address of the location where the aircraft is to be

13 titled or registered, the address of the primary

14 physical location of the aircraft, and other

15 information that the Department may reasonably

16 require.

17 If tax becomes due under this subsection (h-2) because of

18 the purchaser's use of the aircraft in this State, the

19 purchaser shall file a return with the Department and pay the

20 tax on the fair market value of the aircraft. This return and

21 payment of the tax must be made no later than 30 days after the

22 aircraft is used in a taxable manner in this State. The tax is

23 based on the fair market value of the aircraft on the date that

24 it is first used in a taxable manner in this State.

25 For purposes of this subsection (h-2):

26 "Based in this State" means hangared, stored, or otherwise

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1 used, excluding post-sale customizations as defined in this

2 Section, for 10 or more days in each 12-month period

3 immediately following the date of the sale of the aircraft.

4 "Post-sale customization" means any improvement,

5 maintenance, or repair that is performed on an aircraft

6 following a transfer of ownership of the aircraft.

7 "Prepurchase evaluation" means an examination of an

8 aircraft to provide a potential purchaser with information

9 relevant to the potential purchase.

10 "Registered in this State" means an aircraft registered

11 with the Department of Transportation, Aeronautics Division,

12 or titled or registered with the Federal Aviation

13 Administration to an address located in this State.

14 This subsection (h-2) is exempt from the provisions of

15 Section 3-90.

16 (i) Beginning July 1, 1999, the use, in this State, of fuel

17 acquired outside this State and brought into this State in the

18 fuel supply tanks of locomotives engaged in freight hauling and

19 passenger service for interstate commerce. This subsection is

20 exempt from the provisions of Section 3-90.

21 (j) Beginning on January 1, 2002 and through June 30, 2016,

22 the use of tangible personal property purchased from an

23 Illinois retailer by a taxpayer engaged in centralized

24 purchasing activities in Illinois who will, upon receipt of the

25 property in Illinois, temporarily store the property in

26 Illinois (i) for the purpose of subsequently transporting it

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1 outside this State for use or consumption thereafter solely

2 outside this State or (ii) for the purpose of being processed,

3 fabricated, or manufactured into, attached to, or incorporated

4 into other tangible personal property to be transported outside

5 this State and thereafter used or consumed solely outside this

6 State. The Director of Revenue shall, pursuant to rules adopted

7 in accordance with the Illinois Administrative Procedure Act,

8 issue a permit to any taxpayer in good standing with the

9 Department who is eligible for the exemption under this

10 subsection (j). The permit issued under this subsection (j)

11 shall authorize the holder, to the extent and in the manner

12 specified in the rules adopted under this Act, to purchase

13 tangible personal property from a retailer exempt from the

14 taxes imposed by this Act. Taxpayers shall maintain all

15 necessary books and records to substantiate the use and

16 consumption of all such tangible personal property outside of

17 the State of Illinois.

18 (Source: P.A. 97-73, eff. 6-30-11.)

19 (35 ILCS 105/3-65) (from Ch. 120, par. 439.3-65)

20 Sec. 3-65. R.O.T. nontaxability. If the seller of tangible

21 personal propertyor taxable servicefor use would not be

22 taxable under the Retailers' Occupation Tax Act despite all

23 elements of the sale occurring in Illinois, then the tax

24 imposed by this Act does not apply to the use of the tangible

25 personal propertyor taxable service in this State.

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1 (Source: P.A. 91-51, eff. 6-30-99.)

2 (35 ILCS 105/3-75) (from Ch. 120, par. 439.3-75)

3 Sec. 3-75. Serviceman transfer. Tangible personal property

4 purchased by a serviceman, as defined in Section 2 of the

5 Service Occupation Tax Act, is subject to the tax imposed by

6 this Act when purchased for transfer by the serviceman

7 incidental to completion of a maintenance agreement. Effective

8 January 1, 2018, purchases of tangible personal property

9 purchased for transfer incidental to performance of a taxable

10 service is not subject to the tax imposed by this Act.

11 (Source: P.A. 91-51, eff. 6-30-99.)

12 (35 ILCS 105/3a) (from Ch. 120, par. 439.3a)

13 Sec. 3a. The tax imposed by the Act shall when collected be

14 stated as a distinct item separate and apart from the selling

15 price of the tangible personal propertyor taxable service.

16 However, where it is not possible to state the sales tax

17 separately in situations such as sales from vending machines or

18 sales of liquor by the drink the Department may by rule exempt

19 such sales from this requirement so long as purchasers are

20 notified by a sign that the tax is included in the selling

21 price.

22 (Source: P.A. 84-229.)

23 (35 ILCS 105/4) (from Ch. 120, par. 439.4)

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1 Sec. 4. Evidence that tangible personal property or taxable

2 servicewas sold by any person for delivery to a person

3 residing or engaged in business in this State shall be prima

4 facie evidence that such tangible personal property or taxable

5 servicewas sold for use in this State.

6 (Source: Laws 1955, p. 2027.)

7 (35 ILCS 105/5) (from Ch. 120, par. 439.5)

8 Sec. 5. Except as to motor vehicles and other items of

9 tangible personal property that must be titled or registered

10 under an Illinois law, but that cannot be so titled or

11 registered without a use tax receipt or exemption determination

12 from the Department, every retailer maintaining a place of

13 business in this State and making sales of tangible personal

14 property or taxable service for use in this State (whether

15 those sales are made within or without this State) shall, when

16 collecting the tax as provided in Section 3-45 of this Act from

17 the purchaser, give to the purchaser (if demanded by the

18 purchaser) a receipt for the tax in the manner and form

19 prescribed by the Department. The receipt shall be sufficient

20 to relieve the purchaser from further liability for the tax to

21 which the receipt may refer. Each retailer shall list with the

22 Department the names and addresses of all of his or her agents

23 operating in this State and the location of any and all of his

24 or her distribution or sales houses, offices, or other places

25 of business in this State.

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1 (Source: P.A. 86-1475.)

2 (35 ILCS 105/7) (from Ch. 120, par. 439.7)

3 Sec. 7.

4 It is unlawful for any retailer to advertise or hold out or

5 state to the public or to any purchaser, consumer or user,

6 directly or indirectly, that the tax or any part thereof

7 imposed by Section 3 hereof will be assumed or absorbed by the

8 retailer or that it will not be added to the selling price of

9 the property or taxable service sold, or if added that it or

10 any part thereof will be refunded other than when the retailer

11 refunds the selling price and tax because of the merchandise's

12 being returned to the retailer (or the taxable service

13 transaction's being partially or wholly cancelled) or other

14 than when the retailer credits or refunds the tax to the

15 purchaser to support a claim filed with the Department under

16 the Retailers' Occupation Tax Act or under this Act. Any person

17 violating any of the provisions of this Section within this

18 State shall be guilty of a Class A misdemeanor.

19 (Source: P.A. 77-2830.)

20 (35 ILCS 105/9) (from Ch. 120, par. 439.9)

21 Sec. 9. Except as to motor vehicles, watercraft, aircraft,

22 and trailers that are required to be registered with an agency

23 of this State, each retailer required or authorized to collect

24 the tax imposed by this Act shall pay to the Department the

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1 amount of such tax (except as otherwise provided) at the time

2 when he is required to file his return for the period during

3 which such tax was collected, less a discount of 2.1% prior to

4 January 1, 1990, and 1.75% on and after January 1, 1990, or $5

5 per calendar year, whichever is greater, which is allowed to

6 reimburse the retailer for expenses incurred in collecting the

7 tax, keeping records, preparing and filing returns, remitting

8 the tax and supplying data to the Department on request. In the

9 case of retailers who report and pay the tax on a transaction

10 by transaction basis, as provided in this Section, such

11 discount shall be taken with each such tax remittance instead

12 of when such retailer files his periodic return. The Department

13 may disallow the discount for retailers whose certificate of

14 registration is revoked at the time the return is filed, but

15 only if the Department's decision to revoke the certificate of

16 registration has become final. A retailer need not remit that

17 part of any tax collected by him to the extent that he is

18 required to remit and does remit the tax imposed by the

19 Retailers' Occupation Tax Act, with respect to the sale of the

20 same property.

21 Where such tangible personal property or taxable service is

22 sold under a conditional sales contract, or under any other

23 form of sale wherein the payment of the principal sum, or a

24 part thereof, is extended beyond the close of the period for

25 which the return is filed, the retailer, in collecting the tax

26 (except as to motor vehicles, watercraft, aircraft, and

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1 trailers that are required to be registered with an agency of

2 this State), may collect for each tax return period, only the

3 tax applicable to that part of the selling price actually

4 received during such tax return period.

5 Except as provided in this Section, on or before the

6 twentieth day of each calendar month, such retailer shall file

7 a return for the preceding calendar month. Such return shall be

8 filed on forms prescribed by the Department and shall furnish

9 such information as the Department may reasonably require.

10 The Department may require returns to be filed on a

11 quarterly basis. If so required, a return for each calendar

12 quarter shall be filed on or before the twentieth day of the

13 calendar month following the end of such calendar quarter. The

14 taxpayer shall also file a return with the Department for each

15 of the first two months of each calendar quarter, on or before

16 the twentieth day of the following calendar month, stating:

17 1. The name of the seller;

18 2. The address of the principal place of business from

19 which he engages in the business of selling tangible

20 personal property at retail in this State;

21 3. The total amount of taxable receipts received by him

22 during the preceding calendar month from sales of tangible

23 personal property by him during such preceding calendar

24 month, including receipts from charge and time sales, but

25 less all deductions allowed by law;

26 4. The amount of credit provided in Section 2d of this

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1 Act;

2 5. The amount of tax due;

3 5-5. The signature of the taxpayer; and

4 6. Such other reasonable information as the Department

5 may require.

6 If a taxpayer fails to sign a return within 30 days after

7 the proper notice and demand for signature by the Department,

8 the return shall be considered valid and any amount shown to be

9 due on the return shall be deemed assessed.

10 Beginning October 1, 1993, a taxpayer who has an average

11 monthly tax liability of $150,000 or more shall make all

12 payments required by rules of the Department by electronic

13 funds transfer. Beginning October 1, 1994, a taxpayer who has

14 an average monthly tax liability of $100,000 or more shall make

15 all payments required by rules of the Department by electronic

16 funds transfer. Beginning October 1, 1995, a taxpayer who has

17 an average monthly tax liability of $50,000 or more shall make

18 all payments required by rules of the Department by electronic

19 funds transfer. Beginning October 1, 2000, a taxpayer who has

20 an annual tax liability of $200,000 or more shall make all

21 payments required by rules of the Department by electronic

22 funds transfer. The term "annual tax liability" shall be the

23 sum of the taxpayer's liabilities under this Act, and under all

24 other State and local occupation and use tax laws administered

25 by the Department, for the immediately preceding calendar year.

26 The term "average monthly tax liability" means the sum of the

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1 taxpayer's liabilities under this Act, and under all other

2 State and local occupation and use tax laws administered by the

3 Department, for the immediately preceding calendar year

4 divided by 12. Beginning on October 1, 2002, a taxpayer who has

5 a tax liability in the amount set forth in subsection (b) of

6 Section 2505-210 of the Department of Revenue Law shall make

7 all payments required by rules of the Department by electronic

8 funds transfer.

9 Before August 1 of each year beginning in 1993, the

10 Department shall notify all taxpayers required to make payments

11 by electronic funds transfer. All taxpayers required to make

12 payments by electronic funds transfer shall make those payments

13 for a minimum of one year beginning on October 1.

14 Any taxpayer not required to make payments by electronic

15 funds transfer may make payments by electronic funds transfer

16 with the permission of the Department.

17 All taxpayers required to make payment by electronic funds

18 transfer and any taxpayers authorized to voluntarily make

19 payments by electronic funds transfer shall make those payments

20 in the manner authorized by the Department.

21 The Department shall adopt such rules as are necessary to

22 effectuate a program of electronic funds transfer and the

23 requirements of this Section.

24 Before October 1, 2000, if the taxpayer's average monthly

25 tax liability to the Department under this Act, the Retailers'

26 Occupation Tax Act, the Service Occupation Tax Act, the Service

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1 Use Tax Act was $10,000 or more during the preceding 4 complete

2 calendar quarters, he shall file a return with the Department

3 each month by the 20th day of the month next following the

4 month during which such tax liability is incurred and shall

5 make payments to the Department on or before the 7th, 15th,

6 22nd and last day of the month during which such liability is

7 incurred. On and after October 1, 2000, if the taxpayer's

8 average monthly tax liability to the Department under this Act,

9 the Retailers' Occupation Tax Act, the Service Occupation Tax

10 Act, and the Service Use Tax Act was $20,000 or more during the

11 preceding 4 complete calendar quarters, he shall file a return

12 with the Department each month by the 20th day of the month

13 next following the month during which such tax liability is

14 incurred and shall make payment to the Department on or before

15 the 7th, 15th, 22nd and last day of the month during which such

16 liability is incurred. If the month during which such tax

17 liability is incurred began prior to January 1, 1985, each

18 payment shall be in an amount equal to 1/4 of the taxpayer's

19 actual liability for the month or an amount set by the

20 Department not to exceed 1/4 of the average monthly liability

21 of the taxpayer to the Department for the preceding 4 complete

22 calendar quarters (excluding the month of highest liability and

23 the month of lowest liability in such 4 quarter period). If the

24 month during which such tax liability is incurred begins on or

25 after January 1, 1985, and prior to January 1, 1987, each

26 payment shall be in an amount equal to 22.5% of the taxpayer's

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1 actual liability for the month or 27.5% of the taxpayer's

2 liability for the same calendar month of the preceding year. If

3 the month during which such tax liability is incurred begins on

4 or after January 1, 1987, and prior to January 1, 1988, each

5 payment shall be in an amount equal to 22.5% of the taxpayer's

6 actual liability for the month or 26.25% of the taxpayer's

7 liability for the same calendar month of the preceding year. If

8 the month during which such tax liability is incurred begins on

9 or after January 1, 1988, and prior to January 1, 1989, or

10 begins on or after January 1, 1996, each payment shall be in an

11 amount equal to 22.5% of the taxpayer's actual liability for

12 the month or 25% of the taxpayer's liability for the same

13 calendar month of the preceding year. If the month during which

14 such tax liability is incurred begins on or after January 1,

15 1989, and prior to January 1, 1996, each payment shall be in an

16 amount equal to 22.5% of the taxpayer's actual liability for

17 the month or 25% of the taxpayer's liability for the same

18 calendar month of the preceding year or 100% of the taxpayer's

19 actual liability for the quarter monthly reporting period. The

20 amount of such quarter monthly payments shall be credited

21 against the final tax liability of the taxpayer's return for

22 that month. Before October 1, 2000, once applicable, the

23 requirement of the making of quarter monthly payments to the

24 Department shall continue until such taxpayer's average

25 monthly liability to the Department during the preceding 4

26 complete calendar quarters (excluding the month of highest

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1 liability and the month of lowest liability) is less than

2 $9,000, or until such taxpayer's average monthly liability to

3 the Department as computed for each calendar quarter of the 4

4 preceding complete calendar quarter period is less than

5 $10,000. However, if a taxpayer can show the Department that a

6 substantial change in the taxpayer's business has occurred

7 which causes the taxpayer to anticipate that his average

8 monthly tax liability for the reasonably foreseeable future

9 will fall below the $10,000 threshold stated above, then such

10 taxpayer may petition the Department for change in such

11 taxpayer's reporting status. On and after October 1, 2000, once

12 applicable, the requirement of the making of quarter monthly

13 payments to the Department shall continue until such taxpayer's

14 average monthly liability to the Department during the

15 preceding 4 complete calendar quarters (excluding the month of

16 highest liability and the month of lowest liability) is less

17 than $19,000 or until such taxpayer's average monthly liability

18 to the Department as computed for each calendar quarter of the

19 4 preceding complete calendar quarter period is less than

20 $20,000. However, if a taxpayer can show the Department that a

21 substantial change in the taxpayer's business has occurred

22 which causes the taxpayer to anticipate that his average

23 monthly tax liability for the reasonably foreseeable future

24 will fall below the $20,000 threshold stated above, then such

25 taxpayer may petition the Department for a change in such

26 taxpayer's reporting status. The Department shall change such

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1 taxpayer's reporting status unless it finds that such change is

2 seasonal in nature and not likely to be long term. If any such

3 quarter monthly payment is not paid at the time or in the

4 amount required by this Section, then the taxpayer shall be

5 liable for penalties and interest on the difference between the

6 minimum amount due and the amount of such quarter monthly

7 payment actually and timely paid, except insofar as the

8 taxpayer has previously made payments for that month to the

9 Department in excess of the minimum payments previously due as

10 provided in this Section. The Department shall make reasonable

11 rules and regulations to govern the quarter monthly payment

12 amount and quarter monthly payment dates for taxpayers who file

13 on other than a calendar monthly basis.

14 If any such payment provided for in this Section exceeds

15 the taxpayer's liabilities under this Act, the Retailers'

16 Occupation Tax Act, the Service Occupation Tax Act and the

17 Service Use Tax Act, as shown by an original monthly return,

18 the Department shall issue to the taxpayer a credit memorandum

19 no later than 30 days after the date of payment, which

20 memorandum may be submitted by the taxpayer to the Department

21 in payment of tax liability subsequently to be remitted by the

22 taxpayer to the Department or be assigned by the taxpayer to a

23 similar taxpayer under this Act, the Retailers' Occupation Tax

24 Act, the Service Occupation Tax Act or the Service Use Tax Act,

25 in accordance with reasonable rules and regulations to be

26 prescribed by the Department, except that if such excess

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1 payment is shown on an original monthly return and is made

2 after December 31, 1986, no credit memorandum shall be issued,

3 unless requested by the taxpayer. If no such request is made,

4 the taxpayer may credit such excess payment against tax

5 liability subsequently to be remitted by the taxpayer to the

6 Department under this Act, the Retailers' Occupation Tax Act,

7 the Service Occupation Tax Act or the Service Use Tax Act, in

8 accordance with reasonable rules and regulations prescribed by

9 the Department. If the Department subsequently determines that

10 all or any part of the credit taken was not actually due to the

11 taxpayer, the taxpayer's 2.1% or 1.75% vendor's discount shall

12 be reduced by 2.1% or 1.75% of the difference between the

13 credit taken and that actually due, and the taxpayer shall be

14 liable for penalties and interest on such difference.

15 If the retailer is otherwise required to file a monthly

16 return and if the retailer's average monthly tax liability to

17 the Department does not exceed $200, the Department may

18 authorize his returns to be filed on a quarter annual basis,

19 with the return for January, February, and March of a given

20 year being due by April 20 of such year; with the return for

21 April, May and June of a given year being due by July 20 of such

22 year; with the return for July, August and September of a given

23 year being due by October 20 of such year, and with the return

24 for October, November and December of a given year being due by

25 January 20 of the following year.

26 If the retailer is otherwise required to file a monthly or

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1 quarterly return and if the retailer's average monthly tax

2 liability to the Department does not exceed $50, the Department

3 may authorize his returns to be filed on an annual basis, with

4 the return for a given year being due by January 20 of the

5 following year.

6 Such quarter annual and annual returns, as to form and

7 substance, shall be subject to the same requirements as monthly

8 returns.

9 Notwithstanding any other provision in this Act concerning

10 the time within which a retailer may file his return, in the

11 case of any retailer who ceases to engage in a kind of business

12 which makes him responsible for filing returns under this Act,

13 such retailer shall file a final return under this Act with the

14 Department not more than one month after discontinuing such

15 business.

16 In addition, with respect to motor vehicles, watercraft,

17 aircraft, and trailers that are required to be registered with

18 an agency of this State, every retailer selling this kind of

19 tangible personal property shall file, with the Department,

20 upon a form to be prescribed and supplied by the Department, a

21 separate return for each such item of tangible personal

22 property which the retailer sells, except that if, in the same

23 transaction, (i) a retailer of aircraft, watercraft, motor

24 vehicles or trailers transfers more than one aircraft,

25 watercraft, motor vehicle or trailer to another aircraft,

26 watercraft, motor vehicle or trailer retailer for the purpose

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1 of resale or (ii) a retailer of aircraft, watercraft, motor

2 vehicles, or trailers transfers more than one aircraft,

3 watercraft, motor vehicle, or trailer to a purchaser for use as

4 a qualifying rolling stock as provided in Section 3-55 of this

5 Act, then that seller may report the transfer of all the

6 aircraft, watercraft, motor vehicles or trailers involved in

7 that transaction to the Department on the same uniform

8 invoice-transaction reporting return form. For purposes of

9 this Section, "watercraft" means a Class 2, Class 3, or Class 4

10 watercraft as defined in Section 3-2 of the Boat Registration

11 and Safety Act, a personal watercraft, or any boat equipped

12 with an inboard motor.

13 The transaction reporting return in the case of motor

14 vehicles or trailers that are required to be registered with an

15 agency of this State, shall be the same document as the Uniform

16 Invoice referred to in Section 5-402 of the Illinois Vehicle

17 Code and must show the name and address of the seller; the name

18 and address of the purchaser; the amount of the selling price

19 including the amount allowed by the retailer for traded-in

20 property, if any; the amount allowed by the retailer for the

21 traded-in tangible personal property, if any, to the extent to

22 which Section 2 of this Act allows an exemption for the value

23 of traded-in property; the balance payable after deducting such

24 trade-in allowance from the total selling price; the amount of

25 tax due from the retailer with respect to such transaction; the

26 amount of tax collected from the purchaser by the retailer on

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1 such transaction (or satisfactory evidence that such tax is not

2 due in that particular instance, if that is claimed to be the

3 fact); the place and date of the sale; a sufficient

4 identification of the property sold; such other information as

5 is required in Section 5-402 of the Illinois Vehicle Code, and

6 such other information as the Department may reasonably

7 require.

8 The transaction reporting return in the case of watercraft

9 and aircraft must show the name and address of the seller; the

10 name and address of the purchaser; the amount of the selling

11 price including the amount allowed by the retailer for

12 traded-in property, if any; the amount allowed by the retailer

13 for the traded-in tangible personal property, if any, to the

14 extent to which Section 2 of this Act allows an exemption for

15 the value of traded-in property; the balance payable after

16 deducting such trade-in allowance from the total selling price;

17 the amount of tax due from the retailer with respect to such

18 transaction; the amount of tax collected from the purchaser by

19 the retailer on such transaction (or satisfactory evidence that

20 such tax is not due in that particular instance, if that is

21 claimed to be the fact); the place and date of the sale, a

22 sufficient identification of the property sold, and such other

23 information as the Department may reasonably require.

24 Such transaction reporting return shall be filed not later

25 than 20 days after the date of delivery of the item that is

26 being sold, but may be filed by the retailer at any time sooner

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1 than that if he chooses to do so. The transaction reporting

2 return and tax remittance or proof of exemption from the tax

3 that is imposed by this Act may be transmitted to the

4 Department by way of the State agency with which, or State

5 officer with whom, the tangible personal property must be

6 titled or registered (if titling or registration is required)

7 if the Department and such agency or State officer determine

8 that this procedure will expedite the processing of

9 applications for title or registration.

10 With each such transaction reporting return, the retailer

11 shall remit the proper amount of tax due (or shall submit

12 satisfactory evidence that the sale is not taxable if that is

13 the case), to the Department or its agents, whereupon the

14 Department shall issue, in the purchaser's name, a tax receipt

15 (or a certificate of exemption if the Department is satisfied

16 that the particular sale is tax exempt) which such purchaser

17 may submit to the agency with which, or State officer with

18 whom, he must title or register the tangible personal property

19 that is involved (if titling or registration is required) in

20 support of such purchaser's application for an Illinois

21 certificate or other evidence of title or registration to such

22 tangible personal property.

23 No retailer's failure or refusal to remit tax under this

24 Act precludes a user, who has paid the proper tax to the

25 retailer, from obtaining his certificate of title or other

26 evidence of title or registration (if titling or registration

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1 is required) upon satisfying the Department that such user has

2 paid the proper tax (if tax is due) to the retailer. The

3 Department shall adopt appropriate rules to carry out the

4 mandate of this paragraph.

5 If the user who would otherwise pay tax to the retailer

6 wants the transaction reporting return filed and the payment of

7 tax or proof of exemption made to the Department before the

8 retailer is willing to take these actions and such user has not

9 paid the tax to the retailer, such user may certify to the fact

10 of such delay by the retailer, and may (upon the Department

11 being satisfied of the truth of such certification) transmit

12 the information required by the transaction reporting return

13 and the remittance for tax or proof of exemption directly to

14 the Department and obtain his tax receipt or exemption

15 determination, in which event the transaction reporting return

16 and tax remittance (if a tax payment was required) shall be

17 credited by the Department to the proper retailer's account

18 with the Department, but without the 2.1% or 1.75% discount

19 provided for in this Section being allowed. When the user pays

20 the tax directly to the Department, he shall pay the tax in the

21 same amount and in the same form in which it would be remitted

22 if the tax had been remitted to the Department by the retailer.

23 Where a retailer collects the tax with respect to the

24 selling price of tangible personal propertyor taxable service

25 which he sells and the purchaser thereafter returns such

26 tangible personal property or cancels the providing of taxable

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1 serviceand the retailer refunds the selling price thereof to

2 the purchaser, such retailer shall also refund, to the

3 purchaser, the tax so collected from the purchaser. When filing

4 his return for the period in which he refunds such tax to the

5 purchaser, the retailer may deduct the amount of the tax so

6 refunded by him to the purchaser from any other use tax which

7 such retailer may be required to pay or remit to the

8 Department, as shown by such return, if the amount of the tax

9 to be deducted was previously remitted to the Department by

10 such retailer. If the retailer has not previously remitted the

11 amount of such tax to the Department, he is entitled to no

12 deduction under this Act upon refunding such tax to the

13 purchaser.

14 Any retailer filing a return under this Section shall also

15 include (for the purpose of paying tax thereon) the total tax

16 covered by such return upon the selling price of tangible

17 personal property or taxable servicepurchased by him at retail

18 from a retailer, but as to which the tax imposed by this Act

19 was not collected from the retailer filing such return, and

20 such retailer shall remit the amount of such tax to the

21 Department when filing such return.

22 If experience indicates such action to be practicable, the

23 Department may prescribe and furnish a combination or joint

24 return which will enable retailers, who are required to file

25 returns hereunder and also under the Retailers' Occupation Tax

26 Act, to furnish all the return information required by both

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1 Acts on the one form.

2 Where the retailer has more than one business registered

3 with the Department under separate registration under this Act,

4 such retailer may not file each return that is due as a single

5 return covering all such registered businesses, but shall file

6 separate returns for each such registered business.

7 Beginning January 1, 1990, each month the Department shall

8 pay into the State and Local Sales Tax Reform Fund, a special

9 fund in the State Treasury which is hereby created, the net

10 revenue realized for the preceding month from the 1% tax on

11 sales of food for human consumption which is to be consumed off

12 the premises where it is sold (other than alcoholic beverages,

13 soft drinks and food which has been prepared for immediate

14 consumption) and prescription and nonprescription medicines,

15 drugs, medical appliances, products classified as Class III

16 medical devices by the United States Food and Drug

17 Administration that are used for cancer treatment pursuant to a

18 prescription, as well as any accessories and components related

19 to those devices, and insulin, urine testing materials,

20 syringes and needles used by diabetics.

21 Beginning January 1, 1990, each month the Department shall

22 pay into the County and Mass Transit District Fund 4% of the

23 net revenue realized for the preceding month from the 6.25%

24 general rate on the selling price of tangible personal property

25 which is purchased outside Illinois at retail from a retailer

26 and which is titled or registered by an agency of this State's

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1 government.

2 Beginning January 1, 1990, each month the Department shall

3 pay into the State and Local Sales Tax Reform Fund, a special

4 fund in the State Treasury, 20% of the net revenue realized for

5 the preceding month from the 6.25% general rate on the selling

6 price of tangible personal property, other than tangible

7 personal property which is purchased outside Illinois at retail

8 from a retailer and which is titled or registered by an agency

9 of this State's government.

10 From July 1, 2017 through June 30, 2018, no deposits shall

11 be made into the State and Local Sales Tax Reform Fund from the

12 net revenue realized from the 6.25% general rate on taxable

13 services. Beginning July 1, 2018 and through June 30, 2019,

14 each month the Department shall pay into the State and Local

15 Sales Tax Reform Fund 7% of the net revenue realized for the

16 preceding month from the 6.25% general rate on the selling

17 price of taxable services. Beginning July 1, 2019 and through

18 June 30, 2020, each month the Department shall pay into the

19 State and Local Sales Tax Reform Fund 13% of the net revenue

20 realized for the preceding month from the 6.25% general rate on

21 the selling price of taxable services. Beginning July 1, 2020,

22 each month the Department shall pay into the State and Local

23 Sales Tax Reform Fund 20% of the net revenue realized for the

24 preceding month from the 6.25% general rate on the selling

25 price of taxable services.

26 Beginning August 1, 2000, each month the Department shall

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1 pay into the State and Local Sales Tax Reform Fund 100% 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. Beginning

4 September 1, 2010, each month the Department shall pay into the

5 State and Local Sales Tax Reform Fund 100% of the net revenue

6 realized for the preceding month from the 1.25% rate on the

7 selling price of sales tax holiday items.

8 Beginning January 1, 1990, each month the Department shall

9 pay into the Local Government Tax Fund 16% of the net revenue

10 realized for the preceding month from the 6.25% general rate on

11 the selling price of tangible personal property which is

12 purchased outside Illinois at retail from a retailer and which

13 is titled or registered by an agency of this State's

14 government.

15 Beginning October 1, 2009, each month the Department shall

16 pay into the Capital Projects Fund an amount that is equal to

17 an amount estimated by the Department to represent 80% of the

18 net revenue realized for the preceding month from the sale of

19 candy, grooming and hygiene products, and soft drinks that had

20 been taxed at a rate of 1% prior to September 1, 2009 but that

21 are now taxed at 6.25%.

22 Beginning July 1, 2011, each month the Department shall pay

23 into the Clean Air Act Permit Fund 80% of the net revenue

24 realized for the preceding month from the 6.25% general rate on

25 the selling price of sorbents used in Illinois in the process

26 of sorbent injection as used to comply with the Environmental

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1 Protection Act or the federal Clean Air Act, but the total

2 payment into the Clean Air Act Permit Fund under this Act and

3 the Retailers' Occupation Tax Act shall not exceed $2,000,000

4 in any fiscal year.

5 Beginning July 1, 2013, each month the Department shall pay

6 into the Underground Storage Tank Fund from the proceeds

7 collected under this Act, the Service Use Tax Act, the Service

8 Occupation Tax Act, and the Retailers' Occupation Tax Act an

9 amount equal to the average monthly deficit in the Underground

10 Storage Tank Fund during the prior year, as certified annually

11 by the Illinois Environmental Protection Agency, but the total

12 payment into the Underground Storage Tank Fund under this Act,

13 the Service Use Tax Act, the Service Occupation Tax Act, and

14 the Retailers' Occupation Tax Act shall not exceed $18,000,000

15 in any State fiscal year. As used in this paragraph, the

16 "average monthly deficit" shall be equal to the difference

17 between the average monthly claims for payment by the fund and

18 the average monthly revenues deposited into the fund, excluding

19 payments made pursuant to this paragraph.

20 Beginning July 1, 2015, of the remainder of the moneys

21 received by the Department under this Act, the Service Use Tax

22 Act, the Service Occupation Tax Act, and the Retailers'

23 Occupation Tax Act, each month the Department shall deposit

24 $500,000 into the State Crime Laboratory Fund.

25 Of the remainder of the moneys received by the Department

26 pursuant to this Act, (a) 1.75% thereof shall be paid into the

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1 Build Illinois Fund and (b) prior to July 1, 1989, 2.2% and on

2 and after July 1, 1989, 3.8% thereof shall be paid into the

3 Build Illinois Fund; provided, however, that if in any fiscal

4 year the sum of (1) the aggregate of 2.2% or 3.8%, as the case

5 may be, of the moneys received by the Department and required

6 to be paid into the Build Illinois Fund pursuant to Section 3

7 of the Retailers' Occupation Tax Act, Section 9 of the Use Tax

8 Act, Section 9 of the Service Use Tax Act, and Section 9 of the

9 Service Occupation Tax Act, such Acts being hereinafter called

10 the "Tax Acts" and such aggregate of 2.2% or 3.8%, as the case

11 may be, of moneys being hereinafter called the "Tax Act

12 Amount", and (2) the amount transferred to the Build Illinois

13 Fund from the State and Local Sales Tax Reform Fund shall be

14 less than the Annual Specified Amount (as defined in Section 3

15 of the Retailers' Occupation Tax Act), an amount equal to the

16 difference shall be immediately paid into the Build Illinois

17 Fund from other moneys received by the Department pursuant to

18 the Tax Acts; and further provided, that if on the last

19 business day of any month the sum of (1) the Tax Act Amount

20 required to be deposited into the Build Illinois Bond Account

21 in the Build Illinois Fund during such month and (2) the amount

22 transferred during such month to the Build Illinois Fund from

23 the State and Local Sales Tax Reform Fund shall have been less

24 than 1/12 of the Annual Specified Amount, an amount equal to

25 the difference shall be immediately paid into the Build

26 Illinois Fund from other moneys received by the Department

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1 pursuant to the Tax Acts; and, further provided, that in no

2 event shall the payments required under the preceding proviso

3 result in aggregate payments into the Build Illinois Fund

4 pursuant to this clause (b) for any fiscal year in excess of

5 the greater of (i) the Tax Act Amount or (ii) the Annual

6 Specified Amount for such fiscal year; and, further provided,

7 that the amounts payable into the Build Illinois Fund under

8 this clause (b) shall be payable only until such time as the

9 aggregate amount on deposit under each trust indenture securing

10 Bonds issued and outstanding pursuant to the Build Illinois

11 Bond Act is sufficient, taking into account any future

12 investment income, to fully provide, in accordance with such

13 indenture, for the defeasance of or the payment of the

14 principal of, premium, if any, and interest on the Bonds

15 secured by such indenture and on any Bonds expected to be

16 issued thereafter and all fees and costs payable with respect

17 thereto, all as certified by the Director of the Bureau of the

18 Budget (now Governor's Office of Management and Budget). If on

19 the last business day of any month in which Bonds are

20 outstanding pursuant to the Build Illinois Bond Act, the

21 aggregate of the moneys deposited in the Build Illinois Bond

22 Account in the Build Illinois Fund in such month shall be less

23 than the amount required to be transferred in such month from

24 the Build Illinois Bond Account to the Build Illinois Bond

25 Retirement and Interest Fund pursuant to Section 13 of the

26 Build Illinois Bond Act, an amount equal to such deficiency

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1 shall be immediately paid from other moneys received by the

2 Department pursuant to the Tax Acts to the Build Illinois Fund;

3 provided, however, that any amounts paid to the Build Illinois

4 Fund in any fiscal year pursuant to this sentence shall be

5 deemed to constitute payments pursuant to clause (b) of the

6 preceding sentence and shall reduce the amount otherwise

7 payable for such fiscal year pursuant to clause (b) of the

8 preceding sentence. The moneys received by the Department

9 pursuant to this Act and required to be deposited into the

10 Build Illinois Fund are subject to the pledge, claim and charge

11 set forth in Section 12 of the Build Illinois Bond Act.

12 Subject to payment of amounts into the Build Illinois Fund

13 as provided in the preceding paragraph or in any amendment

14 thereto hereafter enacted, the following specified monthly

15 installment of the amount requested in the certificate of the

16 Chairman of the Metropolitan Pier and Exposition Authority

17 provided under Section 8.25f of the State Finance Act, but not

18 in excess of the sums designated as "Total Deposit", shall be

19 deposited in the aggregate from collections under Section 9 of

20 the Use Tax Act, Section 9 of the Service Use Tax Act, Section

21 9 of the Service Occupation Tax Act, and Section 3 of the

22 Retailers' Occupation Tax Act into the McCormick Place

23 Expansion Project Fund in the specified fiscal years.

24	`Fiscal Year`	`Total Deposit`
25	`1993`	`$0`
26	`1994`	`53,000,000`

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1	`1995`	`58,000,000`
2	`1996`	`61,000,000`
3	`1997`	`64,000,000`
4	`1998`	`68,000,000`
5	`1999`	`71,000,000`
6	`2000`	`75,000,000`
7	`2001`	`80,000,000`
8	`2002`	`93,000,000`
9	`2003`	`99,000,000`
10	`2004`	`103,000,000`
11	`2005`	`108,000,000`
12	`2006`	`113,000,000`
13	`2007`	`119,000,000`
14	`2008`	`126,000,000`
15	`2009`	`132,000,000`
16	`2010`	`139,000,000`
17	`2011`	`146,000,000`
18	`2012`	`153,000,000`
19	`2013`	`161,000,000`
20	`2014`	`170,000,000`
21	`2015`	`179,000,000`
22	`2016`	`189,000,000`
23	`2017`	`199,000,000`
24	`2018`	`210,000,000`
25	`2019`	`221,000,000`
26	`2020`	`233,000,000`

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1	`2021`	`246,000,000`
2	`2022`	`260,000,000`
3	`2023`	`275,000,000`
4	`2024`	`275,000,000`
5	`2025`	`275,000,000`
6	`2026`	`279,000,000`
7	`2027`	`292,000,000`
8	`2028`	`307,000,000`
9	`2029`	`322,000,000`
10	`2030`	`338,000,000`
11	`2031`	`350,000,000`
12	`2032`	`350,000,000`
13	`and`
14	`each fiscal year`
15	`thereafter that bonds`
16	`are outstanding under`
17	`Section 13.2 of the`
18	`Metropolitan Pier and`
19	`Exposition Authority Act,`
20	`but not after fiscal year 2060.`

21 Beginning July 20, 1993 and in each month of each fiscal

22 year thereafter, one-eighth of the amount requested in the

23 certificate of the Chairman of the Metropolitan Pier and

24 Exposition Authority for that fiscal year, less the amount

25 deposited into the McCormick Place Expansion Project Fund by

26 the State Treasurer in the respective month under subsection

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1 (g) of Section 13 of the Metropolitan Pier and Exposition

2 Authority Act, plus cumulative deficiencies in the deposits

3 required under this Section for previous months and years,

4 shall be deposited into the McCormick Place Expansion Project

5 Fund, until the full amount requested for the fiscal year, but

6 not in excess of the amount specified above as "Total Deposit",

7 has been deposited.

8 Subject to payment of amounts into the Build Illinois Fund

9 and the McCormick Place Expansion Project Fund pursuant to the

10 preceding paragraphs or in any amendments thereto hereafter

11 enacted, beginning July 1, 1993 and ending on September 30,

12 2013, the Department shall each month pay into the Illinois Tax

13 Increment Fund 0.27% of 80% of the net revenue realized for the

14 preceding month from the 6.25% general rate on the selling

15 price of tangible personal property.

16 Subject to payment of amounts into the Build Illinois Fund

17 and the McCormick Place Expansion Project Fund pursuant to the

18 preceding paragraphs or in any amendments thereto hereafter

19 enacted, beginning with the receipt of the first report of

20 taxes paid by an eligible business and continuing for a 25-year

21 period, the Department shall each month pay into the Energy

22 Infrastructure Fund 80% of the net revenue realized from the

23 6.25% general rate on the selling price of Illinois-mined coal

24 that was sold to an eligible business. For purposes of this

25 paragraph, the term "eligible business" means a new electric

26 generating facility certified pursuant to Section 605-332 of

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1 the Department of Commerce and Economic Opportunity Law of the

2 Civil Administrative Code of Illinois.

3 Subject to payment of amounts into the Build Illinois Fund,

4 the McCormick Place Expansion Project Fund, the Illinois Tax

5 Increment Fund, and the Energy Infrastructure Fund pursuant to

6 the preceding paragraphs or in any amendments to this Section

7 hereafter enacted, beginning on the first day of the first

8 calendar month to occur on or after August 26, 2014 (the

9 effective date of Public Act 98-1098) ~~this amendatory Act of~~

10 ~~the 98th General Assembly~~, each month, from the collections

11 made under Section 9 of the Use Tax Act, Section 9 of the

12 Service Use Tax Act, Section 9 of the Service Occupation Tax

13 Act, and Section 3 of the Retailers' Occupation Tax Act, the

14 Department shall pay into the Tax Compliance and Administration

15 Fund, to be used, subject to appropriation, to fund additional

16 auditors and compliance personnel at the Department of Revenue,

17 an amount equal to 1/12 of 5% of 80% of the cash receipts

18 collected during the preceding fiscal year by the Audit Bureau

19 of the Department under the Use Tax Act, the Service Use Tax

20 Act, the Service Occupation Tax Act, the Retailers' Occupation

21 Tax Act, and associated local occupation and use taxes

22 administered by the Department.

23 Of the remainder of the moneys received by the Department

24 pursuant to this Act, 75% thereof shall be paid into the State

25 Treasury and 25% shall be reserved in a special account and

26 used only for the transfer to the Common School Fund as part of

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1 the monthly transfer from the General Revenue Fund in

2 accordance with Section 8a of the State Finance Act.

3 As soon as possible after the first day of each month, upon

4 certification of the Department of Revenue, the Comptroller

5 shall order transferred and the Treasurer shall transfer from

6 the General Revenue Fund to the Motor Fuel Tax Fund an amount

7 equal to 1.7% of 80% of the net revenue realized under this Act

8 for the second preceding month. Beginning April 1, 2000, this

9 transfer is no longer required and shall not be made.

10 Net revenue realized for a month shall be the revenue

11 collected by the State pursuant to this Act, less the amount

12 paid out during that month as refunds to taxpayers for

13 overpayment of liability.

14 For greater simplicity of administration, manufacturers,

15 importers and wholesalers whose products are sold at retail in

16 Illinois by numerous retailers, and who wish to do so, may

17 assume the responsibility for accounting and paying to the

18 Department all tax accruing under this Act with respect to such

19 sales, if the retailers who are affected do not make written

20 objection to the Department to this arrangement.

21 (Source: P.A. 98-24, eff. 6-19-13; 98-109, eff. 7-25-13;

22 98-496, eff. 1-1-14; 98-756, eff. 7-16-14; 98-1098, eff.

23 8-26-14; 99-352, eff. 8-12-15; 99-858, eff. 8-19-16; 99-933,

24 eff. 1-27-17; revised 2-3-17.)

25 (35 ILCS 105/10) (from Ch. 120, par. 439.10)

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1 Sec. 10. Except as to motor vehicles, aircraft, watercraft,

2 and trailers, and except as to cigarettes as defined in the

3 Cigarette Use Tax Act, when tangible personal propertyor

4 (beginning January 1, 2018 a taxable service)is purchased from

5 a retailer for use in this State by a purchaser who did not pay

6 the tax imposed by this Act to the retailer, and who does not

7 file returns with the Department as a retailer under Section 9

8 of this Act, such purchaser (by the last day of the month

9 following the calendar month in which such purchaser makes any

10 payment upon the selling price of such property) shall, except

11 as otherwise provided in this Section, file a return with the

12 Department and pay the tax upon that portion of the selling

13 price so paid by the purchaser during the preceding calendar

14 month. When tangible personal property, including but not

15 limited to motor vehicles and aircraft, is purchased by a

16 lessor, under a lease for one year or longer, executed or in

17 effect at the time of purchase to an interstate carrier for

18 hire, who did not pay the tax imposed by this Act to the

19 retailer, such lessor (by the last day of the month following

20 the calendar month in which such property reverts to the use of

21 such lessor) shall file a return with the Department and pay

22 the tax upon the fair market value of such property on the date

23 of such reversion. However, in determining the fair market

24 value at the time of reversion, the fair market value of such

25 property shall not exceed the original purchase price of the

26 property that was paid by the lessor at the time of purchase.

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1 Such return shall be filed on a form prescribed by the

2 Department and shall contain such information as the Department

3 may reasonably require. Such return and payment from the

4 purchaser shall be submitted to the Department sooner than the

5 last day of the month after the month in which the purchase is

6 made to the extent that that may be necessary in order to

7 secure the title to a motor vehicle or the certificate of

8 registration for an aircraft. However, except as to motor

9 vehicles and aircraft, and except as to cigarettes as defined

10 in the Cigarette Use Tax Act, if the purchaser's annual use tax

11 liability does not exceed $600, the purchaser may file the

12 return on an annual basis on or before April 15th of the year

13 following the year use tax liability was incurred. Individual

14 purchasers with an annual use tax liability that does not

15 exceed $600 may, in lieu of the filing and payment requirements

16 in this Section, file and pay in compliance with Section 502.1

17 of the Illinois Income Tax Act.

18 If cigarettes, as defined in the Cigarette Use Tax Act, are

19 purchased from a retailer for use in this State by a purchaser

20 who did not pay the tax imposed by this Act to the retailer,

21 and who does not file returns with the Department as a retailer

22 under Section 9 of this Act, such purchaser must, within 30

23 days after acquiring the cigarettes, file a return with the

24 Department and pay the tax upon that portion of the selling

25 price so paid by the purchaser for the cigarettes.

26 In addition with respect to motor vehicles, aircraft,

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1 watercraft, and trailers, a purchaser of such tangible personal

2 property for use in this State, who purchases such tangible

3 personal property from an out-of-state retailer, shall file

4 with the Department, upon a form to be prescribed and supplied

5 by the Department, a return for each such item of tangible

6 personal property purchased, except that if, in the same

7 transaction, (i) a purchaser of motor vehicles, aircraft,

8 watercraft, or trailers who is a retailer of motor vehicles,

9 aircraft, watercraft, or trailers purchases more than one motor

10 vehicle, aircraft, watercraft, or trailer for the purpose of

11 resale or (ii) a purchaser of motor vehicles, aircraft,

12 watercraft, or trailers purchases more than one motor vehicle,

13 aircraft, watercraft, or trailer for use as qualifying rolling

14 stock as provided in Section 3-55 of this Act, then the

15 purchaser may report the purchase of all motor vehicles,

16 aircraft, watercraft, or trailers involved in that transaction

17 to the Department on a single return prescribed by the

18 Department. Such return in the case of motor vehicles and

19 aircraft must show the name and address of the seller, the

20 name, address of purchaser, the amount of the selling price

21 including the amount allowed by the retailer for traded in

22 property, if any; the amount allowed by the retailer for the

23 traded-in tangible personal property, if any, to the extent to

24 which Section 2 of this Act allows an exemption for the value

25 of traded-in property; the balance payable after deducting such

26 trade-in allowance from the total selling price; the amount of

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1 tax due from the purchaser with respect to such transaction;

2 the amount of tax collected from the purchaser by the retailer

3 on such transaction (or satisfactory evidence that such tax is

4 not due in that particular instance if that is claimed to be

5 the fact); the place and date of the sale, a sufficient

6 identification of the property sold, and such other information

7 as the Department may reasonably require.

8 Such return shall be filed not later than 30 days after

9 such motor vehicle or aircraft is brought into this State for

10 use.

11 For purposes of this Section, "watercraft" means a Class 2,

12 Class 3, or Class 4 watercraft as defined in Section 3-2 of the

13 Boat Registration and Safety Act, a personal watercraft, or any

14 boat equipped with an inboard motor.

15 The return and tax remittance or proof of exemption from

16 the tax that is imposed by this Act may be transmitted to the

17 Department by way of the State agency with which, or State

18 officer with whom, the tangible personal property must be

19 titled or registered (if titling or registration is required)

20 if the Department and such agency or State officer determine

21 that this procedure will expedite the processing of

22 applications for title or registration.

23 With each such return, the purchaser shall remit the proper

24 amount of tax due (or shall submit satisfactory evidence that

25 the sale is not taxable if that is the case), to the Department

26 or its agents, whereupon the Department shall issue, in the

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1 purchaser's name, a tax receipt (or a certificate of exemption

2 if the Department is satisfied that the particular sale is tax

3 exempt) which such purchaser may submit to the agency with

4 which, or State officer with whom, he must title or register

5 the tangible personal property that is involved (if titling or

6 registration is required) in support of such purchaser's

7 application for an Illinois certificate or other evidence of

8 title or registration to such tangible personal property.

9 When a purchaser pays a tax imposed by this Act directly to

10 the Department, the Department (upon request therefor from such

11 purchaser) shall issue an appropriate receipt to such purchaser

12 showing that he has paid such tax to the Department. Such

13 receipt shall be sufficient to relieve the purchaser from

14 further liability for the tax to which such receipt may refer.

15 A user who is liable to pay use tax directly to the

16 Department only occasionally and not on a frequently recurring

17 basis, and who is not required to file returns with the

18 Department as a retailer under Section 9 of this Act, or under

19 the "Retailers' Occupation Tax Act", or as a registrant with

20 the Department under the "Service Occupation Tax Act" or the

21 "Service Use Tax Act", need not register with the Department.

22 However, if such a user has a frequently recurring direct use

23 tax liability to pay to the Department, such user shall be

24 required to register with the Department on forms prescribed by

25 the Department and to obtain and display a certificate of

26 registration from the Department. In that event, all of the

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1 provisions of Section 9 of this Act concerning the filing of

2 regular monthly, quarterly or annual tax returns and all of the

3 provisions of Section 2a of the "Retailers' Occupation Tax Act"

4 concerning the requirements for registrants to post bond or

5 other security with the Department, as the provisions of such

6 sections now exist or may hereafter be amended, shall apply to

7 such users to the same extent as if such provisions were

8 included herein.

9 (Source: P.A. 96-520, eff. 8-14-09; 96-1000, eff. 7-2-10;

10 96-1388, eff. 7-29-10.)

11 (35 ILCS 105/11) (from Ch. 120, par. 439.11)

12 Sec. 11. Every retailer required or authorized to collect

13 taxes hereunder and every person using in this State tangible

14 personal property or taxable servicepurchased at retail from a

15 retailer on or after the effective date hereof shall keep such

16 records, receipts, invoices and other pertinent books,

17 documents, memoranda and papers as the Department shall

18 require, in such form as the Department shall require. The

19 Department may adopt rules that establish requirements,

20 including record forms and formats, for records required to be

21 kept and maintained by taxpayers. For purposes of this Section,

22 "records" means all data maintained by the taxpayer, including

23 data on paper, microfilm, microfiche or any type of

24 machine-sensible data compilation. For the purpose of

25 administering and enforcing the provisions hereof, the

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1 Department, or any officer or employee of the Department

2 designated, in writing, by the Director thereof, may hold

3 investigations and hearings concerning any matters covered

4 herein and may examine any books, papers, records, documents or

5 memoranda of any retailer or purchaser bearing upon the sales

6 or purchases of tangible personal property, the privilege of

7 using which is taxed hereunder, and may require the attendance

8 of such person or any officer or employee of such person, or of

9 any person having knowledge of the facts, and may take

10 testimony and require proof for its information.

11 (Source: P.A. 88-480.)

12 Section 30-25. The Service Use Tax Act is amended by

13 changing Sections 2 and 3-5 as follows:

14 (35 ILCS 110/2) (from Ch. 120, par. 439.32)

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, but does not include the sale or use for

19 demonstration by him of that property in any form as tangible

20 personal property in the regular course of business. "Use" does

21 not mean the interim use of tangible personal property nor the

22 physical incorporation of tangible personal property, as an

23 ingredient or constituent, into other tangible personal

24 property, (a) which is sold in the regular course of business

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1 or (b) which the person incorporating such ingredient or

2 constituent therein has undertaken at the time of such purchase

3 to cause to be transported in interstate commerce to

4 destinations outside the State of Illinois.

5 "Purchased from a serviceman" means the acquisition of the

6 ownership of, or title to, tangible personal property through a

7 sale of service.

8 "Purchaser" means any person who, through a sale of

9 service, acquires the ownership of, or title to, any tangible

10 personal property.

11 "Cost price" means the consideration paid by the serviceman

12 for a purchase valued in money, whether paid in money or

13 otherwise, including cash, credits and services, and shall be

14 determined without any deduction on account of the supplier's

15 cost of the property sold or on account of any other expense

16 incurred by the supplier. When a serviceman contracts out part

17 or all of the services required in his sale of service, it

18 shall be presumed that the cost price to the serviceman of the

19 property transferred to him or her by his or her subcontractor

20 is equal to 50% of the subcontractor's charges to the

21 serviceman in the absence of proof of the consideration paid by

22 the subcontractor for the purchase of such property.

23 "Selling price" means the consideration for a sale valued

24 in money whether received in money or otherwise, including

25 cash, credits and service, and shall be determined without any

26 deduction on account of the serviceman's cost of the property

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1 sold, the cost of materials used, labor or service cost or any

2 other expense whatsoever, but does not include interest or

3 finance charges which appear as separate items on the bill of

4 sale or sales contract nor charges that are added to prices by

5 sellers on account of the seller's duty to collect, from the

6 purchaser, the tax that is imposed by this Act.

7 "Department" means the Department of Revenue.

8 "Person" means any natural individual, firm, partnership,

9 association, joint stock company, joint venture, public or

10 private corporation, limited liability company, and any

11 receiver, executor, trustee, guardian or other representative

12 appointed by order of any court.

13 "Sale of service" means any transaction except:

14 (1) a retail sale of tangible personal property taxable

15 under the Retailers' Occupation Tax Act or under the Use

16 Tax Act.

17 (2) a sale of tangible personal property for the

18 purpose of resale made in compliance with Section 2c of the

19 Retailers' Occupation Tax Act.

20 (3) except as hereinafter provided, a sale or transfer

21 of tangible personal property as an incident to the

22 rendering of service for or by any governmental body, or

23 for or by any corporation, society, association,

24 foundation or institution organized and operated

25 exclusively for charitable, religious or educational

26 purposes or any not-for-profit corporation, society,

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1 association, foundation, institution or organization which

2 has no compensated officers or employees and which is

3 organized and operated primarily for the recreation of

4 persons 55 years of age or older. A limited liability

5 company may qualify for the exemption under this paragraph

6 only if the limited liability company is organized and

7 operated exclusively for educational purposes.

8 (4) a sale or transfer of tangible personal property as

9 an incident to the rendering of service for interstate

10 carriers for hire for use as rolling stock moving in

11 interstate commerce or by lessors under a lease of one year

12 or longer, executed or in effect at the time of purchase of

13 personal property, to interstate carriers for hire for use

14 as rolling stock moving in interstate commerce so long as

15 so used by such interstate carriers for hire, and equipment

16 operated by a telecommunications provider, licensed as a

17 common carrier by the Federal Communications Commission,

18 which is permanently installed in or affixed to aircraft

19 moving in interstate commerce.

20 (4a) a sale or transfer of tangible personal property

21 as an incident to the rendering of service for owners,

22 lessors, or shippers of tangible personal property which is

23 utilized by interstate carriers for hire for use as rolling

24 stock moving in interstate commerce so long as so used by

25 interstate carriers for hire, and equipment operated by a

26 telecommunications provider, licensed as a common carrier

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1 by the Federal Communications Commission, which is

2 permanently installed in or affixed to aircraft moving in

3 interstate commerce.

4 (4a-5) on and after July 1, 2003 and through June 30,

5 2004, a sale or transfer of a motor vehicle of the second

6 division with a gross vehicle weight in excess of 8,000

7 pounds as an incident to the rendering of service if that

8 motor vehicle is subject to the commercial distribution fee

9 imposed under Section 3-815.1 of the Illinois Vehicle Code.

10 Beginning on July 1, 2004 and through June 30, 2005, the

11 use in this State of motor vehicles of the second division:

12 (i) with a gross vehicle weight rating in excess of 8,000

13 pounds; (ii) that are subject to the commercial

14 distribution fee imposed under Section 3-815.1 of the

15 Illinois Vehicle Code; and (iii) that are primarily used

16 for commercial purposes. Through June 30, 2005, this

17 exemption applies to repair and replacement parts added

18 after the initial purchase of such a motor vehicle if that

19 motor vehicle is used in a manner that would qualify for

20 the rolling stock exemption otherwise provided for in this

21 Act. For purposes of this paragraph, "used for commercial

22 purposes" means the transportation of persons or property

23 in furtherance of any commercial or industrial enterprise

24 whether for-hire or not.

25 (5) a sale or transfer of machinery and equipment used

26 primarily in the process of the manufacturing or

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1 assembling, either in an existing, an expanded or a new

2 manufacturing facility, of tangible personal property for

3 wholesale or retail sale or lease, whether such sale or

4 lease is made directly by the manufacturer or by some other

5 person, whether the materials used in the process are owned

6 by the manufacturer or some other person, or whether such

7 sale or lease is made apart from or as an incident to the

8 seller's engaging in a service occupation and the

9 applicable tax is a Service Use Tax or Service Occupation

10 Tax, rather than Use Tax or Retailers' Occupation Tax. The

11 exemption provided by this paragraph (5) does not include

12 machinery and equipment used in (i) the generation of

13 electricity for wholesale or retail sale; (ii) the

14 generation or treatment of natural or artificial gas for

15 wholesale or retail sale that is delivered to customers

16 through pipes, pipelines, or mains; or (iii) the treatment

17 of water for wholesale or retail sale that is delivered to

18 customers through pipes, pipelines, or mains. The

19 provisions of this amendatory Act of the 98th General

20 Assembly are declaratory of existing law as to the meaning

21 and scope of this exemption. The exemption under this

22 paragraph (5) is exempt from the provisions of Section

23 3-75.

24 (5a) the repairing, reconditioning or remodeling, for

25 a common carrier by rail, of tangible personal property

26 which belongs to such carrier for hire, and as to which

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1 such carrier receives the physical possession of the

2 repaired, reconditioned or remodeled item of tangible

3 personal property in Illinois, and which such carrier

4 transports, or shares with another common carrier in the

5 transportation of such property, out of Illinois on a

6 standard uniform bill of lading showing the person who

7 repaired, reconditioned or remodeled the property to a

8 destination outside Illinois, for use outside Illinois.

9 (5b) a sale or transfer of tangible personal property

10 which is produced by the seller thereof on special order in

11 such a way as to have made the applicable tax the Service

12 Occupation Tax or the Service Use Tax, rather than the

13 Retailers' Occupation Tax or the Use Tax, for an interstate

14 carrier by rail which receives the physical possession of

15 such property in Illinois, and which transports such

16 property, 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 seller of the

19 property as the shipper or consignor of such property to a

20 destination outside Illinois, for use outside Illinois.

21 (6) until July 1, 2003, a sale or transfer of

22 distillation machinery and equipment, sold as a unit or kit

23 and assembled or installed by the retailer, which machinery

24 and equipment is certified by the user to be used only for

25 the production of ethyl alcohol that will be used for

26 consumption as motor fuel or as a component of motor fuel

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1 for the personal use of such user and not subject to sale

2 or resale.

3 (7) at the election of any serviceman not required to

4 be otherwise registered as a retailer under Section 2a of

5 the Retailers' Occupation Tax Act, made for each fiscal

6 year sales of service in which the aggregate annual cost

7 price of tangible personal property transferred as an

8 incident to the sales of service is less than 35%, or 75%

9 in the case of servicemen transferring prescription drugs

10 or servicemen engaged in graphic arts production, of the

11 aggregate annual total gross receipts from all sales of

12 service. The purchase of such tangible personal property by

13 the serviceman shall be subject to tax under the Retailers'

14 Occupation Tax Act and the Use Tax Act. However, if a

15 primary serviceman who has made the election described in

16 this paragraph subcontracts service work to a secondary

17 serviceman who has also made the election described in this

18 paragraph, the primary serviceman does not incur a Use Tax

19 liability if the secondary serviceman (i) has paid or will

20 pay Use Tax on his or her cost price of any tangible

21 personal property transferred to the primary serviceman

22 and (ii) certifies that fact in writing to the primary

23 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 (5) 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 (5) also

5 includes production related tangible personal property, as

6 defined in Section 3-50 of the Use Tax Act. On and after July

7 1, 2017, exemption (5) also includes graphic arts machinery and

8 equipment, as defined in paragraph (5) of Section 3-5. The

9 machinery and equipment exemption does not include machinery

10 and equipment used in (i) the generation of electricity for

11 wholesale or retail sale; (ii) the generation or treatment of

12 natural or artificial gas for wholesale or retail sale that is

13 delivered to customers through pipes, pipelines, or mains; or

14 (iii) the treatment of water for wholesale or retail sale that

15 is delivered to customers through pipes, pipelines, or mains.

16 The provisions of this amendatory Act of the 98th General

17 Assembly are declaratory of existing law as to the meaning and

18 scope of this exemption. For the purposes of exemption (5),

19 each of these terms shall have the following meanings: (1)

20 "manufacturing process" shall mean the production of any

21 article of tangible personal property, whether such article is

22 a finished product or an article for use in the process of

23 manufacturing or assembling a different article of tangible

24 personal property, by procedures commonly regarded as

25 manufacturing, processing, fabricating, or refining which

26 changes some existing material or materials into a material

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1 with a different form, use or name. In relation to a recognized

2 integrated business composed of a series of operations which

3 collectively constitute manufacturing, or individually

4 constitute manufacturing operations, the manufacturing process

5 shall be deemed to commence with the first operation or stage

6 of production in the series, and shall not be deemed to end

7 until the completion of the final product in the last operation

8 or stage of production in the series; and further, for purposes

9 of exemption (5), photoprocessing is deemed to be a

10 manufacturing process of tangible personal property for

11 wholesale or retail sale; (2) "assembling process" shall mean

12 the production of any article of tangible personal property,

13 whether such article is a finished product or an article for

14 use in the process of manufacturing or assembling a different

15 article of tangible personal property, by the combination of

16 existing materials in a manner commonly regarded as assembling

17 which results in a material of a different form, use or name;

18 (3) "machinery" shall mean major mechanical machines or major

19 components of such machines contributing to a manufacturing or

20 assembling process; and (4) "equipment" shall include any

21 independent device or tool separate from any machinery but

22 essential to an integrated manufacturing or assembly process;

23 including computers used primarily in a manufacturer's

24 computer assisted design, computer assisted manufacturing

25 (CAD/CAM) system; or any subunit or assembly comprising a

26 component of any machinery or auxiliary, adjunct or attachment

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1 parts of machinery, such as tools, dies, jigs, fixtures,

2 patterns and molds; or any parts which require periodic

3 replacement in the course of normal operation; but shall not

4 include hand tools. Equipment includes chemicals or chemicals

5 acting as catalysts but only if the chemicals or chemicals

6 acting as catalysts effect a direct and immediate change upon a

7 product being manufactured or assembled for wholesale or retail

8 sale or lease. The purchaser of such machinery and equipment

9 who has an active resale registration number shall furnish such

10 number to the seller at the time of purchase. The user of such

11 machinery and equipment and tools without an active resale

12 registration number shall prepare a certificate of exemption

13 for each transaction stating facts establishing the exemption

14 for that transaction, which certificate shall be available to

15 the Department for inspection or audit. The Department shall

16 prescribe the form of the certificate.

17 Any informal rulings, opinions or letters issued by the

18 Department in response to an inquiry or request for any opinion

19 from any person regarding the coverage and applicability of

20 exemption (5) to specific devices shall be published,

21 maintained as a public record, and made available for public

22 inspection and copying. If the informal ruling, opinion or

23 letter contains trade secrets or other confidential

24 information, where possible the Department shall delete such

25 information prior to publication. Whenever such informal

26 rulings, opinions, or letters contain any policy of general

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1 applicability, the Department shall formulate and adopt such

2 policy as a rule in accordance with the provisions of the

3 Illinois Administrative Procedure Act.

4 On and after July 1, 1987, no entity otherwise eligible

5 under exemption (3) of this Section shall make tax free

6 purchases unless it has an active exemption identification

7 number issued by the Department.

8 The purchase, employment and transfer of such tangible

9 personal property as newsprint and ink for the primary purpose

10 of conveying news (with or without other information) is not a

11 purchase, use or sale of service or of tangible personal

12 property within the meaning of this Act.

13 "Serviceman" means any person who is engaged in the

14 occupation of making sales of service.

15 "Sale at retail" means "sale at retail" as defined in the

16 Retailers' Occupation Tax Act.

17 "Supplier" means any person who makes sales of tangible

18 personal property to servicemen for the purpose of resale as an

19 incident to a sale of service.

20 "Serviceman maintaining a place of business in this State",

21 or any like term, means and includes any serviceman:

22 1. having or maintaining within this State, directly or

23 by a subsidiary, an office, distribution house, sales

24 house, warehouse or other place of business, or any agent

25 or other representative operating within this State under

26 the authority of the serviceman or its subsidiary,

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1 irrespective of whether such place of business or agent or

2 other representative is located here permanently or

3 temporarily, or whether such serviceman or subsidiary is

4 licensed to do business in this State;

5 1.1. having a contract with a person located in this

6 State under which the person, for a commission or other

7 consideration based on the sale of service by the

8 serviceman, directly or indirectly refers potential

9 customers to the serviceman by providing to the potential

10 customers a promotional code or other mechanism that allows

11 the serviceman to track purchases referred by such persons.

12 Examples of mechanisms that allow the serviceman to track

13 purchases referred by such persons include but are not

14 limited to the use of a link on the person's Internet

15 website, promotional codes distributed through the

16 person's hand-delivered or mailed material, and

17 promotional codes distributed by the person through radio

18 or other broadcast media. The provisions of this paragraph

19 1.1 shall apply only if the cumulative gross receipts from

20 sales of service by the serviceman to customers who are

21 referred to the serviceman by all persons in this State

22 under such contracts exceed $10,000 during the preceding 4

23 quarterly periods ending on the last day of March, June,

24 September, and December; a serviceman meeting the

25 requirements of this paragraph 1.1 shall be presumed to be

26 maintaining a place of business in this State but may rebut

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1 this presumption by submitting proof that the referrals or

2 other activities pursued within this State by such persons

3 were not sufficient to meet the nexus standards of the

4 United States Constitution during the preceding 4

5 quarterly periods;

6 1.2. beginning July 1, 2011, having a contract with a

7 person located in this State under which:

8 A. the serviceman sells the same or substantially

9 similar line of services as the person located in this

10 State and does so using an identical or substantially

11 similar name, trade name, or trademark as the person

12 located in this State; and

13 B. the serviceman provides a commission or other

14 consideration to the person located in this State based

15 upon the sale of services by the serviceman.

16 The provisions of this paragraph 1.2 shall apply only if

17 the cumulative gross receipts from sales of service by the

18 serviceman to customers in this State under all such

19 contracts exceed $10,000 during the preceding 4 quarterly

20 periods ending on the last day of March, June, September,

21 and December;

22 2. soliciting orders for tangible personal property by

23 means of a telecommunication or television shopping system

24 (which utilizes toll free numbers) which is intended by the

25 retailer to be broadcast by cable television or other means

26 of broadcasting, to consumers located in this State;

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1 3. pursuant to a contract with a broadcaster or

2 publisher located in this State, soliciting orders for

3 tangible personal property by means of advertising which is

4 disseminated primarily to consumers located in this State

5 and only secondarily to bordering jurisdictions;

6 4. soliciting orders for tangible personal property by

7 mail if the solicitations are substantial and recurring and

8 if the retailer benefits from any banking, financing, debt

9 collection, telecommunication, or marketing activities

10 occurring in this State or benefits from the location in

11 this State of authorized installation, servicing, or

12 repair facilities;

13 5. being owned or controlled by the same interests

14 which own or control any retailer engaging in business in

15 the same or similar line of business in this State;

16 6. having a franchisee or licensee operating under its

17 trade name if the franchisee or licensee is required to

18 collect the tax under this Section;

19 7. pursuant to a contract with a cable television

20 operator located in this State, soliciting orders for

21 tangible personal property by means of advertising which is

22 transmitted or distributed over a cable television system

23 in this State; or

24 8. engaging in activities in Illinois, which

25 activities in the state in which the supply business

26 engaging in such activities is located would constitute

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1 maintaining a place of business in that state.

2 (Source: P.A. 98-583, eff. 1-1-14; 98-1089, eff. 1-1-15.)

3 (35 ILCS 110/3-5)

4 Sec. 3-5. Exemptions. Use of the following tangible

5 personal property is exempt from the tax imposed by this Act:

6 (1) Personal property purchased from a corporation,

7 society, association, foundation, institution, or

8 organization, other than a limited liability company, that is

9 organized and operated as a not-for-profit service enterprise

10 for the benefit of persons 65 years of age or older if the

11 personal property was not purchased by the enterprise for the

12 purpose of resale by the enterprise.

13 (2) Personal property purchased by a non-profit Illinois

14 county fair association for use in conducting, operating, or

15 promoting the county fair.

16 (3) Personal property purchased by a not-for-profit arts or

17 cultural organization that establishes, by proof required by

18 the Department by rule, that it has received an exemption under

19 Section 501(c)(3) of the Internal Revenue Code and that is

20 organized and operated primarily for the presentation or

21 support of arts or cultural programming, activities, or

22 services. These organizations include, but are not limited to,

23 music and dramatic arts organizations such as symphony

24 orchestras and theatrical groups, arts and cultural service

25 organizations, local arts councils, visual arts organizations,

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1 and media arts organizations. On and after the effective date

2 of this amendatory Act of the 92nd General Assembly, however,

3 an entity otherwise eligible for this exemption shall not make

4 tax-free purchases unless it has an active identification

5 number issued by the Department.

6 (4) Legal tender, currency, medallions, or gold or silver

7 coinage issued by the State of Illinois, the government of the

8 United States of America, or the government of any foreign

9 country, and bullion.

10 (5) Until July 1, 2003 and beginning again on September 1,

11 2004 through August 30, 2014, graphic arts machinery and

12 equipment, including repair and replacement parts, both new and

13 used, and including that manufactured on special order or

14 purchased for lease, certified by the purchaser to be used

15 primarily for graphic arts production. Equipment includes

16 chemicals or chemicals acting as catalysts but only if the

17 chemicals or chemicals acting as catalysts effect a direct and

18 immediate change upon a graphic arts product.Beginning on July

19 1, 2017, graphic arts machinery and equipment is included in

20 the manufacturing and assembling machinery and equipment

21 exemption under Section 2 of this Act.

22 (6) Personal property purchased from a teacher-sponsored

23 student organization affiliated with an elementary or

24 secondary school located in Illinois.

25 (7) Farm machinery and equipment, both new and used,

26 including that manufactured on special order, certified by the

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1 purchaser to be used primarily for production agriculture or

2 State or federal agricultural programs, including individual

3 replacement parts for the machinery and equipment, including

4 machinery and equipment purchased for lease, and including

5 implements of husbandry defined in Section 1-130 of the

6 Illinois Vehicle Code, farm machinery and agricultural

7 chemical and fertilizer spreaders, and nurse wagons required to

8 be registered under Section 3-809 of the Illinois Vehicle Code,

9 but excluding other motor vehicles required to be registered

10 under the Illinois Vehicle Code. Horticultural polyhouses or

11 hoop houses used for propagating, growing, or overwintering

12 plants shall be considered farm machinery and equipment under

13 this item (7). Agricultural chemical tender tanks and dry boxes

14 shall include units sold separately from a motor vehicle

15 required to be licensed and units sold mounted on a motor

16 vehicle required to be licensed if the selling price of the

17 tender is separately stated.

18 Farm machinery and equipment shall include precision

19 farming equipment that is installed or purchased to be

20 installed on farm machinery and equipment including, but not

21 limited to, tractors, harvesters, sprayers, planters, seeders,

22 or spreaders. Precision farming equipment includes, but is not

23 limited to, soil testing sensors, computers, monitors,

24 software, global positioning and mapping systems, and other

25 such equipment.

26 Farm machinery and equipment also includes computers,

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1 sensors, software, and related equipment used primarily in the

2 computer-assisted operation of production agriculture

3 facilities, equipment, and activities such as, but not limited

4 to, the collection, monitoring, and correlation of animal and

5 crop data for the purpose of formulating animal diets and

6 agricultural chemicals. This item (7) is exempt from the

7 provisions of Section 3-75.

8 (8) Until June 30, 2013, fuel and petroleum products sold

9 to or used by an air common carrier, certified by the carrier

10 to be used for consumption, shipment, or storage in the conduct

11 of its business as an air common carrier, for a flight destined

12 for or returning from a location or locations outside the

13 United States without regard to previous or subsequent domestic

14 stopovers.

15 Beginning July 1, 2013, fuel and petroleum products sold to

16 or used by an air carrier, certified by the carrier to be used

17 for consumption, shipment, or storage in the conduct of its

18 business as an air common carrier, for a flight that (i) is

19 engaged in foreign trade or is engaged in trade between the

20 United States and any of its possessions and (ii) transports at

21 least one individual or package for hire from the city of

22 origination to the city of final destination on the same

23 aircraft, without regard to a change in the flight number of

24 that aircraft.

25 (9) Proceeds of mandatory service charges separately

26 stated on customers' bills for the purchase and consumption of

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1 food and beverages acquired as an incident to the purchase of a

2 service from a serviceman, to the extent that the proceeds of

3 the service charge are in fact turned over as tips or as a

4 substitute for tips to the employees who participate directly

5 in preparing, serving, hosting or cleaning up the food or

6 beverage function with respect to which the service charge is

7 imposed.

8 (10) Until July 1, 2003, oil field exploration, drilling,

9 and production equipment, including (i) rigs and parts of rigs,

10 rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and

11 tubular goods, including casing and drill strings, (iii) pumps

12 and pump-jack units, (iv) storage tanks and flow lines, (v) any

13 individual replacement part for oil field exploration,

14 drilling, and production equipment, and (vi) machinery and

15 equipment purchased for lease; but excluding motor vehicles

16 required to be registered under the Illinois Vehicle Code.

17 (11) Proceeds from the sale of photoprocessing machinery

18 and equipment, including repair and replacement parts, both new

19 and used, including that manufactured on special order,

20 certified by the purchaser to be used primarily for

21 photoprocessing, and including photoprocessing machinery and

22 equipment purchased for lease.

23 (12) Coal and aggregate exploration, mining, off-highway

24 hauling, processing, maintenance, and reclamation equipment,

25 including replacement parts and equipment, and including

26 equipment purchased for lease, but excluding motor vehicles

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1 required to be registered under the Illinois Vehicle Code. The

2 changes made to this Section by Public Act 97-767 apply on and

3 after July 1, 2003, but no claim for credit or refund is

4 allowed on or after August 16, 2013 (the effective date of

5 Public Act 98-456) for such taxes paid during the period

6 beginning July 1, 2003 and ending on August 16, 2013 (the

7 effective date of Public Act 98-456).

8 (13) Semen used for artificial insemination of livestock

9 for direct agricultural production.

10 (14) Horses, or interests in horses, registered with and

11 meeting the requirements of any of the Arabian Horse Club

12 Registry of America, Appaloosa Horse Club, American Quarter

13 Horse Association, United States Trotting Association, or

14 Jockey Club, as appropriate, used for purposes of breeding or

15 racing for prizes. This item (14) is exempt from the provisions

16 of Section 3-75, and the exemption provided for under this item

17 (14) applies for all periods beginning May 30, 1995, but no

18 claim for credit or refund is allowed on or after the effective

19 date of this amendatory Act of the 95th General Assembly for

20 such taxes paid during the period beginning May 30, 2000 and

21 ending on the effective date of this amendatory Act of the 95th

22 General Assembly.

23 (15) Computers and communications equipment utilized for

24 any hospital purpose and equipment used in the diagnosis,

25 analysis, or treatment of hospital patients purchased by a

26 lessor who leases the equipment, under a lease of one year or

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1 longer executed or in effect at the time the lessor would

2 otherwise be subject to the tax imposed by this Act, to a

3 hospital that has been issued an active tax exemption

4 identification number by the Department under Section 1g of the

5 Retailers' Occupation Tax Act. If the equipment is leased in a

6 manner that does not qualify for this exemption or is used in

7 any other non-exempt manner, the lessor shall be liable for the

8 tax imposed under this Act or the Use Tax Act, as the case may

9 be, based on the fair market value of the property at the time

10 the non-qualifying use occurs. No lessor shall collect or

11 attempt to collect an amount (however designated) that purports

12 to reimburse that lessor for the tax imposed by this Act or the

13 Use Tax Act, as the case may be, if the tax has not been paid by

14 the lessor. If a lessor improperly collects any such amount

15 from the lessee, the lessee shall have a legal right to claim a

16 refund of that amount from the lessor. If, however, that amount

17 is not refunded to the lessee for any reason, the lessor is

18 liable to pay that amount to the Department.

19 (16) Personal property purchased by a lessor who leases the

20 property, under a lease of one year or longer executed or in

21 effect at the time the lessor would otherwise be subject to the

22 tax imposed by this Act, to a governmental body that has been

23 issued an active tax exemption identification number by the

24 Department under Section 1g of the Retailers' Occupation Tax

25 Act. If the property is leased in a manner that does not

26 qualify for this exemption or is used in any other non-exempt

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1 manner, the lessor shall be liable for the tax imposed under

2 this Act or the Use Tax Act, as the case may be, based on the

3 fair market value of the property at the time the

4 non-qualifying use occurs. No lessor shall collect or attempt

5 to collect an amount (however designated) that purports to

6 reimburse that lessor for the tax imposed by this Act or the

7 Use Tax Act, as the case may be, if the tax has not been paid by

8 the lessor. If a lessor improperly collects any such amount

9 from the lessee, the lessee shall have a legal right to claim a

10 refund of that amount from the lessor. If, however, that amount

11 is not refunded to the lessee for any reason, the lessor is

12 liable to pay that amount to the Department.

13 (17) Beginning with taxable years ending on or after

14 December 31, 1995 and ending with taxable years ending on or

15 before December 31, 2004, personal property that is donated for

16 disaster relief to be used in a State or federally declared

17 disaster area in Illinois or bordering Illinois by a

18 manufacturer or retailer that is registered in this State to a

19 corporation, society, association, foundation, or institution

20 that has been issued a sales tax exemption identification

21 number by the Department that assists victims of the disaster

22 who reside within the declared disaster area.

23 (18) Beginning with taxable years ending on or after

24 December 31, 1995 and ending with taxable years ending on or

25 before December 31, 2004, personal property that is used in the

26 performance of infrastructure repairs in this State, including

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1 but not limited to municipal roads and streets, access roads,

2 bridges, sidewalks, waste disposal systems, water and sewer

3 line extensions, water distribution and purification

4 facilities, storm water drainage and retention facilities, and

5 sewage treatment facilities, resulting from a State or

6 federally declared disaster in Illinois or bordering Illinois

7 when such repairs are initiated on facilities located in the

8 declared disaster area within 6 months after the disaster.

9 (19) Beginning July 1, 1999, game or game birds purchased

10 at a "game breeding and hunting preserve area" as that term is

11 used in the Wildlife Code. This paragraph is exempt from the

12 provisions of Section 3-75.

13 (20) A motor vehicle, as that term is defined in Section

14 1-146 of the Illinois Vehicle Code, that is donated to a

15 corporation, limited liability company, society, association,

16 foundation, or institution that is determined by the Department

17 to be organized and operated exclusively for educational

18 purposes. For purposes of this exemption, "a corporation,

19 limited liability company, society, association, foundation,

20 or institution organized and operated exclusively for

21 educational purposes" means all tax-supported public schools,

22 private schools that offer systematic instruction in useful

23 branches of learning by methods common to public schools and

24 that compare favorably in their scope and intensity with the

25 course of study presented in tax-supported schools, and

26 vocational or technical schools or institutes organized and

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1 operated exclusively to provide a course of study of not less

2 than 6 weeks duration and designed to prepare individuals to

3 follow a trade or to pursue a manual, technical, mechanical,

4 industrial, business, or commercial occupation.

5 (21) Beginning January 1, 2000, personal property,

6 including food, purchased through fundraising events for the

7 benefit of a public or private elementary or secondary school,

8 a group of those schools, or one or more school districts if

9 the events are sponsored by an entity recognized by the school

10 district that consists primarily of volunteers and includes

11 parents and teachers of the school children. This paragraph

12 does not apply to fundraising events (i) for the benefit of

13 private home instruction or (ii) for which the fundraising

14 entity purchases the personal property sold at the events from

15 another individual or entity that sold the property for the

16 purpose of resale by the fundraising entity and that profits

17 from the sale to the fundraising entity. This paragraph is

18 exempt from the provisions of Section 3-75.

19 (22) Beginning January 1, 2000 and through December 31,

20 2001, new or used automatic vending machines that prepare and

21 serve hot food and beverages, including coffee, soup, and other

22 items, and replacement parts for these machines. Beginning

23 January 1, 2002 and through June 30, 2003, machines and parts

24 for machines used in commercial, coin-operated amusement and

25 vending business if a use or occupation tax is paid on the

26 gross receipts derived from the use of the commercial,

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1 coin-operated amusement and vending machines. This paragraph

2 is exempt from the provisions of Section 3-75.

3 (23) Beginning August 23, 2001 and through June 30, 2016,

4 food for human consumption that is to be consumed off the

5 premises where it is sold (other than alcoholic beverages, soft

6 drinks, and food that has been prepared for immediate

7 consumption) and prescription and nonprescription medicines,

8 drugs, medical appliances, and insulin, urine testing

9 materials, syringes, and needles used by diabetics, for human

10 use, when purchased for use by a person receiving medical

11 assistance under Article V of the Illinois Public Aid Code who

12 resides in a licensed long-term care facility, as defined in

13 the Nursing Home Care Act, or in a licensed facility as defined

14 in the ID/DD Community Care Act, the MC/DD Act, or the

15 Specialized Mental Health Rehabilitation Act of 2013.

16 (24) Beginning on the effective date of this amendatory Act

17 of the 92nd General Assembly, computers and communications

18 equipment utilized for any hospital purpose and equipment used

19 in the diagnosis, analysis, or treatment of hospital patients

20 purchased by a lessor who leases the equipment, under a lease

21 of one year or longer executed or in effect at the time the

22 lessor would otherwise be subject to the tax imposed by this

23 Act, to a hospital that has been issued an active tax exemption

24 identification number by the Department under Section 1g of the

25 Retailers' Occupation Tax Act. If the equipment is leased in a

26 manner that does not qualify for this exemption or is used in

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1 any other nonexempt manner, the lessor shall be liable for the

2 tax imposed under this Act or the Use Tax Act, as the case may

3 be, based on the fair market value of the property at the time

4 the nonqualifying use occurs. No lessor shall collect or

5 attempt to collect an amount (however designated) that purports

6 to reimburse that lessor for the tax imposed by this Act or the

7 Use Tax Act, as the case may be, if the tax has not been paid by

8 the lessor. If a lessor improperly collects any such amount

9 from the lessee, the lessee shall have a legal right to claim a

10 refund of that amount from the lessor. If, however, that amount

11 is not refunded to the lessee for any reason, the lessor is

12 liable to pay that amount to the Department. This paragraph is

13 exempt from the provisions of Section 3-75.

14 (25) Beginning on the effective date of this amendatory Act

15 of the 92nd General Assembly, personal property purchased by a

16 lessor who leases the property, under a lease of one year or

17 longer executed or in effect at the time the lessor would

18 otherwise be subject to the tax imposed by this Act, to a

19 governmental body that has been issued an active tax exemption

20 identification number by the Department under Section 1g of the

21 Retailers' Occupation Tax Act. If the property is leased in a

22 manner that does not qualify for this exemption or is used in

23 any other nonexempt manner, the lessor shall be liable for the

24 tax imposed under this Act or the Use Tax Act, as the case may

25 be, based on the fair market value of the property at the time

26 the nonqualifying use occurs. No lessor shall collect or

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1 attempt to collect an amount (however designated) that purports

2 to reimburse that lessor for the tax imposed by this Act or the

3 Use Tax Act, as the case may be, if the tax has not been paid by

4 the lessor. If a lessor improperly collects any such amount

5 from the lessee, the lessee shall have a legal right to claim a

6 refund of that amount from the lessor. If, however, that amount

7 is not refunded to the lessee for any reason, the lessor is

8 liable to pay that amount to the Department. This paragraph is

9 exempt from the provisions of Section 3-75.

10 (26) Beginning January 1, 2008, tangible personal property

11 used in the construction or maintenance of a community water

12 supply, as defined under Section 3.145 of the Environmental

13 Protection Act, that is operated by a not-for-profit

14 corporation that holds a valid water supply permit issued under

15 Title IV of the Environmental Protection Act. This paragraph is

16 exempt from the provisions of Section 3-75.

17 (27) Beginning January 1, 2010, materials, parts,

18 equipment, components, and furnishings incorporated into or

19 upon an aircraft as part of the modification, refurbishment,

20 completion, replacement, repair, or maintenance of the

21 aircraft. This exemption includes consumable supplies used in

22 the modification, refurbishment, completion, replacement,

23 repair, and maintenance of aircraft, but excludes any

24 materials, parts, equipment, components, and consumable

25 supplies used in the modification, replacement, repair, and

26 maintenance of aircraft engines or power plants, whether such

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1 engines or power plants are installed or uninstalled upon any

2 such aircraft. "Consumable supplies" include, but are not

3 limited to, adhesive, tape, sandpaper, general purpose

4 lubricants, cleaning solution, latex gloves, and protective

5 films. This exemption applies only to the use of qualifying

6 tangible personal property transferred incident to the

7 modification, refurbishment, completion, replacement, repair,

8 or maintenance of aircraft by persons who (i) hold an Air

9 Agency Certificate and are empowered to operate an approved

10 repair station by the Federal Aviation Administration, (ii)

11 have a Class IV Rating, and (iii) conduct operations in

12 accordance with Part 145 of the Federal Aviation Regulations.

13 The exemption does not include aircraft operated by a

14 commercial air carrier providing scheduled passenger air

15 service pursuant to authority issued under Part 121 or Part 129

16 of the Federal Aviation Regulations. The changes made to this

17 paragraph (27) by Public Act 98-534 are declarative of existing

18 law.

19 (28) Tangible personal property purchased by a

20 public-facilities corporation, as described in Section

21 11-65-10 of the Illinois Municipal Code, for purposes of

22 constructing or furnishing a municipal convention hall, but

23 only if the legal title to the municipal convention hall is

24 transferred to the municipality without any further

25 consideration by or on behalf of the municipality at the time

26 of the completion of the municipal convention hall or upon the

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1 retirement or redemption of any bonds or other debt instruments

2 issued by the public-facilities corporation in connection with

3 the development of the municipal convention hall. This

4 exemption includes existing public-facilities corporations as

5 provided in Section 11-65-25 of the Illinois Municipal Code.

6 This paragraph is exempt from the provisions of Section 3-75.

7 (29) Beginning January 1, 2017, menstrual pads, tampons,

8 and menstrual cups.

9 (Source: P.A. 98-104, eff. 7-22-13; 98-422, eff. 8-16-13;

10 98-456, eff. 8-16-13; 98-534, eff. 8-23-13; 98-756, eff.

11 7-16-14; 99-180, eff. 7-29-15; 99-855, eff. 8-19-16.)

12 Section 30-30. The Service Occupation Tax Act is amended by

13 changing Sections 2 and 3-5 as follows:

14 (35 ILCS 115/2) (from Ch. 120, par. 439.102)

15 Sec. 2. "Transfer" means any transfer of the title to

16 property or of the ownership of property whether or not the

17 transferor retains title as security for the payment of amounts

18 due him from the transferee.

19 "Cost Price" means the consideration paid by the serviceman

20 for a purchase valued in money, whether paid in money or

21 otherwise, including cash, credits and services, and shall be

22 determined without any deduction on account of the supplier's

23 cost of the property sold or on account of any other expense

24 incurred by the supplier. When a serviceman contracts out part

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1 or all of the services required in his sale of service, it

2 shall be presumed that the cost price to the serviceman of the

3 property transferred to him by his or her subcontractor is

4 equal to 50% of the subcontractor's charges to the serviceman

5 in the absence of proof of the consideration paid by the

6 subcontractor for the purchase of such property.

7 "Department" means the Department of Revenue.

8 "Person" means any natural individual, firm, partnership,

9 association, joint stock company, joint venture, public or

10 private corporation, limited liability company, and any

11 receiver, executor, trustee, guardian or other representative

12 appointed by order of any court.

13 "Sale of Service" means any transaction except:

14 (a) A retail sale of tangible personal property taxable

15 under the Retailers' Occupation Tax Act or under the Use Tax

16 Act.

17 (b) A sale of tangible personal property for the purpose of

18 resale made in compliance with Section 2c of the Retailers'

19 Occupation Tax Act.

20 (c) Except as hereinafter provided, a sale or transfer of

21 tangible personal property as an incident to the rendering of

22 service for or by any governmental body or for or by any

23 corporation, society, association, foundation or institution

24 organized and operated exclusively for charitable, religious

25 or educational purposes or any not-for-profit corporation,

26 society, association, foundation, institution or organization

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1 which has no compensated officers or employees and which is

2 organized and operated primarily for the recreation of persons

3 55 years of age or older. A limited liability company may

4 qualify for the exemption under this paragraph only if the

5 limited liability company is organized and operated

6 exclusively for educational purposes.

7 (d) A sale or transfer of tangible personal property as an

8 incident to the rendering of service for interstate carriers

9 for hire for use as rolling stock moving in interstate commerce

10 or lessors under leases of one year or longer, executed or in

11 effect at the time of purchase, to interstate carriers for hire

12 for use as rolling stock moving in interstate commerce, and

13 equipment operated by a telecommunications provider, licensed

14 as a common carrier by the Federal Communications Commission,

15 which is permanently installed in or affixed to aircraft moving

16 in interstate commerce.

17 (d-1) A sale or transfer of tangible personal property as

18 an incident to the rendering of service for owners, lessors or

19 shippers of tangible personal property which is utilized by

20 interstate carriers for hire for use as rolling stock moving in

21 interstate commerce, and equipment operated by a

22 telecommunications provider, licensed as a common carrier by

23 the Federal Communications Commission, which is permanently

24 installed in or affixed to aircraft moving in interstate

25 commerce.

26 (d-1.1) On and after July 1, 2003 and through June 30,

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1 2004, a sale or transfer of a motor vehicle of the second

2 division with a gross vehicle weight in excess of 8,000 pounds

3 as an incident to the rendering of service if that motor

4 vehicle is subject to the commercial distribution fee imposed

5 under Section 3-815.1 of the Illinois Vehicle Code. Beginning

6 on July 1, 2004 and through June 30, 2005, the use in this

7 State of motor vehicles of the second division: (i) with a

8 gross vehicle weight rating in excess of 8,000 pounds; (ii)

9 that are subject to the commercial distribution fee imposed

10 under Section 3-815.1 of the Illinois Vehicle Code; and (iii)

11 that are primarily used for commercial purposes. Through June

12 30, 2005, this exemption applies to repair and replacement

13 parts added after the initial purchase of such a motor vehicle

14 if that motor vehicle is used in a manner that would qualify

15 for the rolling stock exemption otherwise provided for in this

16 Act. For purposes of this paragraph, "used for commercial

17 purposes" means the transportation of persons or property in

18 furtherance of any commercial or industrial enterprise whether

19 for-hire or not.

20 (d-2) The repairing, reconditioning or remodeling, for a

21 common carrier by rail, of tangible personal property which

22 belongs to such carrier for hire, and as to which such carrier

23 receives the physical possession of the repaired,

24 reconditioned or remodeled item of tangible personal property

25 in Illinois, and which such carrier transports, or shares with

26 another common carrier in the transportation of such property,

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1 out of Illinois on a standard uniform bill of lading showing

2 the person who repaired, reconditioned or remodeled the

3 property as the shipper or consignor of such property to a

4 destination outside Illinois, for use outside Illinois.

5 (d-3) A sale or transfer of tangible personal property

6 which is produced by the seller thereof on special order in

7 such a way as to have made the applicable tax the Service

8 Occupation Tax or the Service Use Tax, rather than the

9 Retailers' Occupation Tax or the Use Tax, for an interstate

10 carrier by rail which receives the physical possession of such

11 property in Illinois, and which transports such property, or

12 shares with another common carrier in the transportation of

13 such property, out of Illinois on a standard uniform bill of

14 lading showing the seller of the property as the shipper or

15 consignor of such property to a destination outside Illinois,

16 for use outside Illinois.

17 (d-4) Until January 1, 1997, a sale, by a registered

18 serviceman paying tax under this Act to the Department, of

19 special order printed materials delivered outside Illinois and

20 which are not returned to this State, if delivery is made by

21 the seller or agent of the seller, including an agent who

22 causes the product to be delivered outside Illinois by a common

23 carrier or the U.S. postal service.

24 (e) A sale or transfer of machinery and equipment used

25 primarily in the process of the manufacturing or assembling,

26 either in an existing, an expanded or a new manufacturing

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1 facility, of tangible personal property for wholesale or retail

2 sale or lease, whether such sale or lease is made directly by

3 the manufacturer or by some other person, whether the materials

4 used in the process are owned by the manufacturer or some other

5 person, or whether such sale or lease is made apart from or as

6 an incident to the seller's engaging in a service occupation

7 and the applicable tax is a Service Occupation Tax or Service

8 Use Tax, rather than Retailers' Occupation Tax or Use Tax. The

9 exemption provided by this paragraph (e) does not include

10 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. The

19 exemption under this subsection (e) is exempt from the

20 provisions of Section 3-75.

21 (f) Until July 1, 2003, the sale or transfer of

22 distillation machinery and equipment, sold as a unit or kit and

23 assembled or installed by the retailer, which machinery and

24 equipment is certified by the user to be used only for the

25 production of ethyl alcohol that will be used for consumption

26 as motor fuel or as a component of motor fuel for the personal

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1 use of such user and not subject to sale or resale.

2 (g) At the election of any serviceman not required to be

3 otherwise registered as a retailer under Section 2a of the

4 Retailers' Occupation Tax Act, made for each fiscal year sales

5 of service in which the aggregate annual cost price of tangible

6 personal property transferred as an incident to the sales of

7 service is less than 35% (75% in the case of servicemen

8 transferring prescription drugs or servicemen engaged in

9 graphic arts production) of the aggregate annual total gross

10 receipts from all sales of service. The purchase of such

11 tangible personal property by the serviceman shall be subject

12 to tax under the Retailers' Occupation Tax Act and the Use Tax

13 Act. However, if a primary serviceman who has made the election

14 described in this paragraph subcontracts service work to a

15 secondary serviceman who has also made the election described

16 in this paragraph, the primary serviceman does not incur a Use

17 Tax liability if the secondary serviceman (i) has paid or will

18 pay Use Tax on his or her cost price of any tangible personal

19 property transferred to the primary serviceman and (ii)

20 certifies that fact in writing to the primary serviceman.

21 Tangible personal property transferred incident to the

22 completion of a maintenance agreement is exempt from the tax

23 imposed pursuant to this Act.

24 Exemption (e) also includes machinery and equipment used in

25 the general maintenance or repair of such exempt machinery and

26 equipment or for in-house manufacture of exempt machinery and

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1 equipment.On and after July 1, 2017, exemption (e) also

2 includes production related tangible personal property, as

3 defined in Section 2-45 of the Retailers' Occupation Tax Act.

4 On and after July 1, 2017, exemption (e) also includes graphic

5 arts machinery and equipment, as defined in paragraph (5) of

6 Section 3-5. The machinery and equipment exemption does not

7 include machinery and equipment used in (i) the generation of

8 electricity for wholesale or retail sale; (ii) the generation

9 or treatment of natural or artificial gas for wholesale or

10 retail sale that is delivered to customers through pipes,

11 pipelines, or mains; or (iii) the treatment of water for

12 wholesale or retail sale that is delivered to customers through

13 pipes, pipelines, or mains. The provisions of this amendatory

14 Act of the 98th General Assembly are declaratory of existing

15 law as to the meaning and scope of this exemption. For the

16 purposes of exemption (e), each of these terms shall have the

17 following meanings: (1) "manufacturing process" shall mean the

18 production of any article of tangible personal property,

19 whether such article is a finished product or an article for

20 use in the process of manufacturing or assembling a different

21 article of tangible personal property, by procedures commonly

22 regarded as manufacturing, processing, fabricating, or

23 refining which changes some existing material or materials into

24 a material with a different form, use or name. In relation to a

25 recognized integrated business composed of a series of

26 operations which collectively constitute manufacturing, or

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1 individually constitute manufacturing operations, the

2 manufacturing process shall be deemed to commence with the

3 first operation or stage of production in the series, and shall

4 not be deemed to end until the completion of the final product

5 in the last operation or stage of production in the series; and

6 further for purposes of exemption (e), photoprocessing is

7 deemed to be a manufacturing process of tangible personal

8 property for wholesale or retail sale; (2) "assembling process"

9 shall mean the production of any article of tangible personal

10 property, whether such article is a finished product or an

11 article for use in the process of manufacturing or assembling a

12 different article of tangible personal property, by the

13 combination of existing materials in a manner commonly regarded

14 as assembling which results in a material of a different form,

15 use or name; (3) "machinery" shall mean major mechanical

16 machines or major components of such machines contributing to a

17 manufacturing or assembling process; and (4) "equipment" shall

18 include any independent device or tool separate from any

19 machinery but essential to an integrated manufacturing or

20 assembly process; including computers used primarily in a

21 manufacturer's computer assisted design, computer assisted

22 manufacturing (CAD/CAM) system; or any subunit or assembly

23 comprising a component of any machinery or auxiliary, adjunct

24 or attachment parts of machinery, such as tools, dies, jigs,

25 fixtures, patterns and molds; or any parts which require

26 periodic replacement in the course of normal operation; but

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1 shall not include hand tools. Equipment includes chemicals or

2 chemicals acting as catalysts but only if the chemicals or

3 chemicals acting as catalysts effect a direct and immediate

4 change upon a product being manufactured or assembled for

5 wholesale or retail sale or lease. The purchaser of such

6 machinery and equipment who has an active resale registration

7 number shall furnish such number to the seller at the time of

8 purchase. The purchaser of such machinery and equipment and

9 tools without an active resale registration number shall

10 furnish to the seller a certificate of exemption for each

11 transaction stating facts establishing the exemption for that

12 transaction, which certificate shall be available to the

13 Department for inspection or audit.

14 Except as provided in Section 2d of this Act, the rolling

15 stock exemption applies to rolling stock used by an interstate

16 carrier for hire, even just between points in Illinois, if such

17 rolling stock transports, for hire, persons whose journeys or

18 property whose shipments originate or terminate outside

19 Illinois.

20 Any informal rulings, opinions or letters issued by the

21 Department in response to an inquiry or request for any opinion

22 from any person regarding the coverage and applicability of

23 exemption (e) to specific devices shall be published,

24 maintained as a public record, and made available for public

25 inspection and copying. If the informal ruling, opinion or

26 letter contains trade secrets or other confidential

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1 information, where possible the Department shall delete such

2 information prior to publication. Whenever such informal

3 rulings, opinions, or letters contain any policy of general

4 applicability, the Department shall formulate and adopt such

5 policy as a rule in accordance with the provisions of the

6 Illinois Administrative Procedure Act.

7 On and after July 1, 1987, no entity otherwise eligible

8 under exemption (c) of this Section shall make tax free

9 purchases unless it has an active exemption identification

10 number issued by the Department.

11 "Serviceman" means any person who is engaged in the

12 occupation of making sales of service.

13 "Sale at Retail" means "sale at retail" as defined in the

14 Retailers' Occupation Tax Act.

15 "Supplier" means any person who makes sales of tangible

16 personal property to servicemen for the purpose of resale as an

17 incident to a sale of service.

18 (Source: P.A. 98-583, eff. 1-1-14.)

19 (35 ILCS 115/3-5)

20 Sec. 3-5. Exemptions. The following tangible personal

21 property is exempt from the tax imposed by this Act:

22 (1) Personal property sold by a corporation, society,

23 association, foundation, institution, or organization, other

24 than a limited liability company, that is organized and

25 operated as a not-for-profit service enterprise for the benefit

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1 of persons 65 years of age or older if the personal property

2 was not purchased by the enterprise for the purpose of resale

3 by the enterprise.

4 (2) Personal property purchased by a not-for-profit

5 Illinois county fair association for use in conducting,

6 operating, or promoting the county fair.

7 (3) Personal property purchased by any not-for-profit arts

8 or cultural organization that establishes, by proof required by

9 the Department by rule, that it has received an exemption under

10 Section 501(c)(3) of the Internal Revenue Code and that is

11 organized and operated primarily for the presentation or

12 support of arts or cultural programming, activities, or

13 services. These organizations include, but are not limited to,

14 music and dramatic arts organizations such as symphony

15 orchestras and theatrical groups, arts and cultural service

16 organizations, local arts councils, visual arts organizations,

17 and media arts organizations. On and after the effective date

18 of this amendatory Act of the 92nd General Assembly, however,

19 an entity otherwise eligible for this exemption shall not make

20 tax-free purchases unless it has an active identification

21 number issued by the Department.

22 (4) Legal tender, currency, medallions, or gold or silver

23 coinage issued by the State of Illinois, the government of the

24 United States of America, or the government of any foreign

25 country, and bullion.

26 (5) Until July 1, 2003 and beginning again on September 1,

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1 2004 through August 30, 2014, graphic arts machinery and

2 equipment, including repair and replacement parts, both new and

3 used, and including that manufactured on special order or

4 purchased for lease, certified by the purchaser to be used

5 primarily for graphic arts production. Equipment includes

6 chemicals or chemicals acting as catalysts but only if the

7 chemicals or chemicals acting as catalysts effect a direct and

8 immediate change upon a graphic arts product.Beginning on July

9 1, 2017, graphic arts machinery and equipment is included in

10 the manufacturing and assembling machinery and equipment

11 exemption under Section 2 of this Act.

12 (6) Personal property sold by a teacher-sponsored student

13 organization affiliated with an elementary or secondary school

14 located in Illinois.

15 (7) Farm machinery and equipment, both new and used,

16 including that manufactured on special order, certified by the

17 purchaser to be used primarily for production agriculture or

18 State or federal agricultural programs, including individual

19 replacement parts for the machinery and equipment, including

20 machinery and equipment purchased for lease, and including

21 implements of husbandry defined in Section 1-130 of the

22 Illinois Vehicle Code, farm machinery and agricultural

23 chemical and fertilizer spreaders, and nurse wagons required to

24 be registered under Section 3-809 of the Illinois Vehicle Code,

25 but excluding other motor vehicles required to be registered

26 under the Illinois Vehicle Code. Horticultural polyhouses or

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1 hoop houses used for propagating, growing, or overwintering

2 plants shall be considered farm machinery and equipment under

3 this item (7). Agricultural chemical tender tanks and dry boxes

4 shall include units sold separately from a motor vehicle

5 required to be licensed and units sold mounted on a motor

6 vehicle required to be licensed if the selling price of the

7 tender is separately stated.

8 Farm machinery and equipment shall include precision

9 farming equipment that is installed or purchased to be

10 installed on farm machinery and equipment including, but not

11 limited to, tractors, harvesters, sprayers, planters, seeders,

12 or spreaders. Precision farming equipment includes, but is not

13 limited to, soil testing sensors, computers, monitors,

14 software, global positioning and mapping systems, and other

15 such equipment.

16 Farm machinery and equipment also includes computers,

17 sensors, software, and related equipment used primarily in the

18 computer-assisted operation of production agriculture

19 facilities, equipment, and activities such as, but not limited

20 to, the collection, monitoring, and correlation of animal and

21 crop data for the purpose of formulating animal diets and

22 agricultural chemicals. This item (7) is exempt from the

23 provisions of Section 3-55.

24 (8) Until June 30, 2013, fuel and petroleum products sold

25 to or used by an air common carrier, certified by the carrier

26 to be used for consumption, shipment, or storage in the conduct

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1 of its business as an air common carrier, for a flight destined

2 for or returning from a location or locations outside the

3 United States without regard to previous or subsequent domestic

4 stopovers.

5 Beginning July 1, 2013, fuel and petroleum products sold to

6 or used by an air carrier, certified by the carrier to be used

7 for consumption, shipment, or storage in the conduct of its

8 business as an air common carrier, for a flight that (i) is

9 engaged in foreign trade or is engaged in trade between the

10 United States and any of its possessions and (ii) transports at

11 least one individual or package for hire from the city of

12 origination to the city of final destination on the same

13 aircraft, without regard to a change in the flight number of

14 that aircraft.

15 (9) Proceeds of mandatory service charges separately

16 stated on customers' bills for the purchase and consumption of

17 food and beverages, to the extent that the proceeds of the

18 service charge are in fact turned over as tips or as a

19 substitute for tips to the employees who participate directly

20 in preparing, serving, hosting or cleaning up the food or

21 beverage function with respect to which the service charge is

22 imposed.

23 (10) Until July 1, 2003, oil field exploration, drilling,

24 and production equipment, including (i) rigs and parts of rigs,

25 rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and

26 tubular goods, including casing and drill strings, (iii) pumps

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1 and pump-jack units, (iv) storage tanks and flow lines, (v) any

2 individual replacement part for oil field exploration,

3 drilling, and production equipment, and (vi) machinery and

4 equipment purchased for lease; but excluding motor vehicles

5 required to be registered under the Illinois Vehicle Code.

6 (11) Photoprocessing machinery and equipment, including

7 repair and replacement parts, both new and used, including that

8 manufactured on special order, certified by the purchaser to be

9 used primarily for photoprocessing, and including

10 photoprocessing machinery and equipment purchased for lease.

11 (12) Coal and aggregate exploration, mining, off-highway

12 hauling, processing, maintenance, and reclamation equipment,

13 including replacement parts and equipment, and including

14 equipment purchased for lease, but excluding motor vehicles

15 required to be registered under the Illinois Vehicle Code. The

16 changes made to this Section by Public Act 97-767 apply on and

17 after July 1, 2003, but no claim for credit or refund is

18 allowed on or after August 16, 2013 (the effective date of

19 Public Act 98-456) for such taxes paid during the period

20 beginning July 1, 2003 and ending on August 16, 2013 (the

21 effective date of Public Act 98-456).

22 (13) Beginning January 1, 1992 and through June 30, 2016,

23 food for human consumption that is to be consumed off the

24 premises where it is sold (other than alcoholic beverages, soft

25 drinks and food that has been prepared for immediate

26 consumption) and prescription and non-prescription medicines,

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1 drugs, medical appliances, and insulin, urine testing

2 materials, syringes, and needles used by diabetics, for human

3 use, when purchased for use by a person receiving medical

4 assistance under Article V of the Illinois Public Aid Code who

5 resides in a licensed long-term care facility, as defined in

6 the Nursing Home Care Act, or in a licensed facility as defined

7 in the ID/DD Community Care Act, the MC/DD Act, or the

8 Specialized Mental Health Rehabilitation Act of 2013.

9 (14) Semen used for artificial insemination of livestock

10 for direct agricultural production.

11 (15) Horses, or interests in horses, registered with and

12 meeting the requirements of any of the Arabian Horse Club

13 Registry of America, Appaloosa Horse Club, American Quarter

14 Horse Association, United States Trotting Association, or

15 Jockey Club, as appropriate, used for purposes of breeding or

16 racing for prizes. This item (15) is exempt from the provisions

17 of Section 3-55, and the exemption provided for under this item

18 (15) applies for all periods beginning May 30, 1995, but no

19 claim for credit or refund is allowed on or after January 1,

20 2008 (the effective date of Public Act 95-88) for such taxes

21 paid during the period beginning May 30, 2000 and ending on

22 January 1, 2008 (the effective date of Public Act 95-88).

23 (16) Computers and communications equipment utilized for

24 any hospital purpose and equipment used in the diagnosis,

25 analysis, or treatment of hospital patients sold to a lessor

26 who leases the equipment, under a lease of one year or longer

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1 executed or in effect at the time of the purchase, to a

2 hospital that has been issued an active tax exemption

3 identification number by the Department under Section 1g of the

4 Retailers' Occupation Tax Act.

5 (17) Personal property sold to a lessor who leases the

6 property, under a lease of one year or longer executed or in

7 effect at the time of the purchase, to a governmental body that

8 has been issued an active tax exemption identification number

9 by the Department under Section 1g of the Retailers' Occupation

10 Tax Act.

11 (18) Beginning with taxable years ending on or after

12 December 31, 1995 and ending with taxable years ending on or

13 before December 31, 2004, personal property that is donated for

14 disaster relief to be used in a State or federally declared

15 disaster area in Illinois or bordering Illinois by a

16 manufacturer or retailer that is registered in this State to a

17 corporation, society, association, foundation, or institution

18 that has been issued a sales tax exemption identification

19 number by the Department that assists victims of the disaster

20 who reside within the declared disaster area.

21 (19) Beginning with taxable years ending on or after

22 December 31, 1995 and ending with taxable years ending on or

23 before December 31, 2004, personal property that is used in the

24 performance of infrastructure repairs in this State, including

25 but not limited to municipal roads and streets, access roads,

26 bridges, sidewalks, waste disposal systems, water and sewer

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1 line extensions, water distribution and purification

2 facilities, storm water drainage and retention facilities, and

3 sewage treatment facilities, resulting from a State or

4 federally declared disaster in Illinois or bordering Illinois

5 when such repairs are initiated on facilities located in the

6 declared disaster area within 6 months after the disaster.

7 (20) Beginning July 1, 1999, game or game birds sold at a

8 "game breeding and hunting preserve area" as that term is used

9 in the Wildlife Code. This paragraph is exempt from the

10 provisions of Section 3-55.

11 (21) A motor vehicle, as that term is defined in Section

12 1-146 of the Illinois Vehicle Code, that is donated to a

13 corporation, limited liability company, society, association,

14 foundation, or institution that is determined by the Department

15 to be organized and operated exclusively for educational

16 purposes. For purposes of this exemption, "a corporation,

17 limited liability company, society, association, foundation,

18 or institution organized and operated exclusively for

19 educational purposes" means all tax-supported public schools,

20 private schools that offer systematic instruction in useful

21 branches of learning by methods common to public schools and

22 that compare favorably in their scope and intensity with the

23 course of study presented in tax-supported schools, and

24 vocational or technical schools or institutes organized and

25 operated exclusively to provide a course of study of not less

26 than 6 weeks duration and designed to prepare individuals to

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1 follow a trade or to pursue a manual, technical, mechanical,

2 industrial, business, or commercial occupation.

3 (22) Beginning January 1, 2000, personal property,

4 including food, purchased through fundraising events for the

5 benefit of a public or private elementary or secondary school,

6 a group of those schools, or one or more school districts if

7 the events are sponsored by an entity recognized by the school

8 district that consists primarily of volunteers and includes

9 parents and teachers of the school children. This paragraph

10 does not apply to fundraising events (i) for the benefit of

11 private home instruction or (ii) for which the fundraising

12 entity purchases the personal property sold at the events from

13 another individual or entity that sold the property for the

14 purpose of resale by the fundraising entity and that profits

15 from the sale to the fundraising entity. This paragraph is

16 exempt from the provisions of Section 3-55.

17 (23) Beginning January 1, 2000 and through December 31,

18 2001, new or used automatic vending machines that prepare and

19 serve hot food and beverages, including coffee, soup, and other

20 items, and replacement parts for these machines. Beginning

21 January 1, 2002 and through June 30, 2003, machines and parts

22 for machines used in commercial, coin-operated amusement and

23 vending business if a use or occupation tax is paid on the

24 gross receipts derived from the use of the commercial,

25 coin-operated amusement and vending machines. This paragraph

26 is exempt from the provisions of Section 3-55.

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1 (24) Beginning on the effective date of this amendatory Act

2 of the 92nd General Assembly, computers and communications

3 equipment utilized for any hospital purpose and equipment used

4 in the diagnosis, analysis, or treatment of hospital patients

5 sold to a lessor who leases the equipment, under a lease of one

6 year or longer executed or in effect at the time of the

7 purchase, to a hospital that has been issued an active tax

8 exemption identification number by the Department under

9 Section 1g of the Retailers' Occupation Tax Act. This paragraph

10 is exempt from the provisions of Section 3-55.

11 (25) Beginning on the effective date of this amendatory Act

12 of the 92nd General Assembly, personal property sold to a

13 lessor who leases the property, under a lease of one year or

14 longer executed or in effect at the time of the purchase, to a

15 governmental body that has been issued an active tax exemption

16 identification number by the Department under Section 1g of the

17 Retailers' Occupation Tax Act. This paragraph is exempt from

18 the provisions of Section 3-55.

19 (26) Beginning on January 1, 2002 and through June 30,

20 2016, tangible personal property purchased from an Illinois

21 retailer by a taxpayer engaged in centralized purchasing

22 activities in Illinois who will, upon receipt of the property

23 in Illinois, temporarily store the property in Illinois (i) for

24 the purpose of subsequently transporting it outside this State

25 for use or consumption thereafter solely outside this State or

26 (ii) for the purpose of being processed, fabricated, or

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1 manufactured into, attached to, or incorporated into other

2 tangible personal property to be transported outside this State

3 and thereafter used or consumed solely outside this State. The

4 Director of Revenue shall, pursuant to rules adopted in

5 accordance with the Illinois Administrative Procedure Act,

6 issue a permit to any taxpayer in good standing with the

7 Department who is eligible for the exemption under this

8 paragraph (26). The permit issued under this paragraph (26)

9 shall authorize the holder, to the extent and in the manner

10 specified in the rules adopted under this Act, to purchase

11 tangible personal property from a retailer exempt from the

12 taxes imposed by this Act. Taxpayers shall maintain all

13 necessary books and records to substantiate the use and

14 consumption of all such tangible personal property outside of

15 the State of Illinois.

16 (27) Beginning January 1, 2008, tangible personal property

17 used in the construction or maintenance of a community water

18 supply, as defined under Section 3.145 of the Environmental

19 Protection Act, that is operated by a not-for-profit

20 corporation that holds a valid water supply permit issued under

21 Title IV of the Environmental Protection Act. This paragraph is

22 exempt from the provisions of Section 3-55.

23 (28) Tangible personal property sold to a

24 public-facilities corporation, as described in Section

25 11-65-10 of the Illinois Municipal Code, for purposes of

26 constructing or furnishing a municipal convention hall, but

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1 only if the legal title to the municipal convention hall is

2 transferred to the municipality without any further

3 consideration by or on behalf of the municipality at the time

4 of the completion of the municipal convention hall or upon the

5 retirement or redemption of any bonds or other debt instruments

6 issued by the public-facilities corporation in connection with

7 the development of the municipal convention hall. This

8 exemption includes existing public-facilities corporations as

9 provided in Section 11-65-25 of the Illinois Municipal Code.

10 This paragraph is exempt from the provisions of Section 3-55.

11 (29) Beginning January 1, 2010, materials, parts,

12 equipment, components, and furnishings incorporated into or

13 upon an aircraft as part of the modification, refurbishment,

14 completion, replacement, repair, or maintenance of the

15 aircraft. This exemption includes consumable supplies used in

16 the modification, refurbishment, completion, replacement,

17 repair, and maintenance of aircraft, but excludes any

18 materials, parts, equipment, components, and consumable

19 supplies used in the modification, replacement, repair, and

20 maintenance of aircraft engines or power plants, whether such

21 engines or power plants are installed or uninstalled upon any

22 such aircraft. "Consumable supplies" include, but are not

23 limited to, adhesive, tape, sandpaper, general purpose

24 lubricants, cleaning solution, latex gloves, and protective

25 films. This exemption applies only to the transfer of

26 qualifying tangible personal property incident to the

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1 modification, refurbishment, completion, replacement, repair,

2 or maintenance of an aircraft by persons who (i) hold an Air

3 Agency Certificate and are empowered to operate an approved

4 repair station by the Federal Aviation Administration, (ii)

5 have a Class IV Rating, and (iii) conduct operations in

6 accordance with Part 145 of the Federal Aviation Regulations.

7 The exemption does not include aircraft operated by a

8 commercial air carrier providing scheduled passenger air

9 service pursuant to authority issued under Part 121 or Part 129

10 of the Federal Aviation Regulations. The changes made to this

11 paragraph (29) by Public Act 98-534 are declarative of existing

12 law.

13 (30) Beginning January 1, 2017, menstrual pads, tampons,

14 and menstrual cups.

15 (Source: P.A. 98-104, eff. 7-22-13; 98-422, eff. 8-16-13;

16 98-456, eff. 8-16-13; 98-534, eff. 8-23-13; 98-756, eff.

17 7-16-14; 99-180, eff. 7-29-15; 99-855, eff. 8-19-16.)

18 Section 30-35. The Retailers' Occupation Tax Act is amended

19 by changing Sections 1, 2, 2-5, 2-10, 2-10.5, 2-12, 2-45, 2-55,

20 2a, 2b, 2c, 3, 7, and 13 and by adding Section 1b as follows:

21 (35 ILCS 120/1) (from Ch. 120, par. 440)

22 Sec. 1. Definitions. "Sale at retail" means any transfer of

23 the ownership of or title to tangible personal property to a

24 purchaser or the performance of a taxable service for a

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1 purchaser, for the purpose of use or consumption, and not for

2 the purpose of resale in any form as tangible personal property

3 or taxable service to the extent not first subjected to a use

4 for which it was purchased, for a valuable consideration:

5 Provided that the propertyor service purchased is deemed to be

6 purchased for the purpose of resale, despite first being used,

7 to the extent to which it is resold as an ingredient of an

8 intentionally produced product or byproduct of manufacturing

9 or otherwise transferred to the purchaser of tangible personal

10 property or taxable service. For this purpose, slag produced as

11 an incident to manufacturing pig iron or steel and sold is

12 considered to be an intentionally produced byproduct of

13 manufacturing. Transactions whereby the possession of the

14 property is transferred but the seller retains the title as

15 security for payment of the selling price shall be deemed to be

16 sales.

17 "Sale at retail" shall be construed to include any transfer

18 of the ownership of or title to tangible personal property to a

19 purchaser or the performance of a taxable service for a

20 purchaser, for use or consumption by any other person to whom

21 such purchaser may transfer the tangible personal propertyor

22 taxable service without a valuable consideration, and to

23 include any transfer, whether made for or without a valuable

24 consideration, for resale in any form as tangible personal

25 property or taxable serviceunless made in compliance with

26 Section 2c of this Act.

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1 Sales of tangible personal property, which property, to the

2 extent not first subjected to a use for which it was purchased,

3 as an ingredient or constituent, goes into and forms a part of

4 tangible personal property subsequently the subject of a "Sale

5 at retail", or transferred to a purchaser of a taxable service

6 that is a "sale at retail"are not sales at retail as defined

7 in this Act: Provided that the property purchased is deemed to

8 be purchased for the purpose of resale, despite first being

9 used, to the extent to which it is resold as an ingredient of

10 an intentionally produced product or byproduct of

11 manufacturing.

12 "Sale at retail" shall be construed to include any Illinois

13 florist's sales transaction in which the purchase order is

14 received in Illinois by a florist and the sale is for use or

15 consumption, but the Illinois florist has a florist in another

16 state deliver the property to the purchaser or the purchaser's

17 donee in such other state.

18 Nonreusable tangible personal property that is used by

19 persons engaged in the business of operating a restaurant,

20 cafeteria, or drive-in is a sale for resale when it is

21 transferred to customers in the ordinary course of business as

22 part of the sale of food or beverages and is used to deliver,

23 package, or consume food or beverages, regardless of where

24 consumption of the food or beverages occurs. Examples of those

25 items include, but are not limited to nonreusable, paper and

26 plastic cups, plates, baskets, boxes, sleeves, buckets or other

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1 containers, utensils, straws, placemats, napkins, doggie bags,

2 and wrapping or packaging materials that are transferred to

3 customers as part of the sale of food or beverages in the

4 ordinary course of business.

5 The purchase, employment and transfer of such tangible

6 personal property as newsprint and ink for the primary purpose

7 of conveying news (with or without other information) is not a

8 purchase, use or sale of tangible personal property.

9 A person whose activities are organized and conducted

10 primarily as a not-for-profit service enterprise, and who

11 engages in selling tangible personal propertyor taxable

12 service at retail (whether to the public or merely to members

13 and their guests) is engaged in the business of selling

14 tangible personal propertyor taxable service at retail with

15 respect to such transactions, excepting only a person organized

16 and operated exclusively for charitable, religious or

17 educational purposes either (1), to the extent of sales by such

18 person to its members, students, patients or inmates of

19 tangible personal property or taxable serviceto be used

20 primarily for the purposes of such person, or (2), to the

21 extent of sales by such person of tangible personal propertyor

22 taxable servicewhich is not sold or offered for sale by

23 persons organized for profit. The selling of school books and

24 school supplies by schools at retail to students is not

25 "primarily for the purposes of" the school which does such

26 selling. The provisions of this paragraph shall not apply to

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1 nor subject to taxation occasional dinners, socials or similar

2 activities of a person organized and operated exclusively for

3 charitable, religious or educational purposes, whether or not

4 such activities are open to the public.

5 A person who is the recipient of a grant or contract under

6 Title VII of the Older Americans Act of 1965 (P.L. 92-258) and

7 serves meals to participants in the federal Nutrition Program

8 for the Elderly in return for contributions established in

9 amount by the individual participant pursuant to a schedule of

10 suggested fees as provided for in the federal Act is not

11 engaged in the business of selling tangible personal property

12 or taxable serviceat retail with respect to such transactions.

13 "Purchaser" means anyone who, through a sale at retail,

14 acquires the ownership of or title to tangible personal

15 property or taxable servicefor a valuable consideration.

16 "Reseller of motor fuel" means any person engaged in the

17 business of selling or delivering or transferring title of

18 motor fuel to another person other than for use or consumption.

19 No person shall act as a reseller of motor fuel within this

20 State without first being registered as a reseller pursuant to

21 Section 2c or a retailer pursuant to Section 2a.

22 "Selling price" or the "amount of sale" means the

23 consideration for a sale valued in money whether received in

24 money or otherwise, including cash, credits, property, other

25 than as hereinafter provided, and services, but not including

26 the value of or credit given for traded-in tangible personal

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1 property where the item that is traded-in is of like kind and

2 character as that which is being sold, and shall be determined

3 without any deduction on account of the cost of the property

4 sold, the cost of materials used, labor or service cost or any

5 other expense whatsoever, but does not include charges that are

6 added to prices by sellers on account of the seller's tax

7 liability under this Act, or on account of the seller's duty to

8 collect, from the purchaser, the tax that is imposed by the Use

9 Tax Act, or, except as otherwise provided with respect to any

10 cigarette tax imposed by a home rule unit, on account of the

11 seller's tax liability under any local occupation tax

12 administered by the Department, or, except as otherwise

13 provided with respect to any cigarette tax imposed by a home

14 rule unit on account of the seller's duty to collect, from the

15 purchasers, the tax that is imposed under any local use tax

16 administered by the Department. Effective December 1, 1985,

17 "selling price" shall include charges that are added to prices

18 by sellers on account of the seller's tax liability under the

19 Cigarette Tax Act, on account of the sellers' duty to collect,

20 from the purchaser, the tax imposed under the Cigarette Use Tax

21 Act, and on account of the seller's duty to collect, from the

22 purchaser, any cigarette tax imposed by a home rule unit.

23 Notwithstanding any law to the contrary, for any motor

24 vehicle, as defined in Section 1-146 of the Vehicle Code, that

25 is sold on or after January 1, 2015 for the purpose of leasing

26 the vehicle for a defined period that is longer than one year

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1 and (1) is a motor vehicle of the second division that: (A) is

2 a self-contained motor vehicle designed or permanently

3 converted to provide living quarters for recreational,

4 camping, or travel use, with direct walk through access to the

5 living quarters from the driver's seat; (B) is of the van

6 configuration designed for the transportation of not less than

7 7 nor more than 16 passengers; or (C) has a gross vehicle

8 weight rating of 8,000 pounds or less or (2) is a motor vehicle

9 of the first division, "selling price" or "amount of sale"

10 means the consideration received by the lessor pursuant to the

11 lease contract, including amounts due at lease signing and all

12 monthly or other regular payments charged over the term of the

13 lease. Also included in the selling price is any amount

14 received by the lessor from the lessee for the leased vehicle

15 that is not calculated at the time the lease is executed,

16 including, but not limited to, excess mileage charges and

17 charges for excess wear and tear. For sales that occur in

18 Illinois, with respect to any amount received by the lessor

19 from the lessee for the leased vehicle that is not calculated

20 at the time the lease is executed, the lessor who purchased the

21 motor vehicle does not incur the tax imposed by the Use Tax Act

22 on those amounts, and the retailer who makes the retail sale of

23 the motor vehicle to the lessor is not required to collect the

24 tax imposed by the Use Tax Act or to pay the tax imposed by this

25 Act on those amounts. However, the lessor who purchased the

26 motor vehicle assumes the liability for reporting and paying

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1 the tax on those amounts directly to the Department in the same

2 form (Illinois Retailers' Occupation Tax, and local retailers'

3 occupation taxes, if applicable) in which the retailer would

4 have reported and paid such tax if the retailer had accounted

5 for the tax to the Department. For amounts received by the

6 lessor from the lessee that are not calculated at the time the

7 lease is executed, the lessor must file the return and pay the

8 tax to the Department by the due date otherwise required by

9 this Act for returns other than transaction returns. If the

10 retailer is entitled under this Act to a discount for

11 collecting and remitting the tax imposed under this Act to the

12 Department with respect to the sale of the motor vehicle to the

13 lessor, then the right to the discount provided in this Act

14 shall be transferred to the lessor with respect to the tax paid

15 by the lessor for any amount received by the lessor from the

16 lessee for the leased vehicle that is not calculated at the

17 time the lease is executed; provided that the discount is only

18 allowed if the return is timely filed and for amounts timely

19 paid. The "selling price" of a motor vehicle that is sold on or

20 after January 1, 2015 for the purpose of leasing for a defined

21 period of longer than one year shall not be reduced by the

22 value of or credit given for traded-in tangible personal

23 property owned by the lessor, nor shall it be reduced by the

24 value of or credit given for traded-in tangible personal

25 property owned by the lessee, regardless of whether the

26 trade-in value thereof is assigned by the lessee to the lessor.

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1 In the case of a motor vehicle that is sold for the purpose of

2 leasing for a defined period of longer than one year, the sale

3 occurs at the time of the delivery of the vehicle, regardless

4 of the due date of any lease payments. A lessor who incurs a

5 Retailers' Occupation Tax liability on the sale of a motor

6 vehicle coming off lease may not take a credit against that

7 liability for the Use Tax the lessor paid upon the purchase of

8 the motor vehicle (or for any tax the lessor paid with respect

9 to any amount received by the lessor from the lessee for the

10 leased vehicle that was not calculated at the time the lease

11 was executed) if the selling price of the motor vehicle at the

12 time of purchase was calculated using the definition of

13 "selling price" as defined in this paragraph. Notwithstanding

14 any other provision of this Act to the contrary, lessors shall

15 file all returns and make all payments required under this

16 paragraph to the Department by electronic means in the manner

17 and form as required by the Department. This paragraph does not

18 apply to leases of motor vehicles for which, at the time the

19 lease is entered into, the term of the lease is not a defined

20 period, including leases with a defined initial period with the

21 option to continue the lease on a month-to-month or other basis

22 beyond the initial defined period.

23 The phrase "like kind and character" shall be liberally

24 construed (including but not limited to any form of motor

25 vehicle for any form of motor vehicle, or any kind of farm or

26 agricultural implement for any other kind of farm or

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1 agricultural implement), while not including a kind of item

2 which, if sold at retail by that retailer, would be exempt from

3 retailers' occupation tax and use tax as an isolated or

4 occasional sale.

5 "Gross receipts" from the sales of tangible personal

6 property or taxable serviceat retail means the total selling

7 price or the amount of such sales, as hereinbefore defined. In

8 the case of charge and time sales, the amount thereof shall be

9 included only as and when payments are received by the seller.

10 Receipts or other consideration derived by a seller from the

11 sale, transfer or assignment of accounts receivable to a wholly

12 owned subsidiary will not be deemed payments prior to the time

13 the purchaser makes payment on such accounts.

14 "Department" means the Department of Revenue.

15 "Person" means any natural individual, firm, partnership,

16 association, joint stock company, joint adventure, public or

17 private corporation, limited liability company, or a receiver,

18 executor, trustee, guardian or other representative appointed

19 by order of any court.

20 The isolated or occasional sale of tangible personal

21 property or taxable serviceat retail by a person who does not

22 hold himself out as being engaged (or who does not habitually

23 engage) in selling such tangible personal property or taxable

24 serviceat retail, or a sale through a bulk vending machine,

25 does not constitute engaging in a business of selling such

26 tangible personal property or taxable service at retail within

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1 the meaning of this Act; provided that any person who is

2 engaged in a business which is not subject to the tax imposed

3 by this Act because of involving the sale of or a contract to

4 sell real estate or a construction contract to improve real

5 estate or a construction contract to engineer, install, and

6 maintain an integrated system of products, but who, in the

7 course of conducting such business, transfers tangible

8 personal property to users or consumers in the finished form in

9 which it was purchased, and which does not become real estate

10 or was not engineered and installed, under any provision of a

11 construction contract or real estate sale or real estate sales

12 agreement entered into with some other person arising out of or

13 because of such nontaxable business, is engaged in the business

14 of selling tangible personal property at retail to the extent

15 of the value of the tangible personal property so transferred.

16 If, in such a transaction, a separate charge is made for the

17 tangible personal property so transferred, the value of such

18 property, for the purpose of this Act, shall be the amount so

19 separately charged, but not less than the cost of such property

20 to the transferor; if no separate charge is made, the value of

21 such property, for the purposes of this Act, is the cost to the

22 transferor of such tangible personal property. Construction

23 contracts for the improvement of real estate consisting of

24 engineering, installation, and maintenance of voice, data,

25 video, security, and all telecommunication systems do not

26 constitute engaging in a business of selling tangible personal

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1 property or taxable serviceat retail within the meaning of

2 this Act if they are sold at one specified contract price.

3 A person who holds himself or herself out as being engaged

4 (or who habitually engages) in selling tangible personal

5 property or taxable serviceat retail is a person engaged in

6 the business of selling tangible personal property or taxable

7 serviceat retail hereunder with respect to such sales (and not

8 primarily in a nontaxableservice occupation) notwithstanding

9 the fact that such person designs and produces such tangible

10 personal property or taxable service on special order for the

11 purchaser and in such a way as to render the propertyor

12 serviceof value only to such purchaser, if such tangible

13 personal property or taxable service so produced on special

14 order serves substantially the same function as stock or

15 standard items of tangible personal propertyor taxable service

16 that are sold at retail.

17 Persons who engage in the business of transferring tangible

18 personal propertyor taxable service upon the redemption of

19 trading stamps are engaged in the business of selling such

20 property or service at retail and shall be liable for and shall

21 pay the tax imposed by this Act on the basis of the retail

22 value of the propertyor service transferred upon redemption of

23 such stamps.

24 "Bulk vending machine" means a vending machine, containing

25 unsorted confections, nuts, toys, or other items designed

26 primarily to be used or played with by children which, when a

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1 coin or coins of a denomination not larger than $0.50 are

2 inserted, are dispensed in equal portions, at random and

3 without selection by the customer.

4 (Source: P.A. 98-628, eff. 1-1-15; 98-1080, eff. 8-26-14.)

5 (35 ILCS 120/1b new)

6 Sec. 1b. Taxable service. Beginning January 1, 2018,

7 "taxable service" has the meaning provided in Section 2a-2 of

8 the Use Tax Act.

9 (35 ILCS 120/2) (from Ch. 120, par. 441)

10 Sec. 2. Tax imposed. A tax is imposed upon persons engaged

11 in the business of selling at retailtaxable service or

12 tangible personal property, or both,including computer

13 software, and including photographs, negatives, and positives

14 that are the product of photoprocessing, but not including

15 products of photoprocessing produced for use in motion pictures

16 for public commercial exhibition. Beginning January 1, 2001,

17 prepaid telephone calling arrangements shall be considered

18 tangible personal property subject to the tax imposed under

19 this Act regardless of the form in which those arrangements may

20 be embodied, transmitted, or fixed by any method now known or

21 hereafter developed. Sales of (1) electricity delivered to

22 customers by wire; (2) natural or artificial gas that is

23 delivered to customers through pipes, pipelines, or mains; and

24 (3) water that is delivered to customers through pipes,

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1 pipelines, or mains are not subject to tax under this Act. The

2 provisions of this amendatory Act of the 98th General Assembly

3 are declaratory of existing law as to the meaning and scope of

4 this Act.

5 (Source: P.A. 98-583, eff. 1-1-14.)

6 (35 ILCS 120/2-5)

7 Sec. 2-5. Exemptions. Gross receipts from proceeds from the

8 sale of the following tangible personal propertyand taxable

9 servicesare exempt from the tax imposed by this Act:

10 (1) Farm chemicals.

11 (2) 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 (2). Agricultural chemical tender tanks and dry boxes

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1 shall include units sold separately from a motor vehicle

2 required to be licensed and units sold mounted on a motor

3 vehicle required to be licensed, if the selling price of the

4 tender is separately stated.

5 Farm machinery and equipment shall include precision

6 farming equipment that is installed or purchased to be

7 installed on farm machinery and equipment including, but not

8 limited to, tractors, harvesters, sprayers, planters, seeders,

9 or spreaders. Precision farming equipment includes, but is not

10 limited to, soil testing sensors, computers, monitors,

11 software, global positioning and mapping systems, and other

12 such equipment.

13 Farm machinery and equipment also includes computers,

14 sensors, software, and related equipment used primarily in the

15 computer-assisted operation of production agriculture

16 facilities, equipment, and activities such as, but not limited

17 to, the collection, monitoring, and correlation of animal and

18 crop data for the purpose of formulating animal diets and

19 agricultural chemicals. This item (2) is exempt from the

20 provisions of Section 2-70.

21 (3) Until July 1, 2003, distillation machinery and

22 equipment, sold as a unit or kit, assembled or installed by the

23 retailer, certified by the user to be used only for the

24 production of ethyl alcohol that will be used for consumption

25 as motor fuel or as a component of motor fuel for the personal

26 use of the user, and not subject to sale or resale.

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1 (4) Until July 1, 2003 and beginning again September 1,

2 2004 through August 30, 2014, graphic arts machinery and

3 equipment, including repair and replacement parts, both new and

4 used, and including that manufactured on special order or

5 purchased for lease, certified by the purchaser to be used

6 primarily for graphic arts production. Equipment includes

7 chemicals or chemicals acting as catalysts but only if the

8 chemicals or chemicals acting as catalysts effect a direct and

9 immediate change upon a graphic arts product.Beginning on July

10 1, 2017, graphic arts machinery and equipment is included in

11 the manufacturing and assembling machinery and equipment

12 exemption under paragraph (14).

13 (5) A motor vehicle that is used for automobile renting, as

14 defined in the Automobile Renting Occupation and Use Tax Act.

15 This paragraph is exempt from the provisions of Section 2-70.

16 (6) Personal property sold by a teacher-sponsored student

17 organization affiliated with an elementary or secondary school

18 located in Illinois.

19 (7) Until July 1, 2003, proceeds of that portion of the

20 selling price of a passenger car the sale of which is subject

21 to the Replacement Vehicle Tax.

22 (8) Personal property sold to an Illinois county fair

23 association for use in conducting, operating, or promoting the

24 county fair.

25 (9) Personal property sold to or taxable service performed

26 fora not-for-profit arts or cultural organization that

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1 establishes, by proof required by the Department by rule, that

2 it has received an exemption under Section 501(c)(3) of the

3 Internal Revenue Code and that is organized and operated

4 primarily for the presentation or support of arts or cultural

5 programming, activities, or services. These organizations

6 include, but are not limited to, music and dramatic arts

7 organizations such as symphony orchestras and theatrical

8 groups, arts and cultural service organizations, local arts

9 councils, visual arts organizations, and media arts

10 organizations. On and after the effective date of this

11 amendatory Act of the 92nd General Assembly, however, an entity

12 otherwise eligible for this exemption shall not make tax-free

13 purchases unless it has an active identification number issued

14 by the Department.

15 (10) Personal property sold or taxable service performed by

16 a corporation, society, association, foundation, institution,

17 or organization, other than a limited liability company, that

18 is organized and operated as a not-for-profit service

19 enterprise for the benefit of persons 65 years of age or older

20 if the personal property was not purchased by the enterprise

21 for the purpose of resale by the enterprise.

22 (11) Personal property or taxable service sold to a

23 governmental body, to a corporation, society, association,

24 foundation, or institution organized and operated exclusively

25 for charitable, religious, or educational purposes, or to a

26 not-for-profit corporation, society, association, foundation,

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1 institution, or organization that has no compensated officers

2 or employees and that is organized and operated primarily for

3 the recreation of persons 55 years of age or older. A limited

4 liability company may qualify for the exemption under this

5 paragraph only if the limited liability company is organized

6 and operated exclusively for educational purposes. On and after

7 July 1, 1987, however, no entity otherwise eligible for this

8 exemption shall make tax-free purchases unless it has an active

9 identification number issued by the Department.

10 (12) Tangible personal property sold to interstate

11 carriers for hire for use as rolling stock moving in interstate

12 commerce or to lessors under leases of one year or longer

13 executed or in effect at the time of purchase by interstate

14 carriers for hire for use as rolling stock moving in interstate

15 commerce and equipment operated by a telecommunications

16 provider, licensed as a common carrier by the Federal

17 Communications Commission, which is permanently installed in

18 or affixed to aircraft moving in interstate commerce.

19 (12-5) On and after July 1, 2003 and through June 30, 2004,

20 motor vehicles of the second division with a gross vehicle

21 weight in excess of 8,000 pounds that are subject to the

22 commercial distribution fee imposed under Section 3-815.1 of

23 the Illinois Vehicle Code. Beginning on July 1, 2004 and

24 through June 30, 2005, the use in this State of motor vehicles

25 of the second division: (i) with a gross vehicle weight rating

26 in excess of 8,000 pounds; (ii) that are subject to the

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1 commercial distribution fee imposed under Section 3-815.1 of

2 the Illinois Vehicle Code; and (iii) that are primarily used

3 for commercial purposes. Through June 30, 2005, this exemption

4 applies to repair and replacement parts added after the initial

5 purchase of such a motor vehicle if that motor vehicle is used

6 in a manner that would qualify for the rolling stock exemption

7 otherwise provided for in this Act. For purposes of this

8 paragraph, "used for commercial purposes" means the

9 transportation of persons or property in furtherance of any

10 commercial or industrial enterprise whether for-hire or not.

11 (13) Proceeds from sales to owners, lessors, or shippers of

12 tangible personal property that is utilized by interstate

13 carriers for hire for use as rolling stock moving in interstate

14 commerce and equipment operated by a telecommunications

15 provider, licensed as a common carrier by the Federal

16 Communications Commission, which is permanently installed in

17 or affixed to aircraft moving in interstate commerce.

18 (14) Machinery and equipment that will be used by the

19 purchaser, or a lessee of the purchaser, primarily in the

20 process of manufacturing or assembling tangible personal

21 property for wholesale or retail sale or lease, whether the

22 sale or lease is made directly by the manufacturer or by some

23 other person, whether the materials used in the process are

24 owned by the manufacturer or some other person, or whether the

25 sale or lease is made apart from or as an incident to the

26 seller's engaging in the service occupation of producing

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1 machines, tools, dies, jigs, patterns, gauges, or other similar

2 items of no commercial value on special order for a particular

3 purchaser. The exemption provided by this paragraph (14) does

4 not include machinery and equipment used in (i) the generation

5 of electricity for wholesale or retail sale; (ii) the

6 generation or treatment of natural or artificial gas for

7 wholesale or retail sale that is delivered to customers through

8 pipes, pipelines, or mains; or (iii) the treatment of water for

9 wholesale or retail sale that is delivered to customers through

10 pipes, pipelines, or mains. The provisions of Public Act 98-583

11 are declaratory of existing law as to the meaning and scope of

12 this exemption. Beginning on July 1, 2017, the exemption

13 provided by this paragraph (14) includes, but is not limited

14 to, graphic arts machinery and equipment, as defined in

15 paragraph (4) of this Section. Beginning on July 1, 2017, the

16 exemption provided by this paragraph (14) includes, but is not

17 limited to, production related tangible personal property, as

18 defined in Section 2-45 of this Act. The exemption provided by

19 this paragraph (14) is exempt from the provisions of Section

20 2-70.

21 (15) Proceeds of mandatory service charges separately

22 stated on customers' bills for purchase and consumption of food

23 and beverages or of taxable service, to the extent that the

24 proceeds of the service charge are in fact turned over as tips

25 or as a substitute for tips to the employees who participate

26 directly in preparing, serving, hosting or cleaning up the food

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1 or beverage function with respect to which the service charge

2 is imposed.

3 (16) Petroleum products sold to a purchaser if the seller

4 is prohibited by federal law from charging tax to the

5 purchaser.

6 (17) Tangible personal property sold to a common carrier by

7 rail or motor that receives the physical possession of the

8 property in Illinois and that transports the property, or

9 shares with another common carrier in the transportation of the

10 property, out of Illinois on a standard uniform bill of lading

11 showing the seller of the property as the shipper or consignor

12 of the property to a destination outside Illinois, for use

13 outside Illinois.

14 (18) Legal tender, currency, medallions, or gold or silver

15 coinage issued by the State of Illinois, the government of the

16 United States of America, or the government of any foreign

17 country, and bullion.

18 (19) Until July 1 2003, oil field exploration, drilling,

19 and production equipment, including (i) rigs and parts of rigs,

20 rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and

21 tubular goods, including casing and drill strings, (iii) pumps

22 and pump-jack units, (iv) storage tanks and flow lines, (v) any

23 individual replacement part for oil field exploration,

24 drilling, and production equipment, and (vi) machinery and

25 equipment purchased for lease; but excluding motor vehicles

26 required to be registered under the Illinois Vehicle Code.

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1 (20) Photoprocessing machinery and equipment, including

2 repair and replacement parts, both new and used, including that

3 manufactured on special order, certified by the purchaser to be

4 used primarily for photoprocessing, and including

5 photoprocessing machinery and equipment purchased for lease.

6 (21) Coal and aggregate exploration, mining, off-highway

7 hauling, processing, maintenance, and reclamation equipment,

8 including replacement parts and equipment, and including

9 equipment purchased for lease, but excluding motor vehicles

10 required to be registered under the Illinois Vehicle Code. The

11 changes made to this Section by Public Act 97-767 apply on and

12 after July 1, 2003, but no claim for credit or refund is

13 allowed on or after August 16, 2013 (the effective date of

14 Public Act 98-456) for such taxes paid during the period

15 beginning July 1, 2003 and ending on August 16, 2013 (the

16 effective date of Public Act 98-456).

17 (22) Until June 30, 2013, fuel and petroleum products sold

18 to or used by an air carrier, certified by the carrier to be

19 used for consumption, shipment, or storage in the conduct of

20 its business as an air common carrier, for a flight destined

21 for or returning from a location or locations outside the

22 United States without regard to previous or subsequent domestic

23 stopovers.

24 Beginning July 1, 2013, fuel and petroleum products sold to

25 or used by an air carrier, certified by the carrier to be used

26 for consumption, shipment, or storage in the conduct of its

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1 business as an air common carrier, for a flight that (i) is

2 engaged in foreign trade or is engaged in trade between the

3 United States and any of its possessions and (ii) transports at

4 least one individual or package for hire from the city of

5 origination to the city of final destination on the same

6 aircraft, without regard to a change in the flight number of

7 that aircraft.

8 (23) A transaction in which the purchase order is received

9 by a florist who is located outside Illinois, but who has a

10 florist located in Illinois deliver the property to the

11 purchaser or the purchaser's donee in Illinois.

12 (24) Fuel consumed or used in the operation of ships,

13 barges, or vessels that are used primarily in or for the

14 transportation of property or the conveyance of persons for

15 hire on rivers bordering on this State if the fuel is delivered

16 by the seller to the purchaser's barge, ship, or vessel while

17 it is afloat upon that bordering river.

18 (25) Except as provided in item (25-5) of this Section, a

19 motor vehicle sold in this State to a nonresident even though

20 the motor vehicle is delivered to the nonresident in this

21 State, if the motor vehicle is not to be titled in this State,

22 and if a drive-away permit is issued to the motor vehicle as

23 provided in Section 3-603 of the Illinois Vehicle Code or if

24 the nonresident purchaser has vehicle registration plates to

25 transfer to the motor vehicle upon returning to his or her home

26 state. The issuance of the drive-away permit or having the

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1 out-of-state registration plates to be transferred is prima

2 facie evidence that the motor vehicle will not be titled in

3 this State.

4 (25-5) The exemption under item (25) does not apply if the

5 state in which the motor vehicle will be titled does not allow

6 a reciprocal exemption for a motor vehicle sold and delivered

7 in that state to an Illinois resident but titled in Illinois.

8 The tax collected under this Act on the sale of a motor vehicle

9 in this State to a resident of another state that does not

10 allow a reciprocal exemption shall be imposed at a rate equal

11 to the state's rate of tax on taxable property in the state in

12 which the purchaser is a resident, except that the tax shall

13 not exceed the tax that would otherwise be imposed under this

14 Act. At the time of the sale, the purchaser shall execute a

15 statement, signed under penalty of perjury, of his or her

16 intent to title the vehicle in the state in which the purchaser

17 is a resident within 30 days after the sale and of the fact of

18 the payment to the State of Illinois of tax in an amount

19 equivalent to the state's rate of tax on taxable property in

20 his or her state of residence and shall submit the statement to

21 the appropriate tax collection agency in his or her state of

22 residence. In addition, the retailer must retain a signed copy

23 of the statement in his or her records. Nothing in this item

24 shall be construed to require the removal of the vehicle from

25 this state following the filing of an intent to title the

26 vehicle in the purchaser's state of residence if the purchaser

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1 titles the vehicle in his or her state of residence within 30

2 days after the date of sale. The tax collected under this Act

3 in accordance with this item (25-5) shall be proportionately

4 distributed as if the tax were collected at the 6.25% general

5 rate imposed under this Act.

6 (25-7) Beginning on July 1, 2007, no tax is imposed under

7 this Act on the sale of an aircraft, as defined in Section 3 of

8 the Illinois Aeronautics Act, if all of the following

9 conditions are met:

10 (1) the aircraft leaves this State within 15 days after

11 the later of either the issuance of the final billing for

12 the sale of the aircraft, or the authorized approval for

13 return to service, completion of the maintenance record

14 entry, and completion of the test flight and ground test

15 for inspection, as required by 14 C.F.R. 91.407;

16 (2) the aircraft is not based or registered in this

17 State after the sale of the aircraft; and

18 (3) the seller retains in his or her books and records

19 and provides to the Department a signed and dated

20 certification from the purchaser, on a form prescribed by

21 the Department, certifying that the requirements of this

22 item (25-7) are met. The certificate must also include the

23 name and address of the purchaser, the address of the

24 location where the aircraft is to be titled or registered,

25 the address of the primary physical location of the

26 aircraft, and other information that the Department may

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1 reasonably require.

2 For purposes of this item (25-7):

3 "Based in this State" means hangared, stored, or otherwise

4 used, excluding post-sale customizations as defined in this

5 Section, for 10 or more days in each 12-month period

6 immediately following the date of the sale of the aircraft.

7 "Registered in this State" means an aircraft registered

8 with the Department of Transportation, Aeronautics Division,

9 or titled or registered with the Federal Aviation

10 Administration to an address located in this State.

11 This paragraph (25-7) is exempt from the provisions of

12 Section 2-70.

13 (26) Semen used for artificial insemination of livestock

14 for direct agricultural production.

15 (27) Horses, or interests in horses, registered with and

16 meeting the requirements of any of the Arabian Horse Club

17 Registry of America, Appaloosa Horse Club, American Quarter

18 Horse Association, United States Trotting Association, or

19 Jockey Club, as appropriate, used for purposes of breeding or

20 racing for prizes. This item (27) is exempt from the provisions

21 of Section 2-70, and the exemption provided for under this item

22 (27) applies for all periods beginning May 30, 1995, but no

23 claim for credit or refund is allowed on or after January 1,

24 2008 (the effective date of Public Act 95-88) for such taxes

25 paid during the period beginning May 30, 2000 and ending on

26 January 1, 2008 (the effective date of Public Act 95-88).

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1 (28) Computers and communications equipment utilized for

2 any hospital purpose and equipment used in the diagnosis,

3 analysis, or treatment of hospital patients sold to a lessor

4 who leases the equipment, under a lease of one year or longer

5 executed or in effect at the time of the purchase, to a

6 hospital that has been issued an active tax exemption

7 identification number by the Department under Section 1g of

8 this Act.

9 (29) Personal property sold to a lessor who leases the

10 property, under a lease of one year or longer executed or in

11 effect at the time of the purchase, to a governmental body that

12 has been issued an active tax exemption identification number

13 by the Department under Section 1g of this Act.

14 (30) 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 (31) 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 (32) 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 2-70.

14 (33) 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 (34) 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 2-70.

20 (35) 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 2-70.

4 (35-5) Beginning August 23, 2001 and through June 30, 2016,

5 food for human consumption that is to be consumed off the

6 premises where it is sold (other than alcoholic beverages, soft

7 drinks, and food that has been prepared for immediate

8 consumption) and prescription and nonprescription medicines,

9 drugs, medical appliances, and insulin, urine testing

10 materials, syringes, and needles used by diabetics, for human

11 use, when purchased for use by a person receiving medical

12 assistance under Article V of the Illinois Public Aid Code who

13 resides in a licensed long-term care facility, as defined in

14 the Nursing Home Care Act, or a licensed facility as defined in

15 the ID/DD Community Care Act, the MC/DD Act, or the Specialized

16 Mental Health Rehabilitation Act of 2013.

17 (36) Beginning August 2, 2001, computers and

18 communications equipment utilized for any hospital purpose and

19 equipment used in the diagnosis, analysis, or treatment of

20 hospital patients sold to a lessor who leases the equipment,

21 under a lease of one year or longer executed or in effect at

22 the time of the purchase, to a hospital that has been issued an

23 active tax exemption identification number by the Department

24 under Section 1g of this Act. This paragraph is exempt from the

25 provisions of Section 2-70.

26 (37) Beginning August 2, 2001, personal property sold to a

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1 lessor who leases the property, under a lease of one year or

2 longer executed or in effect at the time of the purchase, to a

3 governmental body that has been issued an active tax exemption

4 identification number by the Department under Section 1g of

5 this Act. This paragraph is exempt from the provisions of

6 Section 2-70.

7 (38) Beginning on January 1, 2002 and through June 30,

8 2016, tangible personal property purchased from an Illinois

9 retailer by a taxpayer engaged in centralized purchasing

10 activities in Illinois who will, upon receipt of the property

11 in Illinois, temporarily store the property in Illinois (i) for

12 the purpose of subsequently transporting it outside this State

13 for use or consumption thereafter solely outside this State or

14 (ii) for the purpose of being processed, fabricated, or

15 manufactured into, attached to, or incorporated into other

16 tangible personal property to be transported outside this State

17 and thereafter used or consumed solely outside this State. The

18 Director of Revenue shall, pursuant to rules adopted in

19 accordance with the Illinois Administrative Procedure Act,

20 issue a permit to any taxpayer in good standing with the

21 Department who is eligible for the exemption under this

22 paragraph (38). The permit issued under this paragraph (38)

23 shall authorize the holder, to the extent and in the manner

24 specified in the rules adopted under this Act, to purchase

25 tangible personal property from a retailer exempt from the

26 taxes imposed by this Act. Taxpayers shall maintain all

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1 necessary books and records to substantiate the use and

2 consumption of all such tangible personal property outside of

3 the State of Illinois.

4 (39) Beginning January 1, 2008, tangible personal property

5 used in the construction or maintenance of a community water

6 supply, as defined under Section 3.145 of the Environmental

7 Protection Act, that is operated by a not-for-profit

8 corporation that holds a valid water supply permit issued under

9 Title IV of the Environmental Protection Act. This paragraph is

10 exempt from the provisions of Section 2-70.

11 (40) Beginning January 1, 2010, materials, parts,

12 equipment, components, and furnishings incorporated into or

13 upon an aircraft as part of the modification, refurbishment,

14 completion, replacement, repair, or maintenance of the

15 aircraft. This exemption includes consumable supplies used in

16 the modification, refurbishment, completion, replacement,

17 repair, and maintenance of aircraft, but excludes any

18 materials, parts, equipment, components, and consumable

19 supplies used in the modification, replacement, repair, and

20 maintenance of aircraft engines or power plants, whether such

21 engines or power plants are installed or uninstalled upon any

22 such aircraft. "Consumable supplies" include, but are not

23 limited to, adhesive, tape, sandpaper, general purpose

24 lubricants, cleaning solution, latex gloves, and protective

25 films. This exemption applies only to the sale of qualifying

26 tangible personal property to persons who modify, refurbish,

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1 complete, replace, or maintain an aircraft and who (i) hold an

2 Air Agency Certificate and are empowered to operate an approved

3 repair station by the Federal Aviation Administration, (ii)

4 have a Class IV Rating, and (iii) conduct operations in

5 accordance with Part 145 of the Federal Aviation Regulations.

6 The exemption does not include aircraft operated by a

7 commercial air carrier providing scheduled passenger air

8 service pursuant to authority issued under Part 121 or Part 129

9 of the Federal Aviation Regulations. The changes made to this

10 paragraph (40) by Public Act 98-534 are declarative of existing

11 law.

12 (41) Tangible personal property sold to a

13 public-facilities corporation, as described in Section

14 11-65-10 of the Illinois Municipal Code, for purposes of

15 constructing or furnishing a municipal convention hall, but

16 only if the legal title to the municipal convention hall is

17 transferred to the municipality without any further

18 consideration by or on behalf of the municipality at the time

19 of the completion of the municipal convention hall or upon the

20 retirement or redemption of any bonds or other debt instruments

21 issued by the public-facilities corporation in connection with

22 the development of the municipal convention hall. This

23 exemption includes existing public-facilities corporations as

24 provided in Section 11-65-25 of the Illinois Municipal Code.

25 This paragraph is exempt from the provisions of Section 2-70.

26 (42) Beginning January 1, 2017, menstrual pads, tampons,

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1 and menstrual cups.

2 (43) Beginning January 1, 2018, taxable service performed

3 on or to tangible personal property the sale of which is exempt

4 from taxation under this Act. This paragraph is exempt from the

5 provisions of Section 2-70.

6 (44) Beginning January 1, 2018, taxable service performed

7 in a transaction that would be exempt from taxation under this

8 Act if it involved solely the sale of tangible personal

9 property. Such exemption could be due to the nature of the

10 seller or of the service provider, the purchaser or service

11 recipient, or other features of the transaction, including but

12 not limited to the location or sale-for-resale nature of the

13 transaction. Any such exemption applies to transactions

14 involving solely the sale of tangible personal property, solely

15 the performance of taxable service, or some combination

16 thereof. This paragraph is exempt from the provisions of

17 Section 2-70.

18 (45) Beginning January 1, 2018, taxable service performed

19 for or provided to businesses making purchases of services for

20 the benefit of or in furtherance of the business. This

21 paragraph is exempt from the provisions of Section 2-70.

22 (Source: P.A. 98-104, eff. 7-22-13; 98-422, eff. 8-16-13;

23 98-456, eff. 8-16-13; 98-534, eff. 8-23-13; 98-574, eff.

24 1-1-14; 98-583, eff. 1-1-14; 98-756, eff. 7-16-14; 99-180, eff.

25 7-29-15; 99-855, eff. 8-19-16.)

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1 (35 ILCS 120/2-10)

2 Sec. 2-10. Rate of tax. Unless otherwise provided in this

3 Section, the tax imposed by this Act is at the rate of 6.25% of

4 gross receipts from sales of tangible personal property made in

5 the course of business. Beginning July 1, 2017, the tax is also

6 imposed at the rate of 6.25% of the gross receipts from sales

7 of taxable services.

8 Beginning on July 1, 2000 and through December 31, 2000,

9 with respect to motor fuel, as defined in Section 1.1 of the

10 Motor Fuel Tax Law, and gasohol, as defined in Section 3-40 of

11 the Use Tax Act, the tax is imposed at the rate of 1.25%.

12 Beginning on August 6, 2010 through August 15, 2010, with

13 respect to sales tax holiday items as defined in Section 2-8 of

14 this Act, the tax is imposed at the rate of 1.25%.

15 Within 14 days after the effective date of this amendatory

16 Act of the 91st General Assembly, each retailer of motor fuel

17 and gasohol shall cause the following notice to be posted in a

18 prominently visible place on each retail dispensing device that

19 is used to dispense motor fuel or gasohol in the State of

20 Illinois: "As of July 1, 2000, the State of Illinois has

21 eliminated the State's share of sales tax on motor fuel and

22 gasohol through December 31, 2000. The price on this pump

23 should reflect the elimination of the tax." The notice shall be

24 printed in bold print on a sign that is no smaller than 4

25 inches by 8 inches. The sign shall be clearly visible to

26 customers. Any retailer who fails to post or maintain a

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1 required sign through December 31, 2000 is guilty of a petty

2 offense for which the fine shall be $500 per day per each

3 retail premises where a violation occurs.

4 With respect to gasohol, as defined in the Use Tax Act, the

5 tax imposed by this Act applies to (i) 70% of the proceeds of

6 sales made on or after January 1, 1990, and before July 1,

7 2003, (ii) 80% of the proceeds of sales made on or after July

8 1, 2003 and on or before December 31, 2018, and (iii) 100% of

9 the proceeds of sales made thereafter. If, at any time,

10 however, the tax under this Act on sales of gasohol, as defined

11 in the Use Tax Act, is imposed at the rate of 1.25%, then the

12 tax imposed by this Act applies to 100% of the proceeds of

13 sales of gasohol made during that time.

14 With respect to majority blended ethanol fuel, as defined

15 in the Use Tax Act, the tax imposed by this Act does not apply

16 to the proceeds of sales made on or after July 1, 2003 and on or

17 before December 31, 2018 but applies to 100% of the proceeds of

18 sales made thereafter.

19 With respect to biodiesel blends, as defined in the Use Tax

20 Act, with no less than 1% and no more than 10% biodiesel, the

21 tax imposed by this Act applies to (i) 80% of the proceeds of

22 sales made on or after July 1, 2003 and on or before December

23 31, 2018 and (ii) 100% of the proceeds of sales made

24 thereafter. If, at any time, however, the tax under this Act on

25 sales of biodiesel blends, as defined in the Use Tax Act, with

26 no less than 1% and no more than 10% biodiesel is imposed at

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1 the rate of 1.25%, then the tax imposed by this Act applies to

2 100% of the proceeds of sales of biodiesel blends with no less

3 than 1% and no more than 10% biodiesel made during that time.

4 With respect to 100% biodiesel, as defined in the Use Tax

5 Act, and biodiesel blends, as defined in the Use Tax Act, with

6 more than 10% but no more than 99% biodiesel, the tax imposed

7 by this Act does not apply to the proceeds of sales made on or

8 after July 1, 2003 and on or before December 31, 2018 but

9 applies to 100% of the proceeds of sales made thereafter.

10 With respect to food for human consumption that is to be

11 consumed off the premises where it is sold (other than

12 alcoholic beverages, soft drinks, and food that has been

13 prepared for immediate consumption) and prescription and

14 nonprescription medicines, drugs, medical appliances, products

15 classified as Class III medical devices by the United States

16 Food and Drug Administration that are used for cancer treatment

17 pursuant to a prescription, as well as any accessories and

18 components related to those devices, modifications to a motor

19 vehicle for the purpose of rendering it usable by a person with

20 a disability, and insulin, urine testing materials, syringes,

21 and needles used by diabetics, for human use, the tax is

22 imposed at the rate of 1%. For the purposes of this Section,

23 until September 1, 2009: the term "soft drinks" means any

24 complete, finished, ready-to-use, non-alcoholic drink, whether

25 carbonated or not, including but not limited to soda water,

26 cola, fruit juice, vegetable juice, carbonated water, and all

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1 other preparations commonly known as soft drinks of whatever

2 kind or description that are contained in any closed or sealed

3 bottle, can, carton, or container, regardless of size; but

4 "soft drinks" does not include coffee, tea, non-carbonated

5 water, infant formula, milk or milk products as defined in the

6 Grade A Pasteurized Milk and Milk Products Act, or drinks

7 containing 50% or more natural fruit or vegetable juice.

8 Notwithstanding any other provisions of this Act,

9 beginning September 1, 2009, "soft drinks" means non-alcoholic

10 beverages that contain natural or artificial sweeteners. "Soft

11 drinks" do not include beverages that contain milk or milk

12 products, soy, rice or similar milk substitutes, or greater

13 than 50% of vegetable or fruit juice by volume.

14 Until August 1, 2009, and notwithstanding any other

15 provisions of this Act, "food for human consumption that is to

16 be consumed off the premises where it is sold" includes all

17 food sold through a vending machine, except soft drinks and

18 food products that are dispensed hot from a vending machine,

19 regardless of the location of the vending machine. Beginning

20 August 1, 2009, and notwithstanding any other provisions of

21 this Act, "food for human consumption that is to be consumed

22 off the premises where it is sold" includes all food sold

23 through a vending machine, except soft drinks, candy, and food

24 products that are dispensed hot from a vending machine,

25 regardless of the location of the vending machine.

26 Notwithstanding any other provisions of this Act,

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1 beginning September 1, 2009, "food for human consumption that

2 is to be consumed off the premises where it is sold" does not

3 include candy. For purposes of this Section, "candy" means a

4 preparation of sugar, honey, or other natural or artificial

5 sweeteners in combination with chocolate, fruits, nuts or other

6 ingredients or flavorings in the form of bars, drops, or

7 pieces. "Candy" does not include any preparation that contains

8 flour or requires refrigeration.

9 Notwithstanding any other provisions of this Act,

10 beginning September 1, 2009, "nonprescription medicines and

11 drugs" does not include grooming and hygiene products. For

12 purposes of this Section, "grooming and hygiene products"

13 includes, but is not limited to, soaps and cleaning solutions,

14 shampoo, toothpaste, mouthwash, antiperspirants, and sun tan

15 lotions and screens, unless those products are available by

16 prescription only, regardless of whether the products meet the

17 definition of "over-the-counter-drugs". For the purposes of

18 this paragraph, "over-the-counter-drug" means a drug for human

19 use that contains a label that identifies the product as a drug

20 as required by 21 C.F.R. � 201.66. The "over-the-counter-drug"

21 label includes:

22 (A) A "Drug Facts" panel; or

23 (B) A statement of the "active ingredient(s)" with a

24 list of those ingredients contained in the compound,

25 substance or preparation.

26 Beginning on the effective date of this amendatory Act of

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1 the 98th General Assembly, "prescription and nonprescription

2 medicines and drugs" includes medical cannabis purchased from a

3 registered dispensing organization under the Compassionate Use

4 of Medical Cannabis Pilot Program Act.

5 (Source: P.A. 98-122, eff. 1-1-14; 99-143, eff. 7-27-15;

6 99-858, eff. 8-19-16.)

7 (35 ILCS 120/2-10.5)

8 Sec. 2-10.5. Direct payment program; purchaser's providing

9 of permit to retailer; retailer relieved of collecting use tax

10 and local retailers' occupation tax reimbursements from

11 purchaser; direct payment of retailers' occupation tax and

12 local retailers' occupation tax by purchaser.

13 (a) Beginning on July 1, 2001 there is established in this

14 State a Direct Payment Program to be administered by the

15 Department. The Department shall issue a Direct Pay Permit to

16 applicants who have been approved to participate in the Direct

17 Payment Program. Each person applying to participate in the

18 Direct Payment Program must demonstrate (1) the applicant's

19 ability to comply with the retailers' occupation tax laws and

20 the use tax laws in effect in this State and that the

21 applicant's accounting system will reflect the proper amount of

22 tax due, (2) that the applicant has a valid business purpose

23 for participating in the Direct Payment Program, and (3) how

24 the applicant's participation in the Direct Payment Program

25 will benefit tax compliance. Application shall be made on forms

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1 provided by the Department and shall contain information as the

2 Department may reasonably require. The Department shall

3 approve or deny an applicant within 90 days after the

4 Department's receipt of the application, unless the Department

5 makes a written request for additional information from the

6 applicant.

7 (b) A person who has been approved for the Direct Payment

8 Program and who has been issued a Direct Pay Permit by the

9 Department is relieved of paying tax to a retailer when

10 purchasing tangible personal property or taxable service for

11 use or consumption, except as provided in subsection (d), by

12 providing that retailer a copy of that Direct Pay Permit. A

13 retailer who accepts a copy of a customer's Direct Pay Permit

14 is relieved of the obligation to remit the tax imposed by this

15 Act on the transaction. References in this Section to "the tax

16 imposed by this Act" include any local occupation taxes

17 administered by the Department that would be incurred on the

18 retail sale.

19 (c) Once the holder of a Direct Pay Permit uses that Permit

20 to relieve the Permit holder from paying tax to a particular

21 retailer, the holder must use its Permit for all purchases,

22 except as provided in subsection (d), from that retailer for so

23 long as the Permit is valid.

24 (d) Direct Pay Permits are not valid and shall not be used

25 for sales or purchases of:

26 (1) food or beverage;

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1 (2) tangible personal property required to be titled or

2 registered with an agency of government; or

3 (3) any transactions subject to the Service Occupation

4 Tax Act or Service Use Tax Act.

5 (e) Direct Pay Permits are not assignable and are not

6 transferable. As an illustration, a construction contractor

7 shall not make purchases using a customer's Direct Pay Permit.

8 (f) A Direct Pay Permit is valid until it is revoked by the

9 Department or until the holder notifies the Department in

10 writing that the holder is withdrawing from the Direct Payment

11 Program. A Direct Pay Permit can be revoked by the Department,

12 after notice and hearing, if the holder violates any provision

13 of this Act, any provision of the Illinois Use Tax Act, or any

14 provision of any Act imposing a local retailers' occupation tax

15 administered by the Department.

16 (g) The holder of a Direct Pay Permit who has been relieved

17 of paying tax to a retailer on a purchase for use or

18 consumption by representing to that retailer that it would pay

19 all applicable taxes directly to the Department shall pay those

20 taxes to the Department not later than the 20th day of the

21 month following the month in which the purchase was made.

22 Permit holders making such purchases are subject to all

23 provisions of this Act, and the tax must be reported and paid

24 as retailers' occupation tax in the same manner that the

25 retailer from whom the purchases were made would have reported

26 and paid it, including any local retailers' occupation taxes

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1 applicable to that retail sale. Notwithstanding any other

2 provision of this Act, Permit holders shall make all payments

3 to the Department through the use of electronic funds transfer.

4 (Source: P.A. 92-484, eff. 8-23-01.)

5 (35 ILCS 120/2-12)

6 Sec. 2-12. Location where retailer is deemed to be engaged

7 in the business of selling. The purpose of this Section is to

8 specify where a retailer is deemed to be engaged in the

9 business of selling tangible personal property or taxable

10 service for the purposes of this Act, the Use Tax Act, the

11 Service Use Tax Act, and the Service Occupation Tax Act, and

12 for the purpose of collecting any other local retailers'

13 occupation tax administered by the Department. This Section

14 applies only with respect to the particular selling activities

15 described in the following paragraphs. The provisions of this

16 Section are not intended to, and shall not be interpreted to,

17 affect where a retailer is deemed to be engaged in the business

18 of selling with respect to any activity that is not

19 specifically described in the following paragraphs.

20 (1) If a purchaser who is present at the retailer's

21 place of business, having no prior commitment to the

22 retailer, agrees to purchase and makes payment for tangible

23 personal property at the retailer's place of business, then

24 the transaction shall be deemed an over-the-counter sale

25 occurring at the retailer's same place of business where

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1 the purchaser was present and made payment for that

2 tangible personal property if the retailer regularly

3 stocks the purchased tangible personal property or similar

4 tangible personal property in the quantity, or similar

5 quantity, for sale at the retailer's same place of business

6 and then either (i) the purchaser takes possession of the

7 tangible personal property at the same place of business or

8 (ii) the retailer delivers or arranges for the tangible

9 personal property to be delivered to the purchaser.

10 (2) If a purchaser, having no prior commitment to the

11 retailer, agrees to purchase tangible personal property

12 and makes payment over the phone, in writing, or via the

13 Internet and takes possession of the tangible personal

14 property at the retailer's place of business, then the sale

15 shall be deemed to have occurred at the retailer's place of

16 business where the purchaser takes possession of the

17 property if the retailer regularly stocks the item or

18 similar items in the quantity, or similar quantities,

19 purchased by the purchaser.

20 (3) A retailer is deemed to be engaged in the business

21 of selling food, beverages, or other tangible personal

22 property through a vending machine at the location where

23 the vending machine is located at the time the sale is made

24 if (i) the vending machine is a device operated by coin,

25 currency, credit card, token, coupon or similar device; (2)

26 the food, beverage or other tangible personal property is

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1 contained within the vending machine and dispensed from the

2 vending machine; and (3) the purchaser takes possession of

3 the purchased food, beverage or other tangible personal

4 property immediately.

5 (4) Minerals. A producer of coal or other mineral mined

6 in Illinois is deemed to be engaged in the business of

7 selling at the place where the coal or other mineral mined

8 in Illinois is extracted from the earth. With respect to

9 minerals (i) the term "extracted from the earth" means the

10 location at which the coal or other mineral is extracted

11 from the mouth of the mine, and (ii) a "mineral" includes

12 not only coal, but also oil, sand, stone taken from a

13 quarry, gravel and any other thing commonly regarded as a

14 mineral and extracted from the earth. This paragraph does

15 not apply to coal or another mineral when it is delivered

16 or shipped by the seller to the purchaser at a point

17 outside Illinois so that the sale is exempt under the

18 United States Constitution as a sale in interstate or

19 foreign commerce.

20 (5) A retailer selling tangible personal property to a

21 nominal lessee or bailee pursuant to a lease with a dollar

22 or other nominal option to purchase is engaged in the

23 business of selling at the location where the property is

24 first delivered to the lessee or bailee for its intended

25 use.

26 (6) Landscaping services shall be sourced to the

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1 location of the parcel or tract of land where the benefit

2 of the landscaping services is realized.

3 (Source: P.A. 98-1098, eff. 8-26-14; 99-126, eff. 7-23-15.)

4 (35 ILCS 120/2-45) (from Ch. 120, par. 441-45)

5 Sec. 2-45. Manufacturing and assembly exemption. The

6 manufacturing and assembly machinery and equipment exemption

7 includes machinery and equipment that replaces machinery and

8 equipment in an existing manufacturing facility as well as

9 machinery and equipment that are for use in an expanded or new

10 manufacturing facility.

11 The machinery and equipment exemption also includes

12 machinery and equipment used in the general maintenance or

13 repair of exempt machinery and equipment or for in-house

14 manufacture of exempt machinery and equipment.Beginning on

15 July 1, 2017, the manufacturing and assembling machinery and

16 equipment exemption also includes graphic arts machinery and

17 equipment, as defined in paragraph (4) of Section 2-5.

18 Beginning on July 1, 2017, the manufacturing and assembling

19 machinery and equipment exemption also includes production

20 related tangible personal property, as defined in this Section.

21 The machinery and equipment exemption does not include

22 machinery and equipment used in (i) the generation of

23 electricity for wholesale or retail sale; (ii) the generation

24 or treatment of natural or artificial gas for wholesale or

25 retail sale that is delivered to customers through pipes,

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1 pipelines, or mains; or (iii) the treatment of water for

2 wholesale or retail sale that is delivered to customers through

3 pipes, pipelines, or mains. The provisions of this amendatory

4 Act of the 98th General Assembly are declaratory of existing

5 law as to the meaning and scope of this exemption. For the

6 purposes of this exemption, terms have the following meanings:

7 (1) "Manufacturing process" means the production of an

8 article of tangible personal property, whether the article

9 is a finished product or an article for use in the process

10 of manufacturing or assembling a different article of

11 tangible personal property, by a procedure commonly

12 regarded as manufacturing, processing, fabricating, or

13 refining that changes some existing material or materials

14 into a material with a different form, use, or name. In

15 relation to a recognized integrated business composed of a

16 series of operations that collectively constitute

17 manufacturing, or individually constitute manufacturing

18 operations, the manufacturing process commences with the

19 first operation or stage of production in the series and

20 does not end until the completion of the final product in

21 the last operation or stage of production in the series.

22 For purposes of this exemption, photoprocessing is a

23 manufacturing process of tangible personal property for

24 wholesale or retail sale.

25 (2) "Assembling process" means the production of an

26 article of tangible personal property, whether the article

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1 is a finished product or an article for use in the process

2 of manufacturing or assembling a different article of

3 tangible personal property, by the combination of existing

4 materials in a manner commonly regarded as assembling that

5 results in a material of a different form, use, or name.

6 (3) "Machinery" means major mechanical machines or

7 major components of those machines contributing to a

8 manufacturing or assembling process.

9 (4) "Equipment" includes an independent device or tool

10 separate from machinery but essential to an integrated

11 manufacturing or assembly process; including computers

12 used primarily in a manufacturer's computer assisted

13 design, computer assisted manufacturing (CAD/CAM) system;

14 any subunit or assembly comprising a component of any

15 machinery or auxiliary, adjunct, or attachment parts of

16 machinery, such as tools, dies, jigs, fixtures, patterns,

17 and molds; and any parts that require periodic replacement

18 in the course of normal operation; but does not include

19 hand tools. Equipment includes chemicals or chemicals

20 acting as catalysts but only if the chemicals or chemicals

21 acting as catalysts effect a direct and immediate change

22 upon a product being manufactured or assembled for

23 wholesale or retail sale or lease.

24 (5) "Production related tangible personal property"

25 means all tangible personal property that is used or

26 consumed by the purchaser in a manufacturing facility in

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1 which a manufacturing process takes place and includes,

2 without limitation, tangible personal property that is

3 purchased for incorporation into real estate within a

4 manufacturing facility and tangible personal property that

5 is used or consumed in activities such as research and

6 development, preproduction material handling, receiving,

7 quality control, inventory control, storage, staging, and

8 packaging for shipping and transportation purposes.

9 "Production related tangible personal property" does not

10 include (i) tangible personal property that is used, within

11 or without a manufacturing facility, in sales, purchasing,

12 accounting, fiscal management, marketing, personnel

13 recruitment or selection, or landscaping or (ii) tangible

14 personal property that is required to be titled or

15 registered with a department, agency, or unit of federal,

16 State, or local government.

17 The manufacturing and assembling machinery and equipment

18 exemption includes production related tangible personal

19 property that is purchased (i) on or after July 1, 2007 and on

20 or before June 30, 2008 or (ii) on and after July 1, 2017. The

21 exemption for production related tangible personal property

22 purchased on or after July 1, 2007 and on or before June 30,

23 2008 is subject to both of the following limitations:

24 (1) The maximum amount of the exemption for any one

25 taxpayer may not exceed 5% of the purchase price of

26 production related tangible personal property that is

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1 purchased on or after July 1, 2007 and on or before June

2 30, 2008. A credit under Section 3-85 of this Act may not

3 be earned by the purchase of production related tangible

4 personal property for which an exemption is received under

5 this Section.

6 (2) The maximum aggregate amount of the exemptions for

7 production related tangible personal property awarded

8 under this Act and the Use Tax Act to all taxpayers may not

9 exceed $10,000,000. If the claims for the exemption exceed

10 $10,000,000, then the Department shall reduce the amount of

11 the exemption to each taxpayer on a pro rata basis.

12 The Department may adopt rules to implement and administer the

13 exemption for production related tangible personal property.

14 The manufacturing and assembling machinery and equipment

15 exemption includes the sale of materials to a purchaser who

16 produces exempted types of machinery, equipment, or tools and

17 who rents or leases that machinery, equipment, or tools to a

18 manufacturer of tangible personal property. This exemption

19 also includes the sale of materials to a purchaser who

20 manufactures those materials into an exempted type of

21 machinery, equipment, or tools that the purchaser uses himself

22 or herself in the manufacturing of tangible personal property.

23 The purchaser of the machinery and equipment who has an active

24 resale registration number shall furnish that number to the

25 seller at the time of purchase. A purchaser of the machinery,

26 equipment, and tools without an active resale registration

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1 number shall furnish to the seller a certificate of exemption

2 for each transaction stating facts establishing the exemption

3 for that transaction, and that certificate shall be available

4 to the Department for inspection or audit. Informal rulings,

5 opinions, or letters issued by the Department in response to an

6 inquiry or request for an opinion from any person regarding the

7 coverage and applicability of this exemption to specific

8 devices shall be published, maintained as a public record, and

9 made available for public inspection and copying. If the

10 informal ruling, opinion, or letter contains trade secrets or

11 other confidential information, where possible, the Department

12 shall delete that information before publication. Whenever

13 informal rulings, opinions, or letters contain a policy of

14 general applicability, the Department shall formulate and

15 adopt that policy as a rule in accordance with the Illinois

16 Administrative Procedure Act.

17 The manufacturing and assembling machinery and equipment

18 exemption is exempt from the provisions of Section 2-70.

19 (Source: P.A. 98-583, eff. 1-1-14.)

20 (35 ILCS 120/2-55) (from Ch. 120, par. 441-55)

21 Sec. 2-55. Serviceman transfer. Tangible personal property

22 purchased by a serviceman, as defined in Section 2 of the

23 Service Occupation Tax Act, is subject to the tax imposed by

24 this Act when purchased for transfer by the serviceman

25 incidental to completion of a maintenance agreement.Effective

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1 January 1, 2018, purchases of tangible personal property

2 purchased for transfer incidental to performance of a taxable

3 service is not subject to the tax imposed by this Act.

4 (Source: P.A. 91-51, eff. 6-30-99.)

5 (35 ILCS 120/2a) (from Ch. 120, par. 441a)

6 Sec. 2a. It is unlawful for any person to engage in the

7 business of selling tangible personal propertyor taxable

8 serviceat retail in this State without a certificate of

9 registration from the Department. Application for a

10 certificate of registration shall be made to the Department

11 upon forms furnished by it. Each such application shall be

12 signed and verified and shall state: (1) the name and social

13 security number of the applicant; (2) the address of his

14 principal place of business; (3) the address of the principal

15 place of business from which he engages in the business of

16 selling tangible personal property or taxable serviceat retail

17 in this State and the addresses of all other places of

18 business, if any (enumerating such addresses, if any, in a

19 separate list attached to and made a part of the application),

20 from which he engages in the business of selling tangible

21 personal property or taxable service at retail in this State;

22 (4) the name and address of the person or persons who will be

23 responsible for filing returns and payment of taxes due under

24 this Act; (5) in the case of a publicly traded corporation, the

25 name and title of the Chief Financial Officer, Chief Operating

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1 Officer, and any other officer or employee with responsibility

2 for preparing tax returns under this Act, along with the last 4

3 digits of each of their social security numbers, and, in the

4 case of all other corporations, the name, title, and social

5 security number of each corporate officer; (6) in the case of a

6 limited liability company, the name, social security number,

7 and FEIN number of each manager and member; and (7) such other

8 information as the Department may reasonably require. The

9 application shall contain an acceptance of responsibility

10 signed by the person or persons who will be responsible for

11 filing returns and payment of the taxes due under this Act. If

12 the applicant will sell tangible personal property at retail

13 through vending machines, his application to register shall

14 indicate the number of vending machines to be so operated. If

15 requested by the Department at any time, that person shall

16 verify the total number of vending machines he or she uses in

17 his or her business of selling tangible personal property at

18 retail.

19 The Department may deny a certificate of registration to

20 any applicant if a person who is named as the owner, a partner,

21 a manager or member of a limited liability company, or a

22 corporate officer of the applicant on the application for the

23 certificate of registration is or has been named as the owner,

24 a partner, a manager or member of a limited liability company,

25 or a corporate officer on the application for the certificate

26 of registration of another retailer that is in default for

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1 moneys due under this Act or any other tax or fee Act

2 administered by the Department. For purposes of this paragraph

3 only, in determining whether a person is in default for moneys

4 due, the Department shall include only amounts established as a

5 final liability within the 20 years prior to the date of the

6 Department's notice of denial of a certificate of registration.

7 The Department may require an applicant for a certificate

8 of registration hereunder to, at the time of filing such

9 application, furnish a bond from a surety company authorized to

10 do business in the State of Illinois, or an irrevocable bank

11 letter of credit or a bond signed by 2 personal sureties who

12 have filed, with the Department, sworn statements disclosing

13 net assets equal to at least 3 times the amount of the bond to

14 be required of such applicant, or a bond secured by an

15 assignment of a bank account or certificate of deposit, stocks

16 or bonds, conditioned upon the applicant paying to the State of

17 Illinois all moneys becoming due under this Act and under any

18 other State tax law or municipal or county tax ordinance or

19 resolution under which the certificate of registration that is

20 issued to the applicant under this Act will permit the

21 applicant to engage in business without registering separately

22 under such other law, ordinance or resolution. In making a

23 determination as to whether to require a bond or other

24 security, the Department shall take into consideration whether

25 the owner, any partner, any manager or member of a limited

26 liability company, or a corporate officer of the applicant is

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1 or has been the owner, a partner, a manager or member of a

2 limited liability company, or a corporate officer of another

3 retailer that is in default for moneys due under this Act or

4 any other tax or fee Act administered by the Department; and

5 whether the owner, any partner, any manager or member of a

6 limited liability company, or a corporate officer of the

7 applicant is or has been the owner, a partner, a manager or

8 member of a limited liability company, or a corporate officer

9 of another retailer whose certificate of registration has been

10 revoked within the previous 5 years under this Act or any other

11 tax or fee Act administered by the Department. If a bond or

12 other security is required, the Department shall fix the amount

13 of the bond or other security, taking into consideration the

14 amount of money expected to become due from the applicant under

15 this Act and under any other State tax law or municipal or

16 county tax ordinance or resolution under which the certificate

17 of registration that is issued to the applicant under this Act

18 will permit the applicant to engage in business without

19 registering separately under such other law, ordinance, or

20 resolution. The amount of security required by the Department

21 shall be such as, in its opinion, will protect the State of

22 Illinois against failure to pay the amount which may become due

23 from the applicant under this Act and under any other State tax

24 law or municipal or county tax ordinance or resolution under

25 which the certificate of registration that is issued to the

26 applicant under this Act will permit the applicant to engage in

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1 business without registering separately under such other law,

2 ordinance or resolution, but the amount of the security

3 required by the Department shall not exceed three times the

4 amount of the applicant's average monthly tax liability, or

5 $50,000.00, whichever amount is lower.

6 No certificate of registration under this Act shall be

7 issued by the Department until the applicant provides the

8 Department with satisfactory security, if required, as herein

9 provided for.

10 Upon receipt of the application for certificate of

11 registration in proper form, and upon approval by the

12 Department of the security furnished by the applicant, if

13 required, the Department shall issue to such applicant a

14 certificate of registration which shall permit the person to

15 whom it is issued to engage in the business of selling tangible

16 personal property at retail in this State. The certificate of

17 registration shall be conspicuously displayed at the place of

18 business which the person so registered states in his

19 application to be the principal place of business from which he

20 engages in the business of selling tangible personal property

21 at retail in this State.

22 No certificate of registration issued to a taxpayer who

23 files returns required by this Act on a monthly basis shall be

24 valid after the expiration of 5 years from the date of its

25 issuance or last renewal. The expiration date of a

26 sub-certificate of registration shall be that of the

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1 certificate of registration to which the sub-certificate

2 relates. A certificate of registration shall automatically be

3 renewed, subject to revocation as provided by this Act, for an

4 additional 5 years from the date of its expiration unless

5 otherwise notified by the Department as provided by this

6 paragraph. Where a taxpayer to whom a certificate of

7 registration is issued under this Act is in default to the

8 State of Illinois for delinquent returns or for moneys due

9 under this Act or any other State tax law or municipal or

10 county ordinance administered or enforced by the Department,

11 the Department shall, not less than 60 days before the

12 expiration date of such certificate of registration, give

13 notice to the taxpayer to whom the certificate was issued of

14 the account period of the delinquent returns, the amount of

15 tax, penalty and interest due and owing from the taxpayer, and

16 that the certificate of registration shall not be automatically

17 renewed upon its expiration date unless the taxpayer, on or

18 before the date of expiration, has filed and paid the

19 delinquent returns or paid the defaulted amount in full. A

20 taxpayer to whom such a notice is issued shall be deemed an

21 applicant for renewal. The Department shall promulgate

22 regulations establishing procedures for taxpayers who file

23 returns on a monthly basis but desire and qualify to change to

24 a quarterly or yearly filing basis and will no longer be

25 subject to renewal under this Section, and for taxpayers who

26 file returns on a yearly or quarterly basis but who desire or

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1 are required to change to a monthly filing basis and will be

2 subject to renewal under this Section.

3 The Department may in its discretion approve renewal by an

4 applicant who is in default if, at the time of application for

5 renewal, the applicant files all of the delinquent returns or

6 pays to the Department such percentage of the defaulted amount

7 as may be determined by the Department and agrees in writing to

8 waive all limitations upon the Department for collection of the

9 remaining defaulted amount to the Department over a period not

10 to exceed 5 years from the date of renewal of the certificate;

11 however, no renewal application submitted by an applicant who

12 is in default shall be approved if the immediately preceding

13 renewal by the applicant was conditioned upon the installment

14 payment agreement described in this Section. The payment

15 agreement herein provided for shall be in addition to and not

16 in lieu of the security that may be required by this Section of

17 a taxpayer who is no longer considered a prior continuous

18 compliance taxpayer. The execution of the payment agreement as

19 provided in this Act shall not toll the accrual of interest at

20 the statutory rate.

21 The Department may suspend a certificate of registration if

22 the Department finds that the person to whom the certificate of

23 registration has been issued knowingly sold contraband

24 cigarettes.

25 A certificate of registration issued under this Act more

26 than 5 years before the effective date of this amendatory Act

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1 of 1989 shall expire and be subject to the renewal provisions

2 of this Section on the next anniversary of the date of issuance

3 of such certificate which occurs more than 6 months after the

4 effective date of this amendatory Act of 1989. A certificate of

5 registration issued less than 5 years before the effective date

6 of this amendatory Act of 1989 shall expire and be subject to

7 the renewal provisions of this Section on the 5th anniversary

8 of the issuance of the certificate.

9 If the person so registered states that he operates other

10 places of business from which he engages in the business of

11 selling tangible personal propertyor taxable service at retail

12 in this State, the Department shall furnish him with a

13 sub-certificate of registration for each such place of

14 business, and the applicant shall display the appropriate

15 sub-certificate of registration at each such place of business.

16 All sub-certificates of registration shall bear the same

17 registration number as that appearing upon the certificate of

18 registration to which such sub-certificates relate.

19 If the applicant will sell tangible personal property at

20 retail through vending machines, the Department shall furnish

21 him with a sub-certificate of registration for each such

22 vending machine, and the applicant shall display the

23 appropriate sub-certificate of registration on each such

24 vending machine by attaching the sub-certificate of

25 registration to a conspicuous part of such vending machine. If

26 a person who is registered to sell tangible personal property

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1 at retail through vending machines adds an additional vending

2 machine or additional vending machines to the number of vending

3 machines he or she uses in his or her business of selling

4 tangible personal property at retail, he or she shall notify

5 the Department, on a form prescribed by the Department, to

6 request an additional sub-certificate or additional

7 sub-certificates of registration, as applicable. With each

8 such request, the applicant shall report the number of

9 sub-certificates of registration he or she is requesting as

10 well as the total number of vending machines from which he or

11 she makes retail sales.

12 Where the same person engages in 2 or more businesses of

13 selling tangible personal propertyor taxable service at retail

14 in this State, which businesses are substantially different in

15 character or engaged in under different trade names or engaged

16 in under other substantially dissimilar circumstances (so that

17 it is more practicable, from an accounting, auditing or

18 bookkeeping standpoint, for such businesses to be separately

19 registered), the Department may require or permit such person

20 (subject to the same requirements concerning the furnishing of

21 security as those that are provided for hereinbefore in this

22 Section as to each application for a certificate of

23 registration) to apply for and obtain a separate certificate of

24 registration for each such business or for any of such

25 businesses, under a single certificate of registration

26 supplemented by related sub-certificates of registration.

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1 Any person who is registered under the "Retailers'

2 Occupation Tax Act" as of March 8, 1963, and who, during the

3 3-year period immediately prior to March 8, 1963, or during a

4 continuous 3-year period part of which passed immediately

5 before and the remainder of which passes immediately after

6 March 8, 1963, has been so registered continuously and who is

7 determined by the Department not to have been either delinquent

8 or deficient in the payment of tax liability during that period

9 under this Act or under any other State tax law or municipal or

10 county tax ordinance or resolution under which the certificate

11 of registration that is issued to the registrant under this Act

12 will permit the registrant to engage in business without

13 registering separately under such other law, ordinance or

14 resolution, shall be considered to be a Prior Continuous

15 Compliance taxpayer. Also any taxpayer who has, as verified by

16 the Department, faithfully and continuously complied with the

17 condition of his bond or other security under the provisions of

18 this Act for a period of 3 consecutive years shall be

19 considered to be a Prior Continuous Compliance taxpayer.

20 Every Prior Continuous Compliance taxpayer shall be exempt

21 from all requirements under this Act concerning the furnishing

22 of a bond or other security as a condition precedent to his

23 being authorized to engage in the business of selling tangible

24 personal property or taxable service at retail in this State.

25 This exemption shall continue for each such taxpayer until such

26 time as he may be determined by the Department to be delinquent

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1 in the filing of any returns, or is determined by the

2 Department (either through the Department's issuance of a final

3 assessment which has become final under the Act, or by the

4 taxpayer's filing of a return which admits tax that is not paid

5 to be due) to be delinquent or deficient in the paying of any

6 tax under this Act or under any other State tax law or

7 municipal or county tax ordinance or resolution under which the

8 certificate of registration that is issued to the registrant

9 under this Act will permit the registrant to engage in business

10 without registering separately under such other law, ordinance

11 or resolution, at which time that taxpayer shall become subject

12 to all the financial responsibility requirements of this Act

13 and, as a condition of being allowed to continue to engage in

14 the business of selling tangible personal propertyor taxable

15 serviceat retail, may be required to post bond or other

16 acceptable security with the Department covering liability

17 which such taxpayer may thereafter incur. Any taxpayer who

18 fails to pay an admitted or established liability under this

19 Act may also be required to post bond or other acceptable

20 security with this Department guaranteeing the payment of such

21 admitted or established liability.

22 No certificate of registration shall be issued to any

23 person who is in default to the State of Illinois for moneys

24 due under this Act or under any other State tax law or

25 municipal or county tax ordinance or resolution under which the

26 certificate of registration that is issued to the applicant

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1 under this Act will permit the applicant to engage in business

2 without registering separately under such other law, ordinance

3 or resolution.

4 Any person aggrieved by any decision of the Department

5 under this Section may, within 20 days after notice of such

6 decision, protest and request a hearing, whereupon the

7 Department shall give notice to such person of the time and

8 place fixed for such hearing and shall hold a hearing in

9 conformity with the provisions of this Act and then issue its

10 final administrative decision in the matter to such person. In

11 the absence of such a protest within 20 days, the Department's

12 decision shall become final without any further determination

13 being made or notice given.

14 With respect to security other than bonds (upon which the

15 Department may sue in the event of a forfeiture), if the

16 taxpayer fails to pay, when due, any amount whose payment such

17 security guarantees, the Department shall, after such

18 liability is admitted by the taxpayer or established by the

19 Department through the issuance of a final assessment that has

20 become final under the law, convert the security which that

21 taxpayer has furnished into money for the State, after first

22 giving the taxpayer at least 10 days' written notice, by

23 registered or certified mail, to pay the liability or forfeit

24 such security to the Department. If the security consists of

25 stocks or bonds or other securities which are listed on a

26 public exchange, the Department shall sell such securities

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1 through such public exchange. If the security consists of an

2 irrevocable bank letter of credit, the Department shall convert

3 the security in the manner provided for in the Uniform

4 Commercial Code. If the security consists of a bank certificate

5 of deposit, the Department shall convert the security into

6 money by demanding and collecting the amount of such bank

7 certificate of deposit from the bank which issued such

8 certificate. If the security consists of a type of stocks or

9 other securities which are not listed on a public exchange, the

10 Department shall sell such security to the highest and best

11 bidder after giving at least 10 days' notice of the date, time

12 and place of the intended sale by publication in the "State

13 Official Newspaper". If the Department realizes more than the

14 amount of such liability from the security, plus the expenses

15 incurred by the Department in converting the security into

16 money, the Department shall pay such excess to the taxpayer who

17 furnished such security, and the balance shall be paid into the

18 State Treasury.

19 The Department shall discharge any surety and shall release

20 and return any security deposited, assigned, pledged or

21 otherwise provided to it by a taxpayer under this Section

22 within 30 days after:

23 (1) such taxpayer becomes a Prior Continuous

24 Compliance taxpayer; or

25 (2) such taxpayer has ceased to collect receipts on

26 which he is required to remit tax to the Department, has

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1 filed a final tax return, and has paid to the Department an

2 amount sufficient to discharge his remaining tax

3 liability, as determined by the Department, under this Act

4 and under every other State tax law or municipal or county

5 tax ordinance or resolution under which the certificate of

6 registration issued under this Act permits the registrant

7 to engage in business without registering separately under

8 such other law, ordinance or resolution. The Department

9 shall make a final determination of the taxpayer's

10 outstanding tax liability as expeditiously as possible

11 after his final tax return has been filed; if the

12 Department cannot make such final determination within 45

13 days after receiving the final tax return, within such

14 period it shall so notify the taxpayer, stating its reasons

15 therefor.

16 (Source: P.A. 97-335, eff. 1-1-12; 98-496, eff. 1-1-14; 98-583,

17 eff. 1-1-14; 98-756, eff. 7-16-14; 98-974, eff. 1-1-15.)

18 (35 ILCS 120/2b) (from Ch. 120, par. 441b)

19 Sec. 2b. The Department may, after notice and a hearing as

20 provided herein, revoke the certificate of registration of any

21 person who violates any of the provisions of this Act. Before

22 revocation of a certificate of registration the Department

23 shall, within 90 days after non-compliance and at least 7 days

24 prior to the date of the hearing, give the person so accused

25 notice in writing of the charge against him or her, and on the

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1 date designated shall conduct a hearing upon this matter. The

2 lapse of such 90 day period shall not preclude the Department

3 from conducting revocation proceedings at a later date if

4 necessary. Any hearing held under this Section shall be

5 conducted by the Director of Revenue or by any officer or

6 employee of the Department designated, in writing, by the

7 Director of Revenue.

8 Upon the hearing of any such proceeding, the Director of

9 Revenue, or any officer or employee of the Department

10 designated, in writing, by the Director of Revenue, may

11 administer oaths and the Department may procure by its subpoena

12 the attendance of witnesses and, by its subpoena duces tecum,

13 the production of relevant books and papers. Any circuit court,

14 upon application either of the accused or of the Department,

15 may, by order duly entered, require the attendance of witnesses

16 and the production of relevant books and papers, before the

17 Department in any hearing relating to the revocation of

18 certificates of registration. Upon refusal or neglect to obey

19 the order of the court, the court may compel obedience thereof

20 by proceedings for contempt.

21 The Department may, by application to any circuit court,

22 obtain an injunction restraining any person who engages in the

23 business of selling tangible personal property or taxable

24 serviceat retail in this State without a certificate of

25 registration (either because the certificate of registration

26 has been revoked or because of a failure to obtain a

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1 certificate of registration in the first instance) from

2 engaging in such business until such person, as if he or she

3 were a new applicant for a certificate of registration, shall

4 comply with all of the conditions, restrictions and

5 requirements of Section 2a of this Act and qualify for and

6 obtain a certificate of registration. Upon refusal or neglect

7 to obey the order of the court, the court may compel obedience

8 thereof by proceedings for contempt.

9 It shall not be a defense in a proceeding before the

10 Department to revoke a certificate of registration issued under

11 the Act, or in any action by the Department to collect any tax

12 due under this Act, that the holder of the certificate is a

13 party to an installment payment agreement under Section 2a of

14 this Act if the liability which is the basis of the revocation

15 proceeding, or the tax that is sought to be collected: (1) was

16 incurred after the date of the agreement was approved by the

17 Department; or (2) was incurred prior to the date the agreement

18 was approved by the Department, but was not included in the

19 agreement; or (3) was included in the agreement, but the

20 taxpayer is in default of the agreement.

21 (Source: P.A. 86-338; 86-383; 86-1028.)

22 (35 ILCS 120/2c) (from Ch. 120, par. 441c)

23 Sec. 2c. If the purchaser is not registered with the

24 Department as a taxpayer, but claims to be a reseller of the

25 tangible personal property or taxable servicein such a way

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1 that such resales are not taxable under this Act or under some

2 other tax law which the Department may administer, such

3 purchaser (except in the case of an out-of-State purchaser who

4 will always resell and deliver the property to his customers

5 outside Illinois) shall apply to the Department for a resale

6 number. Such applicant shall state facts which will show the

7 Department why such applicant is not liable for tax under this

8 Act or under some other tax law which the Department may

9 administer on any of his resales and shall furnish such

10 additional information as the Department may reasonably

11 require.

12 Upon approval of the application, the Department shall

13 assign a resale number to the applicant and shall certify such

14 number to him. The Department may cancel any such number which

15 is obtained through misrepresentation, or which is used to make

16 a purchase tax-free when the purchase in fact is not a purchase

17 for resale, or which no longer applies because of the

18 purchaser's having discontinued the making of tax exempt

19 resales of the property.

20 The Department may restrict the use of the number to one

21 year at a time or to some other definite period if the

22 Department finds it impracticable or otherwise inadvisable to

23 issue such numbers for indefinite periods.

24 Except as provided hereinabove in this Section, a sale

25 shall be made tax-free on the ground of being a sale for resale

26 if the purchaser has an active registration number or resale

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1 number from the Department and furnishes that number to the

2 seller in connection with certifying to the seller that any

3 sale to such purchaser is nontaxable because of being a sale

4 for resale.

5 Failure to present an active registration number or resale

6 number and a certification to the seller that a sale is for

7 resale creates a presumption that a sale is not for resale.

8 This presumption may be rebutted by other evidence that all of

9 the seller's sales are sale for resale, or that a particular

10 sale is a sale for resale.

11 (Source: P.A. 83-1463.)

12 (35 ILCS 120/3) (from Ch. 120, par. 442)

13 Sec. 3. Except as provided in this Section, on or before

14 the twentieth day of each calendar month, every person engaged

15 in the business of selling tangible personal propertyor

16 taxable serviceat retail in this State during the preceding

17 calendar month shall file a return with the Department,

18 stating:

19 1. The name of the seller;

20 2. His residence address and the address of his

21 principal place of business and the address of the

22 principal place of business (if that is a different

23 address) from which he engages in the business of selling

24 tangible personal property or taxable service at retail in

25 this State;

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1 3. Total amount of receipts received by him during the

2 preceding calendar month or quarter, as the case may be,

3 from sales of tangible personal propertyand taxable

4 service, and from services other than taxable services

5 furnished, by him during such preceding calendar month or

6 quarter;

7 4. Total amount received by him during the preceding

8 calendar month or quarter on charge and time sales of

9 tangible personal property and taxable service, and from

10 services other than taxable services furnished, by him

11 prior to the month or quarter for which the return is

12 filed;

13 5. Deductions allowed by law;

14 6. Gross receipts which were received by him during the

15 preceding calendar month or quarter and upon the basis of

16 which the tax is imposed;

17 7. The amount of credit provided in Section 2d of this

18 Act;

19 8. The amount of tax due;

20 9. The signature of the taxpayer; and

21 10. Such other reasonable information as the

22 Department may require.

23 If a taxpayer fails to sign a return within 30 days after

24 the proper notice and demand for signature by the Department,

25 the return shall be considered valid and any amount shown to be

26 due on the return shall be deemed assessed.

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1 Each return shall be accompanied by the statement of

2 prepaid tax issued pursuant to Section 2e for which credit is

3 claimed.

4 Prior to October 1, 2003, and on and after September 1,

5 2004 a retailer may accept a Manufacturer's Purchase Credit

6 certification from a purchaser in satisfaction of Use Tax as

7 provided in Section 3-85 of the Use Tax Act if the purchaser

8 provides the appropriate documentation as required by Section

9 3-85 of the Use Tax Act. A Manufacturer's Purchase Credit

10 certification, accepted by a retailer prior to October 1, 2003

11 and on and after September 1, 2004 as provided in Section 3-85

12 of the Use Tax Act, may be used by that retailer to satisfy

13 Retailers' Occupation Tax liability in the amount claimed in

14 the certification, not to exceed 6.25% of the receipts subject

15 to tax from a qualifying purchase. A Manufacturer's Purchase

16 Credit reported on any original or amended return filed under

17 this Act after October 20, 2003 for reporting periods prior to

18 September 1, 2004 shall be disallowed. Manufacturer's

19 Purchaser Credit reported on annual returns due on or after

20 January 1, 2005 will be disallowed for periods prior to

21 September 1, 2004. No Manufacturer's Purchase Credit may be

22 used after September 30, 2003 through August 31, 2004 to

23 satisfy any tax liability imposed under this Act, including any

24 audit liability.

25 The Department may require returns to be filed on a

26 quarterly basis. If so required, a return for each calendar

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1 quarter shall be filed on or before the twentieth day of the

2 calendar month following the end of such calendar quarter. The

3 taxpayer shall also file a return with the Department for each

4 of the first two months of each calendar quarter, on or before

5 the twentieth day of the following calendar month, stating:

6 1. The name of the seller;

7 2. The address of the principal place of business from

8 which he engages in the business of selling tangible

9 personal property at retail in this State;

10 3. The total amount of taxable receipts received by him

11 during the preceding calendar month from sales of tangible

12 personal property and taxable servicesby him during such

13 preceding calendar month, including receipts from charge

14 and time sales, but less all deductions allowed by law;

15 4. The amount of credit provided in Section 2d of this

16 Act;

17 5. The amount of tax due; and

18 6. Such other reasonable information as the Department

19 may require.

20 Beginning on October 1, 2003, any person who is not a

21 licensed distributor, importing distributor, or manufacturer,

22 as defined in the Liquor Control Act of 1934, but is engaged in

23 the business of selling, at retail, alcoholic liquor shall file

24 a statement with the Department of Revenue, in a format and at

25 a time prescribed by the Department, showing the total amount

26 paid for alcoholic liquor purchased during the preceding month

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1 and such other information as is reasonably required by the

2 Department. The Department may adopt rules to require that this

3 statement be filed in an electronic or telephonic format. Such

4 rules may provide for exceptions from the filing requirements

5 of this paragraph. For the purposes of this paragraph, the term

6 "alcoholic liquor" shall have the meaning prescribed in the

7 Liquor Control Act of 1934.

8 Beginning on October 1, 2003, every distributor, importing

9 distributor, and manufacturer of alcoholic liquor as defined in

10 the Liquor Control Act of 1934, shall file a statement with the

11 Department of Revenue, no later than the 10th day of the month

12 for the preceding month during which transactions occurred, by

13 electronic means, showing the total amount of gross receipts

14 from the sale of alcoholic liquor sold or distributed during

15 the preceding month to purchasers; identifying the purchaser to

16 whom it was sold or distributed; the purchaser's tax

17 registration number; and such other information reasonably

18 required by the Department. A distributor, importing

19 distributor, or manufacturer of alcoholic liquor must

20 personally deliver, mail, or provide by electronic means to

21 each retailer listed on the monthly statement a report

22 containing a cumulative total of that distributor's, importing

23 distributor's, or manufacturer's total sales of alcoholic

24 liquor to that retailer no later than the 10th day of the month

25 for the preceding month during which the transaction occurred.

26 The distributor, importing distributor, or manufacturer shall

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1 notify the retailer as to the method by which the distributor,

2 importing distributor, or manufacturer will provide the sales

3 information. If the retailer is unable to receive the sales

4 information by electronic means, the distributor, importing

5 distributor, or manufacturer shall furnish the sales

6 information by personal delivery or by mail. For purposes of

7 this paragraph, the term "electronic means" includes, but is

8 not limited to, the use of a secure Internet website, e-mail,

9 or facsimile.

10 If a total amount of less than $1 is payable, refundable or

11 creditable, such amount shall be disregarded if it is less than

12 50 cents and shall be increased to $1 if it is 50 cents or more.

13 Beginning October 1, 1993, a taxpayer who has an average

14 monthly tax liability of $150,000 or more shall make all

15 payments required by rules of the Department by electronic

16 funds transfer. Beginning October 1, 1994, a taxpayer who has

17 an average monthly tax liability of $100,000 or more shall make

18 all payments required by rules of the Department by electronic

19 funds transfer. Beginning October 1, 1995, a taxpayer who has

20 an average monthly tax liability of $50,000 or more shall make

21 all payments required by rules of the Department by electronic

22 funds transfer. Beginning October 1, 2000, a taxpayer who has

23 an annual tax liability of $200,000 or more shall make all

24 payments required by rules of the Department by electronic

25 funds transfer. The term "annual tax liability" shall be the

26 sum of the taxpayer's liabilities under this Act, and under all

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1 other State and local occupation and use tax laws administered

2 by the Department, for the immediately preceding calendar year.

3 The term "average monthly tax liability" shall be the sum of

4 the taxpayer's liabilities under this Act, and under all other

5 State and local occupation and use tax laws administered by the

6 Department, for the immediately preceding calendar year

7 divided by 12. Beginning on October 1, 2002, a taxpayer who has

8 a tax liability in the amount set forth in subsection (b) of

9 Section 2505-210 of the Department of Revenue Law shall make

10 all payments required by rules of the Department by electronic

11 funds transfer.

12 Before August 1 of each year beginning in 1993, the

13 Department shall notify all taxpayers required to make payments

14 by electronic funds transfer. All taxpayers required to make

15 payments by electronic funds transfer shall make those payments

16 for a minimum of one year beginning on October 1.

17 Any taxpayer not required to make payments by electronic

18 funds transfer may make payments by electronic funds transfer

19 with the permission of the Department.

20 All taxpayers required to make payment by electronic funds

21 transfer and any taxpayers authorized to voluntarily make

22 payments by electronic funds transfer shall make those payments

23 in the manner authorized by the Department.

24 The Department shall adopt such rules as are necessary to

25 effectuate a program of electronic funds transfer and the

26 requirements of this Section.

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1 Any amount which is required to be shown or reported on any

2 return or other document under this Act shall, if such amount

3 is not a whole-dollar amount, be increased to the nearest

4 whole-dollar amount in any case where the fractional part of a

5 dollar is 50 cents or more, and decreased to the nearest

6 whole-dollar amount where the fractional part of a dollar is

7 less than 50 cents.

8 If the retailer is otherwise required to file a monthly

9 return and if the retailer's average monthly tax liability to

10 the Department does not exceed $200, the Department may

11 authorize his returns to be filed on a quarter annual basis,

12 with the return for January, February and March of a given year

13 being due by April 20 of such year; with the return for April,

14 May and June of a given year being due by July 20 of such year;

15 with the return for July, August and September of a given year

16 being due by October 20 of such year, and with the return for

17 October, November and December of a given year being due by

18 January 20 of the following year.

19 If the retailer is otherwise required to file a monthly or

20 quarterly return and if the retailer's average monthly tax

21 liability with the Department does not exceed $50, the

22 Department may authorize his returns to be filed on an annual

23 basis, with the return for a given year being due by January 20

24 of the following year.

25 Such quarter annual and annual returns, as to form and

26 substance, shall be subject to the same requirements as monthly

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1 returns.

2 Notwithstanding any other provision in this Act concerning

3 the time within which a retailer may file his return, in the

4 case of any retailer who ceases to engage in a kind of business

5 which makes him responsible for filing returns under this Act,

6 such retailer shall file a final return under this Act with the

7 Department not more than one month after discontinuing such

8 business.

9 Where the same person has more than one business registered

10 with the Department under separate registrations under this

11 Act, such person may not file each return that is due as a

12 single return covering all such registered businesses, but

13 shall file separate returns for each such registered business.

14 In addition, with respect to motor vehicles, watercraft,

15 aircraft, and trailers that are required to be registered with

16 an agency of this State, every retailer selling this kind of

17 tangible personal property shall file, with the Department,

18 upon a form to be prescribed and supplied by the Department, a

19 separate return for each such item of tangible personal

20 property which the retailer sells, except that if, in the same

21 transaction, (i) a retailer of aircraft, watercraft, motor

22 vehicles or trailers transfers more than one aircraft,

23 watercraft, motor vehicle or trailer to another aircraft,

24 watercraft, motor vehicle retailer or trailer retailer for the

25 purpose of resale or (ii) a retailer of aircraft, watercraft,

26 motor vehicles, or trailers transfers more than one aircraft,

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1 watercraft, motor vehicle, or trailer to a purchaser for use as

2 a qualifying rolling stock as provided in Section 2-5 of this

3 Act, then that seller may report the transfer of all aircraft,

4 watercraft, motor vehicles or trailers involved in that

5 transaction to the Department on the same uniform

6 invoice-transaction reporting return form. For purposes of

7 this Section, "watercraft" means a Class 2, Class 3, or Class 4

8 watercraft as defined in Section 3-2 of the Boat Registration

9 and Safety Act, a personal watercraft, or any boat equipped

10 with an inboard motor.

11 Any retailer who sells only motor vehicles, watercraft,

12 aircraft, or trailers that are required to be registered with

13 an agency of this State, so that all retailers' occupation tax

14 liability is required to be reported, and is reported, on such

15 transaction reporting returns and who is not otherwise required

16 to file monthly or quarterly returns, need not file monthly or

17 quarterly returns. However, those retailers shall be required

18 to file returns on an annual basis.

19 The transaction reporting return, in the case of motor

20 vehicles or trailers that are required to be registered with an

21 agency of this State, shall be the same document as the Uniform

22 Invoice referred to in Section 5-402 of The Illinois Vehicle

23 Code and must show the name and address of the seller; the name

24 and address of the purchaser; the amount of the selling price

25 including the amount allowed by the retailer for traded-in

26 property, if any; the amount allowed by the retailer for the

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1 traded-in tangible personal property, if any, to the extent to

2 which Section 1 of this Act allows an exemption for the value

3 of traded-in property; the balance payable after deducting such

4 trade-in allowance from the total selling price; the amount of

5 tax due from the retailer with respect to such transaction; the

6 amount of tax collected from the purchaser by the retailer on

7 such transaction (or satisfactory evidence that such tax is not

8 due in that particular instance, if that is claimed to be the

9 fact); the place and date of the sale; a sufficient

10 identification of the property sold; such other information as

11 is required in Section 5-402 of The Illinois Vehicle Code, and

12 such other information as the Department may reasonably

13 require.

14 The transaction reporting return in the case of watercraft

15 or aircraft must show the name and address of the seller; the

16 name and address of the purchaser; the amount of the selling

17 price including the amount allowed by the retailer for

18 traded-in property, if any; the amount allowed by the retailer

19 for the traded-in tangible personal property, if any, to the

20 extent to which Section 1 of this Act allows an exemption for

21 the value of traded-in property; the balance payable after

22 deducting such trade-in allowance from the total selling price;

23 the amount of tax due from the retailer with respect to such

24 transaction; the amount of tax collected from the purchaser by

25 the retailer on such transaction (or satisfactory evidence that

26 such tax is not due in that particular instance, if that is

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1 claimed to be the fact); the place and date of the sale, a

2 sufficient identification of the property sold, and such other

3 information as the Department may reasonably require.

4 Such transaction reporting return shall be filed not later

5 than 20 days after the day of delivery of the item that is

6 being sold, but may be filed by the retailer at any time sooner

7 than that if he chooses to do so. The transaction reporting

8 return and tax remittance or proof of exemption from the

9 Illinois use tax may be transmitted to the Department by way of

10 the State agency with which, or State officer with whom the

11 tangible personal property must be titled or registered (if

12 titling or registration is required) if the Department and such

13 agency or State officer determine that this procedure will

14 expedite the processing of applications for title or

15 registration.

16 With each such transaction reporting return, the retailer

17 shall remit the proper amount of tax due (or shall submit

18 satisfactory evidence that the sale is not taxable if that is

19 the case), to the Department or its agents, whereupon the

20 Department shall issue, in the purchaser's name, a use tax

21 receipt (or a certificate of exemption if the Department is

22 satisfied that the particular sale is tax exempt) which such

23 purchaser may submit to the agency with which, or State officer

24 with whom, he must title or register the tangible personal

25 property that is involved (if titling or registration is

26 required) in support of such purchaser's application for an

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1 Illinois certificate or other evidence of title or registration

2 to such tangible personal property.

3 No retailer's failure or refusal to remit tax under this

4 Act precludes a user, who has paid the proper tax to the

5 retailer, from obtaining his certificate of title or other

6 evidence of title or registration (if titling or registration

7 is required) upon satisfying the Department that such user has

8 paid the proper tax (if tax is due) to the retailer. The

9 Department shall adopt appropriate rules to carry out the

10 mandate of this paragraph.

11 If the user who would otherwise pay tax to the retailer

12 wants the transaction reporting return filed and the payment of

13 the tax or proof of exemption made to the Department before the

14 retailer is willing to take these actions and such user has not

15 paid the tax to the retailer, such user may certify to the fact

16 of such delay by the retailer and may (upon the Department

17 being satisfied of the truth of such certification) transmit

18 the information required by the transaction reporting return

19 and the remittance for tax or proof of exemption directly to

20 the Department and obtain his tax receipt or exemption

21 determination, in which event the transaction reporting return

22 and tax remittance (if a tax payment was required) shall be

23 credited by the Department to the proper retailer's account

24 with the Department, but without the 2.1% or 1.75% discount

25 provided for in this Section being allowed. When the user pays

26 the tax directly to the Department, he shall pay the tax in the

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1 same amount and in the same form in which it would be remitted

2 if the tax had been remitted to the Department by the retailer.

3 Refunds made by the seller during the preceding return

4 period to purchasers, on account of tangible personal property

5 returned to the selleror taxable services not performed in

6 full, shall be allowed as a deduction under subdivision 5 of

7 his monthly or quarterly return, as the case may be, in case

8 the seller had theretofore included the receipts from the sale

9 of such tangible personal property in a return filed by him and

10 had paid the tax imposed by this Act with respect to such

11 receipts.

12 Where the seller is a corporation, the return filed on

13 behalf of such corporation shall be signed by the president,

14 vice-president, secretary or treasurer or by the properly

15 accredited agent of such corporation.

16 Where the seller is a limited liability company, the return

17 filed on behalf of the limited liability company shall be

18 signed by a manager, member, or properly accredited agent of

19 the limited liability company.

20 Except as provided in this Section, the retailer filing the

21 return under this Section shall, at the time of filing such

22 return, pay to the Department the amount of tax imposed by this

23 Act less a discount of 2.1% prior to January 1, 1990 and 1.75%

24 on and after January 1, 1990, or $5 per calendar year,

25 whichever is greater, which is allowed to reimburse the

26 retailer for the expenses incurred in keeping records,

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1 preparing and filing returns, remitting the tax and supplying

2 data to the Department on request. Any prepayment made pursuant

3 to Section 2d of this Act shall be included in the amount on

4 which such 2.1% or 1.75% discount is computed. In the case of

5 retailers who report and pay the tax on a transaction by

6 transaction basis, as provided in this Section, such discount

7 shall be taken with each such tax remittance instead of when

8 such retailer files his periodic return. The Department may

9 disallow the discount for retailers whose certificate of

10 registration is revoked at the time the return is filed, but

11 only if the Department's decision to revoke the certificate of

12 registration has become final.

13 Before October 1, 2000, if the taxpayer's average monthly

14 tax liability to the Department under this Act, the Use Tax

15 Act, the Service Occupation Tax Act, and the Service Use Tax

16 Act, excluding any liability for prepaid sales tax to be

17 remitted in accordance with Section 2d of this Act, was $10,000

18 or more during the preceding 4 complete calendar quarters, he

19 shall file a return with the Department each month by the 20th

20 day of the month next following the month during which such tax

21 liability is incurred and shall make payments to the Department

22 on or before the 7th, 15th, 22nd and last day of the month

23 during which such liability is incurred. On and after October

24 1, 2000, if the taxpayer's average monthly tax liability to the

25 Department under this Act, the Use Tax Act, the Service

26 Occupation Tax Act, and the Service Use Tax Act, excluding any

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1 liability for prepaid sales tax to be remitted in accordance

2 with Section 2d of this Act, was $20,000 or more during the

3 preceding 4 complete calendar quarters, he shall file a return

4 with the Department each month by the 20th day of the month

5 next following the month during which such tax liability is

6 incurred and shall make payment to the Department on or before

7 the 7th, 15th, 22nd and last day of the month during which such

8 liability is incurred. If the month during which such tax

9 liability is incurred began prior to January 1, 1985, each

10 payment shall be in an amount equal to 1/4 of the taxpayer's

11 actual liability for the month or an amount set by the

12 Department not to exceed 1/4 of the average monthly liability

13 of the taxpayer to the Department for the preceding 4 complete

14 calendar quarters (excluding the month of highest liability and

15 the month of lowest liability in such 4 quarter period). If the

16 month during which such tax liability is incurred begins on or

17 after January 1, 1985 and prior to January 1, 1987, each

18 payment shall be in an amount equal to 22.5% of the taxpayer's

19 actual liability for the month or 27.5% of the taxpayer's

20 liability for the same calendar month of the preceding year. If

21 the month during which such tax liability is incurred begins on

22 or after January 1, 1987 and prior to January 1, 1988, each

23 payment shall be in an amount equal to 22.5% of the taxpayer's

24 actual liability for the month or 26.25% of the taxpayer's

25 liability for the same calendar month of the preceding year. If

26 the month during which such tax liability is incurred begins on

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1 or after January 1, 1988, and prior to January 1, 1989, or

2 begins on or after January 1, 1996, each payment shall be in an

3 amount equal to 22.5% of the taxpayer's actual liability for

4 the month or 25% of the taxpayer's liability for the same

5 calendar month of the preceding year. If the month during which

6 such tax liability is incurred begins on or after January 1,

7 1989, and prior to January 1, 1996, each payment shall be in an

8 amount equal to 22.5% of the taxpayer's actual liability for

9 the month or 25% of the taxpayer's liability for the same

10 calendar month of the preceding year or 100% of the taxpayer's

11 actual liability for the quarter monthly reporting period. The

12 amount of such quarter monthly payments shall be credited

13 against the final tax liability of the taxpayer's return for

14 that month. Before October 1, 2000, once applicable, the

15 requirement of the making of quarter monthly payments to the

16 Department by taxpayers having an average monthly tax liability

17 of $10,000 or more as determined in the manner provided above

18 shall continue until such taxpayer's average monthly liability

19 to the Department during the preceding 4 complete calendar

20 quarters (excluding the month of highest liability and the

21 month of lowest liability) is less than $9,000, or until such

22 taxpayer's average monthly liability to the Department as

23 computed for each calendar quarter of the 4 preceding complete

24 calendar quarter period is less than $10,000. However, if a

25 taxpayer can show the Department that a substantial change in

26 the taxpayer's business has occurred which causes the taxpayer

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1 to anticipate that his average monthly tax liability for the

2 reasonably foreseeable future will fall below the $10,000

3 threshold stated above, then such taxpayer may petition the

4 Department for a change in such taxpayer's reporting status. On

5 and after October 1, 2000, once applicable, the requirement of

6 the making of quarter monthly payments to the Department by

7 taxpayers having an average monthly tax liability of $20,000 or

8 more as determined in the manner provided above shall continue

9 until such taxpayer's average monthly liability to the

10 Department during the preceding 4 complete calendar quarters

11 (excluding the month of highest liability and the month of

12 lowest liability) is less than $19,000 or until such taxpayer's

13 average monthly liability to the Department as computed for

14 each calendar quarter of the 4 preceding complete calendar

15 quarter period is less than $20,000. However, if a taxpayer can

16 show the Department that a substantial change in the taxpayer's

17 business has occurred which causes the taxpayer to anticipate

18 that his average monthly tax liability for the reasonably

19 foreseeable future will fall below the $20,000 threshold stated

20 above, then such taxpayer may petition the Department for a

21 change in such taxpayer's reporting status. The Department

22 shall change such taxpayer's reporting status unless it finds

23 that such change is seasonal in nature and not likely to be

24 long term. If any such quarter monthly payment is not paid at

25 the time or in the amount required by this Section, then the

26 taxpayer shall be liable for penalties and interest on the

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1 difference between the minimum amount due as a payment and the

2 amount of such quarter monthly payment actually and timely

3 paid, except insofar as the taxpayer has previously made

4 payments for that month to the Department in excess of the

5 minimum payments previously due as provided in this Section.

6 The Department shall make reasonable rules and regulations to

7 govern the quarter monthly payment amount and quarter monthly

8 payment dates for taxpayers who file on other than a calendar

9 monthly basis.

10 The provisions of this paragraph apply before October 1,

11 2001. Without regard to whether a taxpayer is required to make

12 quarter monthly payments as specified above, any taxpayer who

13 is required by Section 2d of this Act to collect and remit

14 prepaid taxes and has collected prepaid taxes which average in

15 excess of $25,000 per month during the preceding 2 complete

16 calendar quarters, shall file a return with the Department as

17 required by Section 2f and shall make payments to the

18 Department on or before the 7th, 15th, 22nd and last day of the

19 month during which such liability is incurred. If the month

20 during which such tax liability is incurred began prior to

21 September 1, 1985 (the effective date of Public Act 84-221)

22 ~~this amendatory Act of 1985~~, each payment shall be in an amount

23 not less than 22.5% of the taxpayer's actual liability under

24 Section 2d. If the month during which such tax liability is

25 incurred begins on or after January 1, 1986, each payment shall

26 be in an amount equal to 22.5% of the taxpayer's actual

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1 liability for the month or 27.5% of the taxpayer's liability

2 for the same calendar month of the preceding calendar year. If

3 the month during which such tax liability is incurred begins on

4 or after January 1, 1987, each payment shall be in an amount

5 equal to 22.5% of the taxpayer's actual liability for the month

6 or 26.25% of the taxpayer's liability for the same calendar

7 month of the preceding year. The amount of such quarter monthly

8 payments shall be credited against the final tax liability of

9 the taxpayer's return for that month filed under this Section

10 or Section 2f, as the case may be. Once applicable, the

11 requirement of the making of quarter monthly payments to the

12 Department pursuant to this paragraph shall continue until such

13 taxpayer's average monthly prepaid tax collections during the

14 preceding 2 complete calendar quarters is $25,000 or less. If

15 any such quarter monthly payment is not paid at the time or in

16 the amount required, the taxpayer shall be liable for penalties

17 and interest on such difference, except insofar as the taxpayer

18 has previously made payments for that month in excess of the

19 minimum payments previously due.

20 The provisions of this paragraph apply on and after October

21 1, 2001. Without regard to whether a taxpayer is required to

22 make quarter monthly payments as specified above, any taxpayer

23 who is required by Section 2d of this Act to collect and remit

24 prepaid taxes and has collected prepaid taxes that average in

25 excess of $20,000 per month during the preceding 4 complete

26 calendar quarters shall file a return with the Department as

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1 required by Section 2f and shall make payments to the

2 Department on or before the 7th, 15th, 22nd and last day of the

3 month during which the liability is incurred. Each payment

4 shall be in an amount equal to 22.5% of the taxpayer's actual

5 liability for the month or 25% of the taxpayer's liability for

6 the same calendar month of the preceding year. The amount of

7 the quarter monthly payments shall be credited against the

8 final tax liability of the taxpayer's return for that month

9 filed under this Section or Section 2f, as the case may be.

10 Once applicable, the requirement of the making of quarter

11 monthly payments to the Department pursuant to this paragraph

12 shall continue until the taxpayer's average monthly prepaid tax

13 collections during the preceding 4 complete calendar quarters

14 (excluding the month of highest liability and the month of

15 lowest liability) is less than $19,000 or until such taxpayer's

16 average monthly liability to the Department as computed for

17 each calendar quarter of the 4 preceding complete calendar

18 quarters is less than $20,000. If any such quarter monthly

19 payment is not paid at the time or in the amount required, the

20 taxpayer shall be liable for penalties and interest on such

21 difference, except insofar as the taxpayer has previously made

22 payments for that month in excess of the minimum payments

23 previously due.

24 If any payment provided for in this Section exceeds the

25 taxpayer's liabilities under this Act, the Use Tax Act, the

26 Service Occupation Tax Act and the Service Use Tax Act, as

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1 shown on an original monthly return, the Department shall, if

2 requested by the taxpayer, issue to the taxpayer a credit

3 memorandum no later than 30 days after the date of payment. The

4 credit evidenced by such credit memorandum may be assigned by

5 the taxpayer to a similar taxpayer under this Act, the Use Tax

6 Act, the Service Occupation Tax Act or the Service Use Tax Act,

7 in accordance with reasonable rules and regulations to be

8 prescribed by the Department. If no such request is made, the

9 taxpayer may credit such excess payment against tax liability

10 subsequently to be remitted to the Department under this Act,

11 the Use Tax Act, the Service Occupation Tax Act or the Service

12 Use Tax Act, in accordance with reasonable rules and

13 regulations prescribed by the Department. If the Department

14 subsequently determined that all or any part of the credit

15 taken was not actually due to the taxpayer, the taxpayer's 2.1%

16 and 1.75% vendor's discount shall be reduced by 2.1% or 1.75%

17 of the difference between the credit taken and that actually

18 due, and that taxpayer shall be liable for penalties and

19 interest on such difference.

20 If a retailer of motor fuel is entitled to a credit under

21 Section 2d of this Act which exceeds the taxpayer's liability

22 to the Department under this Act for the month which the

23 taxpayer is filing a return, the Department shall issue the

24 taxpayer a credit memorandum for the excess.

25 Beginning January 1, 1990, each month the Department shall

26 pay into the Local Government Tax Fund, a special fund in the

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1 State treasury which is hereby created, the net revenue

2 realized for the preceding month from the 1% tax on sales of

3 food for human consumption which is to be consumed off the

4 premises where it is sold (other than alcoholic beverages, soft

5 drinks and food which has been prepared for immediate

6 consumption) and prescription and nonprescription medicines,

7 drugs, medical appliances, products classified as Class III

8 medical devices by the United States Food and Drug

9 Administration that are used for cancer treatment pursuant to a

10 prescription, as well as any accessories and components related

11 to those devices, and insulin, urine testing materials,

12 syringes and needles used by diabetics.

13 Beginning January 1, 1990, each month the Department shall

14 pay into the County and Mass Transit District Fund, a special

15 fund in the State treasury which is hereby created, 4% of the

16 net revenue realized for the preceding month from the 6.25%

17 general rate.

18 Beginning August 1, 2000, each month the Department shall

19 pay into the County and Mass Transit District Fund 20% of the

20 net revenue realized for the preceding month from the 1.25%

21 rate on the selling price of motor fuel and gasohol. Beginning

22 September 1, 2010, each month the Department shall pay into the

23 County and Mass Transit District Fund 20% of the net revenue

24 realized for the preceding month from the 1.25% rate on the

25 selling price of sales tax holiday items.

26 Beginning January 1, 1990, each month the Department shall

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1 pay into the Local Government Tax Fund 16% of the net revenue

2 realized for the preceding month from the 6.25% general rate on

3 the selling price of tangible personal property.

4 From July 1, 2017 through June 30, 2018, no deposits shall

5 be made into the County and Mass Transit District Fund or the

6 Local Government Tax Fund from the net revenue realized from

7 the 6.25% general rate on taxable services. Beginning July 1,

8 2018 and through June 30, 2019, each month the Department shall

9 pay into the County and Mass Transit District Fund 1.4% of the

10 net revenue realized for the preceding month from the 6.25%

11 general rate on the selling price of taxable services and shall

12 pay into the Local Government Tax Fund 5.6% of the net revenue

13 realized for the preceding month from the 6.25% general rate on

14 the selling price of taxable services. Beginning July 1, 2019

15 and through June 30, 2020, each month the Department shall pay

16 into the County and Mass Transit District Fund 2.6% of the net

17 revenue realized for the preceding month from the 6.25% general

18 rate on the selling price of taxable services and shall pay

19 into the Local Government Tax Fund 10.4% of the net revenue

20 realized for the preceding month from the 6.25% general rate on

21 the selling price of taxable services. Beginning July 1, 2020,

22 each month the Department shall pay into the County and Mass

23 Transit District Fund 4% of the net revenue realized for the

24 preceding month from the 6.25% general rate on the selling

25 price of taxable services and shall pay into the Local

26 Government Tax Fund 16% of the net revenue realized for the

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1 preceding month from the 6.25% general rate on the selling

2 price of taxable services.

3 Beginning August 1, 2000, each month the Department shall

4 pay into the Local Government Tax Fund 80% of the net revenue

5 realized for the preceding month from the 1.25% rate on the

6 selling price of motor fuel and gasohol. Beginning September 1,

7 2010, each month the Department shall pay into the Local

8 Government Tax Fund 80% of the net revenue realized for the

9 preceding month from the 1.25% rate on the selling price of

10 sales tax holiday items.

11 Beginning October 1, 2009, each month the Department shall

12 pay into the Capital Projects Fund an amount that is equal to

13 an amount estimated by the Department to represent 80% of the

14 net revenue realized for the preceding month from the sale of

15 candy, grooming and hygiene products, and soft drinks that had

16 been taxed at a rate of 1% prior to September 1, 2009 but that

17 are now taxed at 6.25%.

18 Beginning July 1, 2011, each month the Department shall pay

19 into the Clean Air Act Permit Fund 80% of the net revenue

20 realized for the preceding month from the 6.25% general rate on

21 the selling price of sorbents used in Illinois in the process

22 of sorbent injection as used to comply with the Environmental

23 Protection Act or the federal Clean Air Act, but the total

24 payment into the Clean Air Act Permit Fund under this Act and

25 the Use Tax Act shall not exceed $2,000,000 in any fiscal year.

26 Beginning July 1, 2013, each month the Department shall pay

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1 into the Underground Storage Tank Fund from the proceeds

2 collected under this Act, the Use Tax Act, the Service Use Tax

3 Act, and the Service Occupation Tax Act an amount equal to the

4 average monthly deficit in the Underground Storage Tank Fund

5 during the prior year, as certified annually by the Illinois

6 Environmental Protection Agency, but the total payment into the

7 Underground Storage Tank Fund under this Act, the Use Tax Act,

8 the Service Use Tax Act, and the Service Occupation Tax Act

9 shall not exceed $18,000,000 in any State fiscal year. As used

10 in this paragraph, the "average monthly deficit" shall be equal

11 to the difference between the average monthly claims for

12 payment by the fund and the average monthly revenues deposited

13 into the fund, excluding payments made pursuant to this

14 paragraph.

15 Beginning July 1, 2015, of the remainder of the moneys

16 received by the Department under the Use Tax Act, the Service

17 Use Tax Act, the Service Occupation Tax Act, and this Act, each

18 month the Department shall deposit $500,000 into the State

19 Crime Laboratory Fund.

20 Of the remainder of the moneys received by the Department

21 pursuant to this Act, (a) 1.75% thereof shall be paid into the

22 Build Illinois Fund and (b) prior to July 1, 1989, 2.2% and on

23 and after July 1, 1989, 3.8% thereof shall be paid into the

24 Build Illinois Fund; provided, however, that if in any fiscal

25 year the sum of (1) the aggregate of 2.2% or 3.8%, as the case

26 may be, of the moneys received by the Department and required

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1 to be paid into the Build Illinois Fund pursuant to this Act,

2 Section 9 of the Use Tax Act, Section 9 of the Service Use Tax

3 Act, and Section 9 of the Service Occupation Tax Act, such Acts

4 being hereinafter called the "Tax Acts" and such aggregate of

5 2.2% or 3.8%, as the case may be, of moneys being hereinafter

6 called the "Tax Act Amount", and (2) the amount transferred to

7 the Build Illinois Fund from the State and Local Sales Tax

8 Reform Fund shall be less than the Annual Specified Amount (as

9 hereinafter defined), an amount equal to the difference shall

10 be immediately paid into the Build Illinois Fund from other

11 moneys received by the Department pursuant to the Tax Acts; the

12 "Annual Specified Amount" means the amounts specified below for

13 fiscal years 1986 through 1993:

14	`Fiscal Year`	`Annual Specified Amount`
15	`1986`	`$54,800,000`
16	`1987`	`$76,650,000`
17	`1988`	`$80,480,000`
18	`1989`	`$88,510,000`
19	`1990`	`$115,330,000`
20	`1991`	`$145,470,000`
21	`1992`	`$182,730,000`
22	`1993`	`$206,520,000;`

23 and means the Certified Annual Debt Service Requirement (as

24 defined in Section 13 of the Build Illinois Bond Act) or the

25 Tax Act Amount, whichever is greater, for fiscal year 1994 and

26 each fiscal year thereafter; and further provided, that if on

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1 the last business day of any month the sum of (1) the Tax Act

2 Amount required to be deposited into the Build Illinois Bond

3 Account in the Build Illinois Fund during such month and (2)

4 the amount transferred to the Build Illinois Fund from the

5 State and Local Sales Tax Reform Fund shall have been less than

6 1/12 of the Annual Specified Amount, an amount equal to the

7 difference shall be immediately paid into the Build Illinois

8 Fund from other moneys received by the Department pursuant to

9 the Tax Acts; and, further provided, that in no event shall the

10 payments required under the preceding proviso result in

11 aggregate payments into the Build Illinois Fund pursuant to

12 this clause (b) for any fiscal year in excess of the greater of

13 (i) the Tax Act Amount or (ii) the Annual Specified Amount for

14 such fiscal year. The amounts payable into the Build Illinois

15 Fund under clause (b) of the first sentence in this paragraph

16 shall be payable only until such time as the aggregate amount

17 on deposit under each trust indenture securing Bonds issued and

18 outstanding pursuant to the Build Illinois Bond Act is

19 sufficient, taking into account any future investment income,

20 to fully provide, in accordance with such indenture, for the

21 defeasance of or the payment of the principal of, premium, if

22 any, and interest on the Bonds secured by such indenture and on

23 any Bonds expected to be issued thereafter and all fees and

24 costs payable with respect thereto, all as certified by the

25 Director of the Bureau of the Budget (now Governor's Office of

26 Management and Budget). If on the last business day of any

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1 month in which Bonds are outstanding pursuant to the Build

2 Illinois Bond Act, the aggregate of moneys deposited in the

3 Build Illinois Bond Account in the Build Illinois Fund in such

4 month shall be less than the amount required to be transferred

5 in such month from the Build Illinois Bond Account to the Build

6 Illinois Bond Retirement and Interest Fund pursuant to Section

7 13 of the Build Illinois Bond Act, an amount equal to such

8 deficiency shall be immediately paid from other moneys received

9 by the Department pursuant to the Tax Acts to the Build

10 Illinois Fund; provided, however, that any amounts paid to the

11 Build Illinois Fund in any fiscal year pursuant to this

12 sentence shall be deemed to constitute payments pursuant to

13 clause (b) of the first sentence of this paragraph and shall

14 reduce the amount otherwise payable for such fiscal year

15 pursuant to that clause (b). The moneys received by the

16 Department pursuant to this Act and required to be deposited

17 into the Build Illinois Fund are subject to the pledge, claim

18 and charge set forth in Section 12 of the Build Illinois Bond

19 Act.

20 Subject to payment of amounts into the Build Illinois Fund

21 as provided in the preceding paragraph or in any amendment

22 thereto hereafter enacted, the following specified monthly

23 installment of the amount requested in the certificate of the

24 Chairman of the Metropolitan Pier and Exposition Authority

25 provided under Section 8.25f of the State Finance Act, but not

26 in excess of sums designated as "Total Deposit", shall be

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1 deposited in the aggregate from collections under Section 9 of

2 the Use Tax Act, Section 9 of the Service Use Tax Act, Section

3 9 of the Service Occupation Tax Act, and Section 3 of the

4 Retailers' Occupation Tax Act into the McCormick Place

5 Expansion Project Fund in the specified fiscal years.

6	`Fiscal Year`	`Total Deposit`
7	`1993`	`$0`
8	`1994`	`53,000,000`
9	`1995`	`58,000,000`
10	`1996`	`61,000,000`
11	`1997`	`64,000,000`
12	`1998`	`68,000,000`
13	`1999`	`71,000,000`
14	`2000`	`75,000,000`
15	`2001`	`80,000,000`
16	`2002`	`93,000,000`
17	`2003`	`99,000,000`
18	`2004`	`103,000,000`
19	`2005`	`108,000,000`
20	`2006`	`113,000,000`
21	`2007`	`119,000,000`
22	`2008`	`126,000,000`
23	`2009`	`132,000,000`
24	`2010`	`139,000,000`
25	`2011`	`146,000,000`

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1	`2012`	`153,000,000`
2	`2013`	`161,000,000`
3	`2014`	`170,000,000`
4	`2015`	`179,000,000`
5	`2016`	`189,000,000`
6	`2017`	`199,000,000`
7	`2018`	`210,000,000`
8	`2019`	`221,000,000`
9	`2020`	`233,000,000`
10	`2021`	`246,000,000`
11	`2022`	`260,000,000`
12	`2023`	`275,000,000`
13	`2024`	`275,000,000`
14	`2025`	`275,000,000`
15	`2026`	`279,000,000`
16	`2027`	`292,000,000`
17	`2028`	`307,000,000`
18	`2029`	`322,000,000`
19	`2030`	`338,000,000`
20	`2031`	`350,000,000`
21	`2032`	`350,000,000`
22	`and`
23	`each fiscal year`
24	`thereafter that bonds`
25	`are outstanding under`
26	`Section 13.2 of the`

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1		`Metropolitan Pier and`
2		`Exposition Authority Act,`
3		`but not after fiscal year 2060.`

4 Beginning July 20, 1993 and in each month of each fiscal

5 year thereafter, one-eighth of the amount requested in the

6 certificate of the Chairman of the Metropolitan Pier and

7 Exposition Authority for that fiscal year, less the amount

8 deposited into the McCormick Place Expansion Project Fund by

9 the State Treasurer in the respective month under subsection

10 (g) of Section 13 of the Metropolitan Pier and Exposition

11 Authority Act, plus cumulative deficiencies in the deposits

12 required under this Section for previous months and years,

13 shall be deposited into the McCormick Place Expansion Project

14 Fund, until the full amount requested for the fiscal year, but

15 not in excess of the amount specified above as "Total Deposit",

16 has been deposited.

17 Subject to payment of amounts into the Build Illinois Fund

18 and the McCormick Place Expansion Project Fund pursuant to the

19 preceding paragraphs or in any amendments thereto hereafter

20 enacted, beginning July 1, 1993 and ending on September 30,

21 2013, the Department shall each month pay into the Illinois Tax

22 Increment Fund 0.27% of 80% of the net revenue realized for the

23 preceding month from the 6.25% general rate on the selling

24 price of tangible personal property.

25 Subject to payment of amounts into the Build Illinois Fund

26 and the McCormick Place Expansion Project Fund pursuant to the

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1 preceding paragraphs or in any amendments thereto hereafter

2 enacted, beginning with the receipt of the first report of

3 taxes paid by an eligible business and continuing for a 25-year

4 period, the Department shall each month pay into the Energy

5 Infrastructure Fund 80% of the net revenue realized from the

6 6.25% general rate on the selling price of Illinois-mined coal

7 that was sold to an eligible business. For purposes of this

8 paragraph, the term "eligible business" means a new electric

9 generating facility certified pursuant to Section 605-332 of

10 the Department of Commerce and Economic Opportunity Law of the

11 Civil Administrative Code of Illinois.

12 Subject to payment of amounts into the Build Illinois Fund,

13 the McCormick Place Expansion Project Fund, the Illinois Tax

14 Increment Fund, and the Energy Infrastructure Fund pursuant to

15 the preceding paragraphs or in any amendments to this Section

16 hereafter enacted, beginning on the first day of the first

17 calendar month to occur on or after August 26, 2014 (the

18 effective date of Public Act 98-1098) ~~this amendatory Act of~~

19 ~~the 98th General Assembly~~, each month, from the collections

20 made under Section 9 of the Use Tax Act, Section 9 of the

21 Service Use Tax Act, Section 9 of the Service Occupation Tax

22 Act, and Section 3 of the Retailers' Occupation Tax Act, the

23 Department shall pay into the Tax Compliance and Administration

24 Fund, to be used, subject to appropriation, to fund additional

25 auditors and compliance personnel at the Department of Revenue,

26 an amount equal to 1/12 of 5% of 80% of the cash receipts

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1 collected during the preceding fiscal year by the Audit Bureau

2 of the Department under the Use Tax Act, the Service Use Tax

3 Act, the Service Occupation Tax Act, the Retailers' Occupation

4 Tax Act, and associated local occupation and use taxes

5 administered by the Department.

6 Of the remainder of the moneys received by the Department

7 pursuant to this Act, 75% thereof shall be paid into the State

8 Treasury and 25% shall be reserved in a special account and

9 used only for the transfer to the Common School Fund as part of

10 the monthly transfer from the General Revenue Fund in

11 accordance with Section 8a of the State Finance Act.

12 The Department may, upon separate written notice to a

13 taxpayer, require the taxpayer to prepare and file with the

14 Department on a form prescribed by the Department within not

15 less than 60 days after receipt of the notice an annual

16 information return for the tax year specified in the notice.

17 Such annual return to the Department shall include a statement

18 of gross receipts as shown by the retailer's last Federal

19 income tax return. If the total receipts of the business as

20 reported in the Federal income tax return do not agree with the

21 gross receipts reported to the Department of Revenue for the

22 same period, the retailer shall attach to his annual return a

23 schedule showing a reconciliation of the 2 amounts and the

24 reasons for the difference. The retailer's annual return to the

25 Department shall also disclose the cost of goods sold by the

26 retailer during the year covered by such return, opening and

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1 closing inventories of such goods for such year, costs of goods

2 used from stock or taken from stock and given away by the

3 retailer during such year, payroll information of the

4 retailer's business during such year and any additional

5 reasonable information which the Department deems would be

6 helpful in determining the accuracy of the monthly, quarterly

7 or annual returns filed by such retailer as provided for in

8 this Section.

9 If the annual information return required by this Section

10 is not filed when and as required, the taxpayer shall be liable

11 as follows:

12 (i) Until January 1, 1994, the taxpayer shall be liable

13 for a penalty equal to 1/6 of 1% of the tax due from such

14 taxpayer under this Act during the period to be covered by

15 the annual return for each month or fraction of a month

16 until such return is filed as required, the penalty to be

17 assessed and collected in the same manner as any other

18 penalty provided for in this Act.

19 (ii) On and after January 1, 1994, the taxpayer shall

20 be liable for a penalty as described in Section 3-4 of the

21 Uniform Penalty and Interest Act.

22 The chief executive officer, proprietor, owner or highest

23 ranking manager shall sign the annual return to certify the

24 accuracy of the information contained therein. Any person who

25 willfully signs the annual return containing false or

26 inaccurate information shall be guilty of perjury and punished

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1 accordingly. The annual return form prescribed by the

2 Department shall include a warning that the person signing the

3 return may be liable for perjury.

4 The provisions of this Section concerning the filing of an

5 annual information return do not apply to a retailer who is not

6 required to file an income tax return with the United States

7 Government.

8 As soon as possible after the first day of each month, upon

9 certification of the Department of Revenue, the Comptroller

10 shall order transferred and the Treasurer shall transfer from

11 the General Revenue Fund to the Motor Fuel Tax Fund an amount

12 equal to 1.7% of 80% of the net revenue realized under this Act

13 for the second preceding month. Beginning April 1, 2000, this

14 transfer is no longer required and shall not be made.

15 Net revenue realized for a month shall be the revenue

16 collected by the State pursuant to this Act, less the amount

17 paid out during that month as refunds to taxpayers for

18 overpayment of liability.

19 For greater simplicity of administration, manufacturers,

20 importers and wholesalers whose products are sold at retail in

21 Illinois by numerous retailers, and who wish to do so, may

22 assume the responsibility for accounting and paying to the

23 Department all tax accruing under this Act with respect to such

24 sales, if the retailers who are affected do not make written

25 objection to the Department to this arrangement.

26 Any person who promotes, organizes, provides retail

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1 selling space for concessionaires or other types of sellers at

2 the Illinois State Fair, DuQuoin State Fair, county fairs,

3 local fairs, art shows, flea markets and similar exhibitions or

4 events, including any transient merchant as defined by Section

5 2 of the Transient Merchant Act of 1987, is required to file a

6 report with the Department providing the name of the merchant's

7 business, the name of the person or persons engaged in

8 merchant's business, the permanent address and Illinois

9 Retailers Occupation Tax Registration Number of the merchant,

10 the dates and location of the event and other reasonable

11 information that the Department may require. The report must be

12 filed not later than the 20th day of the month next following

13 the month during which the event with retail sales was held.

14 Any person who fails to file a report required by this Section

15 commits a business offense and is subject to a fine not to

16 exceed $250.

17 Any person engaged in the business of selling tangible

18 personal propertyor taxable service at retail as a

19 concessionaire or other type of seller at the Illinois State

20 Fair, county fairs, art shows, flea markets and similar

21 exhibitions or events, or any transient merchants, as defined

22 by Section 2 of the Transient Merchant Act of 1987, may be

23 required to make a daily report of the amount of such sales to

24 the Department and to make a daily payment of the full amount

25 of tax due. The Department shall impose this requirement when

26 it finds that there is a significant risk of loss of revenue to

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1 the State at such an exhibition or event. Such a finding shall

2 be based on evidence that a substantial number of

3 concessionaires or other sellers who are not residents of

4 Illinois will be engaging in the business of selling tangible

5 personal property or taxable serviceat retail at the

6 exhibition or event, or other evidence of a significant risk of

7 loss of revenue to the State. The Department shall notify

8 concessionaires and other sellers affected by the imposition of

9 this requirement. In the absence of notification by the

10 Department, the concessionaires and other sellers shall file

11 their returns as otherwise required in this Section.

12 (Source: P.A. 98-24, eff. 6-19-13; 98-109, eff. 7-25-13;

13 98-496, eff. 1-1-14; 98-756, eff. 7-16-14; 98-1098, eff.

14 8-26-14; 99-352, eff. 8-12-15; 99-858, eff. 8-19-16; 99-933,

15 eff. 1-27-17; revised 2-3-17.)

16 (35 ILCS 120/7) (from Ch. 120, par. 446)

17 Sec. 7. Every person engaged in the business of selling

18 tangible personal propertyor taxable service at retail in this

19 State shall keep records and books of all sales of tangible

20 personal property, together with invoices, bills of lading,

21 sales records, copies of bills of sale, inventories prepared as

22 of December 31 of each year or otherwise annually as has been

23 the custom in the specific trade and other pertinent papers and

24 documents. Every person who is engaged in the business of

25 selling tangible personal property or taxable serviceat retail

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1 in this State and who, in connection with such business, also

2 engages in other activities (including, but not limited to,

3 engaging in a service occupationnot subject to tax under this

4 Act) shall keep such additional records and books of all such

5 activities as will accurately reflect the character and scope

6 of such activities and the amount of receipts realized

7 therefrom. The Department may adopt rules that establish

8 requirements, including record forms and formats, for records

9 required to be kept and maintained by taxpayers. For purposes

10 of this Section, "records" means all data maintained by the

11 taxpayer, including data on paper, microfilm, microfiche or any

12 type of machine-sensible data compilation.

13 All books and records and other papers and documents which

14 are required by this Act to be kept shall be kept in the

15 English language and shall, at all times during business hours

16 of the day, be subject to inspection by the Department or its

17 duly authorized agents and employees.

18 To support deductions made on the tax return form, or

19 authorized under this Act, on account of receipts from isolated

20 or occasional sales of tangible personal propertyor taxable

21 service, on account of receipts from sales of tangible personal

22 property or taxable service for resale, on account of receipts

23 from sales to governmental bodies or other exempted types of

24 purchasers, on account of receipts from sales of tangible

25 personal property or taxable servicein interstate commerce,

26 and on account of receipts from any other kind of transaction

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1 that is not taxable under this Act, entries in any books,

2 records or other pertinent papers or documents of the taxpayer

3 in relation thereto shall be in detail sufficient to show the

4 name and address of the taxpayer's customer in each such

5 transaction, the character of every such transaction, the date

6 of every such transaction, the amount of receipts realized from

7 every such transaction and such other information as may be

8 necessary to establish the non-taxable character of such

9 transaction under this Act.

10 Except in the case of a sale to a purchaser who will always

11 resell and deliver the property to his customers outside

12 Illinois, anyone claiming that he has made a nontaxable sale

13 for resale in some form as tangible personal property shall

14 also keep a record of the purchaser's registration number or

15 resale number with the Department.

16 It shall be presumed that all sales of tangible personal

17 property or taxable serviceare subject to tax under this Act

18 until the contrary is established, and the burden of proving

19 that a transaction is not taxable hereunder shall be upon the

20 person who would be required to remit the tax to the Department

21 if such transaction is taxable. In the course of any audit or

22 investigation or hearing by the Department with reference to a

23 given taxpayer, if the Department finds that the taxpayer lacks

24 documentary evidence needed to support the taxpayer's claim to

25 exemption from tax hereunder, the Department is authorized to

26 notify the taxpayer in writing to produce such evidence, and

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1 the taxpayer shall have 60 days subject to the right in the

2 Department to extend this period either on request for good

3 cause shown or on its own motion from the date when such notice

4 is sent to the taxpayer by certified or registered mail (or

5 delivered to the taxpayer if the notice is served personally)

6 in which to obtain and produce such evidence for the

7 Department's inspection, failing which the matter shall be

8 closed, and the transaction shall be conclusively presumed to

9 be taxable hereunder.

10 Books and records and other papers reflecting gross

11 receipts received during any period with respect to which the

12 Department is authorized to issue notices of tax liability as

13 provided by Sections 4 and 5 of this Act shall be preserved

14 until the expiration of such period unless the Department, in

15 writing, shall authorize their destruction or disposal prior to

16 such expiration.

17 (Source: P.A. 88-480.)

18 (35 ILCS 120/13) (from Ch. 120, par. 452)

19 Sec. 13. Criminal penalties.

20 (a) When the amount due is under $300, any person engaged

21 in the business of selling tangible personal property or

22 taxable serviceat retail in this State who fails to file a

23 return, or who files a fraudulent return, or any officer,

24 employee or agent of a corporation, member, employee or agent

25 of a partnership, or manager, member, agent, or employee of a

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1 limited liability company engaged in the business of selling

2 tangible personal propertyor taxable service at retail in this

3 State who, as such officer, employee, agent, manager, or member

4 is under a duty to file a return, or any officer, agent or

5 employee of a corporation, member, agent, or employee of a

6 partnership, or manager, member, agent, or employee of a

7 limited liability company engaged in the business of selling

8 tangible personal property or taxable service at retail in this

9 State who files or causes to be filed or signs or causes to be

10 signed a fraudulent return filed on behalf of such corporation

11 or limited liability company, or any accountant or other agent

12 who knowingly enters false information on the return of any

13 taxpayer under this Act, is guilty of a Class 4 felony.

14 Any person who or any officer or director of any

15 corporation, partner or member of any partnership, or manager

16 or member of a limited liability company that: (a) violates

17 Section 2a of this Act or (b) fails to keep books and records,

18 or fails to produce books and records as required by Section 7

19 or (c) willfully violates a rule or regulation of the

20 Department for the administration and enforcement of this Act

21 is guilty of a Class A misdemeanor. Any person, manager or

22 member of a limited liability company, or officer or director

23 of any corporation who engages in the business of selling

24 tangible personal property at retail after the certificate of

25 registration of that person, corporation, limited liability

26 company, or partnership has been revoked is guilty of a Class A

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1 misdemeanor. Each day such person, corporation, or partnership

2 is engaged in business without a certificate of registration or

3 after the certificate of registration of that person,

4 corporation, or partnership has been revoked constitutes a

5 separate offense.

6 Any purchaser who obtains a registration number or resale

7 number from the Department through misrepresentation, or who

8 represents to a seller that such purchaser has a registration

9 number or a resale number from the Department when he knows

10 that he does not, or who uses his registration number or resale

11 number to make a seller believe that he is buying tangible

12 personal property for resale when such purchaser in fact knows

13 that this is not the case is guilty of a Class 4 felony.

14 Any distributor, supplier or other reseller of motor fuel

15 registered pursuant to Section 2a or 2c of this Act who fails

16 to collect the prepaid tax on invoiced gallons of motor fuel

17 sold or who fails to deliver a statement of tax paid to the

18 purchaser or to the Department as required by Sections 2d and

19 2e of this Act, respectively, shall be guilty of a Class A

20 misdemeanor if the amount due is under $300, and a Class 4

21 felony if the amount due is $300 or more.

22 When the amount due is under $300, any person who accepts

23 money that is due to the Department under this Act from a

24 taxpayer for the purpose of acting as the taxpayer's agent to

25 make the payment to the Department, but who fails to remit such

26 payment to the Department when due is guilty of a Class 4

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1 felony.

2 Any seller who collects or attempts to collect an amount

3 (however designated) which purports to reimburse such seller

4 for retailers' occupation tax liability measured by receipts

5 which such seller knows are not subject to retailers'

6 occupation tax, or any seller who knowingly over-collects or

7 attempts to over-collect an amount purporting to reimburse such

8 seller for retailers' occupation tax liability in a transaction

9 which is subject to the tax that is imposed by this Act, shall

10 be guilty of a Class 4 felony for each such offense. This

11 paragraph does not apply to an amount collected by the seller

12 as reimbursement for the seller's retailers' occupation tax

13 liability on receipts which are subject to tax under this Act

14 as long as such collection is made in compliance with the tax

15 collection brackets prescribed by the Department in its Rules

16 and Regulations.

17 When the amount due is $300 or more, any person engaged in

18 the business of selling tangible personal propertyor taxable

19 serviceat retail in this State who fails to file a return, or

20 who files a fraudulent return, or any officer, employee or

21 agent of a corporation, member, employee or agent of a

22 partnership, or manager, member, agent, or employee of a

23 limited liability company engaged in the business of selling

24 tangible personal property or taxable service at retail in this

25 State who, as such officer, employee, agent, manager, or member

26 is under a duty to file a return and who fails to file such

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1 return or any officer, agent, or employee of a corporation,

2 member, agent or employee of a partnership, or manager, member,

3 agent, or employee of a limited liability company engaged in

4 the business of selling tangible personal propertyor taxable

5 serviceat retail in this State who files or causes to be filed

6 or signs or causes to be signed a fraudulent return filed on

7 behalf of such corporation or limited liability company, or any

8 accountant or other agent who knowingly enters false

9 information on the return of any taxpayer under this Act is

10 guilty of a Class 3 felony.

11 When the amount due is $300 or more, any person engaged in

12 the business of selling tangible personal property at retail in

13 this State who accepts money that is due to the Department

14 under this Act from a taxpayer for the purpose of acting as the

15 taxpayer's agent to make payment to the Department but fails to

16 remit such payment to the Department when due, is guilty of a

17 Class 3 felony.

18 Any person whose principal place of business is in this

19 State and who is charged with a violation under this Section

20 shall be tried in the county where his principal place of

21 business is located unless he asserts a right to be tried in

22 another venue.

23 Any taxpayer or agent of a taxpayer who with the intent to

24 defraud purports to make a payment due to the Department by

25 issuing or delivering a check or other order upon a real or

26 fictitious depository for the payment of money, knowing that it

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1 will not be paid by the depository, shall be guilty of a

2 deceptive practice in violation of Section 17-1 of the Criminal

3 Code of 2012.

4 (b) A person commits the offense of sales tax evasion under

5 this Act when he knowingly attempts in any manner to evade or

6 defeat the tax imposed on him or on any other person, or the

7 payment thereof, and he commits an affirmative act in

8 furtherance of the evasion. For purposes of this Section, an

9 "affirmative act in furtherance of the evasion" means an act

10 designed in whole or in part to (i) conceal, misrepresent,

11 falsify, or manipulate any material fact or (ii) tamper with or

12 destroy documents or materials related to a person's tax

13 liability under this Act. Two or more acts of sales tax evasion

14 may be charged as a single count in any indictment,

15 information, or complaint and the amount of tax deficiency may

16 be aggregated for purposes of determining the amount of tax

17 which is attempted to be or is evaded and the period between

18 the first and last acts may be alleged as the date of the

19 offense.

20 (1) When the amount of tax, the assessment or payment

21 of which is attempted to be or is evaded is less than $500

22 a person is guilty of a Class 4 felony.

23 (2) When the amount of tax, the assessment or payment

24 of which is attempted to be or is evaded is $500 or more

25 but less than $10,000, a person is guilty of a Class 3

26 felony.

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1 (3) When the amount of tax, the assessment or payment

2 of which is attempted to be or is evaded is $10,000 or more

3 but less than $100,000, a person is guilty of a Class 2

4 felony.

5 (4) When the amount of tax, the assessment or payment

6 of which is attempted to be or is evaded is $100,000 or

7 more, a person is guilty of a Class 1 felony.

8 Any person who knowingly sells, purchases, installs,

9 transfers, possesses, uses, or accesses any automated sales

10 suppression device, zapper, or phantom-ware in this State is

11 guilty of a Class 3 felony.

12 For the purposes of this Section:

13 "Automated sales suppression device" or "zapper" means a

14 software program that falsifies the electronic records of an

15 electronic cash register or other point-of-sale system,

16 including, but not limited to, transaction data and transaction

17 reports. The term includes the software program, any device

18 that carries the software program, or an Internet link to the

19 software program.

20 "Phantom-ware" means a hidden programming option embedded

21 in the operating system of an electronic cash register or

22 hardwired into an electronic cash register that can be used to

23 create a second set of records or that can eliminate or

24 manipulate transaction records in an electronic cash register.

25 "Electronic cash register" means a device that keeps a

26 register or supporting documents through the use of an

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1 electronic device or computer system designed to record

2 transaction data for the purpose of computing, compiling, or

3 processing retail sales transaction data in any manner.

4 "Transaction data" includes: items purchased by a

5 customer; the price of each item; a taxability determination

6 for each item; a segregated tax amount for each taxed item; the

7 amount of cash or credit tendered; the net amount returned to

8 the customer in change; the date and time of the purchase; the

9 name, address, and identification number of the vendor; and the

10 receipt or invoice number of the transaction.

11 "Transaction report" means a report that documents,

12 without limitation, the sales, taxes, or fees collected, media

13 totals, and discount voids at an electronic cash register and

14 that is printed on a cash register tape at the end of a day or

15 shift, or a report that documents every action at an electronic

16 cash register and is stored electronically.

17 (c) A prosecution for any act in violation of this Section

18 may be commenced at any time within 5 years of the commission

19 of that act.

20 (Source: P.A. 97-1074, eff. 1-1-13; 97-1150, eff. 1-25-13;

21 98-352, eff. 1-1-14.)

22 Section 30-50. The Counties Code is amended by changing

23 Section 5-1009 and by adding Section 5-1008.10 as follows:

24 (55 ILCS 5/5-1008.10 new)

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1 Sec. 5-1008.10. Taxable services. Notwithstanding any

2 other provision of law, whenever a home rule or non-home rule

3 county is authorized to impose a tax on the use or sale of

4 tangible personal property, that county shall also be

5 authorized to impose a tax at the same rate on taxable

6 services, as defined in Section 2a-2 of the Use Tax Act.

7 (55 ILCS 5/5-1009) (from Ch. 34, par. 5-1009)

8 Sec. 5-1009. Limitation on home rule powers. Except as

9 provided in Sections 5-1006, 5-1006.5, 5-1007 and 5-1008, on

10 and after September 1, 1990, no home rule county has the

11 authority to impose, pursuant to its home rule authority, a

12 retailer's occupation tax, service occupation tax, use tax,

13 sales tax or other tax on the (i) ~~use, sale or purchase of~~

14 ~~tangible personal property based on the gross receipts from~~

15 ~~such sales or the~~selling or purchase price, (ii) gross

16 receipts, or (iii) weight or volume from the use, sale, or

17 purchase of that ~~said~~ tangible personal property.

18 Notwithstanding the foregoing, this Section does not preempt

19 any home rule imposed tax such as the following: (1) a tax on

20 alcoholic beverages, whether based on gross receipts, volume

21 sold or any other measurement; (2) a tax based on the number of

22 units of cigarettes or tobacco products; (3) a tax, however

23 measured, based on the use of a hotel or motel room or similar

24 facility; (4) a tax, however measured, on the sale or transfer

25 of real property; (5) a tax, however measured, on lease

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1 receipts; (6) a tax on food prepared for immediate consumption

2 and on alcoholic beverages sold by a business which provides

3 for on premise consumption of said food or alcoholic beverages;

4 ~~or~~(7) other taxes not based on the selling or purchase price

5 or gross receipts from the use, sale or purchase of tangible

6 personal property; or (8) a tax on the sale of taxable

7 services, as defined in the Use Tax Act. This Section does not

8 preempt a home rule county from imposing a tax, however

9 measured, on the use, for consideration, of a parking lot,

10 garage, or other parking facility. This Section is a

11 limitation, pursuant to subsection (g) of Section 6 of Article

12 VII of the Illinois Constitution, on the power of home rule

13 units to tax.

14 (Source: P.A. 97-1168, eff. 3-8-13; 97-1169, eff. 3-8-13.)

15 Section 30-55. The Illinois Municipal Code is amended by

16 changing Section 8-11-6a and by adding Sections 8-3-20 as

17 follows:

18 (65 ILCS 5/8-3-20 new)

19 Sec. 8-3-20. Taxable services. Notwithstanding any other

20 provision of law, whenever a home rule or non-home rule

21 municipality is authorized to impose a tax on the use or sale

22 of tangible personal property, that municipality shall also be

23 authorized to impose a tax at the same rate on taxable

24 services, as defined in Section 2a-2 of the Use Tax Act.

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1 (65 ILCS 5/8-11-6a) (from Ch. 24, par. 8-11-6a)

2 Sec. 8-11-6a. Home rule municipalities; preemption of

3 certain taxes. Except as provided in Sections 8-11-1, 8-11-5,

4 8-11-6, 8-11-6b, 8-11-6c, and 11-74.3-6 on and after September

5 1, 1990, no home rule municipality has the authority to impose,

6 pursuant to its home rule authority, a retailer's occupation

7 tax, service occupation tax, use tax, sales tax or other tax~~on~~

8 ~~the use, sale or purchase of tangible personal property~~based

9 on (i) the selling or purchase price, (ii) the gross receipts,

10 or (iii) the weight or volume from the use, sale, or purchase

11 ~~from such sales or the selling or purchase price~~ of ~~said~~

12 tangible personal property. Notwithstanding the foregoing,

13 this Section does not preempt any home rule imposed tax such as

14 the following: (1) a tax on alcoholic beverages, whether based

15 on gross receipts, volume sold or any other measurement; (2) a

16 tax based on the number of units of cigarettes or tobacco

17 products (provided, however, that a home rule municipality that

18 has not imposed a tax based on the number of units of

19 cigarettes or tobacco products before July 1, 1993, shall not

20 impose such a tax after that date); (3) a tax, however

21 measured, based on the use of a hotel or motel room or similar

22 facility; (4) a tax, however measured, on the sale or transfer

23 of real property; (5) a tax, however measured, on lease

24 receipts; (6) a tax on food prepared for immediate consumption

25 and on alcoholic beverages sold by a business which provides

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1 for on premise consumption of said food or alcoholic beverages;

2 ~~or~~(7) other taxes not based on(i) the selling or purchase

3 price, (ii) the ~~or~~ gross receipts, or (iii) the weight or

4 volumefrom the use, sale or purchase of tangible personal

5 property; or (8) a tax on the sale of taxable services, as

6 defined in the Use Tax Act. This Section does not preempt a

7 home rule municipality with a population of more than 2,000,000

8 from imposing a tax, however measured, on the use, for

9 consideration, of a parking lot, garage, or other parking

10 facility. This Section is not intended to affect any existing

11 tax on food and beverages prepared for immediate consumption on

12 the premises where the sale occurs, or any existing tax on

13 alcoholic beverages, or any existing tax imposed on the charge

14 for renting a hotel or motel room, which was in effect January

15 15, 1988, or any extension of the effective date of such an

16 existing tax by ordinance of the municipality imposing the tax,

17 which extension is hereby authorized, in any non-home rule

18 municipality in which the imposition of such a tax has been

19 upheld by judicial determination, nor is this Section intended

20 to preempt the authority granted by Public Act 85-1006. This

21 Section is a limitation, pursuant to subsection (g) of Section

22 6 of Article VII of the Illinois Constitution, on the power of

23 home rule units to tax.

24 (Source: P.A. 97-1168, eff. 3-8-13; 97-1169, eff. 3-8-13.)

25 Section 30-65. The Illinois False Claims Act is amended by

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1 changing Section 3 as follows:

2 (740 ILCS 175/3) (from Ch. 127, par. 4103)

3 Sec. 3. False claims.

4 (a) Liability for certain acts.

5 (1) In general, any person who:

6 (A) knowingly presents, or causes to be presented,

7 a false or fraudulent claim for payment or approval;

8 (B) knowingly makes, uses, or causes to be made or

9 used, a false record or statement material to a false

10 or fraudulent claim;

11 (C) conspires to commit a violation of

12 subparagraph (A), (B), (D), (E), (F), or (G);

13 (D) has possession, custody, or control of

14 property or money used, or to be used, by the State and

15 knowingly delivers, or causes to be delivered, less

16 than all the money or property;

17 (E) is authorized to make or deliver a document

18 certifying receipt of property used, or to be used, by

19 the State and, intending to defraud the State, makes or

20 delivers the receipt without completely knowing that

21 the information on the receipt is true;

22 (F) knowingly buys, or receives as a pledge of an

23 obligation or debt, public property from an officer or

24 employee of the State, or a member of the Guard, who

25 lawfully may not sell or pledge property; or

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1 (G) knowingly makes, uses, or causes to be made or

2 used, a false record or statement material to an

3 obligation to pay or transmit money or property to the

4 State, or knowingly conceals or knowingly and

5 improperly avoids or decreases an obligation to pay or

6 transmit money or property to the State,

7 is liable to the State for a civil penalty of not less than

8 $5,500 and not more than $11,000, plus 3 times the amount

9 of damages which the State sustains because of the act of

10 that person. The penalties in this Section are intended to

11 be remedial rather than punitive, and shall not preclude,

12 nor be precluded by, a criminal prosecution for the same

13 conduct.

14 (2) A person violating this subsection shall also be

15 liable to the State for the costs of a civil action brought

16 to recover any such penalty or damages.

17 (b) Definitions. For purposes of this Section:

18 (1) The terms "knowing" and "knowingly":

19 (A) mean that a person, with respect to

20 information:

21 (i) has actual knowledge of the information;

22 (ii) acts in deliberate ignorance of the truth

23 or falsity of the information; or

24 (iii) acts in reckless disregard of the truth

25 or falsity of the information, and

26 (B) require no proof of specific intent to defraud.

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1 (2) The term "claim":

2 (A) means any request or demand, whether under a

3 contract or otherwise, for money or property and

4 whether or not the State has title to the money or

5 property, that

6 (i) is presented to an officer, employee, or

7 agent of the State; or

8 (ii) is made to a contractor, grantee, or other

9 recipient, if the money or property is to be spent

10 or used on the State's behalf or to advance a State

11 program or interest, and if the State:

12 (I) provides or has provided any portion

13 of the money or property requested or demanded;

14 or

15 (II) will reimburse such contractor,

16 grantee, or other recipient for any portion of

17 the money or property which is requested or

18 demanded; and

19 (B) does not include requests or demands for money

20 or property that the State has paid to an individual as

21 compensation for State employment or as an income

22 subsidy with no restrictions on that individual's use

23 of the money or property.

24 (3) The term "obligation" means an established duty,

25 whether or not fixed, arising from an express or implied

26 contractual, grantor-grantee, or licensor-licensee

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1 relationship, from a fee-based or similar relationship,

2 from statute or regulation, or from the retention of any

3 overpayment.

4 (4) The term "material" means having a natural tendency

5 to influence, or be capable of influencing, the payment or

6 receipt of money or property.

7 (c) Exclusion. This Section does not apply to any taxes

8 imposed, collected, or administered by the State of Illinois

9 ~~claims, records, or statements made under the Illinois Income~~

10 ~~Tax Act~~.

11 (Source: P.A. 95-128, eff. 1-1-08; 96-1304, eff. 7-27-10.)

12 ARTICLE 99. EFFECTIVE DATE

13 Section 99-999. Effective date. This Act takes effect upon

14 becoming law.".