Bill Amendment: IL HB0293 | 2015-2016 | 99th General Assembly

NOTE: For additional amemendments please see the Bill Drafting List

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Bill Title: REVENUE-TECH

Status: 2017-01-03 - House Committee Amendment No. 1 Rule 19(b) / Re-referred to Rules Committee [HB0293 Detail]

Download: Illinois-2015-HB0293-House_Amendment_001.html

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Rep. William Davis

Filed: 11/10/2016

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AMENDMENT TO HOUSE BILL 293
AMENDMENT NO. ______. Amend House Bill 293 by replacing
everything after the enacting clause with the following:
"ARTICLE 5. ENTERPRISE ZONES
Section 5-5. The Illinois Enterprise Zone Act is amended by
changing Section 5.3 as follows:
(20 ILCS 655/5.3) (from Ch. 67 1/2, par. 608)
Sec. 5.3. Certification of Enterprise Zones; effective
date.
(a) Certification of Board-approved designated Enterprise
Zones shall be made by the Department by certification of the
designating ordinance. The Department shall promptly issue a
certificate for each Enterprise Zone upon approval by the
Board. The certificate shall be signed by the Director of the
Department, shall make specific reference to the designating

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ordinance, which shall be attached thereto, and shall be filed
in the office of the Secretary of State. A certified copy of
the Enterprise Zone Certificate, or a duplicate original
thereof, shall be recorded in the office of recorder of deeds
of the county in which the Enterprise Zone lies.
(b) An Enterprise Zone certified prior to January 1, 2016
or on or after January 1, 2017 shall be effective on January 1
of the first calendar year after Department certification. An
Enterprise Zone certified on or after January 1, 2016 and on or
before December 31, 2016 shall be effective on the date of the
Department's certification. The Department shall transmit a
copy of the certification to the Department of Revenue, and to
the designating municipality or county.
Upon certification of an Enterprise Zone, the terms and
provisions of the designating ordinance shall be in effect, and
may not be amended or repealed except in accordance with
Section 5.4.
(c) With the exception of Enterprise Zones scheduled to
expire before December 31, 2018, an Enterprise Zone designated
before the effective date of this amendatory Act of the 97th
General Assembly shall be in effect for 30 calendar years, or
for a lesser number of years specified in the certified
designating ordinance. Notwithstanding the foregoing, any
Enterprise Zone in existence on the effective date of this
amendatory Act of the 98th General Assembly that has a term of
20 calendar years may be extended for an additional 10 calendar

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years upon amendment of the designating ordinance by the
designating municipality or county and submission of the
ordinance to the Department. The amended ordinance must be
properly recorded in the Office of Recorder of Deeds of each
county in which the Enterprise Zone lies. Each Enterprise Zone
in existence on the effective date of this amendatory Act of
the 97th General Assembly that is scheduled to expire before
July 1, 2016 may have its termination date extended until July
1, 2016 upon amendment of the designating ordinance by the
designating municipality or county extending the termination
date to July 1, 2016 and submission of the ordinance to the
Department. The amended ordinance must be properly recorded in
the Office of Recorder of Deeds of each county in which the
Enterprise Zone lies. An Enterprise Zone designated on or after
the effective date of this amendatory Act of the 97th General
Assembly shall be in effect for a term of 15 calendar years, or
for a lesser number of years specified in the certified
designating ordinance. An enterprise zone designated on or
after the effective date of this amendatory Act of the 97th
General Assembly shall be subject to review by the Board after
13 years for an additional 10-year designation beginning on the
expiration date of the enterprise zone. During the review
process, the Board shall consider the costs incurred by the
State and units of local government as a result of tax benefits
received by the enterprise zone. Enterprise Zones shall
terminate at midnight of December 31 of the final calendar year

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of the certified term, except as provided in Section 5.4.
(d) No more than 12 Enterprise Zones may be certified by
the Department in calendar year 1984, no more than 12
Enterprise Zones may be certified by the Department in calendar
year 1985, no more than 13 Enterprise Zones may be certified by
the Department in calendar year 1986, no more than 15
Enterprise Zones may be certified by the Department in calendar
year 1987, and no more than 20 Enterprise Zones may be
certified by the Department in calendar year 1990. In other
calendar years, no more than 13 Enterprise Zones may be
certified by the Department. The Department may also designate
up to 8 additional Enterprise Zones outside the regular
application cycle if warranted by the extreme economic
circumstances as determined by the Department. The Department
may also designate one additional Enterprise Zone outside the
regular application cycle if an aircraft manufacturer agrees to
locate an aircraft manufacturing facility in the proposed
Enterprise Zone. Notwithstanding any other provision of this
Act, no more than 89 Enterprise Zones may be certified by the
Department for the 10 calendar years commencing with 1983. The
7 additional Enterprise Zones authorized by Public Act 86-15
shall not lie within municipalities or unincorporated areas of
counties that abut or are contiguous to Enterprise Zones
certified pursuant to this Section prior to June 30, 1989. The
7 additional Enterprise Zones (excluding the additional
Enterprise Zone which may be designated outside the regular

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application cycle) authorized by Public Act 86-1030 shall not
lie within municipalities or unincorporated areas of counties
that abut or are contiguous to Enterprise Zones certified
pursuant to this Section prior to February 28, 1990. Beginning
in calendar year 2004 and until December 31, 2008, one
additional enterprise zone may be certified by the Department.
In any calendar year, the Department may not certify more than
3 Zones located within the same municipality. The Department
may certify Enterprise Zones in each of the 10 calendar years
commencing with 1983. The Department may not certify more than
a total of 18 Enterprise Zones located within the same county
(whether within municipalities or within unincorporated
territory) for the 10 calendar years commencing with 1983.
Thereafter, the Department may not certify any additional
Enterprise Zones, but may amend and rescind certifications of
existing Enterprise Zones in accordance with Section 5.4.
(e) Notwithstanding any other provision of law, if (i) the
county board of any county in which a current military base is
located, in part or in whole, or in which a military base that
has been closed within 20 years of the effective date of this
amendatory Act of 1998 is located, in part or in whole, adopts
a designating ordinance in accordance with Section 5 of this
Act to designate the military base in that county as an
enterprise zone and (ii) the property otherwise meets the
qualifications for an enterprise zone as prescribed in Section
4 of this Act, then the Department may certify the designating

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ordinance or ordinances, as the case may be.
(f) Applications for Enterprise Zones that are scheduled to
expire in 2016, including Enterprise Zones that have been
extended until 2016 by this amendatory Act of the 97th General
Assembly, shall be submitted to the Department no later than
December 31, 2014. At that time, the Zone becomes available for
either the previously designated area or a different area to
compete for designation. No preference for designation as a
Zone will be given to the previously designated area.
For Enterprise Zones that are scheduled to expire on or
after January 1, 2017, an application process shall begin 2
years prior to the year in which the Zone expires. At that
time, the Zone becomes available for either the previously
designated area or a different area to compete for designation.
No preference for designation as a Zone will be given to the
previously designated area.
Each Enterprise Zone that reapplies for certification but
does not receive a new certification shall expire on its
scheduled termination date.
(g) Notwithstanding any other provision of law, no new
Enterprise Zone shall be certified on or after the effective
date of this amendatory Act of the 99th General Assembly, and
no Enterprise Zone certified prior to the effective date of
this amendatory Act of the 99th General Assembly shall be
renewed or extended on or after the effective date of this
amendatory Act of the 99th General Assembly.

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(Source: P.A. 98-109, eff. 7-25-13; 99-615, eff. 7-22-16.)
ARTICLE 10. INCOME TAX ACT
Section 10-5. The Illinois Income Tax Act is amended by
changing Sections 201, 203, 223, 304, 901, and 1501 and by
adding Section 309 as follows:
(35 ILCS 5/201) (from Ch. 120, par. 2-201)
Sec. 201. Tax Imposed.
(a) In general. A tax measured by net income is hereby
imposed on every individual, corporation, trust and estate for
each taxable year ending after July 31, 1969 on the privilege
of earning or receiving income in or as a resident of this
State. Such tax shall be in addition to all other occupation or
privilege taxes imposed by this State or by any municipal
corporation or political subdivision thereof.
(b) Rates. The tax imposed by subsection (a) of this
Section shall be determined as follows, except as adjusted by
subsection (d-1):
(1) In the case of an individual, trust or estate, for
taxable years ending prior to July 1, 1989, an amount equal
to 2 1/2% of the taxpayer's net income for the taxable
year.
(2) In the case of an individual, trust or estate, for
taxable years beginning prior to July 1, 1989 and ending

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after June 30, 1989, an amount equal to the sum of (i) 2
1/2% of the taxpayer's net income for the period prior to
July 1, 1989, as calculated under Section 202.3, and (ii)
3% of the taxpayer's net income for the period after June
30, 1989, as calculated under Section 202.3.
(3) In the case of an individual, trust or estate, for
taxable years beginning after June 30, 1989, and ending
prior to January 1, 2011, an amount equal to 3% of the
taxpayer's net income for the taxable year.
(4) In the case of an individual, trust, or estate, for
taxable years beginning prior to January 1, 2011, and
ending after December 31, 2010, an amount equal to the sum
of (i) 3% of the taxpayer's net income for the period prior
to January 1, 2011, as calculated under Section 202.5, and
(ii) 5% of the taxpayer's net income for the period after
December 31, 2010, as calculated under Section 202.5.
(5) In the case of an individual, trust, or estate, for
taxable years beginning on or after January 1, 2011, and
ending prior to January 1, 2015, an amount equal to 5% of
the taxpayer's net income for the taxable year.
(5.1) In the case of an individual, trust, or estate,
for taxable years beginning prior to January 1, 2015, and
ending after December 31, 2014, an amount equal to the sum
of (i) 5% of the taxpayer's net income for the period prior
to January 1, 2015, as calculated under Section 202.5, and
(ii) 3.75% of the taxpayer's net income for the period

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after December 31, 2014, as calculated under Section 202.5.
(5.2) In the case of an individual, trust, or estate,
for taxable years beginning on or after January 1, 2015,
and ending prior to January 1, 2025, an amount equal to
3.75% of the taxpayer's net income for the taxable year.
(5.3) (Blank). In the case of an individual, trust, or
estate, for taxable years beginning prior to January 1,
2025, and ending after December 31, 2024, an amount equal
to the sum of (i) 3.75% of the taxpayer's net income for
the period prior to January 1, 2025, as calculated under
Section 202.5, and (ii) 3.25% of the taxpayer's net income
for the period after December 31, 2024, as calculated under
Section 202.5.
(5.4) (Blank). In the case of an individual, trust, or
estate, for taxable years beginning on or after January 1,
2025, an amount equal to 3.25% of the taxpayer's net income
for the taxable year.
(6) In the case of a corporation, for taxable years
ending prior to July 1, 1989, an amount equal to 4% of the
taxpayer's net income for the taxable year.
(7) In the case of a corporation, for taxable years
beginning prior to July 1, 1989 and ending after June 30,
1989, an amount equal to the sum of (i) 4% of the
taxpayer's net income for the period prior to July 1, 1989,
as calculated under Section 202.3, and (ii) 4.8% of the
taxpayer's net income for the period after June 30, 1989,

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as calculated under Section 202.3.
(8) In the case of a corporation, for taxable years
beginning after June 30, 1989, and ending prior to January
1, 2011, an amount equal to 4.8% of the taxpayer's net
income for the taxable year.
(9) In the case of a corporation, for taxable years
beginning prior to January 1, 2011, and ending after
December 31, 2010, an amount equal to the sum of (i) 4.8%
of the taxpayer's net income for the period prior to
January 1, 2011, as calculated under Section 202.5, and
(ii) 7% of the taxpayer's net income for the period after
December 31, 2010, as calculated under Section 202.5.
(10) In the case of a corporation, for taxable years
beginning on or after January 1, 2011, and ending prior to
January 1, 2015, an amount equal to 7% of the taxpayer's
net income for the taxable year.
(11) In the case of a corporation, for taxable years
beginning prior to January 1, 2015, and ending after
December 31, 2014, an amount equal to the sum of (i) 7% of
the taxpayer's net income for the period prior to January
1, 2015, as calculated under Section 202.5, and (ii) 5.25%
of the taxpayer's net income for the period after December
31, 2014, as calculated under Section 202.5.
(12) In the case of a corporation, for taxable years
beginning on or after January 1, 2015, and ending prior to
January 1, 2017 January 1, 2025, an amount equal to 5.25%

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of the taxpayer's net income for the taxable year.
(13) In the case of a corporation, for taxable years
beginning prior to January 1, 2017 January 1, 2025, and
ending after December 31, 2016 December 31, 2024, an amount
equal to the sum of (i) 5.25% of the taxpayer's net income
for the period prior to January 1, 2025, as calculated
under Section 202.5, and (ii) 6% 4.8% of the taxpayer's net
income for the period after December 31, 2016 December 31,
2024, as calculated under Section 202.5.
(14) In the case of a corporation, for taxable years
beginning on or after January 1, 2017 January 1, 2025, an
amount equal to 6% 4.8% of the taxpayer's net income for
the taxable year.
The rates under this subsection (b) are subject to the
provisions of Section 201.5.
(c) Personal Property Tax Replacement Income Tax.
Beginning on July 1, 1979 and thereafter, in addition to such
income tax, there is also hereby imposed the Personal Property
Tax Replacement Income Tax measured by net income on every
corporation (including Subchapter S corporations), partnership
and trust, for each taxable year ending after June 30, 1979.
Such taxes are imposed on the privilege of earning or receiving
income in or as a resident of this State. The Personal Property
Tax Replacement Income Tax shall be in addition to the income
tax imposed by subsections (a) and (b) of this Section and in
addition to all other occupation or privilege taxes imposed by

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this State or by any municipal corporation or political
subdivision thereof.
(d) Additional Personal Property Tax Replacement Income
Tax Rates. The personal property tax replacement income tax
imposed by this subsection and subsection (c) of this Section
in the case of a corporation, other than a Subchapter S
corporation and except as adjusted by subsection (d-1), shall
be an additional amount equal to 2.85% of such taxpayer's net
income for the taxable year, except that beginning on January
1, 1981, and thereafter, the rate of 2.85% specified in this
subsection shall be reduced to 2.5%, and in the case of a
partnership, trust or a Subchapter S corporation shall be an
additional amount equal to 1.5% of such taxpayer's net income
for the taxable year.
(d-1) Rate reduction for certain foreign insurers. In the
case of a foreign insurer, as defined by Section 35A-5 of the
Illinois Insurance Code, whose state or country of domicile
imposes on insurers domiciled in Illinois a retaliatory tax
(excluding any insurer whose premiums from reinsurance assumed
are 50% or more of its total insurance premiums as determined
under paragraph (2) of subsection (b) of Section 304, except
that for purposes of this determination premiums from
reinsurance do not include premiums from inter-affiliate
reinsurance arrangements), beginning with taxable years ending
on or after December 31, 1999, the sum of the rates of tax
imposed by subsections (b) and (d) shall be reduced (but not

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increased) to the rate at which the total amount of tax imposed
under this Act, net of all credits allowed under this Act,
shall equal (i) the total amount of tax that would be imposed
on the foreign insurer's net income allocable to Illinois for
the taxable year by such foreign insurer's state or country of
domicile if that net income were subject to all income taxes
and taxes measured by net income imposed by such foreign
insurer's state or country of domicile, net of all credits
allowed or (ii) a rate of zero if no such tax is imposed on such
income by the foreign insurer's state of domicile. For the
purposes of this subsection (d-1), an inter-affiliate includes
a mutual insurer under common management.
(1) For the purposes of subsection (d-1), in no event
shall the sum of the rates of tax imposed by subsections
(b) and (d) be reduced below the rate at which the sum of:
(A) the total amount of tax imposed on such foreign
insurer under this Act for a taxable year, net of all
credits allowed under this Act, plus
(B) the privilege tax imposed by Section 409 of the
Illinois Insurance Code, the fire insurance company
tax imposed by Section 12 of the Fire Investigation
Act, and the fire department taxes imposed under
Section 11-10-1 of the Illinois Municipal Code,
equals 1.25% for taxable years ending prior to December 31,
2003, or 1.75% for taxable years ending on or after
December 31, 2003, of the net taxable premiums written for

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the taxable year, as described by subsection (1) of Section
409 of the Illinois Insurance Code. This paragraph will in
no event increase the rates imposed under subsections (b)
and (d).
(2) Any reduction in the rates of tax imposed by this
subsection shall be applied first against the rates imposed
by subsection (b) and only after the tax imposed by
subsection (a) net of all credits allowed under this
Section other than the credit allowed under subsection (i)
has been reduced to zero, against the rates imposed by
subsection (d).
This subsection (d-1) is exempt from the provisions of
Section 250.
(e) Investment credit. A taxpayer shall be allowed a credit
against the Personal Property Tax Replacement Income Tax for
investment in qualified property.
(1) A taxpayer shall be allowed a credit equal to .5%
of the basis of qualified property placed in service during
the taxable year, provided such property is placed in
service on or after July 1, 1984. There shall be allowed an
additional credit equal to .5% of the basis of qualified
property placed in service during the taxable year,
provided such property is placed in service on or after
July 1, 1986, and the taxpayer's base employment within
Illinois has increased by 1% or more over the preceding
year as determined by the taxpayer's employment records

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filed with the Illinois Department of Employment Security.
Taxpayers who are new to Illinois shall be deemed to have
met the 1% growth in base employment for the first year in
which they file employment records with the Illinois
Department of Employment Security. The provisions added to
this Section by Public Act 85-1200 (and restored by Public
Act 87-895) shall be construed as declaratory of existing
law and not as a new enactment. If, in any year, the
increase in base employment within Illinois over the
preceding year is less than 1%, the additional credit shall
be limited to that percentage times a fraction, the
numerator of which is .5% and the denominator of which is
1%, but shall not exceed .5%. The investment credit shall
not be allowed to the extent that it would reduce a
taxpayer's liability in any tax year below zero, nor may
any credit for qualified property be allowed for any year
other than the year in which the property was placed in
service in Illinois. For tax years ending on or after
December 31, 1987, and on or before December 31, 1988, the
credit shall be allowed for the tax year in which the
property is placed in service, or, if the amount of the
credit exceeds the tax liability for that year, whether it
exceeds the original liability or the liability as later
amended, such excess may be carried forward and applied to
the tax liability of the 5 taxable years following the
excess credit years if the taxpayer (i) makes investments

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which cause the creation of a minimum of 2,000 full-time
equivalent jobs in Illinois, (ii) is located in an
enterprise zone established pursuant to the Illinois
Enterprise Zone Act and (iii) is certified by the
Department of Commerce and Community Affairs (now
Department of Commerce and Economic Opportunity) as
complying with the requirements specified in clause (i) and
(ii) by July 1, 1986. The Department of Commerce and
Community Affairs (now Department of Commerce and Economic
Opportunity) shall notify the Department of Revenue of all
such certifications immediately. For tax years ending
after December 31, 1988, the credit shall be allowed for
the tax year in which the property is placed in service,
or, if the amount of the credit exceeds the tax liability
for that year, whether it exceeds the original liability or
the liability as later amended, such excess may be carried
forward and applied to the tax liability of the 5 taxable
years following the excess credit years. The credit shall
be applied to the earliest year for which there is a
liability. If there is credit from more than one tax year
that is available to offset a liability, earlier credit
shall be applied first.
(2) The term "qualified property" means property
which:
(A) is tangible, whether new or used, including
buildings and structural components of buildings and

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signs that are real property, but not including land or
improvements to real property that are not a structural
component of a building such as landscaping, sewer
lines, local access roads, fencing, parking lots, and
other appurtenances;
(B) is depreciable pursuant to Section 167 of the
Internal Revenue Code, except that "3-year property"
as defined in Section 168(c)(2)(A) of that Code is not
eligible for the credit provided by this subsection
(e);
(C) is acquired by purchase as defined in Section
179(d) of the Internal Revenue Code;
(D) is used in Illinois by a taxpayer who is
primarily engaged in manufacturing, or in mining coal
or fluorite, or in retailing, or was placed in service
on or after July 1, 2006 in a River Edge Redevelopment
Zone established pursuant to the River Edge
Redevelopment Zone Act; and
(E) has not previously been used in Illinois in
such a manner and by such a person as would qualify for
the credit provided by this subsection (e) or
subsection (f).
(3) For purposes of this subsection (e),
"manufacturing" means the material staging and production
of tangible personal property by procedures commonly
regarded as manufacturing, processing, fabrication, or

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assembling which changes some existing material into new
shapes, new qualities, or new combinations. For purposes of
this subsection (e) the term "mining" shall have the same
meaning as the term "mining" in Section 613(c) of the
Internal Revenue Code. For purposes of this subsection (e),
the term "retailing" means the sale of tangible personal
property for use or consumption and not for resale, or
services rendered in conjunction with the sale of tangible
personal property for use or consumption and not for
resale. For purposes of this subsection (e), "tangible
personal property" has the same meaning as when that term
is used in the Retailers' Occupation Tax Act, and, for
taxable years ending after December 31, 2008, does not
include the generation, transmission, or distribution of
electricity.
(4) The basis of qualified property shall be the basis
used to compute the depreciation deduction for federal
income tax purposes.
(5) If the basis of the property for federal income tax
depreciation purposes is increased after it has been placed
in service in Illinois by the taxpayer, the amount of such
increase shall be deemed property placed in service on the
date of such increase in basis.
(6) The term "placed in service" shall have the same
meaning as under Section 46 of the Internal Revenue Code.
(7) If during any taxable year, any property ceases to

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be qualified property in the hands of the taxpayer within
48 months after being placed in service, or the situs of
any qualified property is moved outside Illinois within 48
months after being placed in service, the Personal Property
Tax Replacement Income Tax for such taxable year shall be
increased. Such increase shall be determined by (i)
recomputing the investment credit which would have been
allowed for the year in which credit for such property was
originally allowed by eliminating such property from such
computation and, (ii) subtracting such recomputed credit
from the amount of credit previously allowed. For the
purposes of this paragraph (7), a reduction of the basis of
qualified property resulting from a redetermination of the
purchase price shall be deemed a disposition of qualified
property to the extent of such reduction.
(8) Unless the investment credit is extended by law,
the basis of qualified property shall not include costs
incurred after December 31, 2018, except for costs incurred
pursuant to a binding contract entered into on or before
December 31, 2018.
(9) Each taxable year ending before December 31, 2000,
a partnership may elect to pass through to its partners the
credits to which the partnership is entitled under this
subsection (e) for the taxable year. A partner may use the
credit allocated to him or her under this paragraph only
against the tax imposed in subsections (c) and (d) of this

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Section. If the partnership makes that election, those
credits shall be allocated among the partners in the
partnership in accordance with the rules set forth in
Section 704(b) of the Internal Revenue Code, and the rules
promulgated under that Section, and the allocated amount of
the credits shall be allowed to the partners for that
taxable year. The partnership shall make this election on
its Personal Property Tax Replacement Income Tax return for
that taxable year. The election to pass through the credits
shall be irrevocable.
For taxable years ending on or after December 31, 2000,
a partner that qualifies its partnership for a subtraction
under subparagraph (I) of paragraph (2) of subsection (d)
of Section 203 or a shareholder that qualifies a Subchapter
S corporation for a subtraction under subparagraph (S) of
paragraph (2) of subsection (b) of Section 203 shall be
allowed a credit under this subsection (e) equal to its
share of the credit earned under this subsection (e) during
the taxable year by the partnership or Subchapter S
corporation, determined in accordance with the
determination of income and distributive share of income
under Sections 702 and 704 and Subchapter S of the Internal
Revenue Code. This paragraph is exempt from the provisions
of Section 250.
(f) Investment credit; Enterprise Zone; River Edge
Redevelopment Zone.

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(1) A taxpayer shall be allowed a credit against the
tax imposed by subsections (a) and (b) of this Section for
investment in qualified property which is placed in service
in an Enterprise Zone created pursuant to the Illinois
Enterprise Zone Act or, for property placed in service on
or after July 1, 2006, a River Edge Redevelopment Zone
established pursuant to the River Edge Redevelopment Zone
Act. For partners, shareholders of Subchapter S
corporations, and owners of limited liability companies,
if the liability company is treated as a partnership for
purposes of federal and State income taxation, there shall
be allowed a credit under this subsection (f) to be
determined in accordance with the determination of income
and distributive share of income under Sections 702 and 704
and Subchapter S of the Internal Revenue Code. The credit
shall be .5% of the basis for such property. The credit
shall be available only in the taxable year in which the
property is placed in service in the Enterprise Zone or
River Edge Redevelopment Zone and shall not be allowed to
the extent that it would reduce a taxpayer's liability for
the tax imposed by subsections (a) and (b) of this Section
to below zero. For tax years ending on or after December
31, 1985, the credit shall be allowed for the tax year in
which the property is placed in service, or, if the amount
of the credit exceeds the tax liability for that year,
whether it exceeds the original liability or the liability

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as later amended, such excess may be carried forward and
applied to the tax liability of the 5 taxable years
following the excess credit year. The credit shall be
applied to the earliest year for which there is a
liability. If there is credit from more than one tax year
that is available to offset a liability, the credit
accruing first in time shall be applied first.
(2) The term qualified property means property which:
(A) is tangible, whether new or used, including
buildings and structural components of buildings;
(B) is depreciable pursuant to Section 167 of the
Internal Revenue Code, except that "3-year property"
as defined in Section 168(c)(2)(A) of that Code is not
eligible for the credit provided by this subsection
(f);
(C) is acquired by purchase as defined in Section
179(d) of the Internal Revenue Code;
(D) is used in the Enterprise Zone or River Edge
Redevelopment Zone by the taxpayer; and
(E) has not been previously used in Illinois in
such a manner and by such a person as would qualify for
the credit provided by this subsection (f) or
subsection (e).
(3) The basis of qualified property shall be the basis
used to compute the depreciation deduction for federal
income tax purposes.

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(4) If the basis of the property for federal income tax
depreciation purposes is increased after it has been placed
in service in the Enterprise Zone or River Edge
Redevelopment Zone by the taxpayer, the amount of such
increase shall be deemed property placed in service on the
date of such increase in basis.
(5) The term "placed in service" shall have the same
meaning as under Section 46 of the Internal Revenue Code.
(6) If during any taxable year, any property ceases to
be qualified property in the hands of the taxpayer within
48 months after being placed in service, or the situs of
any qualified property is moved outside the Enterprise Zone
or River Edge Redevelopment Zone within 48 months after
being placed in service, the tax imposed under subsections
(a) and (b) of this Section for such taxable year shall be
increased. Such increase shall be determined by (i)
recomputing the investment credit which would have been
allowed for the year in which credit for such property was
originally allowed by eliminating such property from such
computation, and (ii) subtracting such recomputed credit
from the amount of credit previously allowed. For the
purposes of this paragraph (6), a reduction of the basis of
qualified property resulting from a redetermination of the
purchase price shall be deemed a disposition of qualified
property to the extent of such reduction.
(7) There shall be allowed an additional credit equal

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to 0.5% of the basis of qualified property placed in
service during the taxable year in a River Edge
Redevelopment Zone, provided such property is placed in
service on or after July 1, 2006, and the taxpayer's base
employment within Illinois has increased by 1% or more over
the preceding year as determined by the taxpayer's
employment records filed with the Illinois Department of
Employment Security. Taxpayers who are new to Illinois
shall be deemed to have met the 1% growth in base
employment for the first year in which they file employment
records with the Illinois Department of Employment
Security. If, in any year, the increase in base employment
within Illinois over the preceding year is less than 1%,
the additional credit shall be limited to that percentage
times a fraction, the numerator of which is 0.5% and the
denominator of which is 1%, but shall not exceed 0.5%.
(g) (Blank).
(h) Investment credit; High Impact Business.
(1) Subject to subsections (b) and (b-5) of Section 5.5
of the Illinois Enterprise Zone Act, a taxpayer shall be
allowed a credit against the tax imposed by subsections (a)
and (b) of this Section for investment in qualified
property which is placed in service by a Department of
Commerce and Economic Opportunity designated High Impact
Business. The credit shall be .5% of the basis for such
property. The credit shall not be available (i) until the

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minimum investments in qualified property set forth in
subdivision (a)(3)(A) of Section 5.5 of the Illinois
Enterprise Zone Act have been satisfied or (ii) until the
time authorized in subsection (b-5) of the Illinois
Enterprise Zone Act for entities designated as High Impact
Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
(a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
Act, and shall not be allowed to the extent that it would
reduce a taxpayer's liability for the tax imposed by
subsections (a) and (b) of this Section to below zero. The
credit applicable to such investments shall be taken in the
taxable year in which such investments have been completed.
The credit for additional investments beyond the minimum
investment by a designated high impact business authorized
under subdivision (a)(3)(A) of Section 5.5 of the Illinois
Enterprise Zone Act shall be available only in the taxable
year in which the property is placed in service and shall
not be allowed to the extent that it would reduce a
taxpayer's liability for the tax imposed by subsections (a)
and (b) of this Section to below zero. For tax years ending
on or after December 31, 1987, the credit shall be allowed
for the tax year in which the property is placed in
service, or, if the amount of the credit exceeds the tax
liability for that year, whether it exceeds the original
liability or the liability as later amended, such excess
may be carried forward and applied to the tax liability of

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the 5 taxable years following the excess credit year. The
credit shall be applied to the earliest year for which
there is a liability. If there is credit from more than one
tax year that is available to offset a liability, the
credit accruing first in time shall be applied first.
Changes made in this subdivision (h)(1) by Public Act
88-670 restore changes made by Public Act 85-1182 and
reflect existing law.
(2) The term qualified property means property which:
(A) is tangible, whether new or used, including
buildings and structural components of buildings;
(B) is depreciable pursuant to Section 167 of the
Internal Revenue Code, except that "3-year property"
as defined in Section 168(c)(2)(A) of that Code is not
eligible for the credit provided by this subsection
(h);
(C) is acquired by purchase as defined in Section
179(d) of the Internal Revenue Code; and
(D) is not eligible for the Enterprise Zone
Investment Credit provided by subsection (f) of this
Section.
(3) The basis of qualified property shall be the basis
used to compute the depreciation deduction for federal
income tax purposes.
(4) If the basis of the property for federal income tax
depreciation purposes is increased after it has been placed

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in service in a federally designated Foreign Trade Zone or
Sub-Zone located in Illinois by the taxpayer, the amount of
such increase shall be deemed property placed in service on
the date of such increase in basis.
(5) The term "placed in service" shall have the same
meaning as under Section 46 of the Internal Revenue Code.
(6) If during any taxable year ending on or before
December 31, 1996, any property ceases to be qualified
property in the hands of the taxpayer within 48 months
after being placed in service, or the situs of any
qualified property is moved outside Illinois within 48
months after being placed in service, the tax imposed under
subsections (a) and (b) of this Section for such taxable
year shall be increased. Such increase shall be determined
by (i) recomputing the investment credit which would have
been allowed for the year in which credit for such property
was originally allowed by eliminating such property from
such computation, and (ii) subtracting such recomputed
credit from the amount of credit previously allowed. For
the purposes of this paragraph (6), a reduction of the
basis of qualified property resulting from a
redetermination of the purchase price shall be deemed a
disposition of qualified property to the extent of such
reduction.
(7) Beginning with tax years ending after December 31,
1996, if a taxpayer qualifies for the credit under this

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subsection (h) and thereby is granted a tax abatement and
the taxpayer relocates its entire facility in violation of
the explicit terms and length of the contract under Section
18-183 of the Property Tax Code, the tax imposed under
subsections (a) and (b) of this Section shall be increased
for the taxable year in which the taxpayer relocated its
facility by an amount equal to the amount of credit
received by the taxpayer under this subsection (h).
(i) Credit for Personal Property Tax Replacement Income
Tax. For tax years ending prior to December 31, 2003, a credit
shall be allowed against the tax imposed by subsections (a) and
(b) of this Section for the tax imposed by subsections (c) and
(d) of this Section. This credit shall be computed by
multiplying the tax imposed by subsections (c) and (d) of this
Section by a fraction, the numerator of which is base income
allocable to Illinois and the denominator of which is Illinois
base income, and further multiplying the product by the tax
rate imposed by subsections (a) and (b) of this Section.
Any credit earned on or after December 31, 1986 under this
subsection which is unused in the year the credit is computed
because it exceeds the tax liability imposed by subsections (a)
and (b) for that year (whether it exceeds the original
liability or the liability as later amended) may be carried
forward and applied to the tax liability imposed by subsections
(a) and (b) of the 5 taxable years following the excess credit
year, provided that no credit may be carried forward to any

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year ending on or after December 31, 2003. This credit shall be
applied first to the earliest year for which there is a
liability. If there is a credit under this subsection from more
than one tax year that is available to offset a liability the
earliest credit arising under this subsection shall be applied
first.
If, during any taxable year ending on or after December 31,
1986, the tax imposed by subsections (c) and (d) of this
Section for which a taxpayer has claimed a credit under this
subsection (i) is reduced, the amount of credit for such tax
shall also be reduced. Such reduction shall be determined by
recomputing the credit to take into account the reduced tax
imposed by subsections (c) and (d). If any portion of the
reduced amount of credit has been carried to a different
taxable year, an amended return shall be filed for such taxable
year to reduce the amount of credit claimed.
(j) Training expense credit. Beginning with tax years
ending on or after December 31, 1986 and prior to December 31,
2003, a taxpayer shall be allowed a credit against the tax
imposed by subsections (a) and (b) under this Section for all
amounts paid or accrued, on behalf of all persons employed by
the taxpayer in Illinois or Illinois residents employed outside
of Illinois by a taxpayer, for educational or vocational
training in semi-technical or technical fields or semi-skilled
or skilled fields, which were deducted from gross income in the
computation of taxable income. The credit against the tax

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imposed by subsections (a) and (b) shall be 1.6% of such
training expenses. For partners, shareholders of subchapter S
corporations, and owners of limited liability companies, if the
liability company is treated as a partnership for purposes of
federal and State income taxation, there shall be allowed a
credit under this subsection (j) to be determined in accordance
with the determination of income and distributive share of
income under Sections 702 and 704 and subchapter S of the
Internal Revenue Code.
Any credit allowed under this subsection which is unused in
the year the credit is earned may be carried forward to each of
the 5 taxable years following the year for which the credit is
first computed until it is used. This credit shall be applied
first to the earliest year for which there is a liability. If
there is a credit under this subsection from more than one tax
year that is available to offset a liability the earliest
credit arising under this subsection shall be applied first. No
carryforward credit may be claimed in any tax year ending on or
after December 31, 2003.
(k) Research and development credit. For tax years ending
after July 1, 1990 and prior to December 31, 2003, and
beginning again for tax years ending on or after December 31,
2004, and ending prior to January 1, 2016, a taxpayer shall be
allowed a credit against the tax imposed by subsections (a) and
(b) of this Section for increasing research activities in this
State. The credit allowed against the tax imposed by

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subsections (a) and (b) shall be equal to 6 1/2% of the
qualifying expenditures for increasing research activities in
this State. For partners, shareholders of subchapter S
corporations, and owners of limited liability companies, if the
liability company is treated as a partnership for purposes of
federal and State income taxation, there shall be allowed a
credit under this subsection to be determined in accordance
with the determination of income and distributive share of
income under Sections 702 and 704 and subchapter S of the
Internal Revenue Code.
For purposes of this subsection, "qualifying expenditures"
means the qualifying expenditures as defined for the federal
credit for increasing research activities which would be
allowable under Section 41 of the Internal Revenue Code and
which are conducted in this State, "qualifying expenditures for
increasing research activities in this State" means the excess
of qualifying expenditures for the taxable year in which
incurred over qualifying expenditures for the base period,
"qualifying expenditures for the base period" means the average
of the qualifying expenditures for each year in the base
period, and "base period" means the 3 taxable years immediately
preceding the taxable year for which the determination is being
made.
Any credit in excess of the tax liability for the taxable
year may be carried forward. A taxpayer may elect to have the
unused credit shown on its final completed return carried over

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as a credit against the tax liability for the following 5
taxable years or until it has been fully used, whichever occurs
first; provided that no credit earned in a tax year ending
prior to December 31, 2003 may be carried forward to any year
ending on or after December 31, 2003 and no credit earned in a
tax year ending prior to January 1, 2016 may be carried forward
to any year ending on or after January 1, 2016.
If an unused credit is carried forward to a given year from
2 or more earlier years, that credit arising in the earliest
year will be applied first against the tax liability for the
given year. If a tax liability for the given year still
remains, the credit from the next earliest year will then be
applied, and so on, until all credits have been used or no tax
liability for the given year remains. Any remaining unused
credit or credits then will be carried forward to the next
following year in which a tax liability is incurred, except
that no credit can be carried forward to a year which is more
than 5 years after the year in which the expense for which the
credit is given was incurred.
No inference shall be drawn from this amendatory Act of the
91st General Assembly in construing this Section for taxable
years beginning before January 1, 1999.
(l) Environmental Remediation Tax Credit.
(i) For tax years ending after December 31, 1997 and on
or before December 31, 2001, a taxpayer shall be allowed a
credit against the tax imposed by subsections (a) and (b)

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of this Section for certain amounts paid for unreimbursed
eligible remediation costs, as specified in this
subsection. For purposes of this Section, "unreimbursed
eligible remediation costs" means costs approved by the
Illinois Environmental Protection Agency ("Agency") under
Section 58.14 of the Environmental Protection Act that were
paid in performing environmental remediation at a site for
which a No Further Remediation Letter was issued by the
Agency and recorded under Section 58.10 of the
Environmental Protection Act. The credit must be claimed
for the taxable year in which Agency approval of the
eligible remediation costs is granted. The credit is not
available to any taxpayer if the taxpayer or any related
party caused or contributed to, in any material respect, a
release of regulated substances on, in, or under the site
that was identified and addressed by the remedial action
pursuant to the Site Remediation Program of the
Environmental Protection Act. After the Pollution Control
Board rules are adopted pursuant to the Illinois
Administrative Procedure Act for the administration and
enforcement of Section 58.9 of the Environmental
Protection Act, determinations as to credit availability
for purposes of this Section shall be made consistent with
those rules. For purposes of this Section, "taxpayer"
includes a person whose tax attributes the taxpayer has
succeeded to under Section 381 of the Internal Revenue Code

09900HB0293ham001 - 34 - LRB099 04265 HLH 51448 a
and "related party" includes the persons disallowed a
deduction for losses by paragraphs (b), (c), and (f)(1) of
Section 267 of the Internal Revenue Code by virtue of being
a related taxpayer, as well as any of its partners. The
credit allowed against the tax imposed by subsections (a)
and (b) shall be equal to 25% of the unreimbursed eligible
remediation costs in excess of $100,000 per site, except
that the $100,000 threshold shall not apply to any site
contained in an enterprise zone as determined by the
Department of Commerce and Community Affairs (now
Department of Commerce and Economic Opportunity). The
total credit allowed shall not exceed $40,000 per year with
a maximum total of $150,000 per site. For partners and
shareholders of subchapter S corporations, there shall be
allowed a credit under this subsection to be determined in
accordance with the determination of income and
distributive share of income under Sections 702 and 704 and
subchapter S of the Internal Revenue Code.
(ii) A credit allowed under this subsection that is
unused in the year the credit is earned may be carried
forward to each of the 5 taxable years following the year
for which the credit is first earned until it is used. The
term "unused credit" does not include any amounts of
unreimbursed eligible remediation costs in excess of the
maximum credit per site authorized under paragraph (i).
This credit shall be applied first to the earliest year for

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which there is a liability. If there is a credit under this
subsection from more than one tax year that is available to
offset a liability, the earliest credit arising under this
subsection shall be applied first. A credit allowed under
this subsection may be sold to a buyer as part of a sale of
all or part of the remediation site for which the credit
was granted. The purchaser of a remediation site and the
tax credit shall succeed to the unused credit and remaining
carry-forward period of the seller. To perfect the
transfer, the assignor shall record the transfer in the
chain of title for the site and provide written notice to
the Director of the Illinois Department of Revenue of the
assignor's intent to sell the remediation site and the
amount of the tax credit to be transferred as a portion of
the sale. In no event may a credit be transferred to any
taxpayer if the taxpayer or a related party would not be
eligible under the provisions of subsection (i).
(iii) For purposes of this Section, the term "site"
shall have the same meaning as under Section 58.2 of the
Environmental Protection Act.
(m) Education expense credit. Beginning with tax years
ending after December 31, 1999, a taxpayer who is the custodian
of one or more qualifying pupils shall be allowed a credit
against the tax imposed by subsections (a) and (b) of this
Section for qualified education expenses incurred on behalf of
the qualifying pupils. The credit shall be equal to 25% of

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qualified education expenses, but in no event may the total
credit under this subsection claimed by a family that is the
custodian of qualifying pupils exceed $500. In no event shall a
credit under this subsection reduce the taxpayer's liability
under this Act to less than zero. This subsection is exempt
from the provisions of Section 250 of this Act.
For purposes of this subsection:
"Qualifying pupils" means individuals who (i) are
residents of the State of Illinois, (ii) are under the age of
21 at the close of the school year for which a credit is
sought, and (iii) during the school year for which a credit is
sought were full-time pupils enrolled in a kindergarten through
twelfth grade education program at any school, as defined in
this subsection.
"Qualified education expense" means the amount incurred on
behalf of a qualifying pupil in excess of $250 for tuition,
book fees, and lab fees at the school in which the pupil is
enrolled during the regular school year.
"School" means any public or nonpublic elementary or
secondary school in Illinois that is in compliance with Title
VI of the Civil Rights Act of 1964 and attendance at which
satisfies the requirements of Section 26-1 of the School Code,
except that nothing shall be construed to require a child to
attend any particular public or nonpublic school to qualify for
the credit under this Section.
"Custodian" means, with respect to qualifying pupils, an

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Illinois resident who is a parent, the parents, a legal
guardian, or the legal guardians of the qualifying pupils.
(n) River Edge Redevelopment Zone site remediation tax
credit.
(i) For tax years ending on or after December 31, 2006,
a taxpayer shall be allowed a credit against the tax
imposed by subsections (a) and (b) of this Section for
certain amounts paid for unreimbursed eligible remediation
costs, as specified in this subsection. For purposes of
this Section, "unreimbursed eligible remediation costs"
means costs approved by the Illinois Environmental
Protection Agency ("Agency") under Section 58.14a of the
Environmental Protection Act that were paid in performing
environmental remediation at a site within a River Edge
Redevelopment Zone for which a No Further Remediation
Letter was issued by the Agency and recorded under Section
58.10 of the Environmental Protection Act. The credit must
be claimed for the taxable year in which Agency approval of
the eligible remediation costs is granted. The credit is
not available to any taxpayer if the taxpayer or any
related party caused or contributed to, in any material
respect, a release of regulated substances on, in, or under
the site that was identified and addressed by the remedial
action pursuant to the Site Remediation Program of the
Environmental Protection Act. Determinations as to credit
availability for purposes of this Section shall be made

09900HB0293ham001 - 38 - LRB099 04265 HLH 51448 a
consistent with rules adopted by the Pollution Control
Board pursuant to the Illinois Administrative Procedure
Act for the administration and enforcement of Section 58.9
of the Environmental Protection Act. For purposes of this
Section, "taxpayer" includes a person whose tax attributes
the taxpayer has succeeded to under Section 381 of the
Internal Revenue Code and "related party" includes the
persons disallowed a deduction for losses by paragraphs
(b), (c), and (f)(1) of Section 267 of the Internal Revenue
Code by virtue of being a related taxpayer, as well as any
of its partners. The credit allowed against the tax imposed
by subsections (a) and (b) shall be equal to 25% of the
unreimbursed eligible remediation costs in excess of
$100,000 per site.
(ii) A credit allowed under this subsection that is
unused in the year the credit is earned may be carried
forward to each of the 5 taxable years following the year
for which the credit is first earned until it is used. This
credit shall be applied first to the earliest year for
which there is a liability. If there is a credit under this
subsection from more than one tax year that is available to
offset a liability, the earliest credit arising under this
subsection shall be applied first. A credit allowed under
this subsection may be sold to a buyer as part of a sale of
all or part of the remediation site for which the credit
was granted. The purchaser of a remediation site and the

09900HB0293ham001 - 39 - LRB099 04265 HLH 51448 a
tax credit shall succeed to the unused credit and remaining
carry-forward period of the seller. To perfect the
transfer, the assignor shall record the transfer in the
chain of title for the site and provide written notice to
the Director of the Illinois Department of Revenue of the
assignor's intent to sell the remediation site and the
amount of the tax credit to be transferred as a portion of
the sale. In no event may a credit be transferred to any
taxpayer if the taxpayer or a related party would not be
eligible under the provisions of subsection (i).
(iii) For purposes of this Section, the term "site"
shall have the same meaning as under Section 58.2 of the
Environmental Protection Act.
(o) For each of taxable years during the Compassionate Use
of Medical Cannabis Pilot Program, a surcharge is imposed on
all taxpayers on income arising from the sale or exchange of
capital assets, depreciable business property, real property
used in the trade or business, and Section 197 intangibles of
an organization registrant under the Compassionate Use of
Medical Cannabis Pilot Program Act. The amount of the surcharge
is equal to the amount of federal income tax liability for the
taxable year attributable to those sales and exchanges. The
surcharge imposed does not apply if:
(1) the medical cannabis cultivation center
registration, medical cannabis dispensary registration, or
the property of a registration is transferred as a result

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of any of the following:
(A) bankruptcy, a receivership, or a debt
adjustment initiated by or against the initial
registration or the substantial owners of the initial
registration;
(B) cancellation, revocation, or termination of
any registration by the Illinois Department of Public
Health;
(C) a determination by the Illinois Department of
Public Health that transfer of the registration is in
the best interests of Illinois qualifying patients as
defined by the Compassionate Use of Medical Cannabis
Pilot Program Act;
(D) the death of an owner of the equity interest in
a registrant;
(E) the acquisition of a controlling interest in
the stock or substantially all of the assets of a
publicly traded company;
(F) a transfer by a parent company to a wholly
owned subsidiary; or
(G) the transfer or sale to or by one person to
another person where both persons were initial owners
of the registration when the registration was issued;
or
(2) the cannabis cultivation center registration,
medical cannabis dispensary registration, or the

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controlling interest in a registrant's property is
transferred in a transaction to lineal descendants in which
no gain or loss is recognized or as a result of a
transaction in accordance with Section 351 of the Internal
Revenue Code in which no gain or loss is recognized.
(Source: P.A. 97-2, eff. 5-6-11; 97-636, eff. 6-1-12; 97-905,
eff. 8-7-12; 98-109, eff. 7-25-13; 98-122, eff. 1-1-14; 98-756,
eff. 7-16-14.)
(35 ILCS 5/203) (from Ch. 120, par. 2-203)
Sec. 203. Base income defined.
(a) Individuals.
(1) In general. In the case of an individual, base
income means an amount equal to the taxpayer's adjusted
gross income for the taxable year as modified by paragraph
(2).
(2) Modifications. The adjusted gross income referred
to in paragraph (1) shall be modified by adding thereto the
sum of the following amounts:
(A) An amount equal to all amounts paid or accrued
to the taxpayer as interest or dividends during the
taxable year to the extent excluded from gross income
in the computation of adjusted gross income, except
stock dividends of qualified public utilities
described in Section 305(e) of the Internal Revenue
Code;

09900HB0293ham001 - 42 - LRB099 04265 HLH 51448 a
(B) An amount equal to the amount of tax imposed by
this Act to the extent deducted from gross income in
the computation of adjusted gross income for the
taxable year;
(C) An amount equal to the amount received during
the taxable year as a recovery or refund of real
property taxes paid with respect to the taxpayer's
principal residence under the Revenue Act of 1939 and
for which a deduction was previously taken under
subparagraph (L) of this paragraph (2) prior to July 1,
1991, the retrospective application date of Article 4
of Public Act 87-17. In the case of multi-unit or
multi-use structures and farm dwellings, the taxes on
the taxpayer's principal residence shall be that
portion of the total taxes for the entire property
which is attributable to such principal residence;
(D) An amount equal to the amount of the capital
gain deduction allowable under the Internal Revenue
Code, to the extent deducted from gross income in the
computation of adjusted gross income;
(D-5) An amount, to the extent not included in
adjusted gross income, equal to the amount of money
withdrawn by the taxpayer in the taxable year from a
medical care savings account and the interest earned on
the account in the taxable year of a withdrawal
pursuant to subsection (b) of Section 20 of the Medical

09900HB0293ham001 - 43 - LRB099 04265 HLH 51448 a
Care Savings Account Act or subsection (b) of Section
20 of the Medical Care Savings Account Act of 2000;
(D-10) For taxable years ending after December 31,
1997, an amount equal to any eligible remediation costs
that the individual deducted in computing adjusted
gross income and for which the individual claims a
credit under subsection (l) of Section 201;
(D-15) For taxable years 2001 and thereafter, an
amount equal to the bonus depreciation deduction taken
on the taxpayer's federal income tax return for the
taxable year under subsection (k) of Section 168 of the
Internal Revenue Code;
(D-16) If the taxpayer sells, transfers, abandons,
or otherwise disposes of property for which the
taxpayer was required in any taxable year to make an
addition modification under subparagraph (D-15), then
an amount equal to the aggregate amount of the
deductions taken in all taxable years under
subparagraph (Z) with respect to that property.
If the taxpayer continues to own property through
the last day of the last tax year for which the
taxpayer may claim a depreciation deduction for
federal income tax purposes and for which the taxpayer
was allowed in any taxable year to make a subtraction
modification under subparagraph (Z), then an amount
equal to that subtraction modification.

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The taxpayer is required to make the addition
modification under this subparagraph only once with
respect to any one piece of property;
(D-17) An amount equal to the amount otherwise
allowed as a deduction in computing base income for
interest paid, accrued, or incurred, directly or
indirectly, (i) for taxable years ending on or after
December 31, 2004, to a foreign person who would be a
member of the same unitary business group but for the
fact that foreign person's business activity outside
the United States is 80% or more of the foreign
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304. The addition modification
required by this subparagraph shall be reduced to the
extent that dividends were included in base income of
the unitary group for the same taxable year and
received by the taxpayer or by a member of the
taxpayer's unitary business group (including amounts
included in gross income under Sections 951 through 964
of the Internal Revenue Code and amounts included in

09900HB0293ham001 - 45 - LRB099 04265 HLH 51448 a
gross income under Section 78 of the Internal Revenue
Code) with respect to the stock of the same person to
whom the interest was paid, accrued, or incurred.
This paragraph shall not apply to the following:
(i) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person who
is subject in a foreign country or state, other
than a state which requires mandatory unitary
reporting, to a tax on or measured by net income
with respect to such interest; or
(ii) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer can establish, based on a
preponderance of the evidence, both of the
following:
(a) the person, during the same taxable
year, paid, accrued, or incurred, the interest
to a person that is not a related member, and
(b) the transaction giving rise to the
interest expense between the taxpayer and the
person did not have as a principal purpose the
avoidance of Illinois income tax, and is paid
pursuant to a contract or agreement that
reflects an arm's-length interest rate and
terms; or
(iii) the taxpayer can establish, based on

09900HB0293ham001 - 46 - LRB099 04265 HLH 51448 a
clear and convincing evidence, that the interest
paid, accrued, or incurred relates to a contract or
agreement entered into at arm's-length rates and
terms and the principal purpose for the payment is
not federal or Illinois tax avoidance; or
(iv) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer establishes by clear and convincing
evidence that the adjustments are unreasonable; or
if the taxpayer and the Director agree in writing
to the application or use of an alternative method
of apportionment under Section 304(f).
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act for
any tax year beginning after the effective date of
this amendment provided such adjustment is made
pursuant to regulation adopted by the Department
and such regulations provide methods and standards
by which the Department will utilize its authority
under Section 404 of this Act;
(D-18) An amount equal to the amount of intangible
expenses and costs otherwise allowed as a deduction in
computing base income, and that were paid, accrued, or
incurred, directly or indirectly, (i) for taxable
years ending on or after December 31, 2004, to a

09900HB0293ham001 - 47 - LRB099 04265 HLH 51448 a
foreign person who would be a member of the same
unitary business group but for the fact that the
foreign person's business activity outside the United
States is 80% or more of that person's total business
activity and (ii) for taxable years ending on or after
December 31, 2008, to a person who would be a member of
the same unitary business group but for the fact that
the person is prohibited under Section 1501(a)(27)
from being included in the unitary business group
because he or she is ordinarily required to apportion
business income under different subsections of Section
304. The addition modification required by this
subparagraph shall be reduced to the extent that
dividends were included in base income of the unitary
group for the same taxable year and received by the
taxpayer or by a member of the taxpayer's unitary
business group (including amounts included in gross
income under Sections 951 through 964 of the Internal
Revenue Code and amounts included in gross income under
Section 78 of the Internal Revenue Code) with respect
to the stock of the same person to whom the intangible
expenses and costs were directly or indirectly paid,
incurred, or accrued. The preceding sentence does not
apply to the extent that the same dividends caused a
reduction to the addition modification required under
Section 203(a)(2)(D-17) of this Act. As used in this

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subparagraph, the term "intangible expenses and costs"
includes (1) expenses, losses, and costs for, or
related to, the direct or indirect acquisition, use,
maintenance or management, ownership, sale, exchange,
or any other disposition of intangible property; (2)
losses incurred, directly or indirectly, from
factoring transactions or discounting transactions;
(3) royalty, patent, technical, and copyright fees;
(4) licensing fees; and (5) other similar expenses and
costs. For purposes of this subparagraph, "intangible
property" includes patents, patent applications, trade
names, trademarks, service marks, copyrights, mask
works, trade secrets, and similar types of intangible
assets.
This paragraph shall not apply to the following:
(i) any item of intangible expenses or costs
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person who is
subject in a foreign country or state, other than a
state which requires mandatory unitary reporting,
to a tax on or measured by net income with respect
to such item; or
(ii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, if the taxpayer can establish, based
on a preponderance of the evidence, both of the

09900HB0293ham001 - 49 - LRB099 04265 HLH 51448 a
following:
(a) the person during the same taxable
year paid, accrued, or incurred, the
intangible expense or cost to a person that is
not a related member, and
(b) the transaction giving rise to the
intangible expense or cost between the
taxpayer and the person did not have as a
principal purpose the avoidance of Illinois
income tax, and is paid pursuant to a contract
or agreement that reflects arm's-length terms;
or
(iii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person if the
taxpayer establishes by clear and convincing
evidence, that the adjustments are unreasonable;
or if the taxpayer and the Director agree in
writing to the application or use of an alternative
method of apportionment under Section 304(f);
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act for
any tax year beginning after the effective date of
this amendment provided such adjustment is made
pursuant to regulation adopted by the Department

09900HB0293ham001 - 50 - LRB099 04265 HLH 51448 a
and such regulations provide methods and standards
by which the Department will utilize its authority
under Section 404 of this Act;
(D-19) For taxable years ending on or after
December 31, 2008, an amount equal to the amount of
insurance premium expenses and costs otherwise allowed
as a deduction in computing base income, and that were
paid, accrued, or incurred, directly or indirectly, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304. The
addition modification required by this subparagraph
shall be reduced to the extent that dividends were
included in base income of the unitary group for the
same taxable year and received by the taxpayer or by a
member of the taxpayer's unitary business group
(including amounts included in gross income under
Sections 951 through 964 of the Internal Revenue Code
and amounts included in gross income under Section 78
of the Internal Revenue Code) with respect to the stock
of the same person to whom the premiums and costs were
directly or indirectly paid, incurred, or accrued. The
preceding sentence does not apply to the extent that

09900HB0293ham001 - 51 - LRB099 04265 HLH 51448 a
the same dividends caused a reduction to the addition
modification required under Section 203(a)(2)(D-17) or
Section 203(a)(2)(D-18) of this Act.
(D-20) For taxable years beginning on or after
January 1, 2002 and ending on or before December 31,
2006, in the case of a distribution from a qualified
tuition program under Section 529 of the Internal
Revenue Code, other than (i) a distribution from a
College Savings Pool created under Section 16.5 of the
State Treasurer Act or (ii) a distribution from the
Illinois Prepaid Tuition Trust Fund, an amount equal to
the amount excluded from gross income under Section
529(c)(3)(B). For taxable years beginning on or after
January 1, 2007, in the case of a distribution from a
qualified tuition program under Section 529 of the
Internal Revenue Code, other than (i) a distribution
from a College Savings Pool created under Section 16.5
of the State Treasurer Act, (ii) a distribution from
the Illinois Prepaid Tuition Trust Fund, or (iii) a
distribution from a qualified tuition program under
Section 529 of the Internal Revenue Code that (I)
adopts and determines that its offering materials
comply with the College Savings Plans Network's
disclosure principles and (II) has made reasonable
efforts to inform in-state residents of the existence
of in-state qualified tuition programs by informing

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Illinois residents directly and, where applicable, to
inform financial intermediaries distributing the
program to inform in-state residents of the existence
of in-state qualified tuition programs at least
annually, an amount equal to the amount excluded from
gross income under Section 529(c)(3)(B).
For the purposes of this subparagraph (D-20), a
qualified tuition program has made reasonable efforts
if it makes disclosures (which may use the term
"in-state program" or "in-state plan" and need not
specifically refer to Illinois or its qualified
programs by name) (i) directly to prospective
participants in its offering materials or makes a
public disclosure, such as a website posting; and (ii)
where applicable, to intermediaries selling the
out-of-state program in the same manner that the
out-of-state program distributes its offering
materials;
(D-21) For taxable years beginning on or after
January 1, 2007, in the case of transfer of moneys from
a qualified tuition program under Section 529 of the
Internal Revenue Code that is administered by the State
to an out-of-state program, an amount equal to the
amount of moneys previously deducted from base income
under subsection (a)(2)(Y) of this Section;
(D-22) For taxable years beginning on or after

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January 1, 2009, in the case of a nonqualified
withdrawal or refund of moneys from a qualified tuition
program under Section 529 of the Internal Revenue Code
administered by the State that is not used for
qualified expenses at an eligible education
institution, an amount equal to the contribution
component of the nonqualified withdrawal or refund
that was previously deducted from base income under
subsection (a)(2)(y) of this Section, provided that
the withdrawal or refund did not result from the
beneficiary's death or disability;
(D-23) An amount equal to the credit allowable to
the taxpayer under Section 218(a) of this Act,
determined without regard to Section 218(c) of this
Act;
(D-24) For taxable years ending on or after
December 31, 2016, an amount equal to the deduction
allowed under Section 199 of the Internal Revenue Code
for the taxable year;
and by deducting from the total so obtained the sum of the
following amounts:
(E) For taxable years ending before December 31,
2001, any amount included in such total in respect of
any compensation (including but not limited to any
compensation paid or accrued to a serviceman while a
prisoner of war or missing in action) paid to a

09900HB0293ham001 - 54 - LRB099 04265 HLH 51448 a
resident by reason of being on active duty in the Armed
Forces of the United States and in respect of any
compensation paid or accrued to a resident who as a
governmental employee was a prisoner of war or missing
in action, and in respect of any compensation paid to a
resident in 1971 or thereafter for annual training
performed pursuant to Sections 502 and 503, Title 32,
United States Code as a member of the Illinois National
Guard or, beginning with taxable years ending on or
after December 31, 2007, the National Guard of any
other state. For taxable years ending on or after
December 31, 2001, any amount included in such total in
respect of any compensation (including but not limited
to any compensation paid or accrued to a serviceman
while a prisoner of war or missing in action) paid to a
resident by reason of being a member of any component
of the Armed Forces of the United States and in respect
of any compensation paid or accrued to a resident who
as a governmental employee was a prisoner of war or
missing in action, and in respect of any compensation
paid to a resident in 2001 or thereafter by reason of
being a member of the Illinois National Guard or,
beginning with taxable years ending on or after
December 31, 2007, the National Guard of any other
state. The provisions of this subparagraph (E) are
exempt from the provisions of Section 250;

09900HB0293ham001 - 55 - LRB099 04265 HLH 51448 a
(F) An amount equal to all amounts included in such
total pursuant to the provisions of Sections 402(a),
402(c), 403(a), 403(b), 406(a), 407(a), and 408 of the
Internal Revenue Code, or included in such total as
distributions under the provisions of any retirement
or disability plan for employees of any governmental
agency or unit, or retirement payments to retired
partners, which payments are excluded in computing net
earnings from self employment by Section 1402 of the
Internal Revenue Code and regulations adopted pursuant
thereto;
(G) The valuation limitation amount;
(H) An amount equal to the amount of any tax
imposed by this Act which was refunded to the taxpayer
and included in such total for the taxable year;
(I) An amount equal to all amounts included in such
total pursuant to the provisions of Section 111 of the
Internal Revenue Code as a recovery of items previously
deducted from adjusted gross income in the computation
of taxable income;
(J) An amount equal to those dividends included in
such total which were paid by a corporation which
conducts business operations in a River Edge
Redevelopment Zone or zones created under the River
Edge Redevelopment Zone Act, and conducts
substantially all of its operations in a River Edge

09900HB0293ham001 - 56 - LRB099 04265 HLH 51448 a
Redevelopment Zone or zones. This subparagraph (J) is
exempt from the provisions of Section 250;
(K) For taxable years ending on or after December
31, 2016, an An amount equal to those dividends
included in such total that were paid by a corporation
that conducts business operations in a federally
designated Foreign Trade Zone or Sub-Zone and that is
designated a High Impact Business located in Illinois;
provided that dividends eligible for the deduction
provided in subparagraph (J) of paragraph (2) of this
subsection shall not be eligible for the deduction
provided under this subparagraph (K);
(L) For taxable years ending after December 31,
1983, an amount equal to all social security benefits
and railroad retirement benefits included in such
total pursuant to Sections 72(r) and 86 of the Internal
Revenue Code;
(M) With the exception of any amounts subtracted
under subparagraph (N), an amount equal to the sum of
all amounts disallowed as deductions by (i) Sections
171(a) (2), and 265(2) of the Internal Revenue Code,
and all amounts of expenses allocable to interest and
disallowed as deductions by Section 265(1) of the
Internal Revenue Code; and (ii) for taxable years
ending on or after August 13, 1999, Sections 171(a)(2),
265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue

09900HB0293ham001 - 57 - LRB099 04265 HLH 51448 a
Code, plus, for taxable years ending on or after
December 31, 2011, Section 45G(e)(3) of the Internal
Revenue Code and, for taxable years ending on or after
December 31, 2008, any amount included in gross income
under Section 87 of the Internal Revenue Code; the
provisions of this subparagraph are exempt from the
provisions of Section 250;
(N) An amount equal to all amounts included in such
total which are exempt from taxation by this State
either by reason of its statutes or Constitution or by
reason of the Constitution, treaties or statutes of the
United States; provided that, in the case of any
statute of this State that exempts income derived from
bonds or other obligations from the tax imposed under
this Act, the amount exempted shall be the interest net
of bond premium amortization;
(O) An amount equal to any contribution made to a
job training project established pursuant to the Tax
Increment Allocation Redevelopment Act;
(P) An amount equal to the amount of the deduction
used to compute the federal income tax credit for
restoration of substantial amounts held under claim of
right for the taxable year pursuant to Section 1341 of
the Internal Revenue Code or of any itemized deduction
taken from adjusted gross income in the computation of
taxable income for restoration of substantial amounts

09900HB0293ham001 - 58 - LRB099 04265 HLH 51448 a
held under claim of right for the taxable year;
(Q) An amount equal to any amounts included in such
total, received by the taxpayer as an acceleration in
the payment of life, endowment or annuity benefits in
advance of the time they would otherwise be payable as
an indemnity for a terminal illness;
(R) An amount equal to the amount of any federal or
State bonus paid to veterans of the Persian Gulf War;
(S) An amount, to the extent included in adjusted
gross income, equal to the amount of a contribution
made in the taxable year on behalf of the taxpayer to a
medical care savings account established under the
Medical Care Savings Account Act or the Medical Care
Savings Account Act of 2000 to the extent the
contribution is accepted by the account administrator
as provided in that Act;
(T) An amount, to the extent included in adjusted
gross income, equal to the amount of interest earned in
the taxable year on a medical care savings account
established under the Medical Care Savings Account Act
or the Medical Care Savings Account Act of 2000 on
behalf of the taxpayer, other than interest added
pursuant to item (D-5) of this paragraph (2);
(U) For one taxable year beginning on or after
January 1, 1994, an amount equal to the total amount of
tax imposed and paid under subsections (a) and (b) of

09900HB0293ham001 - 59 - LRB099 04265 HLH 51448 a
Section 201 of this Act on grant amounts received by
the taxpayer under the Nursing Home Grant Assistance
Act during the taxpayer's taxable years 1992 and 1993;
(V) Beginning with tax years ending on or after
December 31, 1995 and ending with tax years ending on
or before December 31, 2004, an amount equal to the
amount paid by a taxpayer who is a self-employed
taxpayer, a partner of a partnership, or a shareholder
in a Subchapter S corporation for health insurance or
long-term care insurance for that taxpayer or that
taxpayer's spouse or dependents, to the extent that the
amount paid for that health insurance or long-term care
insurance may be deducted under Section 213 of the
Internal Revenue Code, has not been deducted on the
federal income tax return of the taxpayer, and does not
exceed the taxable income attributable to that
taxpayer's income, self-employment income, or
Subchapter S corporation income; except that no
deduction shall be allowed under this item (V) if the
taxpayer is eligible to participate in any health
insurance or long-term care insurance plan of an
employer of the taxpayer or the taxpayer's spouse. The
amount of the health insurance and long-term care
insurance subtracted under this item (V) shall be
determined by multiplying total health insurance and
long-term care insurance premiums paid by the taxpayer

09900HB0293ham001 - 60 - LRB099 04265 HLH 51448 a
times a number that represents the fractional
percentage of eligible medical expenses under Section
213 of the Internal Revenue Code of 1986 not actually
deducted on the taxpayer's federal income tax return;
(W) For taxable years beginning on or after January
1, 1998, all amounts included in the taxpayer's federal
gross income in the taxable year from amounts converted
from a regular IRA to a Roth IRA. This paragraph is
exempt from the provisions of Section 250;
(X) For taxable year 1999 and thereafter, an amount
equal to the amount of any (i) distributions, to the
extent includible in gross income for federal income
tax purposes, made to the taxpayer because of his or
her status as a victim of persecution for racial or
religious reasons by Nazi Germany or any other Axis
regime or as an heir of the victim and (ii) items of
income, to the extent includible in gross income for
federal income tax purposes, attributable to, derived
from or in any way related to assets stolen from,
hidden from, or otherwise lost to a victim of
persecution for racial or religious reasons by Nazi
Germany or any other Axis regime immediately prior to,
during, and immediately after World War II, including,
but not limited to, interest on the proceeds receivable
as insurance under policies issued to a victim of
persecution for racial or religious reasons by Nazi

09900HB0293ham001 - 61 - LRB099 04265 HLH 51448 a
Germany or any other Axis regime by European insurance
companies immediately prior to and during World War II;
provided, however, this subtraction from federal
adjusted gross income does not apply to assets acquired
with such assets or with the proceeds from the sale of
such assets; provided, further, this paragraph shall
only apply to a taxpayer who was the first recipient of
such assets after their recovery and who is a victim of
persecution for racial or religious reasons by Nazi
Germany or any other Axis regime or as an heir of the
victim. The amount of and the eligibility for any
public assistance, benefit, or similar entitlement is
not affected by the inclusion of items (i) and (ii) of
this paragraph in gross income for federal income tax
purposes. This paragraph is exempt from the provisions
of Section 250;
(Y) For taxable years beginning on or after January
1, 2002 and ending on or before December 31, 2004,
moneys contributed in the taxable year to a College
Savings Pool account under Section 16.5 of the State
Treasurer Act, except that amounts excluded from gross
income under Section 529(c)(3)(C)(i) of the Internal
Revenue Code shall not be considered moneys
contributed under this subparagraph (Y). For taxable
years beginning on or after January 1, 2005, a maximum
of $10,000 contributed in the taxable year to (i) a

09900HB0293ham001 - 62 - LRB099 04265 HLH 51448 a
College Savings Pool account under Section 16.5 of the
State Treasurer Act or (ii) the Illinois Prepaid
Tuition Trust Fund, except that amounts excluded from
gross income under Section 529(c)(3)(C)(i) of the
Internal Revenue Code shall not be considered moneys
contributed under this subparagraph (Y). For purposes
of this subparagraph, contributions made by an
employer on behalf of an employee, or matching
contributions made by an employee, shall be treated as
made by the employee. This subparagraph (Y) is exempt
from the provisions of Section 250;
(Z) For taxable years 2001 and thereafter, for the
taxable year in which the bonus depreciation deduction
is taken on the taxpayer's federal income tax return
under subsection (k) of Section 168 of the Internal
Revenue Code and for each applicable taxable year
thereafter, an amount equal to "x", where:
(1) "y" equals the amount of the depreciation
deduction taken for the taxable year on the
taxpayer's federal income tax return on property
for which the bonus depreciation deduction was
taken in any year under subsection (k) of Section
168 of the Internal Revenue Code, but not including
the bonus depreciation deduction;
(2) for taxable years ending on or before
December 31, 2005, "x" equals "y" multiplied by 30

09900HB0293ham001 - 63 - LRB099 04265 HLH 51448 a
and then divided by 70 (or "y" multiplied by
0.429); and
(3) for taxable years ending after December
31, 2005:
(i) for property on which a bonus
depreciation deduction of 30% of the adjusted
basis was taken, "x" equals "y" multiplied by
30 and then divided by 70 (or "y" multiplied by
0.429); and
(ii) for property on which a bonus
depreciation deduction of 50% of the adjusted
basis was taken, "x" equals "y" multiplied by
1.0.
The aggregate amount deducted under this
subparagraph in all taxable years for any one piece of
property may not exceed the amount of the bonus
depreciation deduction taken on that property on the
taxpayer's federal income tax return under subsection
(k) of Section 168 of the Internal Revenue Code. This
subparagraph (Z) is exempt from the provisions of
Section 250;
(AA) If the taxpayer sells, transfers, abandons,
or otherwise disposes of property for which the
taxpayer was required in any taxable year to make an
addition modification under subparagraph (D-15), then
an amount equal to that addition modification.

09900HB0293ham001 - 64 - LRB099 04265 HLH 51448 a
If the taxpayer continues to own property through
the last day of the last tax year for which the
taxpayer may claim a depreciation deduction for
federal income tax purposes and for which the taxpayer
was required in any taxable year to make an addition
modification under subparagraph (D-15), then an amount
equal to that addition modification.
The taxpayer is allowed to take the deduction under
this subparagraph only once with respect to any one
piece of property.
This subparagraph (AA) is exempt from the
provisions of Section 250;
(BB) Any amount included in adjusted gross income,
other than salary, received by a driver in a
ridesharing arrangement using a motor vehicle;
(CC) The amount of (i) any interest income (net of
the deductions allocable thereto) taken into account
for the taxable year with respect to a transaction with
a taxpayer that is required to make an addition
modification with respect to such transaction under
Section 203(a)(2)(D-17), 203(b)(2)(E-12),
203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
the amount of that addition modification, and (ii) any
income from intangible property (net of the deductions
allocable thereto) taken into account for the taxable
year with respect to a transaction with a taxpayer that

09900HB0293ham001 - 65 - LRB099 04265 HLH 51448 a
is required to make an addition modification with
respect to such transaction under Section
203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
203(d)(2)(D-8), but not to exceed the amount of that
addition modification. This subparagraph (CC) is
exempt from the provisions of Section 250;
(DD) An amount equal to the interest income taken
into account for the taxable year (net of the
deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but for
the fact that the foreign person's business activity
outside the United States is 80% or more of that
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304, but not to exceed the
addition modification required to be made for the same
taxable year under Section 203(a)(2)(D-17) for
interest paid, accrued, or incurred, directly or
indirectly, to the same person. This subparagraph (DD)
is exempt from the provisions of Section 250;

09900HB0293ham001 - 66 - LRB099 04265 HLH 51448 a
(EE) An amount equal to the income from intangible
property taken into account for the taxable year (net
of the deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but for
the fact that the foreign person's business activity
outside the United States is 80% or more of that
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304, but not to exceed the
addition modification required to be made for the same
taxable year under Section 203(a)(2)(D-18) for
intangible expenses and costs paid, accrued, or
incurred, directly or indirectly, to the same foreign
person. This subparagraph (EE) is exempt from the
provisions of Section 250;
(FF) An amount equal to any amount awarded to the
taxpayer during the taxable year by the Court of Claims
under subsection (c) of Section 8 of the Court of
Claims Act for time unjustly served in a State prison.
This subparagraph (FF) is exempt from the provisions of

09900HB0293ham001 - 67 - LRB099 04265 HLH 51448 a
Section 250; and
(GG) For taxable years ending on or after December
31, 2011, in the case of a taxpayer who was required to
add back any insurance premiums under Section
203(a)(2)(D-19), such taxpayer may elect to subtract
that part of a reimbursement received from the
insurance company equal to the amount of the expense or
loss (including expenses incurred by the insurance
company) that would have been taken into account as a
deduction for federal income tax purposes if the
expense or loss had been uninsured. If a taxpayer makes
the election provided for by this subparagraph (GG),
the insurer to which the premiums were paid must add
back to income the amount subtracted by the taxpayer
pursuant to this subparagraph (GG). This subparagraph
(GG) is exempt from the provisions of Section 250.
(b) Corporations.
(1) In general. In the case of a corporation, base
income means an amount equal to the taxpayer's taxable
income for the taxable year as modified by paragraph (2).
(2) Modifications. The taxable income referred to in
paragraph (1) shall be modified by adding thereto the sum
of the following amounts:
(A) An amount equal to all amounts paid or accrued
to the taxpayer as interest and all distributions

09900HB0293ham001 - 68 - LRB099 04265 HLH 51448 a
received from regulated investment companies during
the taxable year to the extent excluded from gross
income in the computation of taxable income;
(B) An amount equal to the amount of tax imposed by
this Act to the extent deducted from gross income in
the computation of taxable income for the taxable year;
(C) In the case of a regulated investment company,
an amount equal to the excess of (i) the net long-term
capital gain for the taxable year, over (ii) the amount
of the capital gain dividends designated as such in
accordance with Section 852(b)(3)(C) of the Internal
Revenue Code and any amount designated under Section
852(b)(3)(D) of the Internal Revenue Code,
attributable to the taxable year (this amendatory Act
of 1995 (Public Act 89-89) is declarative of existing
law and is not a new enactment);
(D) The amount of any net operating loss deduction
taken in arriving at taxable income, other than a net
operating loss carried forward from a taxable year
ending prior to December 31, 1986;
(E) For taxable years in which a net operating loss
carryback or carryforward from a taxable year ending
prior to December 31, 1986 is an element of taxable
income under paragraph (1) of subsection (e) or
subparagraph (E) of paragraph (2) of subsection (e),
the amount by which addition modifications other than

09900HB0293ham001 - 69 - LRB099 04265 HLH 51448 a
those provided by this subparagraph (E) exceeded
subtraction modifications in such earlier taxable
year, with the following limitations applied in the
order that they are listed:
(i) the addition modification relating to the
net operating loss carried back or forward to the
taxable year from any taxable year ending prior to
December 31, 1986 shall be reduced by the amount of
addition modification under this subparagraph (E)
which related to that net operating loss and which
was taken into account in calculating the base
income of an earlier taxable year, and
(ii) the addition modification relating to the
net operating loss carried back or forward to the
taxable year from any taxable year ending prior to
December 31, 1986 shall not exceed the amount of
such carryback or carryforward;
For taxable years in which there is a net operating
loss carryback or carryforward from more than one other
taxable year ending prior to December 31, 1986, the
addition modification provided in this subparagraph
(E) shall be the sum of the amounts computed
independently under the preceding provisions of this
subparagraph (E) for each such taxable year;
(E-5) For taxable years ending after December 31,
1997, an amount equal to any eligible remediation costs

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that the corporation deducted in computing adjusted
gross income and for which the corporation claims a
credit under subsection (l) of Section 201;
(E-10) For taxable years 2001 and thereafter, an
amount equal to the bonus depreciation deduction taken
on the taxpayer's federal income tax return for the
taxable year under subsection (k) of Section 168 of the
Internal Revenue Code;
(E-11) If the taxpayer sells, transfers, abandons,
or otherwise disposes of property for which the
taxpayer was required in any taxable year to make an
addition modification under subparagraph (E-10), then
an amount equal to the aggregate amount of the
deductions taken in all taxable years under
subparagraph (T) with respect to that property.
If the taxpayer continues to own property through
the last day of the last tax year for which the
taxpayer may claim a depreciation deduction for
federal income tax purposes and for which the taxpayer
was allowed in any taxable year to make a subtraction
modification under subparagraph (T), then an amount
equal to that subtraction modification.
The taxpayer is required to make the addition
modification under this subparagraph only once with
respect to any one piece of property;
(E-12) An amount equal to the amount otherwise

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allowed as a deduction in computing base income for
interest paid, accrued, or incurred, directly or
indirectly, (i) for taxable years ending on or after
December 31, 2004, to a foreign person who would be a
member of the same unitary business group but for the
fact the foreign person's business activity outside
the United States is 80% or more of the foreign
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304. The addition modification
required by this subparagraph shall be reduced to the
extent that dividends were included in base income of
the unitary group for the same taxable year and
received by the taxpayer or by a member of the
taxpayer's unitary business group (including amounts
included in gross income pursuant to Sections 951
through 964 of the Internal Revenue Code and amounts
included in gross income under Section 78 of the
Internal Revenue Code) with respect to the stock of the
same person to whom the interest was paid, accrued, or
incurred.

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This paragraph shall not apply to the following:
(i) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person who
is subject in a foreign country or state, other
than a state which requires mandatory unitary
reporting, to a tax on or measured by net income
with respect to such interest; or
(ii) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer can establish, based on a
preponderance of the evidence, both of the
following:
(a) the person, during the same taxable
year, paid, accrued, or incurred, the interest
to a person that is not a related member, and
(b) the transaction giving rise to the
interest expense between the taxpayer and the
person did not have as a principal purpose the
avoidance of Illinois income tax, and is paid
pursuant to a contract or agreement that
reflects an arm's-length interest rate and
terms; or
(iii) the taxpayer can establish, based on
clear and convincing evidence, that the interest
paid, accrued, or incurred relates to a contract or
agreement entered into at arm's-length rates and

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terms and the principal purpose for the payment is
not federal or Illinois tax avoidance; or
(iv) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer establishes by clear and convincing
evidence that the adjustments are unreasonable; or
if the taxpayer and the Director agree in writing
to the application or use of an alternative method
of apportionment under Section 304(f).
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act for
any tax year beginning after the effective date of
this amendment provided such adjustment is made
pursuant to regulation adopted by the Department
and such regulations provide methods and standards
by which the Department will utilize its authority
under Section 404 of this Act;
(E-13) An amount equal to the amount of intangible
expenses and costs otherwise allowed as a deduction in
computing base income, and that were paid, accrued, or
incurred, directly or indirectly, (i) for taxable
years ending on or after December 31, 2004, to a
foreign person who would be a member of the same
unitary business group but for the fact that the
foreign person's business activity outside the United

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States is 80% or more of that person's total business
activity and (ii) for taxable years ending on or after
December 31, 2008, to a person who would be a member of
the same unitary business group but for the fact that
the person is prohibited under Section 1501(a)(27)
from being included in the unitary business group
because he or she is ordinarily required to apportion
business income under different subsections of Section
304. The addition modification required by this
subparagraph shall be reduced to the extent that
dividends were included in base income of the unitary
group for the same taxable year and received by the
taxpayer or by a member of the taxpayer's unitary
business group (including amounts included in gross
income pursuant to Sections 951 through 964 of the
Internal Revenue Code and amounts included in gross
income under Section 78 of the Internal Revenue Code)
with respect to the stock of the same person to whom
the intangible expenses and costs were directly or
indirectly paid, incurred, or accrued. The preceding
sentence shall not apply to the extent that the same
dividends caused a reduction to the addition
modification required under Section 203(b)(2)(E-12) of
this Act. As used in this subparagraph, the term
"intangible expenses and costs" includes (1) expenses,
losses, and costs for, or related to, the direct or

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indirect acquisition, use, maintenance or management,
ownership, sale, exchange, or any other disposition of
intangible property; (2) losses incurred, directly or
indirectly, from factoring transactions or discounting
transactions; (3) royalty, patent, technical, and
copyright fees; (4) licensing fees; and (5) other
similar expenses and costs. For purposes of this
subparagraph, "intangible property" includes patents,
patent applications, trade names, trademarks, service
marks, copyrights, mask works, trade secrets, and
similar types of intangible assets.
This paragraph shall not apply to the following:
(i) any item of intangible expenses or costs
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person who is
subject in a foreign country or state, other than a
state which requires mandatory unitary reporting,
to a tax on or measured by net income with respect
to such item; or
(ii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, if the taxpayer can establish, based
on a preponderance of the evidence, both of the
following:
(a) the person during the same taxable
year paid, accrued, or incurred, the

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intangible expense or cost to a person that is
not a related member, and
(b) the transaction giving rise to the
intangible expense or cost between the
taxpayer and the person did not have as a
principal purpose the avoidance of Illinois
income tax, and is paid pursuant to a contract
or agreement that reflects arm's-length terms;
or
(iii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person if the
taxpayer establishes by clear and convincing
evidence, that the adjustments are unreasonable;
or if the taxpayer and the Director agree in
writing to the application or use of an alternative
method of apportionment under Section 304(f);
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act for
any tax year beginning after the effective date of
this amendment provided such adjustment is made
pursuant to regulation adopted by the Department
and such regulations provide methods and standards
by which the Department will utilize its authority
under Section 404 of this Act;

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(E-14) For taxable years ending on or after
December 31, 2008, an amount equal to the amount of
insurance premium expenses and costs otherwise allowed
as a deduction in computing base income, and that were
paid, accrued, or incurred, directly or indirectly, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304. The
addition modification required by this subparagraph
shall be reduced to the extent that dividends were
included in base income of the unitary group for the
same taxable year and received by the taxpayer or by a
member of the taxpayer's unitary business group
(including amounts included in gross income under
Sections 951 through 964 of the Internal Revenue Code
and amounts included in gross income under Section 78
of the Internal Revenue Code) with respect to the stock
of the same person to whom the premiums and costs were
directly or indirectly paid, incurred, or accrued. The
preceding sentence does not apply to the extent that
the same dividends caused a reduction to the addition
modification required under Section 203(b)(2)(E-12) or
Section 203(b)(2)(E-13) of this Act;

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(E-15) For taxable years beginning after December
31, 2008, any deduction for dividends paid by a captive
real estate investment trust that is allowed to a real
estate investment trust under Section 857(b)(2)(B) of
the Internal Revenue Code for dividends paid;
(E-16) An amount equal to the credit allowable to
the taxpayer under Section 218(a) of this Act,
determined without regard to Section 218(c) of this
Act;
(E-17) For taxable years ending on or after
December 31, 2016, an amount equal to the deduction
allowed under Section 199 of the Internal Revenue Code
for the taxable year;
(E-18) For taxable years ending on or after
December 31, 2016, any deduction allowed to the
taxpayer under Sections 243 through 246A of the
Internal Revenue Code;
and by deducting from the total so obtained the sum of the
following amounts:
(F) An amount equal to the amount of any tax
imposed by this Act which was refunded to the taxpayer
and included in such total for the taxable year;
(G) An amount equal to any amount included in such
total under Section 78 of the Internal Revenue Code;
(H) In the case of a regulated investment company,
an amount equal to the amount of exempt interest

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dividends as defined in subsection (b) (5) of Section
852 of the Internal Revenue Code, paid to shareholders
for the taxable year;
(I) With the exception of any amounts subtracted
under subparagraph (J), an amount equal to the sum of
all amounts disallowed as deductions by (i) Sections
171(a) (2), and 265(a)(2) and amounts disallowed as
interest expense by Section 291(a)(3) of the Internal
Revenue Code, and all amounts of expenses allocable to
interest and disallowed as deductions by Section
265(a)(1) of the Internal Revenue Code; and (ii) for
taxable years ending on or after August 13, 1999,
Sections 171(a)(2), 265, 280C, 291(a)(3), and
832(b)(5)(B)(i) of the Internal Revenue Code, plus,
for tax years ending on or after December 31, 2011,
amounts disallowed as deductions by Section 45G(e)(3)
of the Internal Revenue Code and, for taxable years
ending on or after December 31, 2008, any amount
included in gross income under Section 87 of the
Internal Revenue Code and the policyholders' share of
tax-exempt interest of a life insurance company under
Section 807(a)(2)(B) of the Internal Revenue Code (in
the case of a life insurance company with gross income
from a decrease in reserves for the tax year) or
Section 807(b)(1)(B) of the Internal Revenue Code (in
the case of a life insurance company allowed a

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deduction for an increase in reserves for the tax
year); the provisions of this subparagraph are exempt
from the provisions of Section 250;
(J) An amount equal to all amounts included in such
total which are exempt from taxation by this State
either by reason of its statutes or Constitution or by
reason of the Constitution, treaties or statutes of the
United States; provided that, in the case of any
statute of this State that exempts income derived from
bonds or other obligations from the tax imposed under
this Act, the amount exempted shall be the interest net
of bond premium amortization;
(K) An amount equal to those dividends included in
such total which were paid by a corporation which
conducts business operations in a River Edge
Redevelopment Zone or zones created under the River
Edge Redevelopment Zone Act and conducts substantially
all of its operations in a River Edge Redevelopment
Zone or zones. This subparagraph (K) is exempt from the
provisions of Section 250;
(L) For taxable years ending on or after December
31, 2016, an An amount equal to those dividends
included in such total that were paid by a corporation
that conducts business operations in a federally
designated Foreign Trade Zone or Sub-Zone and that is
designated a High Impact Business located in Illinois;

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provided that dividends eligible for the deduction
provided in subparagraph (K) of paragraph 2 of this
subsection shall not be eligible for the deduction
provided under this subparagraph (L);
(M) For any taxpayer that is a financial
organization within the meaning of Section 304(c) of
this Act, an amount included in such total as interest
income from a loan or loans made by such taxpayer to a
borrower, to the extent that such a loan is secured by
property which is eligible for the River Edge
Redevelopment Zone Investment Credit. To determine the
portion of a loan or loans that is secured by property
eligible for a Section 201(f) investment credit to the
borrower, the entire principal amount of the loan or
loans between the taxpayer and the borrower should be
divided into the basis of the Section 201(f) investment
credit property which secures the loan or loans, using
for this purpose the original basis of such property on
the date that it was placed in service in the River
Edge Redevelopment Zone. The subtraction modification
available to taxpayer in any year under this subsection
shall be that portion of the total interest paid by the
borrower with respect to such loan attributable to the
eligible property as calculated under the previous
sentence. This subparagraph (M) is exempt from the
provisions of Section 250;

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(M-1) For any taxpayer that is a financial
organization within the meaning of Section 304(c) of
this Act, an amount included in such total as interest
income from a loan or loans made by such taxpayer to a
borrower, to the extent that such a loan is secured by
property which is eligible for the High Impact Business
Investment Credit. To determine the portion of a loan
or loans that is secured by property eligible for a
Section 201(h) investment credit to the borrower, the
entire principal amount of the loan or loans between
the taxpayer and the borrower should be divided into
the basis of the Section 201(h) investment credit
property which secures the loan or loans, using for
this purpose the original basis of such property on the
date that it was placed in service in a federally
designated Foreign Trade Zone or Sub-Zone located in
Illinois. No taxpayer that is eligible for the
deduction provided in subparagraph (M) of paragraph
(2) of this subsection shall be eligible for the
deduction provided under this subparagraph (M-1). The
subtraction modification available to taxpayers in any
year under this subsection shall be that portion of the
total interest paid by the borrower with respect to
such loan attributable to the eligible property as
calculated under the previous sentence;
(N) Two times any contribution made during the

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taxable year to a designated zone organization to the
extent that the contribution (i) qualifies as a
charitable contribution under subsection (c) of
Section 170 of the Internal Revenue Code and (ii) must,
by its terms, be used for a project approved by the
Department of Commerce and Economic Opportunity under
Section 11 of the Illinois Enterprise Zone Act or under
Section 10-10 of the River Edge Redevelopment Zone Act.
This subparagraph (N) is exempt from the provisions of
Section 250;
(O) An amount equal to: (i) 85% for taxable years
ending on or before December 31, 1992, or, a percentage
equal to the percentage allowable under Section
243(a)(1) of the Internal Revenue Code of 1986 for
taxable years ending after December 31, 1992, of the
amount by which dividends included in taxable income
and received from a corporation that is not created or
organized under the laws of the United States or any
state or political subdivision thereof, including, for
taxable years ending on or after December 31, 1988,
dividends received or deemed received or paid or deemed
paid under Sections 951 through 965 of the Internal
Revenue Code, exceed the amount of the modification
provided under subparagraph (G) of paragraph (2) of
this subsection (b) which is related to such dividends,
and including, for taxable years ending on or after

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December 31, 2008, dividends received from a captive
real estate investment trust; plus (ii) 100% of the
amount by which dividends, included in taxable income
and received, including, for taxable years ending on or
after December 31, 1988, dividends received or deemed
received or paid or deemed paid under Sections 951
through 964 of the Internal Revenue Code and including,
for taxable years ending on or after December 31, 2008,
dividends received from a captive real estate
investment trust, from any such corporation specified
in clause (i) that would but for the provisions of
Section 1504 (b) (3) of the Internal Revenue Code be
treated as a member of the affiliated group which
includes the dividend recipient, exceed the amount of
the modification provided under subparagraph (G) of
paragraph (2) of this subsection (b) which is related
to such dividends. This subparagraph (O) shall not
apply to taxable years ending on or after December 31,
2016 is exempt from the provisions of Section 250 of
this Act;
(P) An amount equal to any contribution made to a
job training project established pursuant to the Tax
Increment Allocation Redevelopment Act;
(Q) An amount equal to the amount of the deduction
used to compute the federal income tax credit for
restoration of substantial amounts held under claim of

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right for the taxable year pursuant to Section 1341 of
the Internal Revenue Code;
(R) On and after July 20, 1999, in the case of an
attorney-in-fact with respect to whom an interinsurer
or a reciprocal insurer has made the election under
Section 835 of the Internal Revenue Code, 26 U.S.C.
835, an amount equal to the excess, if any, of the
amounts paid or incurred by that interinsurer or
reciprocal insurer in the taxable year to the
attorney-in-fact over the deduction allowed to that
interinsurer or reciprocal insurer with respect to the
attorney-in-fact under Section 835(b) of the Internal
Revenue Code for the taxable year; the provisions of
this subparagraph are exempt from the provisions of
Section 250;
(S) For taxable years ending on or after December
31, 1997, in the case of a Subchapter S corporation, an
amount equal to all amounts of income allocable to a
shareholder subject to the Personal Property Tax
Replacement Income Tax imposed by subsections (c) and
(d) of Section 201 of this Act, including amounts
allocable to organizations exempt from federal income
tax by reason of Section 501(a) of the Internal Revenue
Code. This subparagraph (S) is exempt from the
provisions of Section 250;
(T) For taxable years 2001 and thereafter, for the

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taxable year in which the bonus depreciation deduction
is taken on the taxpayer's federal income tax return
under subsection (k) of Section 168 of the Internal
Revenue Code and for each applicable taxable year
thereafter, an amount equal to "x", where:
(1) "y" equals the amount of the depreciation
deduction taken for the taxable year on the
taxpayer's federal income tax return on property
for which the bonus depreciation deduction was
taken in any year under subsection (k) of Section
168 of the Internal Revenue Code, but not including
the bonus depreciation deduction;
(2) for taxable years ending on or before
December 31, 2005, "x" equals "y" multiplied by 30
and then divided by 70 (or "y" multiplied by
0.429); and
(3) for taxable years ending after December
31, 2005:
(i) for property on which a bonus
depreciation deduction of 30% of the adjusted
basis was taken, "x" equals "y" multiplied by
30 and then divided by 70 (or "y" multiplied by
0.429); and
(ii) for property on which a bonus
depreciation deduction of 50% of the adjusted
basis was taken, "x" equals "y" multiplied by

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1.0.
The aggregate amount deducted under this
subparagraph in all taxable years for any one piece of
property may not exceed the amount of the bonus
depreciation deduction taken on that property on the
taxpayer's federal income tax return under subsection
(k) of Section 168 of the Internal Revenue Code. This
subparagraph (T) is exempt from the provisions of
Section 250;
(U) If the taxpayer sells, transfers, abandons, or
otherwise disposes of property for which the taxpayer
was required in any taxable year to make an addition
modification under subparagraph (E-10), then an amount
equal to that addition modification.
If the taxpayer continues to own property through
the last day of the last tax year for which the
taxpayer may claim a depreciation deduction for
federal income tax purposes and for which the taxpayer
was required in any taxable year to make an addition
modification under subparagraph (E-10), then an amount
equal to that addition modification.
The taxpayer is allowed to take the deduction under
this subparagraph only once with respect to any one
piece of property.
This subparagraph (U) is exempt from the
provisions of Section 250;

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(V) The amount of: (i) any interest income (net of
the deductions allocable thereto) taken into account
for the taxable year with respect to a transaction with
a taxpayer that is required to make an addition
modification with respect to such transaction under
Section 203(a)(2)(D-17), 203(b)(2)(E-12),
203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
the amount of such addition modification, (ii) any
income from intangible property (net of the deductions
allocable thereto) taken into account for the taxable
year with respect to a transaction with a taxpayer that
is required to make an addition modification with
respect to such transaction under Section
203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
203(d)(2)(D-8), but not to exceed the amount of such
addition modification, and (iii) any insurance premium
income (net of deductions allocable thereto) taken
into account for the taxable year with respect to a
transaction with a taxpayer that is required to make an
addition modification with respect to such transaction
under Section 203(a)(2)(D-19), Section
203(b)(2)(E-14), Section 203(c)(2)(G-14), or Section
203(d)(2)(D-9), but not to exceed the amount of that
addition modification. This subparagraph (V) is exempt
from the provisions of Section 250;
(W) An amount equal to the interest income taken

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into account for the taxable year (net of the
deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but for
the fact that the foreign person's business activity
outside the United States is 80% or more of that
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304, but not to exceed the
addition modification required to be made for the same
taxable year under Section 203(b)(2)(E-12) for
interest paid, accrued, or incurred, directly or
indirectly, to the same person. This subparagraph (W)
is exempt from the provisions of Section 250;
(X) An amount equal to the income from intangible
property taken into account for the taxable year (net
of the deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but for
the fact that the foreign person's business activity
outside the United States is 80% or more of that

09900HB0293ham001 - 90 - LRB099 04265 HLH 51448 a
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304, but not to exceed the
addition modification required to be made for the same
taxable year under Section 203(b)(2)(E-13) for
intangible expenses and costs paid, accrued, or
incurred, directly or indirectly, to the same foreign
person. This subparagraph (X) is exempt from the
provisions of Section 250;
(Y) For taxable years ending on or after December
31, 2011, in the case of a taxpayer who was required to
add back any insurance premiums under Section
203(b)(2)(E-14), such taxpayer may elect to subtract
that part of a reimbursement received from the
insurance company equal to the amount of the expense or
loss (including expenses incurred by the insurance
company) that would have been taken into account as a
deduction for federal income tax purposes if the
expense or loss had been uninsured. If a taxpayer makes
the election provided for by this subparagraph (Y), the
insurer to which the premiums were paid must add back

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to income the amount subtracted by the taxpayer
pursuant to this subparagraph (Y). This subparagraph
(Y) is exempt from the provisions of Section 250; and
(Z) The difference between the nondeductible
controlled foreign corporation dividends under Section
965(e)(3) of the Internal Revenue Code over the taxable
income of the taxpayer, computed without regard to
Section 965(e)(2)(A) of the Internal Revenue Code, and
without regard to any net operating loss deduction.
This subparagraph (Z) is exempt from the provisions of
Section 250.
(3) Special rule. For purposes of paragraph (2) (A),
"gross income" in the case of a life insurance company, for
tax years ending on and after December 31, 1994, and prior
to December 31, 2011, shall mean the gross investment
income for the taxable year and, for tax years ending on or
after December 31, 2011, shall mean all amounts included in
life insurance gross income under Section 803(a)(3) of the
Internal Revenue Code.
(c) Trusts and estates.
(1) In general. In the case of a trust or estate, base
income means an amount equal to the taxpayer's taxable
income for the taxable year as modified by paragraph (2).
(2) Modifications. Subject to the provisions of
paragraph (3), the taxable income referred to in paragraph

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(1) shall be modified by adding thereto the sum of the
following amounts:
(A) An amount equal to all amounts paid or accrued
to the taxpayer as interest or dividends during the
taxable year to the extent excluded from gross income
in the computation of taxable income;
(B) In the case of (i) an estate, $600; (ii) a
trust which, under its governing instrument, is
required to distribute all of its income currently,
$300; and (iii) any other trust, $100, but in each such
case, only to the extent such amount was deducted in
the computation of taxable income;
(C) An amount equal to the amount of tax imposed by
this Act to the extent deducted from gross income in
the computation of taxable income for the taxable year;
(D) The amount of any net operating loss deduction
taken in arriving at taxable income, other than a net
operating loss carried forward from a taxable year
ending prior to December 31, 1986;
(E) For taxable years in which a net operating loss
carryback or carryforward from a taxable year ending
prior to December 31, 1986 is an element of taxable
income under paragraph (1) of subsection (e) or
subparagraph (E) of paragraph (2) of subsection (e),
the amount by which addition modifications other than
those provided by this subparagraph (E) exceeded

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subtraction modifications in such taxable year, with
the following limitations applied in the order that
they are listed:
(i) the addition modification relating to the
net operating loss carried back or forward to the
taxable year from any taxable year ending prior to
December 31, 1986 shall be reduced by the amount of
addition modification under this subparagraph (E)
which related to that net operating loss and which
was taken into account in calculating the base
income of an earlier taxable year, and
(ii) the addition modification relating to the
net operating loss carried back or forward to the
taxable year from any taxable year ending prior to
December 31, 1986 shall not exceed the amount of
such carryback or carryforward;
For taxable years in which there is a net operating
loss carryback or carryforward from more than one other
taxable year ending prior to December 31, 1986, the
addition modification provided in this subparagraph
(E) shall be the sum of the amounts computed
independently under the preceding provisions of this
subparagraph (E) for each such taxable year;
(F) For taxable years ending on or after January 1,
1989, an amount equal to the tax deducted pursuant to
Section 164 of the Internal Revenue Code if the trust

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or estate is claiming the same tax for purposes of the
Illinois foreign tax credit under Section 601 of this
Act;
(G) An amount equal to the amount of the capital
gain deduction allowable under the Internal Revenue
Code, to the extent deducted from gross income in the
computation of taxable income;
(G-5) For taxable years ending after December 31,
1997, an amount equal to any eligible remediation costs
that the trust or estate deducted in computing adjusted
gross income and for which the trust or estate claims a
credit under subsection (l) of Section 201;
(G-10) For taxable years 2001 and thereafter, an
amount equal to the bonus depreciation deduction taken
on the taxpayer's federal income tax return for the
taxable year under subsection (k) of Section 168 of the
Internal Revenue Code; and
(G-11) If the taxpayer sells, transfers, abandons,
or otherwise disposes of property for which the
taxpayer was required in any taxable year to make an
addition modification under subparagraph (G-10), then
an amount equal to the aggregate amount of the
deductions taken in all taxable years under
subparagraph (R) with respect to that property.
If the taxpayer continues to own property through
the last day of the last tax year for which the

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taxpayer may claim a depreciation deduction for
federal income tax purposes and for which the taxpayer
was allowed in any taxable year to make a subtraction
modification under subparagraph (R), then an amount
equal to that subtraction modification.
The taxpayer is required to make the addition
modification under this subparagraph only once with
respect to any one piece of property;
(G-12) An amount equal to the amount otherwise
allowed as a deduction in computing base income for
interest paid, accrued, or incurred, directly or
indirectly, (i) for taxable years ending on or after
December 31, 2004, to a foreign person who would be a
member of the same unitary business group but for the
fact that the foreign person's business activity
outside the United States is 80% or more of the foreign
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304. The addition modification
required by this subparagraph shall be reduced to the
extent that dividends were included in base income of

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the unitary group for the same taxable year and
received by the taxpayer or by a member of the
taxpayer's unitary business group (including amounts
included in gross income pursuant to Sections 951
through 964 of the Internal Revenue Code and amounts
included in gross income under Section 78 of the
Internal Revenue Code) with respect to the stock of the
same person to whom the interest was paid, accrued, or
incurred.
This paragraph shall not apply to the following:
(i) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person who
is subject in a foreign country or state, other
than a state which requires mandatory unitary
reporting, to a tax on or measured by net income
with respect to such interest; or
(ii) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer can establish, based on a
preponderance of the evidence, both of the
following:
(a) the person, during the same taxable
year, paid, accrued, or incurred, the interest
to a person that is not a related member, and
(b) the transaction giving rise to the
interest expense between the taxpayer and the

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person did not have as a principal purpose the
avoidance of Illinois income tax, and is paid
pursuant to a contract or agreement that
reflects an arm's-length interest rate and
terms; or
(iii) the taxpayer can establish, based on
clear and convincing evidence, that the interest
paid, accrued, or incurred relates to a contract or
agreement entered into at arm's-length rates and
terms and the principal purpose for the payment is
not federal or Illinois tax avoidance; or
(iv) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer establishes by clear and convincing
evidence that the adjustments are unreasonable; or
if the taxpayer and the Director agree in writing
to the application or use of an alternative method
of apportionment under Section 304(f).
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act for
any tax year beginning after the effective date of
this amendment provided such adjustment is made
pursuant to regulation adopted by the Department
and such regulations provide methods and standards
by which the Department will utilize its authority

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under Section 404 of this Act;
(G-13) An amount equal to the amount of intangible
expenses and costs otherwise allowed as a deduction in
computing base income, and that were paid, accrued, or
incurred, directly or indirectly, (i) for taxable
years ending on or after December 31, 2004, to a
foreign person who would be a member of the same
unitary business group but for the fact that the
foreign person's business activity outside the United
States is 80% or more of that person's total business
activity and (ii) for taxable years ending on or after
December 31, 2008, to a person who would be a member of
the same unitary business group but for the fact that
the person is prohibited under Section 1501(a)(27)
from being included in the unitary business group
because he or she is ordinarily required to apportion
business income under different subsections of Section
304. The addition modification required by this
subparagraph shall be reduced to the extent that
dividends were included in base income of the unitary
group for the same taxable year and received by the
taxpayer or by a member of the taxpayer's unitary
business group (including amounts included in gross
income pursuant to Sections 951 through 964 of the
Internal Revenue Code and amounts included in gross
income under Section 78 of the Internal Revenue Code)

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with respect to the stock of the same person to whom
the intangible expenses and costs were directly or
indirectly paid, incurred, or accrued. The preceding
sentence shall not apply to the extent that the same
dividends caused a reduction to the addition
modification required under Section 203(c)(2)(G-12) of
this Act. As used in this subparagraph, the term
"intangible expenses and costs" includes: (1)
expenses, losses, and costs for or related to the
direct or indirect acquisition, use, maintenance or
management, ownership, sale, exchange, or any other
disposition of intangible property; (2) losses
incurred, directly or indirectly, from factoring
transactions or discounting transactions; (3) royalty,
patent, technical, and copyright fees; (4) licensing
fees; and (5) other similar expenses and costs. For
purposes of this subparagraph, "intangible property"
includes patents, patent applications, trade names,
trademarks, service marks, copyrights, mask works,
trade secrets, and similar types of intangible assets.
This paragraph shall not apply to the following:
(i) any item of intangible expenses or costs
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person who is
subject in a foreign country or state, other than a
state which requires mandatory unitary reporting,

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to a tax on or measured by net income with respect
to such item; or
(ii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, if the taxpayer can establish, based
on a preponderance of the evidence, both of the
following:
(a) the person during the same taxable
year paid, accrued, or incurred, the
intangible expense or cost to a person that is
not a related member, and
(b) the transaction giving rise to the
intangible expense or cost between the
taxpayer and the person did not have as a
principal purpose the avoidance of Illinois
income tax, and is paid pursuant to a contract
or agreement that reflects arm's-length terms;
or
(iii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person if the
taxpayer establishes by clear and convincing
evidence, that the adjustments are unreasonable;
or if the taxpayer and the Director agree in
writing to the application or use of an alternative
method of apportionment under Section 304(f);

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Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act for
any tax year beginning after the effective date of
this amendment provided such adjustment is made
pursuant to regulation adopted by the Department
and such regulations provide methods and standards
by which the Department will utilize its authority
under Section 404 of this Act;
(G-14) For taxable years ending on or after
December 31, 2008, an amount equal to the amount of
insurance premium expenses and costs otherwise allowed
as a deduction in computing base income, and that were
paid, accrued, or incurred, directly or indirectly, to
a person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304. The
addition modification required by this subparagraph
shall be reduced to the extent that dividends were
included in base income of the unitary group for the
same taxable year and received by the taxpayer or by a
member of the taxpayer's unitary business group
(including amounts included in gross income under

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Sections 951 through 964 of the Internal Revenue Code
and amounts included in gross income under Section 78
of the Internal Revenue Code) with respect to the stock
of the same person to whom the premiums and costs were
directly or indirectly paid, incurred, or accrued. The
preceding sentence does not apply to the extent that
the same dividends caused a reduction to the addition
modification required under Section 203(c)(2)(G-12) or
Section 203(c)(2)(G-13) of this Act;
(G-15) An amount equal to the credit allowable to
the taxpayer under Section 218(a) of this Act,
determined without regard to Section 218(c) of this
Act;
(G-16) For taxable years ending on or after
December 31, 2016, an amount equal to the deduction
allowed under Section 199 of the Internal Revenue Code
for the taxable year;
and by deducting from the total so obtained the sum of the
following amounts:
(H) An amount equal to all amounts included in such
total pursuant to the provisions of Sections 402(a),
402(c), 403(a), 403(b), 406(a), 407(a) and 408 of the
Internal Revenue Code or included in such total as
distributions under the provisions of any retirement
or disability plan for employees of any governmental
agency or unit, or retirement payments to retired

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partners, which payments are excluded in computing net
earnings from self employment by Section 1402 of the
Internal Revenue Code and regulations adopted pursuant
thereto;
(I) The valuation limitation amount;
(J) An amount equal to the amount of any tax
imposed by this Act which was refunded to the taxpayer
and included in such total for the taxable year;
(K) An amount equal to all amounts included in
taxable income as modified by subparagraphs (A), (B),
(C), (D), (E), (F) and (G) which are exempt from
taxation by this State either by reason of its statutes
or Constitution or by reason of the Constitution,
treaties or statutes of the United States; provided
that, in the case of any statute of this State that
exempts income derived from bonds or other obligations
from the tax imposed under this Act, the amount
exempted shall be the interest net of bond premium
amortization;
(L) With the exception of any amounts subtracted
under subparagraph (K), an amount equal to the sum of
all amounts disallowed as deductions by (i) Sections
171(a) (2) and 265(a)(2) of the Internal Revenue Code,
and all amounts of expenses allocable to interest and
disallowed as deductions by Section 265(1) of the
Internal Revenue Code; and (ii) for taxable years

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ending on or after August 13, 1999, Sections 171(a)(2),
265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue
Code, plus, (iii) for taxable years ending on or after
December 31, 2011, Section 45G(e)(3) of the Internal
Revenue Code and, for taxable years ending on or after
December 31, 2008, any amount included in gross income
under Section 87 of the Internal Revenue Code; the
provisions of this subparagraph are exempt from the
provisions of Section 250;
(M) An amount equal to those dividends included in
such total which were paid by a corporation which
conducts business operations in a River Edge
Redevelopment Zone or zones created under the River
Edge Redevelopment Zone Act and conducts substantially
all of its operations in a River Edge Redevelopment
Zone or zones. This subparagraph (M) is exempt from the
provisions of Section 250;
(N) An amount equal to any contribution made to a
job training project established pursuant to the Tax
Increment Allocation Redevelopment Act;
(O) For taxable years ending on or after December
31, 2016, an An amount equal to those dividends
included in such total that were paid by a corporation
that conducts business operations in a federally
designated Foreign Trade Zone or Sub-Zone and that is
designated a High Impact Business located in Illinois;

09900HB0293ham001 - 105 - LRB099 04265 HLH 51448 a
provided that dividends eligible for the deduction
provided in subparagraph (M) of paragraph (2) of this
subsection shall not be eligible for the deduction
provided under this subparagraph (O);
(P) An amount equal to the amount of the deduction
used to compute the federal income tax credit for
restoration of substantial amounts held under claim of
right for the taxable year pursuant to Section 1341 of
the Internal Revenue Code;
(Q) For taxable year 1999 and thereafter, an amount
equal to the amount of any (i) distributions, to the
extent includible in gross income for federal income
tax purposes, made to the taxpayer because of his or
her status as a victim of persecution for racial or
religious reasons by Nazi Germany or any other Axis
regime or as an heir of the victim and (ii) items of
income, to the extent includible in gross income for
federal income tax purposes, attributable to, derived
from or in any way related to assets stolen from,
hidden from, or otherwise lost to a victim of
persecution for racial or religious reasons by Nazi
Germany or any other Axis regime immediately prior to,
during, and immediately after World War II, including,
but not limited to, interest on the proceeds receivable
as insurance under policies issued to a victim of
persecution for racial or religious reasons by Nazi

09900HB0293ham001 - 106 - LRB099 04265 HLH 51448 a
Germany or any other Axis regime by European insurance
companies immediately prior to and during World War II;
provided, however, this subtraction from federal
adjusted gross income does not apply to assets acquired
with such assets or with the proceeds from the sale of
such assets; provided, further, this paragraph shall
only apply to a taxpayer who was the first recipient of
such assets after their recovery and who is a victim of
persecution for racial or religious reasons by Nazi
Germany or any other Axis regime or as an heir of the
victim. The amount of and the eligibility for any
public assistance, benefit, or similar entitlement is
not affected by the inclusion of items (i) and (ii) of
this paragraph in gross income for federal income tax
purposes. This paragraph is exempt from the provisions
of Section 250;
(R) For taxable years 2001 and thereafter, for the
taxable year in which the bonus depreciation deduction
is taken on the taxpayer's federal income tax return
under subsection (k) of Section 168 of the Internal
Revenue Code and for each applicable taxable year
thereafter, an amount equal to "x", where:
(1) "y" equals the amount of the depreciation
deduction taken for the taxable year on the
taxpayer's federal income tax return on property
for which the bonus depreciation deduction was

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taken in any year under subsection (k) of Section
168 of the Internal Revenue Code, but not including
the bonus depreciation deduction;
(2) for taxable years ending on or before
December 31, 2005, "x" equals "y" multiplied by 30
and then divided by 70 (or "y" multiplied by
0.429); and
(3) for taxable years ending after December
31, 2005:
(i) for property on which a bonus
depreciation deduction of 30% of the adjusted
basis was taken, "x" equals "y" multiplied by
30 and then divided by 70 (or "y" multiplied by
0.429); and
(ii) for property on which a bonus
depreciation deduction of 50% of the adjusted
basis was taken, "x" equals "y" multiplied by
1.0.
The aggregate amount deducted under this
subparagraph in all taxable years for any one piece of
property may not exceed the amount of the bonus
depreciation deduction taken on that property on the
taxpayer's federal income tax return under subsection
(k) of Section 168 of the Internal Revenue Code. This
subparagraph (R) is exempt from the provisions of
Section 250;

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(S) If the taxpayer sells, transfers, abandons, or
otherwise disposes of property for which the taxpayer
was required in any taxable year to make an addition
modification under subparagraph (G-10), then an amount
equal to that addition modification.
If the taxpayer continues to own property through
the last day of the last tax year for which the
taxpayer may claim a depreciation deduction for
federal income tax purposes and for which the taxpayer
was required in any taxable year to make an addition
modification under subparagraph (G-10), then an amount
equal to that addition modification.
The taxpayer is allowed to take the deduction under
this subparagraph only once with respect to any one
piece of property.
This subparagraph (S) is exempt from the
provisions of Section 250;
(T) The amount of (i) any interest income (net of
the deductions allocable thereto) taken into account
for the taxable year with respect to a transaction with
a taxpayer that is required to make an addition
modification with respect to such transaction under
Section 203(a)(2)(D-17), 203(b)(2)(E-12),
203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
the amount of such addition modification and (ii) any
income from intangible property (net of the deductions

09900HB0293ham001 - 109 - LRB099 04265 HLH 51448 a
allocable thereto) taken into account for the taxable
year with respect to a transaction with a taxpayer that
is required to make an addition modification with
respect to such transaction under Section
203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
203(d)(2)(D-8), but not to exceed the amount of such
addition modification. This subparagraph (T) is exempt
from the provisions of Section 250;
(U) An amount equal to the interest income taken
into account for the taxable year (net of the
deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but for
the fact the foreign person's business activity
outside the United States is 80% or more of that
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304, but not to exceed the
addition modification required to be made for the same
taxable year under Section 203(c)(2)(G-12) for
interest paid, accrued, or incurred, directly or

09900HB0293ham001 - 110 - LRB099 04265 HLH 51448 a
indirectly, to the same person. This subparagraph (U)
is exempt from the provisions of Section 250;
(V) An amount equal to the income from intangible
property taken into account for the taxable year (net
of the deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but for
the fact that the foreign person's business activity
outside the United States is 80% or more of that
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304, but not to exceed the
addition modification required to be made for the same
taxable year under Section 203(c)(2)(G-13) for
intangible expenses and costs paid, accrued, or
incurred, directly or indirectly, to the same foreign
person. This subparagraph (V) is exempt from the
provisions of Section 250;
(W) in the case of an estate, an amount equal to
all amounts included in such total pursuant to the
provisions of Section 111 of the Internal Revenue Code

09900HB0293ham001 - 111 - LRB099 04265 HLH 51448 a
as a recovery of items previously deducted by the
decedent from adjusted gross income in the computation
of taxable income. This subparagraph (W) is exempt from
Section 250;
(X) an amount equal to the refund included in such
total of any tax deducted for federal income tax
purposes, to the extent that deduction was added back
under subparagraph (F). This subparagraph (X) is
exempt from the provisions of Section 250; and
(Y) For taxable years ending on or after December
31, 2011, in the case of a taxpayer who was required to
add back any insurance premiums under Section
203(c)(2)(G-14), such taxpayer may elect to subtract
that part of a reimbursement received from the
insurance company equal to the amount of the expense or
loss (including expenses incurred by the insurance
company) that would have been taken into account as a
deduction for federal income tax purposes if the
expense or loss had been uninsured. If a taxpayer makes
the election provided for by this subparagraph (Y), the
insurer to which the premiums were paid must add back
to income the amount subtracted by the taxpayer
pursuant to this subparagraph (Y). This subparagraph
(Y) is exempt from the provisions of Section 250.
(3) Limitation. The amount of any modification
otherwise required under this subsection shall, under

09900HB0293ham001 - 112 - LRB099 04265 HLH 51448 a
regulations prescribed by the Department, be adjusted by
any amounts included therein which were properly paid,
credited, or required to be distributed, or permanently set
aside for charitable purposes pursuant to Internal Revenue
Code Section 642(c) during the taxable year.
(d) Partnerships.
(1) In general. In the case of a partnership, base
income means an amount equal to the taxpayer's taxable
income for the taxable year as modified by paragraph (2).
(2) Modifications. The taxable income referred to in
paragraph (1) shall be modified by adding thereto the sum
of the following amounts:
(A) An amount equal to all amounts paid or accrued
to the taxpayer as interest or dividends during the
taxable year to the extent excluded from gross income
in the computation of taxable income;
(B) An amount equal to the amount of tax imposed by
this Act to the extent deducted from gross income for
the taxable year;
(C) The amount of deductions allowed to the
partnership pursuant to Section 707 (c) of the Internal
Revenue Code in calculating its taxable income;
(D) An amount equal to the amount of the capital
gain deduction allowable under the Internal Revenue
Code, to the extent deducted from gross income in the

09900HB0293ham001 - 113 - LRB099 04265 HLH 51448 a
computation of taxable income;
(D-5) For taxable years 2001 and thereafter, an
amount equal to the bonus depreciation deduction taken
on the taxpayer's federal income tax return for the
taxable year under subsection (k) of Section 168 of the
Internal Revenue Code;
(D-6) If the taxpayer sells, transfers, abandons,
or otherwise disposes of property for which the
taxpayer was required in any taxable year to make an
addition modification under subparagraph (D-5), then
an amount equal to the aggregate amount of the
deductions taken in all taxable years under
subparagraph (O) with respect to that property.
If the taxpayer continues to own property through
the last day of the last tax year for which the
taxpayer may claim a depreciation deduction for
federal income tax purposes and for which the taxpayer
was allowed in any taxable year to make a subtraction
modification under subparagraph (O), then an amount
equal to that subtraction modification.
The taxpayer is required to make the addition
modification under this subparagraph only once with
respect to any one piece of property;
(D-7) An amount equal to the amount otherwise
allowed as a deduction in computing base income for
interest paid, accrued, or incurred, directly or

09900HB0293ham001 - 114 - LRB099 04265 HLH 51448 a
indirectly, (i) for taxable years ending on or after
December 31, 2004, to a foreign person who would be a
member of the same unitary business group but for the
fact the foreign person's business activity outside
the United States is 80% or more of the foreign
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304. The addition modification
required by this subparagraph shall be reduced to the
extent that dividends were included in base income of
the unitary group for the same taxable year and
received by the taxpayer or by a member of the
taxpayer's unitary business group (including amounts
included in gross income pursuant to Sections 951
through 964 of the Internal Revenue Code and amounts
included in gross income under Section 78 of the
Internal Revenue Code) with respect to the stock of the
same person to whom the interest was paid, accrued, or
incurred.
This paragraph shall not apply to the following:
(i) an item of interest paid, accrued, or

09900HB0293ham001 - 115 - LRB099 04265 HLH 51448 a
incurred, directly or indirectly, to a person who
is subject in a foreign country or state, other
than a state which requires mandatory unitary
reporting, to a tax on or measured by net income
with respect to such interest; or
(ii) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer can establish, based on a
preponderance of the evidence, both of the
following:
(a) the person, during the same taxable
year, paid, accrued, or incurred, the interest
to a person that is not a related member, and
(b) the transaction giving rise to the
interest expense between the taxpayer and the
person did not have as a principal purpose the
avoidance of Illinois income tax, and is paid
pursuant to a contract or agreement that
reflects an arm's-length interest rate and
terms; or
(iii) the taxpayer can establish, based on
clear and convincing evidence, that the interest
paid, accrued, or incurred relates to a contract or
agreement entered into at arm's-length rates and
terms and the principal purpose for the payment is
not federal or Illinois tax avoidance; or

09900HB0293ham001 - 116 - LRB099 04265 HLH 51448 a
(iv) an item of interest paid, accrued, or
incurred, directly or indirectly, to a person if
the taxpayer establishes by clear and convincing
evidence that the adjustments are unreasonable; or
if the taxpayer and the Director agree in writing
to the application or use of an alternative method
of apportionment under Section 304(f).
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act for
any tax year beginning after the effective date of
this amendment provided such adjustment is made
pursuant to regulation adopted by the Department
and such regulations provide methods and standards
by which the Department will utilize its authority
under Section 404 of this Act; and
(D-8) An amount equal to the amount of intangible
expenses and costs otherwise allowed as a deduction in
computing base income, and that were paid, accrued, or
incurred, directly or indirectly, (i) for taxable
years ending on or after December 31, 2004, to a
foreign person who would be a member of the same
unitary business group but for the fact that the
foreign person's business activity outside the United
States is 80% or more of that person's total business
activity and (ii) for taxable years ending on or after

09900HB0293ham001 - 117 - LRB099 04265 HLH 51448 a
December 31, 2008, to a person who would be a member of
the same unitary business group but for the fact that
the person is prohibited under Section 1501(a)(27)
from being included in the unitary business group
because he or she is ordinarily required to apportion
business income under different subsections of Section
304. The addition modification required by this
subparagraph shall be reduced to the extent that
dividends were included in base income of the unitary
group for the same taxable year and received by the
taxpayer or by a member of the taxpayer's unitary
business group (including amounts included in gross
income pursuant to Sections 951 through 964 of the
Internal Revenue Code and amounts included in gross
income under Section 78 of the Internal Revenue Code)
with respect to the stock of the same person to whom
the intangible expenses and costs were directly or
indirectly paid, incurred or accrued. The preceding
sentence shall not apply to the extent that the same
dividends caused a reduction to the addition
modification required under Section 203(d)(2)(D-7) of
this Act. As used in this subparagraph, the term
"intangible expenses and costs" includes (1) expenses,
losses, and costs for, or related to, the direct or
indirect acquisition, use, maintenance or management,
ownership, sale, exchange, or any other disposition of

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intangible property; (2) losses incurred, directly or
indirectly, from factoring transactions or discounting
transactions; (3) royalty, patent, technical, and
copyright fees; (4) licensing fees; and (5) other
similar expenses and costs. For purposes of this
subparagraph, "intangible property" includes patents,
patent applications, trade names, trademarks, service
marks, copyrights, mask works, trade secrets, and
similar types of intangible assets;
This paragraph shall not apply to the following:
(i) any item of intangible expenses or costs
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person who is
subject in a foreign country or state, other than a
state which requires mandatory unitary reporting,
to a tax on or measured by net income with respect
to such item; or
(ii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, if the taxpayer can establish, based
on a preponderance of the evidence, both of the
following:
(a) the person during the same taxable
year paid, accrued, or incurred, the
intangible expense or cost to a person that is
not a related member, and

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(b) the transaction giving rise to the
intangible expense or cost between the
taxpayer and the person did not have as a
principal purpose the avoidance of Illinois
income tax, and is paid pursuant to a contract
or agreement that reflects arm's-length terms;
or
(iii) any item of intangible expense or cost
paid, accrued, or incurred, directly or
indirectly, from a transaction with a person if the
taxpayer establishes by clear and convincing
evidence, that the adjustments are unreasonable;
or if the taxpayer and the Director agree in
writing to the application or use of an alternative
method of apportionment under Section 304(f);
Nothing in this subsection shall preclude the
Director from making any other adjustment
otherwise allowed under Section 404 of this Act for
any tax year beginning after the effective date of
this amendment provided such adjustment is made
pursuant to regulation adopted by the Department
and such regulations provide methods and standards
by which the Department will utilize its authority
under Section 404 of this Act;
(D-9) For taxable years ending on or after December
31, 2008, an amount equal to the amount of insurance

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premium expenses and costs otherwise allowed as a
deduction in computing base income, and that were paid,
accrued, or incurred, directly or indirectly, to a
person who would be a member of the same unitary
business group but for the fact that the person is
prohibited under Section 1501(a)(27) from being
included in the unitary business group because he or
she is ordinarily required to apportion business
income under different subsections of Section 304. The
addition modification required by this subparagraph
shall be reduced to the extent that dividends were
included in base income of the unitary group for the
same taxable year and received by the taxpayer or by a
member of the taxpayer's unitary business group
(including amounts included in gross income under
Sections 951 through 964 of the Internal Revenue Code
and amounts included in gross income under Section 78
of the Internal Revenue Code) with respect to the stock
of the same person to whom the premiums and costs were
directly or indirectly paid, incurred, or accrued. The
preceding sentence does not apply to the extent that
the same dividends caused a reduction to the addition
modification required under Section 203(d)(2)(D-7) or
Section 203(d)(2)(D-8) of this Act;
(D-10) An amount equal to the credit allowable to
the taxpayer under Section 218(a) of this Act,

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determined without regard to Section 218(c) of this
Act;
(D-11) For taxable years ending on or after
December 31, 2016, an amount equal to the deduction
allowed under Section 199 of the Internal Revenue Code
for the taxable year;
and by deducting from the total so obtained the following
amounts:
(E) The valuation limitation amount;
(F) An amount equal to the amount of any tax
imposed by this Act which was refunded to the taxpayer
and included in such total for the taxable year;
(G) An amount equal to all amounts included in
taxable income as modified by subparagraphs (A), (B),
(C) and (D) which are exempt from taxation by this
State either by reason of its statutes or Constitution
or by reason of the Constitution, treaties or statutes
of the United States; provided that, in the case of any
statute of this State that exempts income derived from
bonds or other obligations from the tax imposed under
this Act, the amount exempted shall be the interest net
of bond premium amortization;
(H) Any income of the partnership which
constitutes personal service income as defined in
Section 1348 (b) (1) of the Internal Revenue Code (as
in effect December 31, 1981) or a reasonable allowance

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for compensation paid or accrued for services rendered
by partners to the partnership, whichever is greater;
this subparagraph (H) is exempt from the provisions of
Section 250;
(I) An amount equal to all amounts of income
distributable to an entity subject to the Personal
Property Tax Replacement Income Tax imposed by
subsections (c) and (d) of Section 201 of this Act
including amounts distributable to organizations
exempt from federal income tax by reason of Section
501(a) of the Internal Revenue Code; this subparagraph
(I) is exempt from the provisions of Section 250;
(J) With the exception of any amounts subtracted
under subparagraph (G), an amount equal to the sum of
all amounts disallowed as deductions by (i) Sections
171(a) (2), and 265(2) of the Internal Revenue Code,
and all amounts of expenses allocable to interest and
disallowed as deductions by Section 265(1) of the
Internal Revenue Code; and (ii) for taxable years
ending on or after August 13, 1999, Sections 171(a)(2),
265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue
Code, plus, (iii) for taxable years ending on or after
December 31, 2011, Section 45G(e)(3) of the Internal
Revenue Code and, for taxable years ending on or after
December 31, 2008, any amount included in gross income
under Section 87 of the Internal Revenue Code; the

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provisions of this subparagraph are exempt from the
provisions of Section 250;
(K) An amount equal to those dividends included in
such total which were paid by a corporation which
conducts business operations in a River Edge
Redevelopment Zone or zones created under the River
Edge Redevelopment Zone Act and conducts substantially
all of its operations from a River Edge Redevelopment
Zone or zones. This subparagraph (K) is exempt from the
provisions of Section 250;
(L) An amount equal to any contribution made to a
job training project established pursuant to the Real
Property Tax Increment Allocation Redevelopment Act;
(M) For taxable years ending on or after December
31, 2016, an An amount equal to those dividends
included in such total that were paid by a corporation
that conducts business operations in a federally
designated Foreign Trade Zone or Sub-Zone and that is
designated a High Impact Business located in Illinois;
provided that dividends eligible for the deduction
provided in subparagraph (K) of paragraph (2) of this
subsection shall not be eligible for the deduction
provided under this subparagraph (M);
(N) An amount equal to the amount of the deduction
used to compute the federal income tax credit for
restoration of substantial amounts held under claim of

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right for the taxable year pursuant to Section 1341 of
the Internal Revenue Code;
(O) For taxable years 2001 and thereafter, for the
taxable year in which the bonus depreciation deduction
is taken on the taxpayer's federal income tax return
under subsection (k) of Section 168 of the Internal
Revenue Code and for each applicable taxable year
thereafter, an amount equal to "x", where:
(1) "y" equals the amount of the depreciation
deduction taken for the taxable year on the
taxpayer's federal income tax return on property
for which the bonus depreciation deduction was
taken in any year under subsection (k) of Section
168 of the Internal Revenue Code, but not including
the bonus depreciation deduction;
(2) for taxable years ending on or before
December 31, 2005, "x" equals "y" multiplied by 30
and then divided by 70 (or "y" multiplied by
0.429); and
(3) for taxable years ending after December
31, 2005:
(i) for property on which a bonus
depreciation deduction of 30% of the adjusted
basis was taken, "x" equals "y" multiplied by
30 and then divided by 70 (or "y" multiplied by
0.429); and

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(ii) for property on which a bonus
depreciation deduction of 50% of the adjusted
basis was taken, "x" equals "y" multiplied by
1.0.
The aggregate amount deducted under this
subparagraph in all taxable years for any one piece of
property may not exceed the amount of the bonus
depreciation deduction taken on that property on the
taxpayer's federal income tax return under subsection
(k) of Section 168 of the Internal Revenue Code. This
subparagraph (O) is exempt from the provisions of
Section 250;
(P) If the taxpayer sells, transfers, abandons, or
otherwise disposes of property for which the taxpayer
was required in any taxable year to make an addition
modification under subparagraph (D-5), then an amount
equal to that addition modification.
If the taxpayer continues to own property through
the last day of the last tax year for which the
taxpayer may claim a depreciation deduction for
federal income tax purposes and for which the taxpayer
was required in any taxable year to make an addition
modification under subparagraph (D-5), then an amount
equal to that addition modification.
The taxpayer is allowed to take the deduction under
this subparagraph only once with respect to any one

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piece of property.
This subparagraph (P) is exempt from the
provisions of Section 250;
(Q) The amount of (i) any interest income (net of
the deductions allocable thereto) taken into account
for the taxable year with respect to a transaction with
a taxpayer that is required to make an addition
modification with respect to such transaction under
Section 203(a)(2)(D-17), 203(b)(2)(E-12),
203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
the amount of such addition modification and (ii) any
income from intangible property (net of the deductions
allocable thereto) taken into account for the taxable
year with respect to a transaction with a taxpayer that
is required to make an addition modification with
respect to such transaction under Section
203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
203(d)(2)(D-8), but not to exceed the amount of such
addition modification. This subparagraph (Q) is exempt
from Section 250;
(R) An amount equal to the interest income taken
into account for the taxable year (net of the
deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but for
the fact that the foreign person's business activity

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outside the United States is 80% or more of that
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the
unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304, but not to exceed the
addition modification required to be made for the same
taxable year under Section 203(d)(2)(D-7) for interest
paid, accrued, or incurred, directly or indirectly, to
the same person. This subparagraph (R) is exempt from
Section 250;
(S) An amount equal to the income from intangible
property taken into account for the taxable year (net
of the deductions allocable thereto) with respect to
transactions with (i) a foreign person who would be a
member of the taxpayer's unitary business group but for
the fact that the foreign person's business activity
outside the United States is 80% or more of that
person's total business activity and (ii) for taxable
years ending on or after December 31, 2008, to a person
who would be a member of the same unitary business
group but for the fact that the person is prohibited
under Section 1501(a)(27) from being included in the

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unitary business group because he or she is ordinarily
required to apportion business income under different
subsections of Section 304, but not to exceed the
addition modification required to be made for the same
taxable year under Section 203(d)(2)(D-8) for
intangible expenses and costs paid, accrued, or
incurred, directly or indirectly, to the same person.
This subparagraph (S) is exempt from Section 250; and
(T) For taxable years ending on or after December
31, 2011, in the case of a taxpayer who was required to
add back any insurance premiums under Section
203(d)(2)(D-9), such taxpayer may elect to subtract
that part of a reimbursement received from the
insurance company equal to the amount of the expense or
loss (including expenses incurred by the insurance
company) that would have been taken into account as a
deduction for federal income tax purposes if the
expense or loss had been uninsured. If a taxpayer makes
the election provided for by this subparagraph (T), the
insurer to which the premiums were paid must add back
to income the amount subtracted by the taxpayer
pursuant to this subparagraph (T). This subparagraph
(T) is exempt from the provisions of Section 250.
(e) Gross income; adjusted gross income; taxable income.
(1) In general. Subject to the provisions of paragraph

09900HB0293ham001 - 129 - LRB099 04265 HLH 51448 a
(2) and subsection (b) (3), for purposes of this Section
and Section 803(e), a taxpayer's gross income, adjusted
gross income, or taxable income for the taxable year shall
mean the amount of gross income, adjusted gross income or
taxable income properly reportable for federal income tax
purposes for the taxable year under the provisions of the
Internal Revenue Code. Taxable income may be less than
zero. However, for taxable years ending on or after
December 31, 1986, net operating loss carryforwards from
taxable years ending prior to December 31, 1986, may not
exceed the sum of federal taxable income for the taxable
year before net operating loss deduction, plus the excess
of addition modifications over subtraction modifications
for the taxable year. For taxable years ending prior to
December 31, 1986, taxable income may never be an amount in
excess of the net operating loss for the taxable year as
defined in subsections (c) and (d) of Section 172 of the
Internal Revenue Code, provided that when taxable income of
a corporation (other than a Subchapter S corporation),
trust, or estate is less than zero and addition
modifications, other than those provided by subparagraph
(E) of paragraph (2) of subsection (b) for corporations or
subparagraph (E) of paragraph (2) of subsection (c) for
trusts and estates, exceed subtraction modifications, an
addition modification must be made under those
subparagraphs for any other taxable year to which the

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taxable income less than zero (net operating loss) is
applied under Section 172 of the Internal Revenue Code or
under subparagraph (E) of paragraph (2) of this subsection
(e) applied in conjunction with Section 172 of the Internal
Revenue Code.
(2) Special rule. For purposes of paragraph (1) of this
subsection, the taxable income properly reportable for
federal income tax purposes shall mean:
(A) Certain life insurance companies. In the case
of a life insurance company subject to the tax imposed
by Section 801 of the Internal Revenue Code, life
insurance company taxable income, plus the amount of
distribution from pre-1984 policyholder surplus
accounts as calculated under Section 815a of the
Internal Revenue Code;
(B) Certain other insurance companies. In the case
of mutual insurance companies subject to the tax
imposed by Section 831 of the Internal Revenue Code,
insurance company taxable income;
(C) Regulated investment companies. In the case of
a regulated investment company subject to the tax
imposed by Section 852 of the Internal Revenue Code,
investment company taxable income;
(D) Real estate investment trusts. In the case of a
real estate investment trust subject to the tax imposed
by Section 857 of the Internal Revenue Code, real

09900HB0293ham001 - 131 - LRB099 04265 HLH 51448 a
estate investment trust taxable income;
(E) Consolidated corporations. In the case of a
corporation which is a member of an affiliated group of
corporations filing a consolidated income tax return
for the taxable year for federal income tax purposes,
taxable income determined as if such corporation had
filed a separate return for federal income tax purposes
for the taxable year and each preceding taxable year
for which it was a member of an affiliated group. For
purposes of this subparagraph, the taxpayer's separate
taxable income shall be determined as if the election
provided by Section 243(b) (2) of the Internal Revenue
Code had been in effect for all such years;
(F) Cooperatives. In the case of a cooperative
corporation or association, the taxable income of such
organization determined in accordance with the
provisions of Section 1381 through 1388 of the Internal
Revenue Code, but without regard to the prohibition
against offsetting losses from patronage activities
against income from nonpatronage activities; except
that a cooperative corporation or association may make
an election to follow its federal income tax treatment
of patronage losses and nonpatronage losses. In the
event such election is made, such losses shall be
computed and carried over in a manner consistent with
subsection (a) of Section 207 of this Act and

09900HB0293ham001 - 132 - LRB099 04265 HLH 51448 a
apportioned by the apportionment factor reported by
the cooperative on its Illinois income tax return filed
for the taxable year in which the losses are incurred.
The election shall be effective for all taxable years
with original returns due on or after the date of the
election. In addition, the cooperative may file an
amended return or returns, as allowed under this Act,
to provide that the election shall be effective for
losses incurred or carried forward for taxable years
occurring prior to the date of the election. Once made,
the election may only be revoked upon approval of the
Director. The Department shall adopt rules setting
forth requirements for documenting the elections and
any resulting Illinois net loss and the standards to be
used by the Director in evaluating requests to revoke
elections. Public Act 96-932 is declaratory of
existing law;
(G) Subchapter S corporations. In the case of: (i)
a Subchapter S corporation for which there is in effect
an election for the taxable year under Section 1362 of
the Internal Revenue Code, the taxable income of such
corporation determined in accordance with Section
1363(b) of the Internal Revenue Code, except that
taxable income shall take into account those items
which are required by Section 1363(b)(1) of the
Internal Revenue Code to be separately stated; and (ii)

09900HB0293ham001 - 133 - LRB099 04265 HLH 51448 a
a Subchapter S corporation for which there is in effect
a federal election to opt out of the provisions of the
Subchapter S Revision Act of 1982 and have applied
instead the prior federal Subchapter S rules as in
effect on July 1, 1982, the taxable income of such
corporation determined in accordance with the federal
Subchapter S rules as in effect on July 1, 1982; and
(H) Partnerships. In the case of a partnership,
taxable income determined in accordance with Section
703 of the Internal Revenue Code, except that taxable
income shall take into account those items which are
required by Section 703(a)(1) to be separately stated
but which would be taken into account by an individual
in calculating his taxable income.
(3) Recapture of business expenses on disposition of
asset or business. Notwithstanding any other law to the
contrary, if in prior years income from an asset or
business has been classified as business income and in a
later year is demonstrated to be non-business income, then
all expenses, without limitation, deducted in such later
year and in the 2 immediately preceding taxable years
related to that asset or business that generated the
non-business income shall be added back and recaptured as
business income in the year of the disposition of the asset
or business. Such amount shall be apportioned to Illinois
using the greater of the apportionment fraction computed

09900HB0293ham001 - 134 - LRB099 04265 HLH 51448 a
for the business under Section 304 of this Act for the
taxable year or the average of the apportionment fractions
computed for the business under Section 304 of this Act for
the taxable year and for the 2 immediately preceding
taxable years.
(f) Valuation limitation amount.
(1) In general. The valuation limitation amount
referred to in subsections (a) (2) (G), (c) (2) (I) and
(d)(2) (E) is an amount equal to:
(A) The sum of the pre-August 1, 1969 appreciation
amounts (to the extent consisting of gain reportable
under the provisions of Section 1245 or 1250 of the
Internal Revenue Code) for all property in respect of
which such gain was reported for the taxable year; plus
(B) The lesser of (i) the sum of the pre-August 1,
1969 appreciation amounts (to the extent consisting of
capital gain) for all property in respect of which such
gain was reported for federal income tax purposes for
the taxable year, or (ii) the net capital gain for the
taxable year, reduced in either case by any amount of
such gain included in the amount determined under
subsection (a) (2) (F) or (c) (2) (H).
(2) Pre-August 1, 1969 appreciation amount.
(A) If the fair market value of property referred
to in paragraph (1) was readily ascertainable on August

09900HB0293ham001 - 135 - LRB099 04265 HLH 51448 a
1, 1969, the pre-August 1, 1969 appreciation amount for
such property is the lesser of (i) the excess of such
fair market value over the taxpayer's basis (for
determining gain) for such property on that date
(determined under the Internal Revenue Code as in
effect on that date), or (ii) the total gain realized
and reportable for federal income tax purposes in
respect of the sale, exchange or other disposition of
such property.
(B) If the fair market value of property referred
to in paragraph (1) was not readily ascertainable on
August 1, 1969, the pre-August 1, 1969 appreciation
amount for such property is that amount which bears the
same ratio to the total gain reported in respect of the
property for federal income tax purposes for the
taxable year, as the number of full calendar months in
that part of the taxpayer's holding period for the
property ending July 31, 1969 bears to the number of
full calendar months in the taxpayer's entire holding
period for the property.
(C) The Department shall prescribe such
regulations as may be necessary to carry out the
purposes of this paragraph.
(g) Double deductions. Unless specifically provided
otherwise, nothing in this Section shall permit the same item

09900HB0293ham001 - 136 - LRB099 04265 HLH 51448 a
to be deducted more than once.
(h) Legislative intention. Except as expressly provided by
this Section there shall be no modifications or limitations on
the amounts of income, gain, loss or deduction taken into
account in determining gross income, adjusted gross income or
taxable income for federal income tax purposes for the taxable
year, or in the amount of such items entering into the
computation of base income and net income under this Act for
such taxable year, whether in respect of property values as of
August 1, 1969 or otherwise.
(Source: P.A. 96-45, eff. 7-15-09; 96-120, eff. 8-4-09; 96-198,
eff. 8-10-09; 96-328, eff. 8-11-09; 96-520, eff. 8-14-09;
96-835, eff. 12-16-09; 96-932, eff. 1-1-11; 96-935, eff.
6-21-10; 96-1214, eff. 7-22-10; 97-333, eff. 8-12-11; 97-507,
eff. 8-23-11; 97-905, eff. 8-7-12.)
(35 ILCS 5/223)
Sec. 223. Hospital credit.
(a) For tax years ending on or after December 31, 2012 and
ending on or before December 31, 2016, a taxpayer that is the
owner of a hospital licensed under the Hospital Licensing Act,
but not including an organization that is exempt from federal
income taxes under the Internal Revenue Code, is entitled to a
credit against the taxes imposed under subsections (a) and (b)
of Section 201 of this Act in an amount equal to the lesser of

09900HB0293ham001 - 137 - LRB099 04265 HLH 51448 a
the amount of real property taxes paid during the tax year on
real property used for hospital purposes during the prior tax
year or the cost of free or discounted services provided during
the tax year pursuant to the hospital's charitable financial
assistance policy, measured at cost.
(b) If the taxpayer is a partnership or Subchapter S
corporation, the credit is allowed to the partners or
shareholders in accordance with the determination of income and
distributive share of income under Sections 702 and 704 and
Subchapter S of the Internal Revenue Code. A transfer of this
credit may be made by the taxpayer earning the credit within
one year after the credit is earned in accordance with rules
adopted by the Department. The Department shall prescribe rules
to enforce and administer provisions of this Section. If the
amount of the credit exceeds the tax liability for the year,
then the excess credit may be carried forward and applied to
the tax liability of the 5 taxable years following the excess
credit year. The credit shall be applied to the earliest year
for which there is a tax liability. If there are credits from
more than one tax year that are available to offset a
liability, the earlier credit shall be applied first. In no
event shall a credit under this Section reduce the taxpayer's
liability to less than zero.
(Source: P.A. 97-688, eff. 6-14-12.)
(35 ILCS 5/304) (from Ch. 120, par. 3-304)

09900HB0293ham001 - 138 - LRB099 04265 HLH 51448 a
Sec. 304. Business income of persons other than residents.
(a) In general. The business income of a person other than
a resident shall be allocated to this State if such person's
business income is derived solely from this State. If a person
other than a resident derives business income from this State
and one or more other states, then, for tax years ending on or
before December 30, 1998, and for tax years ending on or after
December 31, 2016, and except as otherwise provided by this
Section, such person's business income shall be apportioned to
this State by multiplying the income by a fraction, the
numerator of which is the sum of the property factor (if any),
the payroll factor (if any) and 200% of the sales factor (if
any), and the denominator of which is 4 reduced by the number
of factors other than the sales factor which have a denominator
of zero and by an additional 2 if the sales factor has a
denominator of zero. For tax years ending on or after December
31, 1998, and ending on or before December 30, 2016, and except
as otherwise provided by this Section, persons other than
residents who derive business income from this State and one or
more other states shall compute their apportionment factor by
weighting their property, payroll, and sales factors as
provided in subsection (h) of this Section.
(1) Property factor.
(A) The property factor is a fraction, the numerator of
which is the average value of the person's real and
tangible personal property owned or rented and used in the

09900HB0293ham001 - 139 - LRB099 04265 HLH 51448 a
trade or business in this State during the taxable year and
the denominator of which is the average value of all the
person's real and tangible personal property owned or
rented and used in the trade or business during the taxable
year.
(B) Property owned by the person is valued at its
original cost. Property rented by the person is valued at 8
times the net annual rental rate. Net annual rental rate is
the annual rental rate paid by the person less any annual
rental rate received by the person from sub-rentals.
(C) The average value of property shall be determined
by averaging the values at the beginning and ending of the
taxable year but the Director may require the averaging of
monthly values during the taxable year if reasonably
required to reflect properly the average value of the
person's property.
(2) Payroll factor.
(A) The payroll factor is a fraction, the numerator of
which is the total amount paid in this State during the
taxable year by the person for compensation, and the
denominator of which is the total compensation paid
everywhere during the taxable year.
(B) Compensation is paid in this State if:
(i) The individual's service is performed entirely
within this State;
(ii) The individual's service is performed both

09900HB0293ham001 - 140 - LRB099 04265 HLH 51448 a
within and without this State, but the service
performed without this State is incidental to the
individual's service performed within this State; or
(iii) Some of the service is performed within this
State and either the base of operations, or if there is
no base of operations, the place from which the service
is directed or controlled is within this State, or the
base of operations or the place from which the service
is directed or controlled is not in any state in which
some part of the service is performed, but the
individual's residence is in this State.
(iv) Compensation paid to nonresident professional
athletes.
(a) General. The Illinois source income of a
nonresident individual who is a member of a
professional athletic team includes the portion of the
individual's total compensation for services performed
as a member of a professional athletic team during the
taxable year which the number of duty days spent within
this State performing services for the team in any
manner during the taxable year bears to the total
number of duty days spent both within and without this
State during the taxable year.
(b) Travel days. Travel days that do not involve
either a game, practice, team meeting, or other similar
team event are not considered duty days spent in this

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State. However, such travel days are considered in the
total duty days spent both within and without this
State.
(c) Definitions. For purposes of this subpart
(iv):
(1) The term "professional athletic team"
includes, but is not limited to, any professional
baseball, basketball, football, soccer, or hockey
team.
(2) The term "member of a professional
athletic team" includes those employees who are
active players, players on the disabled list, and
any other persons required to travel and who travel
with and perform services on behalf of a
professional athletic team on a regular basis.
This includes, but is not limited to, coaches,
managers, and trainers.
(3) Except as provided in items (C) and (D) of
this subpart (3), the term "duty days" means all
days during the taxable year from the beginning of
the professional athletic team's official
pre-season training period through the last game
in which the team competes or is scheduled to
compete. Duty days shall be counted for the year in
which they occur, including where a team's
official pre-season training period through the

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last game in which the team competes or is
scheduled to compete, occurs during more than one
tax year.
(A) Duty days shall also include days on
which a member of a professional athletic team
performs service for a team on a date that does
not fall within the foregoing period (e.g.,
participation in instructional leagues, the
"All Star Game", or promotional "caravans").
Performing a service for a professional
athletic team includes conducting training and
rehabilitation activities, when such
activities are conducted at team facilities.
(B) Also included in duty days are game
days, practice days, days spent at team
meetings, promotional caravans, preseason
training camps, and days served with the team
through all post-season games in which the team
competes or is scheduled to compete.
(C) Duty days for any person who joins a
team during the period from the beginning of
the professional athletic team's official
pre-season training period through the last
game in which the team competes, or is
scheduled to compete, shall begin on the day
that person joins the team. Conversely, duty

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days for any person who leaves a team during
this period shall end on the day that person
leaves the team. Where a person switches teams
during a taxable year, a separate duty-day
calculation shall be made for the period the
person was with each team.
(D) Days for which a member of a
professional athletic team is not compensated
and is not performing services for the team in
any manner, including days when such member of
a professional athletic team has been
suspended without pay and prohibited from
performing any services for the team, shall not
be treated as duty days.
(E) Days for which a member of a
professional athletic team is on the disabled
list and does not conduct rehabilitation
activities at facilities of the team, and is
not otherwise performing services for the team
in Illinois, shall not be considered duty days
spent in this State. All days on the disabled
list, however, are considered to be included in
total duty days spent both within and without
this State.
(4) The term "total compensation for services
performed as a member of a professional athletic

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team" means the total compensation received during
the taxable year for services performed:
(A) from the beginning of the official
pre-season training period through the last
game in which the team competes or is scheduled
to compete during that taxable year; and
(B) during the taxable year on a date which
does not fall within the foregoing period
(e.g., participation in instructional leagues,
the "All Star Game", or promotional caravans).
This compensation shall include, but is not
limited to, salaries, wages, bonuses as described
in this subpart, and any other type of compensation
paid during the taxable year to a member of a
professional athletic team for services performed
in that year. This compensation does not include
strike benefits, severance pay, termination pay,
contract or option year buy-out payments,
expansion or relocation payments, or any other
payments not related to services performed for the
team.
For purposes of this subparagraph, "bonuses"
included in "total compensation for services
performed as a member of a professional athletic
team" subject to the allocation described in
Section 302(c)(1) are: bonuses earned as a result

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of play (i.e., performance bonuses) during the
season, including bonuses paid for championship,
playoff or "bowl" games played by a team, or for
selection to all-star league or other honorary
positions; and bonuses paid for signing a
contract, unless the payment of the signing bonus
is not conditional upon the signee playing any
games for the team or performing any subsequent
services for the team or even making the team, the
signing bonus is payable separately from the
salary and any other compensation, and the signing
bonus is nonrefundable.
(3) Sales factor.
(A) The sales factor is a fraction, the numerator of
which is the total sales of the person in this State during
the taxable year, and the denominator of which is the total
sales of the person everywhere during the taxable year.
(B) Sales of tangible personal property are in this
State if:
(i) The property is delivered or shipped to a
purchaser, other than the United States government,
within this State regardless of the f. o. b. point or
other conditions of the sale; or
(ii) The property is shipped from an office, store,
warehouse, factory or other place of storage in this
State and either the purchaser is the United States

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government or the person is not taxable in the state of
the purchaser; provided, however, that premises owned
or leased by a person who has independently contracted
with the seller for the printing of newspapers,
periodicals or books shall not be deemed to be an
office, store, warehouse, factory or other place of
storage for purposes of this Section. Sales of tangible
personal property are not in this State if the seller
and purchaser would be members of the same unitary
business group but for the fact that either the seller
or purchaser is a person with 80% or more of total
business activity outside of the United States and the
property is purchased for resale.
(B-1) Patents, copyrights, trademarks, and similar
items of intangible personal property.
(i) Gross receipts from the licensing, sale, or
other disposition of a patent, copyright, trademark,
or similar item of intangible personal property, other
than gross receipts governed by paragraph (B-7) of this
item (3), are in this State to the extent the item is
utilized in this State during the year the gross
receipts are included in gross income.
(ii) Place of utilization.
(I) A patent is utilized in a state to the
extent that it is employed in production,
fabrication, manufacturing, or other processing in

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the state or to the extent that a patented product
is produced in the state. If a patent is utilized
in more than one state, the extent to which it is
utilized in any one state shall be a fraction equal
to the gross receipts of the licensee or purchaser
from sales or leases of items produced,
fabricated, manufactured, or processed within that
state using the patent and of patented items
produced within that state, divided by the total of
such gross receipts for all states in which the
patent is utilized.
(II) A copyright is utilized in a state to the
extent that printing or other publication
originates in the state. If a copyright is utilized
in more than one state, the extent to which it is
utilized in any one state shall be a fraction equal
to the gross receipts from sales or licenses of
materials printed or published in that state
divided by the total of such gross receipts for all
states in which the copyright is utilized.
(III) Trademarks and other items of intangible
personal property governed by this paragraph (B-1)
are utilized in the state in which the commercial
domicile of the licensee or purchaser is located.
(iii) If the state of utilization of an item of
property governed by this paragraph (B-1) cannot be

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determined from the taxpayer's books and records or
from the books and records of any person related to the
taxpayer within the meaning of Section 267(b) of the
Internal Revenue Code, 26 U.S.C. 267, the gross
receipts attributable to that item shall be excluded
from both the numerator and the denominator of the
sales factor.
(B-2) Gross receipts from the license, sale, or other
disposition of patents, copyrights, trademarks, and
similar items of intangible personal property, other than
gross receipts governed by paragraph (B-7) of this item
(3), may be included in the numerator or denominator of the
sales factor only if gross receipts from licenses, sales,
or other disposition of such items comprise more than 50%
of the taxpayer's total gross receipts included in gross
income during the tax year and during each of the 2
immediately preceding tax years; provided that, when a
taxpayer is a member of a unitary business group, such
determination shall be made on the basis of the gross
receipts of the entire unitary business group.
(B-5) For taxable years ending on or after December 31,
2008, except as provided in subsections (ii) through (vii),
receipts from the sale of telecommunications service or
mobile telecommunications service are in this State if the
customer's service address is in this State.
(i) For purposes of this subparagraph (B-5), the

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following terms have the following meanings:
"Ancillary services" means services that are
associated with or incidental to the provision of
"telecommunications services", including but not
limited to "detailed telecommunications billing",
"directory assistance", "vertical service", and "voice
mail services".
"Air-to-Ground Radiotelephone service" means a
radio service, as that term is defined in 47 CFR 22.99,
in which common carriers are authorized to offer and
provide radio telecommunications service for hire to
subscribers in aircraft.
"Call-by-call Basis" means any method of charging
for telecommunications services where the price is
measured by individual calls.
"Communications Channel" means a physical or
virtual path of communications over which signals are
transmitted between or among customer channel
termination points.
"Conference bridging service" means an "ancillary
service" that links two or more participants of an
audio or video conference call and may include the
provision of a telephone number. "Conference bridging
service" does not include the "telecommunications
services" used to reach the conference bridge.
"Customer Channel Termination Point" means the

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location where the customer either inputs or receives
the communications.
"Detailed telecommunications billing service"
means an "ancillary service" of separately stating
information pertaining to individual calls on a
customer's billing statement.
"Directory assistance" means an "ancillary
service" of providing telephone number information,
and/or address information.
"Home service provider" means the facilities based
carrier or reseller with which the customer contracts
for the provision of mobile telecommunications
services.
"Mobile telecommunications service" means
commercial mobile radio service, as defined in Section
20.3 of Title 47 of the Code of Federal Regulations as
in effect on June 1, 1999.
"Place of primary use" means the street address
representative of where the customer's use of the
telecommunications service primarily occurs, which
must be the residential street address or the primary
business street address of the customer. In the case of
mobile telecommunications services, "place of primary
use" must be within the licensed service area of the
home service provider.
"Post-paid telecommunication service" means the

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telecommunications service obtained by making a
payment on a call-by-call basis either through the use
of a credit card or payment mechanism such as a bank
card, travel card, credit card, or debit card, or by
charge made to a telephone number which is not
associated with the origination or termination of the
telecommunications service. A post-paid calling
service includes telecommunications service, except a
prepaid wireless calling service, that would be a
prepaid calling service except it is not exclusively a
telecommunication service.
"Prepaid telecommunication service" means the
right to access exclusively telecommunications
services, which must be paid for in advance and which
enables the origination of calls using an access number
or authorization code, whether manually or
electronically dialed, and that is sold in
predetermined units or dollars of which the number
declines with use in a known amount.
"Prepaid Mobile telecommunication service" means a
telecommunications service that provides the right to
utilize mobile wireless service as well as other
non-telecommunication services, including but not
limited to ancillary services, which must be paid for
in advance that is sold in predetermined units or
dollars of which the number declines with use in a

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known amount.
"Private communication service" means a
telecommunication service that entitles the customer
to exclusive or priority use of a communications
channel or group of channels between or among
termination points, regardless of the manner in which
such channel or channels are connected, and includes
switching capacity, extension lines, stations, and any
other associated services that are provided in
connection with the use of such channel or channels.
"Service address" means:
(a) The location of the telecommunications
equipment to which a customer's call is charged and
from which the call originates or terminates,
regardless of where the call is billed or paid;
(b) If the location in line (a) is not known,
service address means the origination point of the
signal of the telecommunications services first
identified by either the seller's
telecommunications system or in information
received by the seller from its service provider
where the system used to transport such signals is
not that of the seller; and
(c) If the locations in line (a) and line (b)
are not known, the service address means the
location of the customer's place of primary use.

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"Telecommunications service" means the electronic
transmission, conveyance, or routing of voice, data,
audio, video, or any other information or signals to a
point, or between or among points. The term
"telecommunications service" includes such
transmission, conveyance, or routing in which computer
processing applications are used to act on the form,
code or protocol of the content for purposes of
transmission, conveyance or routing without regard to
whether such service is referred to as voice over
Internet protocol services or is classified by the
Federal Communications Commission as enhanced or value
added. "Telecommunications service" does not include:
(a) Data processing and information services
that allow data to be generated, acquired, stored,
processed, or retrieved and delivered by an
electronic transmission to a purchaser when such
purchaser's primary purpose for the underlying
transaction is the processed data or information;
(b) Installation or maintenance of wiring or
equipment on a customer's premises;
(c) Tangible personal property;
(d) Advertising, including but not limited to
directory advertising.
(e) Billing and collection services provided
to third parties;

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(f) Internet access service;
(g) Radio and television audio and video
programming services, regardless of the medium,
including the furnishing of transmission,
conveyance and routing of such services by the
programming service provider. Radio and television
audio and video programming services shall include
but not be limited to cable service as defined in
47 USC 522(6) and audio and video programming
services delivered by commercial mobile radio
service providers, as defined in 47 CFR 20.3;
(h) "Ancillary services"; or
(i) Digital products "delivered
electronically", including but not limited to
software, music, video, reading materials or ring
tones.
"Vertical service" means an "ancillary service"
that is offered in connection with one or more
"telecommunications services", which offers advanced
calling features that allow customers to identify
callers and to manage multiple calls and call
connections, including "conference bridging services".
"Voice mail service" means an "ancillary service"
that enables the customer to store, send or receive
recorded messages. "Voice mail service" does not
include any "vertical services" that the customer may

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be required to have in order to utilize the "voice mail
service".
(ii) Receipts from the sale of telecommunications
service sold on an individual call-by-call basis are in
this State if either of the following applies:
(a) The call both originates and terminates in
this State.
(b) The call either originates or terminates
in this State and the service address is located in
this State.
(iii) Receipts from the sale of postpaid
telecommunications service at retail are in this State
if the origination point of the telecommunication
signal, as first identified by the service provider's
telecommunication system or as identified by
information received by the seller from its service
provider if the system used to transport
telecommunication signals is not the seller's, is
located in this State.
(iv) Receipts from the sale of prepaid
telecommunications service or prepaid mobile
telecommunications service at retail are in this State
if the purchaser obtains the prepaid card or similar
means of conveyance at a location in this State.
Receipts from recharging a prepaid telecommunications
service or mobile telecommunications service is in

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this State if the purchaser's billing information
indicates a location in this State.
(v) Receipts from the sale of private
communication services are in this State as follows:
(a) 100% of receipts from charges imposed at
each channel termination point in this State.
(b) 100% of receipts from charges for the total
channel mileage between each channel termination
point in this State.
(c) 50% of the total receipts from charges for
service segments when those segments are between 2
customer channel termination points, 1 of which is
located in this State and the other is located
outside of this State, which segments are
separately charged.
(d) The receipts from charges for service
segments with a channel termination point located
in this State and in two or more other states, and
which segments are not separately billed, are in
this State based on a percentage determined by
dividing the number of customer channel
termination points in this State by the total
number of customer channel termination points.
(vi) Receipts from charges for ancillary services
for telecommunications service sold to customers at
retail are in this State if the customer's primary

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place of use of telecommunications services associated
with those ancillary services is in this State. If the
seller of those ancillary services cannot determine
where the associated telecommunications are located,
then the ancillary services shall be based on the
location of the purchaser.
(vii) Receipts to access a carrier's network or
from the sale of telecommunication services or
ancillary services for resale are in this State as
follows:
(a) 100% of the receipts from access fees
attributable to intrastate telecommunications
service that both originates and terminates in
this State.
(b) 50% of the receipts from access fees
attributable to interstate telecommunications
service if the interstate call either originates
or terminates in this State.
(c) 100% of the receipts from interstate end
user access line charges, if the customer's
service address is in this State. As used in this
subdivision, "interstate end user access line
charges" includes, but is not limited to, the
surcharge approved by the federal communications
commission and levied pursuant to 47 CFR 69.
(d) Gross receipts from sales of

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telecommunication services or from ancillary
services for telecommunications services sold to
other telecommunication service providers for
resale shall be sourced to this State using the
apportionment concepts used for non-resale
receipts of telecommunications services if the
information is readily available to make that
determination. If the information is not readily
available, then the taxpayer may use any other
reasonable and consistent method.
(B-7) For taxable years ending on or after December 31,
2008, receipts from the sale of broadcasting services are
in this State if the broadcasting services are received in
this State. For purposes of this paragraph (B-7), the
following terms have the following meanings:
"Advertising revenue" means consideration received
by the taxpayer in exchange for broadcasting services
or allowing the broadcasting of commercials or
announcements in connection with the broadcasting of
film or radio programming, from sponsorships of the
programming, or from product placements in the
programming.
"Audience factor" means the ratio that the
audience or subscribers located in this State of a
station, a network, or a cable system bears to the
total audience or total subscribers for that station,

09900HB0293ham001 - 159 - LRB099 04265 HLH 51448 a
network, or cable system. The audience factor for film
or radio programming shall be determined by reference
to the books and records of the taxpayer or by
reference to published rating statistics provided the
method used by the taxpayer is consistently used from
year to year for this purpose and fairly represents the
taxpayer's activity in this State.
"Broadcast" or "broadcasting" or "broadcasting
services" means the transmission or provision of film
or radio programming, whether through the public
airwaves, by cable, by direct or indirect satellite
transmission, or by any other means of communication,
either through a station, a network, or a cable system.
"Film" or "film programming" means the broadcast
on television of any and all performances, events, or
productions, including but not limited to news,
sporting events, plays, stories, or other literary,
commercial, educational, or artistic works, either
live or through the use of video tape, disc, or any
other type of format or medium. Each episode of a
series of films produced for television shall
constitute separate "film" notwithstanding that the
series relates to the same principal subject and is
produced during one or more tax periods.
"Radio" or "radio programming" means the broadcast
on radio of any and all performances, events, or

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productions, including but not limited to news,
sporting events, plays, stories, or other literary,
commercial, educational, or artistic works, either
live or through the use of an audio tape, disc, or any
other format or medium. Each episode in a series of
radio programming produced for radio broadcast shall
constitute a separate "radio programming"
notwithstanding that the series relates to the same
principal subject and is produced during one or more
tax periods.
(i) In the case of advertising revenue from
broadcasting, the customer is the advertiser and
the service is received in this State if the
commercial domicile of the advertiser is in this
State.
(ii) In the case where film or radio
programming is broadcast by a station, a network,
or a cable system for a fee or other remuneration
received from the recipient of the broadcast, the
portion of the service that is received in this
State is measured by the portion of the recipients
of the broadcast located in this State.
Accordingly, the fee or other remuneration for
such service that is included in the Illinois
numerator of the sales factor is the total of those
fees or other remuneration received from

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recipients in Illinois. For purposes of this
paragraph, a taxpayer may determine the location
of the recipients of its broadcast using the
address of the recipient shown in its contracts
with the recipient or using the billing address of
the recipient in the taxpayer's records.
(iii) In the case where film or radio
programming is broadcast by a station, a network,
or a cable system for a fee or other remuneration
from the person providing the programming, the
portion of the broadcast service that is received
by such station, network, or cable system in this
State is measured by the portion of recipients of
the broadcast located in this State. Accordingly,
the amount of revenue related to such an
arrangement that is included in the Illinois
numerator of the sales factor is the total fee or
other total remuneration from the person providing
the programming related to that broadcast
multiplied by the Illinois audience factor for
that broadcast.
(iv) In the case where film or radio
programming is provided by a taxpayer that is a
network or station to a customer for broadcast in
exchange for a fee or other remuneration from that
customer the broadcasting service is received at

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the location of the office of the customer from
which the services were ordered in the regular
course of the customer's trade or business.
Accordingly, in such a case the revenue derived by
the taxpayer that is included in the taxpayer's
Illinois numerator of the sales factor is the
revenue from such customers who receive the
broadcasting service in Illinois.
(v) In the case where film or radio programming
is provided by a taxpayer that is not a network or
station to another person for broadcasting in
exchange for a fee or other remuneration from that
person, the broadcasting service is received at
the location of the office of the customer from
which the services were ordered in the regular
course of the customer's trade or business.
Accordingly, in such a case the revenue derived by
the taxpayer that is included in the taxpayer's
Illinois numerator of the sales factor is the
revenue from such customers who receive the
broadcasting service in Illinois.
(B-8) Gross receipts from winnings under the Illinois
Lottery Law from the assignment of a prize under Section
13.1 of the Illinois Lottery Law are received in this
State. This paragraph (B-8) applies only to taxable years
ending on or after December 31, 2013.

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(C) For taxable years ending before December 31, 2008,
sales, other than sales governed by paragraphs (B), (B-1),
(B-2), and (B-8) are in this State if:
(i) The income-producing activity is performed in
this State; or
(ii) The income-producing activity is performed
both within and without this State and a greater
proportion of the income-producing activity is
performed within this State than without this State,
based on performance costs.
(C-5) For taxable years ending on or after December 31,
2008, sales, other than sales governed by paragraphs (B),
(B-1), (B-2), (B-5), and (B-7), are in this State if any of
the following criteria are met:
(i) Sales from the sale or lease of real property
are in this State if the property is located in this
State.
(ii) Sales from the lease or rental of tangible
personal property are in this State if the property is
located in this State during the rental period. Sales
from the lease or rental of tangible personal property
that is characteristically moving property, including,
but not limited to, motor vehicles, rolling stock,
aircraft, vessels, or mobile equipment are in this
State to the extent that the property is used in this
State.

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(iii) In the case of interest, net gains (but not
less than zero) and other items of income from
intangible personal property, the sale is in this State
if:
(a) in the case of a taxpayer who is a dealer
in the item of intangible personal property within
the meaning of Section 475 of the Internal Revenue
Code, the income or gain is received from a
customer in this State. For purposes of this
subparagraph, a customer is in this State if the
customer is an individual, trust or estate who is a
resident of this State and, for all other
customers, if the customer's commercial domicile
is in this State. Unless the dealer has actual
knowledge of the residence or commercial domicile
of a customer during a taxable year, the customer
shall be deemed to be a customer in this State if
the billing address of the customer, as shown in
the records of the dealer, is in this State; or
(b) in all other cases, if the
income-producing activity of the taxpayer is
performed in this State or, if the
income-producing activity of the taxpayer is
performed both within and without this State, if a
greater proportion of the income-producing
activity of the taxpayer is performed within this

09900HB0293ham001 - 165 - LRB099 04265 HLH 51448 a
State than in any other state, based on performance
costs.
(iv) Sales of services are in this State if the
services are received in this State. For the purposes
of this section, gross receipts from the performance of
services provided to a corporation, partnership, or
trust may only be attributed to a state where that
corporation, partnership, or trust has a fixed place of
business. If the state where the services are received
is not readily determinable or is a state where the
corporation, partnership, or trust receiving the
service does not have a fixed place of business, the
services shall be deemed to be received at the location
of the office of the customer from which the services
were ordered in the regular course of the customer's
trade or business. If the ordering office cannot be
determined, the services shall be deemed to be received
at the office of the customer to which the services are
billed. If the taxpayer is not taxable in the state in
which the services are received, the sale must be
excluded from both the numerator and the denominator of
the sales factor. The Department shall adopt rules
prescribing where specific types of service are
received, including, but not limited to, publishing,
and utility service.
(D) For taxable years ending on or after December 31,

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1995, the following items of income shall not be included
in the numerator or denominator of the sales factor:
dividends; amounts included under Section 78 of the
Internal Revenue Code; and Subpart F income as defined in
Section 952 of the Internal Revenue Code. No inference
shall be drawn from the enactment of this paragraph (D) in
construing this Section for taxable years ending before
December 31, 1995.
(E) Paragraphs (B-1) and (B-2) shall apply to tax years
ending on or after December 31, 1999, provided that a
taxpayer may elect to apply the provisions of these
paragraphs to prior tax years. Such election shall be made
in the form and manner prescribed by the Department, shall
be irrevocable, and shall apply to all tax years; provided
that, if a taxpayer's Illinois income tax liability for any
tax year, as assessed under Section 903 prior to January 1,
1999, was computed in a manner contrary to the provisions
of paragraphs (B-1) or (B-2), no refund shall be payable to
the taxpayer for that tax year to the extent such refund is
the result of applying the provisions of paragraph (B-1) or
(B-2) retroactively. In the case of a unitary business
group, such election shall apply to all members of such
group for every tax year such group is in existence, but
shall not apply to any taxpayer for any period during which
that taxpayer is not a member of such group.
(b) Insurance companies.

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(1) In general. Except as otherwise provided by
paragraph (2), business income of an insurance company for
a taxable year shall be apportioned to this State by
multiplying such income by a fraction, the numerator of
which is the direct premiums written for insurance upon
property or risk in this State, and the denominator of
which is the direct premiums written for insurance upon
property or risk everywhere. For purposes of this
subsection, the term "direct premiums written" means the
total amount of direct premiums written, assessments and
annuity considerations as reported for the taxable year on
the annual statement filed by the company with the Illinois
Director of Insurance in the form approved by the National
Convention of Insurance Commissioners or such other form as
may be prescribed in lieu thereof.
(2) Reinsurance. If the principal source of premiums
written by an insurance company consists of premiums for
reinsurance accepted by it, the business income of such
company shall be apportioned to this State by multiplying
such income by a fraction, the numerator of which is the
sum of (i) direct premiums written for insurance upon
property or risk in this State, plus (ii) premiums written
for reinsurance accepted in respect of property or risk in
this State, and the denominator of which is the sum of
(iii) direct premiums written for insurance upon property
or risk everywhere, plus (iv) premiums written for

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reinsurance accepted in respect of property or risk
everywhere. For purposes of this paragraph, premiums
written for reinsurance accepted in respect of property or
risk in this State, whether or not otherwise determinable,
may, at the election of the company, be determined on the
basis of the proportion which premiums written for
reinsurance accepted from companies commercially domiciled
in Illinois bears to premiums written for reinsurance
accepted from all sources, or, alternatively, in the
proportion which the sum of the direct premiums written for
insurance upon property or risk in this State by each
ceding company from which reinsurance is accepted bears to
the sum of the total direct premiums written by each such
ceding company for the taxable year. The election made by a
company under this paragraph for its first taxable year
ending on or after December 31, 2011, shall be binding for
that company for that taxable year and for all subsequent
taxable years, and may be altered only with the written
permission of the Department, which shall not be
unreasonably withheld.
(c) Financial organizations.
(1) In general. For taxable years ending before
December 31, 2008, business income of a financial
organization shall be apportioned to this State by
multiplying such income by a fraction, the numerator of
which is its business income from sources within this

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State, and the denominator of which is its business income
from all sources. For the purposes of this subsection, the
business income of a financial organization from sources
within this State is the sum of the amounts referred to in
subparagraphs (A) through (E) following, but excluding the
adjusted income of an international banking facility as
determined in paragraph (2):
(A) Fees, commissions or other compensation for
financial services rendered within this State;
(B) Gross profits from trading in stocks, bonds or
other securities managed within this State;
(C) Dividends, and interest from Illinois
customers, which are received within this State;
(D) Interest charged to customers at places of
business maintained within this State for carrying
debit balances of margin accounts, without deduction
of any costs incurred in carrying such accounts; and
(E) Any other gross income resulting from the
operation as a financial organization within this
State. In computing the amounts referred to in
paragraphs (A) through (E) of this subsection, any
amount received by a member of an affiliated group
(determined under Section 1504(a) of the Internal
Revenue Code but without reference to whether any such
corporation is an "includible corporation" under
Section 1504(b) of the Internal Revenue Code) from

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another member of such group shall be included only to
the extent such amount exceeds expenses of the
recipient directly related thereto.
(2) International Banking Facility. For taxable years
ending before December 31, 2008:
(A) Adjusted Income. The adjusted income of an
international banking facility is its income reduced
by the amount of the floor amount.
(B) Floor Amount. The floor amount shall be the
amount, if any, determined by multiplying the income of
the international banking facility by a fraction, not
greater than one, which is determined as follows:
(i) The numerator shall be:
The average aggregate, determined on a
quarterly basis, of the financial organization's
loans to banks in foreign countries, to foreign
domiciled borrowers (except where secured
primarily by real estate) and to foreign
governments and other foreign official
institutions, as reported for its branches,
agencies and offices within the state on its
"Consolidated Report of Condition", Schedule A,
Lines 2.c., 5.b., and 7.a., which was filed with
the Federal Deposit Insurance Corporation and
other regulatory authorities, for the year 1980,
minus

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The average aggregate, determined on a
quarterly basis, of such loans (other than loans of
an international banking facility), as reported by
the financial institution for its branches,
agencies and offices within the state, on the
corresponding Schedule and lines of the
Consolidated Report of Condition for the current
taxable year, provided, however, that in no case
shall the amount determined in this clause (the
subtrahend) exceed the amount determined in the
preceding clause (the minuend); and
(ii) the denominator shall be the average
aggregate, determined on a quarterly basis, of the
international banking facility's loans to banks in
foreign countries, to foreign domiciled borrowers
(except where secured primarily by real estate)
and to foreign governments and other foreign
official institutions, which were recorded in its
financial accounts for the current taxable year.
(C) Change to Consolidated Report of Condition and
in Qualification. In the event the Consolidated Report
of Condition which is filed with the Federal Deposit
Insurance Corporation and other regulatory authorities
is altered so that the information required for
determining the floor amount is not found on Schedule
A, lines 2.c., 5.b. and 7.a., the financial institution

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shall notify the Department and the Department may, by
regulations or otherwise, prescribe or authorize the
use of an alternative source for such information. The
financial institution shall also notify the Department
should its international banking facility fail to
qualify as such, in whole or in part, or should there
be any amendment or change to the Consolidated Report
of Condition, as originally filed, to the extent such
amendment or change alters the information used in
determining the floor amount.
(3) For taxable years ending on or after December 31,
2008, the business income of a financial organization shall
be apportioned to this State by multiplying such income by
a fraction, the numerator of which is its gross receipts
from sources in this State or otherwise attributable to
this State's marketplace and the denominator of which is
its gross receipts everywhere during the taxable year.
"Gross receipts" for purposes of this subparagraph (3)
means gross income, including net taxable gain on
disposition of assets, including securities and money
market instruments, when derived from transactions and
activities in the regular course of the financial
organization's trade or business. The following examples
are illustrative:
(i) Receipts from the lease or rental of real or
tangible personal property are in this State if the

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property is located in this State during the rental
period. Receipts from the lease or rental of tangible
personal property that is characteristically moving
property, including, but not limited to, motor
vehicles, rolling stock, aircraft, vessels, or mobile
equipment are from sources in this State to the extent
that the property is used in this State.
(ii) Interest income, commissions, fees, gains on
disposition, and other receipts from assets in the
nature of loans that are secured primarily by real
estate or tangible personal property are from sources
in this State if the security is located in this State.
(iii) Interest income, commissions, fees, gains on
disposition, and other receipts from consumer loans
that are not secured by real or tangible personal
property are from sources in this State if the debtor
is a resident of this State.
(iv) Interest income, commissions, fees, gains on
disposition, and other receipts from commercial loans
and installment obligations that are not secured by
real or tangible personal property are from sources in
this State if the proceeds of the loan are to be
applied in this State. If it cannot be determined where
the funds are to be applied, the income and receipts
are from sources in this State if the office of the
borrower from which the loan was negotiated in the

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regular course of business is located in this State. If
the location of this office cannot be determined, the
income and receipts shall be excluded from the
numerator and denominator of the sales factor.
(v) Interest income, fees, gains on disposition,
service charges, merchant discount income, and other
receipts from credit card receivables are from sources
in this State if the card charges are regularly billed
to a customer in this State.
(vi) Receipts from the performance of services,
including, but not limited to, fiduciary, advisory,
and brokerage services, are in this State if the
services are received in this State within the meaning
of subparagraph (a)(3)(C-5)(iv) of this Section.
(vii) Receipts from the issuance of travelers
checks and money orders are from sources in this State
if the checks and money orders are issued from a
location within this State.
(viii) Receipts from investment assets and
activities and trading assets and activities are
included in the receipts factor as follows:
(1) Interest, dividends, net gains (but not
less than zero) and other income from investment
assets and activities from trading assets and
activities shall be included in the receipts
factor. Investment assets and activities and

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trading assets and activities include but are not
limited to: investment securities; trading account
assets; federal funds; securities purchased and
sold under agreements to resell or repurchase;
options; futures contracts; forward contracts;
notional principal contracts such as swaps;
equities; and foreign currency transactions. With
respect to the investment and trading assets and
activities described in subparagraphs (A) and (B)
of this paragraph, the receipts factor shall
include the amounts described in such
subparagraphs.
(A) The receipts factor shall include the
amount by which interest from federal funds
sold and securities purchased under resale
agreements exceeds interest expense on federal
funds purchased and securities sold under
repurchase agreements.
(B) The receipts factor shall include the
amount by which interest, dividends, gains and
other income from trading assets and
activities, including but not limited to
assets and activities in the matched book, in
the arbitrage book, and foreign currency
transactions, exceed amounts paid in lieu of
interest, amounts paid in lieu of dividends,

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and losses from such assets and activities.
(2) The numerator of the receipts factor
includes interest, dividends, net gains (but not
less than zero), and other income from investment
assets and activities and from trading assets and
activities described in paragraph (1) of this
subsection that are attributable to this State.
(A) The amount of interest, dividends, net
gains (but not less than zero), and other
income from investment assets and activities
in the investment account to be attributed to
this State and included in the numerator is
determined by multiplying all such income from
such assets and activities by a fraction, the
numerator of which is the gross income from
such assets and activities which are properly
assigned to a fixed place of business of the
taxpayer within this State and the denominator
of which is the gross income from all such
assets and activities.
(B) The amount of interest from federal
funds sold and purchased and from securities
purchased under resale agreements and
securities sold under repurchase agreements
attributable to this State and included in the
numerator is determined by multiplying the

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amount described in subparagraph (A) of
paragraph (1) of this subsection from such
funds and such securities by a fraction, the
numerator of which is the gross income from
such funds and such securities which are
properly assigned to a fixed place of business
of the taxpayer within this State and the
denominator of which is the gross income from
all such funds and such securities.
(C) The amount of interest, dividends,
gains, and other income from trading assets and
activities, including but not limited to
assets and activities in the matched book, in
the arbitrage book and foreign currency
transactions (but excluding amounts described
in subparagraphs (A) or (B) of this paragraph),
attributable to this State and included in the
numerator is determined by multiplying the
amount described in subparagraph (B) of
paragraph (1) of this subsection by a fraction,
the numerator of which is the gross income from
such trading assets and activities which are
properly assigned to a fixed place of business
of the taxpayer within this State and the
denominator of which is the gross income from
all such assets and activities.

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(D) Properly assigned, for purposes of
this paragraph (2) of this subsection, means
the investment or trading asset or activity is
assigned to the fixed place of business with
which it has a preponderance of substantive
contacts. An investment or trading asset or
activity assigned by the taxpayer to a fixed
place of business without the State shall be
presumed to have been properly assigned if:
(i) the taxpayer has assigned, in the
regular course of its business, such asset
or activity on its records to a fixed place
of business consistent with federal or
state regulatory requirements;
(ii) such assignment on its records is
based upon substantive contacts of the
asset or activity to such fixed place of
business; and
(iii) the taxpayer uses such records
reflecting assignment of such assets or
activities for the filing of all state and
local tax returns for which an assignment
of such assets or activities to a fixed
place of business is required.
(E) The presumption of proper assignment
of an investment or trading asset or activity

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provided in subparagraph (D) of paragraph (2)
of this subsection may be rebutted upon a
showing by the Department, supported by a
preponderance of the evidence, that the
preponderance of substantive contacts
regarding such asset or activity did not occur
at the fixed place of business to which it was
assigned on the taxpayer's records. If the
fixed place of business that has a
preponderance of substantive contacts cannot
be determined for an investment or trading
asset or activity to which the presumption in
subparagraph (D) of paragraph (2) of this
subsection does not apply or with respect to
which that presumption has been rebutted, that
asset or activity is properly assigned to the
state in which the taxpayer's commercial
domicile is located. For purposes of this
subparagraph (E), it shall be presumed,
subject to rebuttal, that taxpayer's
commercial domicile is in the state of the
United States or the District of Columbia to
which the greatest number of employees are
regularly connected with the management of the
investment or trading income or out of which
they are working, irrespective of where the

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services of such employees are performed, as of
the last day of the taxable year.
(4) (Blank).
(5) (Blank).
(c-1) Federally regulated exchanges. For taxable years
ending on or after December 31, 2012 and ending prior to
December 31, 2016, business income of a federally regulated
exchange shall, at the option of the federally regulated
exchange, be apportioned to this State by multiplying such
income by a fraction, the numerator of which is its business
income from sources within this State, and the denominator of
which is its business income from all sources. For purposes of
this subsection, the business income within this State of a
federally regulated exchange is the sum of the following:
(1) Receipts attributable to transactions executed on
a physical trading floor if that physical trading floor is
located in this State.
(2) Receipts attributable to all other matching,
execution, or clearing transactions, including without
limitation receipts from the provision of matching,
execution, or clearing services to another entity,
multiplied by (i) for taxable years ending on or after
December 31, 2012 but before December 31, 2013, 63.77%; and
(ii) for taxable years ending on or after December 31,
2013, 27.54%.
(3) All other receipts not governed by subparagraphs

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(1) or (2) of this subsection (c-1), to the extent the
receipts would be characterized as "sales in this State"
under item (3) of subsection (a) of this Section.
"Federally regulated exchange" means (i) a "registered
entity" within the meaning of 7 U.S.C. Section 1a(40)(A), (B),
or (C), (ii) an "exchange" or "clearing agency" within the
meaning of 15 U.S.C. Section 78c (a)(1) or (23), (iii) any such
entities regulated under any successor regulatory structure to
the foregoing, and (iv) all taxpayers who are members of the
same unitary business group as a federally regulated exchange,
determined without regard to the prohibition in Section
1501(a)(27) of this Act against including in a unitary business
group taxpayers who are ordinarily required to apportion
business income under different subsections of this Section;
provided that this subparagraph (iv) shall apply only if 50% or
more of the business receipts of the unitary business group
determined by application of this subparagraph (iv) for the
taxable year are attributable to the matching, execution, or
clearing of transactions conducted by an entity described in
subparagraph (i), (ii), or (iii) of this paragraph.
In no event shall the Illinois apportionment percentage
computed in accordance with this subsection (c-1) for any
taxpayer for any tax year be less than the Illinois
apportionment percentage computed under this subsection (c-1)
for that taxpayer for the first full tax year ending on or
after December 31, 2013 for which this subsection (c-1) applied

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to the taxpayer.
(d) Transportation services. For taxable years ending
before December 31, 2008, business income derived from
furnishing transportation services shall be apportioned to
this State in accordance with paragraphs (1) and (2):
(1) Such business income (other than that derived from
transportation by pipeline) shall be apportioned to this
State by multiplying such income by a fraction, the
numerator of which is the revenue miles of the person in
this State, and the denominator of which is the revenue
miles of the person everywhere. For purposes of this
paragraph, a revenue mile is the transportation of 1
passenger or 1 net ton of freight the distance of 1 mile
for a consideration. Where a person is engaged in the
transportation of both passengers and freight, the
fraction above referred to shall be determined by means of
an average of the passenger revenue mile fraction and the
freight revenue mile fraction, weighted to reflect the
person's
(A) relative railway operating income from total
passenger and total freight service, as reported to the
Interstate Commerce Commission, in the case of
transportation by railroad, and
(B) relative gross receipts from passenger and
freight transportation, in case of transportation
other than by railroad.

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(2) Such business income derived from transportation
by pipeline shall be apportioned to this State by
multiplying such income by a fraction, the numerator of
which is the revenue miles of the person in this State, and
the denominator of which is the revenue miles of the person
everywhere. For the purposes of this paragraph, a revenue
mile is the transportation by pipeline of 1 barrel of oil,
1,000 cubic feet of gas, or of any specified quantity of
any other substance, the distance of 1 mile for a
consideration.
(3) For taxable years ending on or after December 31,
2008, business income derived from providing
transportation services other than airline services shall
be apportioned to this State by using a fraction, (a) the
numerator of which shall be (i) all receipts from any
movement or shipment of people, goods, mail, oil, gas, or
any other substance (other than by airline) that both
originates and terminates in this State, plus (ii) that
portion of the person's gross receipts from movements or
shipments of people, goods, mail, oil, gas, or any other
substance (other than by airline) that originates in one
state or jurisdiction and terminates in another state or
jurisdiction, that is determined by the ratio that the
miles traveled in this State bears to total miles
everywhere and (b) the denominator of which shall be all
revenue derived from the movement or shipment of people,

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goods, mail, oil, gas, or any other substance (other than
by airline). Where a taxpayer is engaged in the
transportation of both passengers and freight, the
fraction above referred to shall first be determined
separately for passenger miles and freight miles. Then an
average of the passenger miles fraction and the freight
miles fraction shall be weighted to reflect the taxpayer's:
(A) relative railway operating income from total
passenger and total freight service, as reported to the
Surface Transportation Board, in the case of
transportation by railroad; and
(B) relative gross receipts from passenger and
freight transportation, in case of transportation
other than by railroad.
(4) For taxable years ending on or after December 31,
2008, business income derived from furnishing airline
transportation services shall be apportioned to this State
by multiplying such income by a fraction, the numerator of
which is the revenue attributable to take-offs and landings
in this State and the denominator of which is the revenue
attributable to take-offs and landings everywhere the
revenue miles of the person in this State, and the
denominator of which is the revenue miles of the person
everywhere. For purposes of this paragraph, a revenue mile
is the transportation of one passenger or one net ton of
freight the distance of one mile for a consideration. If a

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person is engaged in the transportation of both passengers
and freight, the fraction above referred to shall be
determined by means of an average of the passenger revenue
mile fraction and the freight revenue mile fraction,
weighted to reflect the person's relative gross receipts
from passenger and freight airline transportation.
(e) Combined apportionment. Where 2 or more persons are
engaged in a unitary business as described in subsection
(a)(27) of Section 1501, a part of which is conducted in this
State by one or more members of the group, the business income
attributable to this State by any such member or members shall
be apportioned by means of the combined apportionment method.
(f) Alternative allocation. If the allocation and
apportionment provisions of subsections (a) through (e) and of
subsection (h) do not, for taxable years ending before December
31, 2008, fairly represent the extent of a person's business
activity in this State, or, for taxable years ending on or
after December 31, 2008, fairly represent the market for the
person's goods, services, or other sources of business income,
the person may petition for, or the Director may, without a
petition, permit or require, in respect of all or any part of
the person's business activity, if reasonable:
(1) Separate accounting;
(2) The exclusion of any one or more factors;
(3) The inclusion of one or more additional factors
which will fairly represent the person's business

09900HB0293ham001 - 186 - LRB099 04265 HLH 51448 a
activities or market in this State; or
(4) The employment of any other method to effectuate an
equitable allocation and apportionment of the person's
business income.
(g) Cross reference. For allocation of business income by
residents, see Section 301(a).
(h) For tax years ending on or after December 31, 1998, and
ending on or before December 31, 2016, the apportionment factor
of persons who apportion their business income to this State
under subsection (a) shall be equal to:
(1) for tax years ending on or after December 31, 1998
and before December 31, 1999, 16 2/3% of the property
factor plus 16 2/3% of the payroll factor plus 66 2/3% of
the sales factor;
(2) for tax years ending on or after December 31, 1999
and before December 31, 2000, 8 1/3% of the property factor
plus 8 1/3% of the payroll factor plus 83 1/3% of the sales
factor;
(3) for tax years ending on or after December 31, 2000,
the sales factor.
If, in any tax year ending on or after December 31, 1998 and
before December 31, 2000, the denominator of the payroll,
property, or sales factor is zero, the apportionment factor
computed in paragraph (1) or (2) of this subsection for that
year shall be divided by an amount equal to 100% minus the
percentage weight given to each factor whose denominator is

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equal to zero.
(Source: P.A. 98-478, eff. 1-1-14; 98-496, eff. 1-1-14; 98-756,
eff. 7-16-14; 99-642, eff. 7-28-16.)
(35 ILCS 5/309 new)
Sec. 309. Water's edge election; inclusion of tax havens.
(a) As used in this Section:
"Affiliated corporation" means a United States parent
corporation and any subsidiary of which more than 50% of
the voting stock is owned directly or indirectly by another
corporate member of the water's-edge combined group.
"United States" means the 50 states of the United
States and the District of Columbia.
"Water's edge combined group" means all corporations
or entities included in the election of a taxpayer under
this Section.
(b) Notwithstanding any other provisions of law, a taxpayer
subject to the taxes imposed under subsections (a) and (b) of
Section 201 of this Act may apportion its income under this
Section. A return under filed by a taxpayer that elects to
apportion its income under this Section must include the income
and apportionment factors of the following affiliated
corporations only:
(1) a corporation incorporated in the United States in
a unitary relationship with the taxpayer and eligible to be
included in a federal consolidated return as described in

09900HB0293ham001 - 188 - LRB099 04265 HLH 51448 a
26 U.S.C. 1501 through 1505 that has more than 20% of its
payroll and property assignable to locations inside the
United States; for purposes of determining eligibility for
inclusion in a federal consolidated return under this
subsection (1)(a), the 80% stock ownership requirements of
26 U.S.C. 1504 must be reduced to ownership of over 50% of
the voting stock directly or indirectly owned or controlled
by an includable corporation;
(2) domestic international sales corporations, as
described in 26 U.S.C. 991 through 994, and foreign sales
corporations, as described in 26 U.S.C. 921 through 927;
(3) export trade corporations, as described in 26
U.S.C. 970 and 971;
(4) foreign corporations deriving gain or loss from
disposition of a United States real property interest to
the extent recognized under 26 U.S.C. 897;
(5) a corporation incorporated outside the United
States if over 50% of its voting stock is owned directly or
indirectly by the taxpayer and if more than 20% of the
average of its payroll and property is assignable to a
location inside the United States; or
(6) a corporation that is in a unitary relationship
with the taxpayer and that is incorporated in a tax haven,
including Andorra, Anguilla, Antigua and Barbuda, Aruba,
the Bahamas, Bahrain, Barbados, Belize, Bermuda, British
Virgin Islands, Cayman Islands, Cook Islands, Cyprus,

09900HB0293ham001 - 189 - LRB099 04265 HLH 51448 a
Dominica, Gibraltar, Grenada, Guernsey-Sark-Alderney, Isle
of Man, Jersey, Liberia, Liechtenstein, Luxembourg, Malta,
Marshall Islands, Mauritius, Monaco, Montserrat, Nauru,
Netherlands Antilles, Niue, Panama, Samoa, San Marino,
Seychelles, St. Kitts and Nevis, St. Lucia, St. Vincent and
the Grenadines, Turks and Caicos Islands, U.S. Virgin
Islands, and Vanuatu.
(c) For purposes of paragraphs (1) through (5) of
subsection (b), the location of payroll and property shall be
determined under the individual state's laws and regulations
that set forth the apportionment formulas used to assign net
income subject to taxes on or measured by net income. If a
state does not impose a tax on or measured by net income,
apportionment is determined under this Act. For the purposes of
paragraph (6) of subsection (b), income shifted to a tax haven,
to the extent taxable, is considered income subject to
apportionment.
(d) A water's edge election may be made by a taxpayer and
is effective only if every affiliated corporation subject to
the taxes imposed under this Act consents to the election.
Consent by the common parent of an affiliated group constitutes
consent of all members of the group. An affiliated corporation
that becomes subject to taxes under this Act after the water's
edge election is considered to have consented to the election.
The election must disclose the identity of the taxpayer and the
identity of any affiliated corporation, including an

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affiliated corporation incorporated in a tax haven set forth in
paragraph (6) of subsection (b), in which the taxpayer owns
directly or indirectly more than 50% of the voting stock of the
affiliated corporation.
(e) Each water's edge election must be for a 3-year
renewable period. A water's edge election may be changed by a
taxpayer before the end of each 3-year period only with the
permission of the Department. In granting a change of election,
the Department shall impose reasonable conditions that are
necessary to prevent the avoidance of tax or clearly reflect
income for the election period prior to the change.
(f) For the purposes of this Section, dividends received
from corporations incorporated outside the United States, to
the extent taxable, are considered income subject to
apportionment. The after-tax net income of United States
corporations excluded from eligibility as affiliated
corporations under this Section and possession corporations
described in sections 931 through 934 and 936 of the Internal
Revenue Code are considered dividends received from
corporations incorporated outside the United States. Eighty
percent of all dividends apportionable under this Section must
be excluded from income subject to apportionment. "Deemed"
distributions, as set forth in section 78 of the Internal
Revenue Code, and corresponding amounts with respect to
dividends considered received under this subsection must be
excluded from the income of the water's-edge combined group.

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The dividends apportionable under this subsection are in lieu
of any expenses attributable to dividend income. A dividend
from a corporation required to be combined in the water's edge
combined group must be eliminated from the calculation of
apportionable income.
(35 ILCS 5/901) (from Ch. 120, par. 9-901)
Sec. 901. Collection authority.
(a) In general.
The Department shall collect the taxes imposed by this Act.
The Department shall collect certified past due child support
amounts under Section 2505-650 of the Department of Revenue Law
(20 ILCS 2505/2505-650). Except as provided in subsections (c),
(e), (f), (g), and (h) of this Section, money collected
pursuant to subsections (a) and (b) of Section 201 of this Act
shall be paid into the General Revenue Fund in the State
treasury; money collected pursuant to subsections (c) and (d)
of Section 201 of this Act shall be paid into the Personal
Property Tax Replacement Fund, a special fund in the State
Treasury; and money collected under Section 2505-650 of the
Department of Revenue Law (20 ILCS 2505/2505-650) shall be paid
into the Child Support Enforcement Trust Fund, a special fund
outside the State Treasury, or to the State Disbursement Unit
established under Section 10-26 of the Illinois Public Aid
Code, as directed by the Department of Healthcare and Family
Services.

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(b) Local Government Distributive Fund.
Beginning August 1, 1969, and continuing through June 30,
1994, the Treasurer shall transfer each month from the General
Revenue Fund to a special fund in the State treasury, to be
known as the "Local Government Distributive Fund", an amount
equal to 1/12 of the net revenue realized from the tax imposed
by subsections (a) and (b) of Section 201 of this Act during
the preceding month. Beginning July 1, 1994, and continuing
through June 30, 1995, the Treasurer shall transfer each month
from the General Revenue Fund to the Local Government
Distributive Fund an amount equal to 1/11 of the net revenue
realized from the tax imposed by subsections (a) and (b) of
Section 201 of this Act during the preceding month. Beginning
July 1, 1995 and continuing through January 31, 2011, the
Treasurer shall transfer each month from the General Revenue
Fund to the Local Government Distributive Fund an amount equal
to the net of (i) 1/10 of the net revenue realized from the tax
imposed by subsections (a) and (b) of Section 201 of the
Illinois Income Tax Act during the preceding month (ii) minus,
beginning July 1, 2003 and ending June 30, 2004, $6,666,666,
and beginning July 1, 2004, zero. Beginning February 1, 2011,
and continuing through January 31, 2015, the Treasurer shall
transfer each month from the General Revenue Fund to the Local
Government Distributive Fund an amount equal to the sum of (i)
6% (10% of the ratio of the 3% individual income tax rate prior
to 2011 to the 5% individual income tax rate after 2010) of the

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net revenue realized from the tax imposed by subsections (a)
and (b) of Section 201 of this Act upon individuals, trusts,
and estates during the preceding month and (ii) 6.86% (10% of
the ratio of the 4.8% corporate income tax rate prior to 2011
to the 7% corporate income tax rate after 2010) of the net
revenue realized from the tax imposed by subsections (a) and
(b) of Section 201 of this Act upon corporations during the
preceding month. Beginning February 1, 2015 and continuing
through January 31, 2016 January 31, 2025, the Treasurer shall
transfer each month from the General Revenue Fund to the Local
Government Distributive Fund an amount equal to the sum of (i)
8% (10% of the ratio of the 3% individual income tax rate prior
to 2011 to the 3.75% individual income tax rate after 2014) of
the net revenue realized from the tax imposed by subsections
(a) and (b) of Section 201 of this Act upon individuals,
trusts, and estates during the preceding month and (ii) 9.14%
(10% of the ratio of the 4.8% corporate income tax rate prior
to 2011 to the 5.25% corporate income tax rate after 2014) of
the net revenue realized from the tax imposed by subsections
(a) and (b) of Section 201 of this Act upon corporations during
the preceding month. Beginning February 1, 2016 February 1,
2025, the Treasurer shall transfer each month from the General
Revenue Fund to the Local Government Distributive Fund an
amount equal to the sum of (i) 8% (10% of the ratio of the 3%
individual income tax rate prior to 2011 to the 3.75%
individual income tax rate after 2014) 9.23% (10% of the ratio

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of the 3% individual income tax rate prior to 2011 to the 3.25%
individual income tax rate after 2024) of the net revenue
realized from the tax imposed by subsections (a) and (b) of
Section 201 of this Act upon individuals, trusts, and estates
during the preceding month and (ii) 10% of the net revenue
realized from the tax imposed by subsections (a) and (b) of
Section 201 of this Act upon corporations during the preceding
month. Net revenue realized for a month shall be defined as the
revenue from the tax imposed by subsections (a) and (b) of
Section 201 of this Act which is deposited in the General
Revenue Fund, the Education Assistance Fund, the Income Tax
Surcharge Local Government Distributive Fund, the Fund for the
Advancement of Education, and the Commitment to Human Services
Fund during the month minus the amount paid out of the General
Revenue Fund in State warrants during that same month as
refunds to taxpayers for overpayment of liability under the tax
imposed by subsections (a) and (b) of Section 201 of this Act.
Beginning on August 26, 2014 (the effective date of Public
Act 98-1052), the Comptroller shall perform the transfers
required by this subsection (b) no later than 60 days after he
or she receives the certification from the Treasurer as
provided in Section 1 of the State Revenue Sharing Act.
(c) Deposits Into Income Tax Refund Fund.
(1) Beginning on January 1, 1989 and thereafter, the
Department shall deposit a percentage of the amounts
collected pursuant to subsections (a) and (b)(1), (2), and

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(3), of Section 201 of this Act into a fund in the State
treasury known as the Income Tax Refund Fund. The
Department shall deposit 6% of such amounts during the
period beginning January 1, 1989 and ending on June 30,
1989. Beginning with State fiscal year 1990 and for each
fiscal year thereafter, the percentage deposited into the
Income Tax Refund Fund during a fiscal year shall be the
Annual Percentage. For fiscal years 1999 through 2001, the
Annual Percentage shall be 7.1%. For fiscal year 2003, the
Annual Percentage shall be 8%. For fiscal year 2004, the
Annual Percentage shall be 11.7%. Upon the effective date
of this amendatory Act of the 93rd General Assembly, the
Annual Percentage shall be 10% for fiscal year 2005. For
fiscal year 2006, the Annual Percentage shall be 9.75%. For
fiscal year 2007, the Annual Percentage shall be 9.75%. For
fiscal year 2008, the Annual Percentage shall be 7.75%. For
fiscal year 2009, the Annual Percentage shall be 9.75%. For
fiscal year 2010, the Annual Percentage shall be 9.75%. For
fiscal year 2011, the Annual Percentage shall be 8.75%. For
fiscal year 2012, the Annual Percentage shall be 8.75%. For
fiscal year 2013, the Annual Percentage shall be 9.75%. For
fiscal year 2014, the Annual Percentage shall be 9.5%. For
fiscal year 2015, the Annual Percentage shall be 10%. For
all other fiscal years, the Annual Percentage shall be
calculated as a fraction, the numerator of which shall be
the amount of refunds approved for payment by the

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Department during the preceding fiscal year as a result of
overpayment of tax liability under subsections (a) and
(b)(1), (2), and (3) of Section 201 of this Act plus the
amount of such refunds remaining approved but unpaid at the
end of the preceding fiscal year, minus the amounts
transferred into the Income Tax Refund Fund from the
Tobacco Settlement Recovery Fund, and the denominator of
which shall be the amounts which will be collected pursuant
to subsections (a) and (b)(1), (2), and (3) of Section 201
of this Act during the preceding fiscal year; except that
in State fiscal year 2002, the Annual Percentage shall in
no event exceed 7.6%. The Director of Revenue shall certify
the Annual Percentage to the Comptroller on the last
business day of the fiscal year immediately preceding the
fiscal year for which it is to be effective.
(2) Beginning on January 1, 1989 and thereafter, the
Department shall deposit a percentage of the amounts
collected pursuant to subsections (a) and (b)(6), (7), and
(8), (c) and (d) of Section 201 of this Act into a fund in
the State treasury known as the Income Tax Refund Fund. The
Department shall deposit 18% of such amounts during the
period beginning January 1, 1989 and ending on June 30,
1989. Beginning with State fiscal year 1990 and for each
fiscal year thereafter, the percentage deposited into the
Income Tax Refund Fund during a fiscal year shall be the
Annual Percentage. For fiscal years 1999, 2000, and 2001,

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the Annual Percentage shall be 19%. For fiscal year 2003,
the Annual Percentage shall be 27%. For fiscal year 2004,
the Annual Percentage shall be 32%. Upon the effective date
of this amendatory Act of the 93rd General Assembly, the
Annual Percentage shall be 24% for fiscal year 2005. For
fiscal year 2006, the Annual Percentage shall be 20%. For
fiscal year 2007, the Annual Percentage shall be 17.5%. For
fiscal year 2008, the Annual Percentage shall be 15.5%. For
fiscal year 2009, the Annual Percentage shall be 17.5%. For
fiscal year 2010, the Annual Percentage shall be 17.5%. For
fiscal year 2011, the Annual Percentage shall be 17.5%. For
fiscal year 2012, the Annual Percentage shall be 17.5%. For
fiscal year 2013, the Annual Percentage shall be 14%. For
fiscal year 2014, the Annual Percentage shall be 13.4%. For
fiscal year 2015, the Annual Percentage shall be 14%. For
all other fiscal years, the Annual Percentage shall be
calculated as a fraction, the numerator of which shall be
the amount of refunds approved for payment by the
Department during the preceding fiscal year as a result of
overpayment of tax liability under subsections (a) and
(b)(6), (7), and (8), (c) and (d) of Section 201 of this
Act plus the amount of such refunds remaining approved but
unpaid at the end of the preceding fiscal year, and the
denominator of which shall be the amounts which will be
collected pursuant to subsections (a) and (b)(6), (7), and
(8), (c) and (d) of Section 201 of this Act during the

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preceding fiscal year; except that in State fiscal year
2002, the Annual Percentage shall in no event exceed 23%.
The Director of Revenue shall certify the Annual Percentage
to the Comptroller on the last business day of the fiscal
year immediately preceding the fiscal year for which it is
to be effective.
(3) The Comptroller shall order transferred and the
Treasurer shall transfer from the Tobacco Settlement
Recovery Fund to the Income Tax Refund Fund (i) $35,000,000
in January, 2001, (ii) $35,000,000 in January, 2002, and
(iii) $35,000,000 in January, 2003.
(d) Expenditures from Income Tax Refund Fund.
(1) Beginning January 1, 1989, money in the Income Tax
Refund Fund shall be expended exclusively for the purpose
of paying refunds resulting from overpayment of tax
liability under Section 201 of this Act, for paying rebates
under Section 208.1 in the event that the amounts in the
Homeowners' Tax Relief Fund are insufficient for that
purpose, and for making transfers pursuant to this
subsection (d).
(2) The Director shall order payment of refunds
resulting from overpayment of tax liability under Section
201 of this Act from the Income Tax Refund Fund only to the
extent that amounts collected pursuant to Section 201 of
this Act and transfers pursuant to this subsection (d) and
item (3) of subsection (c) have been deposited and retained

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in the Fund.
(3) As soon as possible after the end of each fiscal
year, the Director shall order transferred and the State
Treasurer and State Comptroller shall transfer from the
Income Tax Refund Fund to the Personal Property Tax
Replacement Fund an amount, certified by the Director to
the Comptroller, equal to the excess of the amount
collected pursuant to subsections (c) and (d) of Section
201 of this Act deposited into the Income Tax Refund Fund
during the fiscal year over the amount of refunds resulting
from overpayment of tax liability under subsections (c) and
(d) of Section 201 of this Act paid from the Income Tax
Refund Fund during the fiscal year.
(4) As soon as possible after the end of each fiscal
year, the Director shall order transferred and the State
Treasurer and State Comptroller shall transfer from the
Personal Property Tax Replacement Fund to the Income Tax
Refund Fund an amount, certified by the Director to the
Comptroller, equal to the excess of the amount of refunds
resulting from overpayment of tax liability under
subsections (c) and (d) of Section 201 of this Act paid
from the Income Tax Refund Fund during the fiscal year over
the amount collected pursuant to subsections (c) and (d) of
Section 201 of this Act deposited into the Income Tax
Refund Fund during the fiscal year.
(4.5) As soon as possible after the end of fiscal year

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1999 and of each fiscal year thereafter, the Director shall
order transferred and the State Treasurer and State
Comptroller shall transfer from the Income Tax Refund Fund
to the General Revenue Fund any surplus remaining in the
Income Tax Refund Fund as of the end of such fiscal year;
excluding for fiscal years 2000, 2001, and 2002 amounts
attributable to transfers under item (3) of subsection (c)
less refunds resulting from the earned income tax credit.
(5) This Act shall constitute an irrevocable and
continuing appropriation from the Income Tax Refund Fund
for the purpose of paying refunds upon the order of the
Director in accordance with the provisions of this Section.
(e) Deposits into the Education Assistance Fund and the
Income Tax Surcharge Local Government Distributive Fund.
On July 1, 1991, and thereafter, of the amounts collected
pursuant to subsections (a) and (b) of Section 201 of this Act,
minus deposits into the Income Tax Refund Fund, the Department
shall deposit 7.3% into the Education Assistance Fund in the
State Treasury. Beginning July 1, 1991, and continuing through
January 31, 1993, of the amounts collected pursuant to
subsections (a) and (b) of Section 201 of the Illinois Income
Tax Act, minus deposits into the Income Tax Refund Fund, the
Department shall deposit 3.0% into the Income Tax Surcharge
Local Government Distributive Fund in the State Treasury.
Beginning February 1, 1993 and continuing through June 30,
1993, of the amounts collected pursuant to subsections (a) and

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(b) of Section 201 of the Illinois Income Tax Act, minus
deposits into the Income Tax Refund Fund, the Department shall
deposit 4.4% into the Income Tax Surcharge Local Government
Distributive Fund in the State Treasury. Beginning July 1,
1993, and continuing through June 30, 1994, of the amounts
collected under subsections (a) and (b) of Section 201 of this
Act, minus deposits into the Income Tax Refund Fund, the
Department shall deposit 1.475% into the Income Tax Surcharge
Local Government Distributive Fund in the State Treasury.
(f) Deposits into the Fund for the Advancement of
Education. Beginning February 1, 2015, the Department shall
deposit the following portions of the revenue realized from the
tax imposed upon individuals, trusts, and estates by
subsections (a) and (b) of Section 201 of this Act during the
preceding month, minus deposits into the Income Tax Refund
Fund, into the Fund for the Advancement of Education:
(1) beginning February 1, 2015, and prior to February
1, 2025, 1/30; and
(2) beginning February 1, 2025, 1/26.
If the rate of tax imposed by subsection (a) and (b) of
Section 201 is reduced pursuant to Section 201.5 of this Act,
the Department shall not make the deposits required by this
subsection (f) on or after the effective date of the reduction.
(g) Deposits into the Commitment to Human Services Fund.
Beginning February 1, 2015, the Department shall deposit the
following portions of the revenue realized from the tax imposed

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upon individuals, trusts, and estates by subsections (a) and
(b) of Section 201 of this Act during the preceding month,
minus deposits into the Income Tax Refund Fund, into the
Commitment to Human Services Fund:
(1) beginning February 1, 2015, and prior to February
1, 2025, 1/30; and
(2) beginning February 1, 2025, 1/26.
If the rate of tax imposed by subsection (a) and (b) of
Section 201 is reduced pursuant to Section 201.5 of this Act,
the Department shall not make the deposits required by this
subsection (g) on or after the effective date of the reduction.
(h) Deposits into the Tax Compliance and Administration
Fund. Beginning on the first day of the first calendar month to
occur on or after August 26, 2014 (the effective date of Public
Act 98-1098), each month the Department shall pay into the Tax
Compliance and Administration Fund, to be used, subject to
appropriation, to fund additional auditors and compliance
personnel at the Department, an amount equal to 1/12 of 5% of
the cash receipts collected during the preceding fiscal year by
the Audit Bureau of the Department from the tax imposed by
subsections (a), (b), (c), and (d) of Section 201 of this Act,
net of deposits into the Income Tax Refund Fund made from those
cash receipts.
(Source: P.A. 98-24, eff. 6-19-13; 98-674, eff. 6-30-14;
98-1052, eff. 8-26-14; 98-1098, eff. 8-26-14; 99-78, eff.
7-20-15.)

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(35 ILCS 5/1501) (from Ch. 120, par. 15-1501)
Sec. 1501. Definitions.
(a) In general. When used in this Act, where not otherwise
distinctly expressed or manifestly incompatible with the
intent thereof:
(1) Business income. The term "business income" means
all income that may be treated as apportionable business
income under the Constitution of the United States.
Business income is net of the deductions allocable thereto.
Such term does not include compensation or the deductions
allocable thereto. For each taxable year beginning on or
after January 1, 2003, a taxpayer may elect to treat all
income other than compensation as business income. This
election shall be made in accordance with rules adopted by
the Department and, once made, shall be irrevocable.
(1.5) Captive real estate investment trust:
(A) The term "captive real estate investment
trust" means a corporation, trust, or association:
(i) that is considered a real estate
investment trust for the taxable year under
Section 856 of the Internal Revenue Code;
(ii) the certificates of beneficial interest
or shares of which are not regularly traded on an
established securities market; and
(iii) of which more than 50% of the voting

09900HB0293ham001 - 204 - LRB099 04265 HLH 51448 a
power or value of the beneficial interest or
shares, at any time during the last half of the
taxable year, is owned or controlled, directly,
indirectly, or constructively, by a single
corporation.
(B) The term "captive real estate investment
trust" does not include:
(i) a real estate investment trust of which
more than 50% of the voting power or value of the
beneficial interest or shares is owned or
controlled, directly, indirectly, or
constructively, by:
(a) a real estate investment trust, other
than a captive real estate investment trust;
(b) a person who is exempt from taxation
under Section 501 of the Internal Revenue Code,
and who is not required to treat income
received from the real estate investment trust
as unrelated business taxable income under
Section 512 of the Internal Revenue Code;
(c) a listed Australian property trust, if
no more than 50% of the voting power or value
of the beneficial interest or shares of that
trust, at any time during the last half of the
taxable year, is owned or controlled, directly
or indirectly, by a single person;

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(d) an entity organized as a trust,
provided a listed Australian property trust
described in subparagraph (c) owns or
controls, directly or indirectly, or
constructively, 75% or more of the voting power
or value of the beneficial interests or shares
of such entity; or
(e) an entity that is organized outside of
the laws of the United States and that
satisfies all of the following criteria:
(1) at least 75% of the entity's total
asset value at the close of its taxable
year is represented by real estate assets
(as defined in Section 856(c)(5)(B) of the
Internal Revenue Code, thereby including
shares or certificates of beneficial
interest in any real estate investment
trust), cash and cash equivalents, and
U.S. Government securities;
(2) the entity is not subject to tax on
amounts that are distributed to its
beneficial owners or is exempt from
entity-level taxation;
(3) the entity distributes at least
85% of its taxable income (as computed in
the jurisdiction in which it is organized)

09900HB0293ham001 - 206 - LRB099 04265 HLH 51448 a
to the holders of its shares or
certificates of beneficial interest on an
annual basis;
(4) either (i) the shares or
beneficial interests of the entity are
regularly traded on an established
securities market or (ii) not more than 10%
of the voting power or value in the entity
is held, directly, indirectly, or
constructively, by a single entity or
individual; and
(5) the entity is organized in a
country that has entered into a tax treaty
with the United States; or
(ii) during its first taxable year for which it
elects to be treated as a real estate investment
trust under Section 856(c)(1) of the Internal
Revenue Code, a real estate investment trust the
certificates of beneficial interest or shares of
which are not regularly traded on an established
securities market, but only if the certificates of
beneficial interest or shares of the real estate
investment trust are regularly traded on an
established securities market prior to the earlier
of the due date (including extensions) for filing
its return under this Act for that first taxable

09900HB0293ham001 - 207 - LRB099 04265 HLH 51448 a
year or the date it actually files that return.
(C) For the purposes of this subsection (1.5), the
constructive ownership rules prescribed under Section
318(a) of the Internal Revenue Code, as modified by
Section 856(d)(5) of the Internal Revenue Code, apply
in determining the ownership of stock, assets, or net
profits of any person.
(D) For the purposes of this item (1.5), for
taxable years ending on or after August 16, 2007, the
voting power or value of the beneficial interest or
shares of a real estate investment trust does not
include any voting power or value of beneficial
interest or shares in a real estate investment trust
held directly or indirectly in a segregated asset
account by a life insurance company (as described in
Section 817 of the Internal Revenue Code) to the extent
such voting power or value is for the benefit of
entities or persons who are either immune from taxation
or exempt from taxation under subtitle A of the
Internal Revenue Code.
(2) Commercial domicile. The term "commercial
domicile" means the principal place from which the trade or
business of the taxpayer is directed or managed.
(3) Compensation. The term "compensation" means wages,
salaries, commissions and any other form of remuneration
paid to employees for personal services.

09900HB0293ham001 - 208 - LRB099 04265 HLH 51448 a
(4) Corporation. The term "corporation" includes
associations, joint-stock companies, insurance companies
and cooperatives. Any entity, including a limited
liability company formed under the Illinois Limited
Liability Company Act, shall be treated as a corporation if
it is so classified for federal income tax purposes.
(5) Department. The term "Department" means the
Department of Revenue of this State.
(6) Director. The term "Director" means the Director of
Revenue of this State.
(7) Fiduciary. The term "fiduciary" means a guardian,
trustee, executor, administrator, receiver, or any person
acting in any fiduciary capacity for any person.
(8) Financial organization.
(A) The term "financial organization" means any
bank, bank holding company, trust company, savings
bank, industrial bank, land bank, safe deposit
company, private banker, savings and loan association,
building and loan association, credit union, currency
exchange, cooperative bank, small loan company, sales
finance company, investment company, or any person
which is owned by a bank or bank holding company. For
the purpose of this Section a "person" will include
only those persons which a bank holding company may
acquire and hold an interest in, directly or
indirectly, under the provisions of the Bank Holding

09900HB0293ham001 - 209 - LRB099 04265 HLH 51448 a
Company Act of 1956 (12 U.S.C. 1841, et seq.), except
where interests in any person must be disposed of
within certain required time limits under the Bank
Holding Company Act of 1956.
(B) For purposes of subparagraph (A) of this
paragraph, the term "bank" includes (i) any entity that
is regulated by the Comptroller of the Currency under
the National Bank Act, or by the Federal Reserve Board,
or by the Federal Deposit Insurance Corporation and
(ii) any federally or State chartered bank operating as
a credit card bank.
(C) For purposes of subparagraph (A) of this
paragraph, the term "sales finance company" has the
meaning provided in the following item (i) or (ii):
(i) A person primarily engaged in one or more
of the following businesses: the business of
purchasing customer receivables, the business of
making loans upon the security of customer
receivables, the business of making loans for the
express purpose of funding purchases of tangible
personal property or services by the borrower, or
the business of finance leasing. For purposes of
this item (i), "customer receivable" means:
(a) a retail installment contract or
retail charge agreement within the meaning of
the Sales Finance Agency Act, the Retail

09900HB0293ham001 - 210 - LRB099 04265 HLH 51448 a
Installment Sales Act, or the Motor Vehicle
Retail Installment Sales Act;
(b) an installment, charge, credit, or
similar contract or agreement arising from the
sale of tangible personal property or services
in a transaction involving a deferred payment
price payable in one or more installments
subsequent to the sale; or
(c) the outstanding balance of a contract
or agreement described in provisions (a) or (b)
of this item (i).
A customer receivable need not provide for
payment of interest on deferred payments. A sales
finance company may purchase a customer receivable
from, or make a loan secured by a customer
receivable to, the seller in the original
transaction or to a person who purchased the
customer receivable directly or indirectly from
that seller.
(ii) A corporation meeting each of the
following criteria:
(a) the corporation must be a member of an
"affiliated group" within the meaning of
Section 1504(a) of the Internal Revenue Code,
determined without regard to Section 1504(b)
of the Internal Revenue Code;

09900HB0293ham001 - 211 - LRB099 04265 HLH 51448 a
(b) more than 50% of the gross income of
the corporation for the taxable year must be
interest income derived from qualifying loans.
A "qualifying loan" is a loan made to a member
of the corporation's affiliated group that
originates customer receivables (within the
meaning of item (i)) or to whom customer
receivables originated by a member of the
affiliated group have been transferred, to the
extent the average outstanding balance of
loans from that corporation to members of its
affiliated group during the taxable year do not
exceed the limitation amount for that
corporation. The "limitation amount" for a
corporation is the average outstanding
balances during the taxable year of customer
receivables (within the meaning of item (i))
originated by all members of the affiliated
group. If the average outstanding balances of
the loans made by a corporation to members of
its affiliated group exceed the limitation
amount, the interest income of that
corporation from qualifying loans shall be
equal to its interest income from loans to
members of its affiliated groups times a
fraction equal to the limitation amount

09900HB0293ham001 - 212 - LRB099 04265 HLH 51448 a
divided by the average outstanding balances of
the loans made by that corporation to members
of its affiliated group;
(c) the total of all shareholder's equity
(including, without limitation, paid-in
capital on common and preferred stock and
retained earnings) of the corporation plus the
total of all of its loans, advances, and other
obligations payable or owed to members of its
affiliated group may not exceed 20% of the
total assets of the corporation at any time
during the tax year; and
(d) more than 50% of all interest-bearing
obligations of the affiliated group payable to
persons outside the group determined in
accordance with generally accepted accounting
principles must be obligations of the
corporation.
This amendatory Act of the 91st General Assembly is
declaratory of existing law.
(D) Subparagraphs (B) and (C) of this paragraph are
declaratory of existing law and apply retroactively,
for all tax years beginning on or before December 31,
1996, to all original returns, to all amended returns
filed no later than 30 days after the effective date of
this amendatory Act of 1996, and to all notices issued

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on or before the effective date of this amendatory Act
of 1996 under subsection (a) of Section 903, subsection
(a) of Section 904, subsection (e) of Section 909, or
Section 912. A taxpayer that is a "financial
organization" that engages in any transaction with an
affiliate shall be a "financial organization" for all
purposes of this Act.
(E) For all tax years beginning on or before
December 31, 1996, a taxpayer that falls within the
definition of a "financial organization" under
subparagraphs (B) or (C) of this paragraph, but who
does not fall within the definition of a "financial
organization" under the Proposed Regulations issued by
the Department of Revenue on July 19, 1996, may
irrevocably elect to apply the Proposed Regulations
for all of those years as though the Proposed
Regulations had been lawfully promulgated, adopted,
and in effect for all of those years. For purposes of
applying subparagraphs (B) or (C) of this paragraph to
all of those years, the election allowed by this
subparagraph applies only to the taxpayer making the
election and to those members of the taxpayer's unitary
business group who are ordinarily required to
apportion business income under the same subsection of
Section 304 of this Act as the taxpayer making the
election. No election allowed by this subparagraph

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shall be made under a claim filed under subsection (d)
of Section 909 more than 30 days after the effective
date of this amendatory Act of 1996.
(F) Finance Leases. For purposes of this
subsection, a finance lease shall be treated as a loan
or other extension of credit, rather than as a lease,
regardless of how the transaction is characterized for
any other purpose, including the purposes of any
regulatory agency to which the lessor is subject. A
finance lease is any transaction in the form of a lease
in which the lessee is treated as the owner of the
leased asset entitled to any deduction for
depreciation allowed under Section 167 of the Internal
Revenue Code.
(9) Fiscal year. The term "fiscal year" means an
accounting period of 12 months ending on the last day of
any month other than December.
(9.5) Fixed place of business. The term "fixed place of
business" has the same meaning as that term is given in
Section 864 of the Internal Revenue Code and the related
Treasury regulations.
(10) Includes and including. The terms "includes" and
"including" when used in a definition contained in this Act
shall not be deemed to exclude other things otherwise
within the meaning of the term defined.
(11) Internal Revenue Code. The term "Internal Revenue

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Code" means the United States Internal Revenue Code of 1954
or any successor law or laws relating to federal income
taxes in effect for the taxable year.
(11.5) Investment partnership.
(A) The term "investment partnership" means any
entity that is treated as a partnership for federal
income tax purposes that meets the following
requirements:
(i) no less than 90% of the partnership's cost
of its total assets consists of qualifying
investment securities, deposits at banks or other
financial institutions, and office space and
equipment reasonably necessary to carry on its
activities as an investment partnership;
(ii) no less than 90% of its gross income
consists of interest, dividends, and gains from
the sale or exchange of qualifying investment
securities; and
(iii) the partnership is not a dealer in
qualifying investment securities.
(B) For purposes of this paragraph (11.5), the term
"qualifying investment securities" includes all of the
following:
(i) common stock, including preferred or debt
securities convertible into common stock, and
preferred stock;

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(ii) bonds, debentures, and other debt
securities;
(iii) foreign and domestic currency deposits
secured by federal, state, or local governmental
agencies;
(iv) mortgage or asset-backed securities
secured by federal, state, or local governmental
agencies;
(v) repurchase agreements and loan
participations;
(vi) foreign currency exchange contracts and
forward and futures contracts on foreign
currencies;
(vii) stock and bond index securities and
futures contracts and other similar financial
securities and futures contracts on those
securities;
(viii) options for the purchase or sale of any
of the securities, currencies, contracts, or
financial instruments described in items (i) to
(vii), inclusive;
(ix) regulated futures contracts;
(x) commodities (not described in Section
1221(a)(1) of the Internal Revenue Code) or
futures, forwards, and options with respect to
such commodities, provided, however, that any item

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of a physical commodity to which title is actually
acquired in the partnership's capacity as a dealer
in such commodity shall not be a qualifying
investment security;
(xi) derivatives; and
(xii) a partnership interest in another
partnership that is an investment partnership.
(12) Mathematical error. The term "mathematical error"
includes the following types of errors, omissions, or
defects in a return filed by a taxpayer which prevents
acceptance of the return as filed for processing:
(A) arithmetic errors or incorrect computations on
the return or supporting schedules;
(B) entries on the wrong lines;
(C) omission of required supporting forms or
schedules or the omission of the information in whole
or in part called for thereon; and
(D) an attempt to claim, exclude, deduct, or
improperly report, in a manner directly contrary to the
provisions of the Act and regulations thereunder any
item of income, exemption, deduction, or credit.
(13) Nonbusiness income. The term "nonbusiness income"
means all income other than business income or
compensation.
(14) Nonresident. The term "nonresident" means a
person who is not a resident.

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(15) Paid, incurred and accrued. The terms "paid",
"incurred" and "accrued" shall be construed according to
the method of accounting upon the basis of which the
person's base income is computed under this Act.
(16) Partnership and partner. The term "partnership"
includes a syndicate, group, pool, joint venture or other
unincorporated organization, through or by means of which
any business, financial operation, or venture is carried
on, and which is not, within the meaning of this Act, a
trust or estate or a corporation; and the term "partner"
includes a member in such syndicate, group, pool, joint
venture or organization.
The term "partnership" includes any entity, including
a limited liability company formed under the Illinois
Limited Liability Company Act, classified as a partnership
for federal income tax purposes.
The term "partnership" does not include a syndicate,
group, pool, joint venture, or other unincorporated
organization established for the sole purpose of playing
the Illinois State Lottery.
(17) Part-year resident. The term "part-year resident"
means an individual who became a resident during the
taxable year or ceased to be a resident during the taxable
year. Under Section 1501(a)(20)(A)(i) residence commences
with presence in this State for other than a temporary or
transitory purpose and ceases with absence from this State

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for other than a temporary or transitory purpose. Under
Section 1501(a)(20)(A)(ii) residence commences with the
establishment of domicile in this State and ceases with the
establishment of domicile in another State.
(18) Person. The term "person" shall be construed to
mean and include an individual, a trust, estate,
partnership, association, firm, company, corporation,
limited liability company, or fiduciary. For purposes of
Section 1301 and 1302 of this Act, a "person" means (i) an
individual, (ii) a corporation, (iii) an officer, agent, or
employee of a corporation, (iv) a member, agent or employee
of a partnership, or (v) a member, manager, employee,
officer, director, or agent of a limited liability company
who in such capacity commits an offense specified in
Section 1301 and 1302.
(18A) Records. The term "records" includes all data
maintained by the taxpayer, whether on paper, microfilm,
microfiche, or any type of machine-sensible data
compilation.
(19) Regulations. The term "regulations" includes
rules promulgated and forms prescribed by the Department.
(20) Resident. The term "resident" means:
(A) an individual (i) who is in this State for
other than a temporary or transitory purpose during the
taxable year; or (ii) who is domiciled in this State
but is absent from the State for a temporary or

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transitory purpose during the taxable year;
(B) The estate of a decedent who at his or her
death was domiciled in this State;
(C) A trust created by a will of a decedent who at
his death was domiciled in this State; and
(D) An irrevocable trust, the grantor of which was
domiciled in this State at the time such trust became
irrevocable. For purpose of this subparagraph, a trust
shall be considered irrevocable to the extent that the
grantor is not treated as the owner thereof under
Sections 671 through 678 of the Internal Revenue Code.
(21) Sales. The term "sales" means all gross receipts
of the taxpayer not allocated under Sections 301, 302 and
303.
(22) State. The term "state" when applied to a
jurisdiction other than this State means any state of the
United States, the District of Columbia, the Commonwealth
of Puerto Rico, any Territory or Possession of the United
States, and any foreign country, or any political
subdivision of any of the foregoing. For purposes of the
foreign tax credit under Section 601, the term "state"
means any state of the United States, the District of
Columbia, the Commonwealth of Puerto Rico, and any
territory or possession of the United States, or any
political subdivision of any of the foregoing, effective
for tax years ending on or after December 31, 1989.

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(23) Taxable year. The term "taxable year" means the
calendar year, or the fiscal year ending during such
calendar year, upon the basis of which the base income is
computed under this Act. "Taxable year" means, in the case
of a return made for a fractional part of a year under the
provisions of this Act, the period for which such return is
made.
(24) Taxpayer. The term "taxpayer" means any person
subject to the tax imposed by this Act.
(25) International banking facility. The term
international banking facility shall have the same meaning
as is set forth in the Illinois Banking Act or as is set
forth in the laws of the United States or regulations of
the Board of Governors of the Federal Reserve System.
(26) Income Tax Return Preparer.
(A) The term "income tax return preparer" means any
person who prepares for compensation, or who employs
one or more persons to prepare for compensation, any
return of tax imposed by this Act or any claim for
refund of tax imposed by this Act. The preparation of a
substantial portion of a return or claim for refund
shall be treated as the preparation of that return or
claim for refund.
(B) A person is not an income tax return preparer
if all he or she does is
(i) furnish typing, reproducing, or other

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mechanical assistance;
(ii) prepare returns or claims for refunds for
the employer by whom he or she is regularly and
continuously employed;
(iii) prepare as a fiduciary returns or claims
for refunds for any person; or
(iv) prepare claims for refunds for a taxpayer
in response to any notice of deficiency issued to
that taxpayer or in response to any waiver of
restriction after the commencement of an audit of
that taxpayer or of another taxpayer if a
determination in the audit of the other taxpayer
directly or indirectly affects the tax liability
of the taxpayer whose claims he or she is
preparing.
(27) Unitary business group.
(A) The term "unitary business group" means a group
of persons related through common ownership whose
business activities are integrated with, dependent
upon and contribute to each other. The group will not
include those members whose business activity outside
the United States is 80% or more of any such member's
total business activity; for purposes of this
paragraph and clause (a)(3)(B)(ii) of Section 304,
business activity within the United States shall be
measured by means of the factors ordinarily applicable

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under subsections (a), (b), (c), (d), or (h) of Section
304 except that, in the case of members ordinarily
required to apportion business income by means of the 3
factor formula of property, payroll and sales
specified in subsection (a) of Section 304, including
the formula as weighted in subsection (h) of Section
304, such members shall not use the sales factor in the
computation and the results of the property and payroll
factor computations of subsection (a) of Section 304
shall be divided by 2 (by one if either the property or
payroll factor has a denominator of zero). The
computation required by the preceding sentence shall,
in each case, involve the division of the member's
property, payroll, or revenue miles in the United
States, insurance premiums on property or risk in the
United States, or financial organization business
income from sources within the United States, as the
case may be, by the respective worldwide figures for
such items. Common ownership in the case of
corporations is the direct or indirect control or
ownership of more than 50% of the outstanding voting
stock of the persons carrying on unitary business
activity. Unitary business activity can ordinarily be
illustrated where the activities of the members are:
(1) in the same general line (such as manufacturing,
wholesaling, retailing of tangible personal property,

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insurance, transportation or finance); or (2) are
steps in a vertically structured enterprise or process
(such as the steps involved in the production of
natural resources, which might include exploration,
mining, refining, and marketing); and, in either
instance, the members are functionally integrated
through the exercise of strong centralized management
(where, for example, authority over such matters as
purchasing, financing, tax compliance, product line,
personnel, marketing and capital investment is not
left to each member).
(B) In no event, for taxable years ending prior to
December 31, 2016, shall any unitary business group
include members which are ordinarily required to
apportion business income under different subsections
of Section 304 except that for tax years ending on or
after December 31, 1987 this prohibition shall not
apply to a holding company that would otherwise be a
member of a unitary business group with taxpayers that
apportion business income under any of subsections
(b), (c), (c-1), or (d) of Section 304. If a unitary
business group would, but for the preceding sentence,
include members that are ordinarily required to
apportion business income under different subsections
of Section 304, then for each subsection of Section 304
for which there are two or more members, there shall be

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a separate unitary business group composed of such
members. For purposes of the preceding two sentences, a
member is "ordinarily required to apportion business
income" under a particular subsection of Section 304 if
it would be required to use the apportionment method
prescribed by such subsection except for the fact that
it derives business income solely from Illinois. As
used in this paragraph, for taxable years ending before
December 31, 2016, the phrase "United States" means
only the 50 states and the District of Columbia, but
does not include any territory or possession of the
United States or any area over which the United States
has asserted jurisdiction or claimed exclusive rights
with respect to the exploration for or exploitation of
natural resources. For taxable years ending on or after
December 31, 2016, the phrase "United States", as used
in this paragraph, means only the 50 states, the
District of Columbia, and any area over which the
United States has asserted jurisdiction or claimed
exclusive rights with respect to the exploration for or
exploitation of natural resources, but does not
include any territory or possession of the United
States.
(C) Holding companies.
(i) For purposes of this subparagraph, a
"holding company" is a corporation (other than a

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corporation that is a financial organization under
paragraph (8) of this subsection (a) of Section
1501 because it is a bank holding company under the
provisions of the Bank Holding Company Act of 1956
(12 U.S.C. 1841, et seq.) or because it is owned by
a bank or a bank holding company) that owns a
controlling interest in one or more other
taxpayers ("controlled taxpayers"); that, during
the period that includes the taxable year and the 2
immediately preceding taxable years or, if the
corporation was formed during the current or
immediately preceding taxable year, the taxable
years in which the corporation has been in
existence, derived substantially all its gross
income from dividends, interest, rents, royalties,
fees or other charges received from controlled
taxpayers for the provision of services, and gains
on the sale or other disposition of interests in
controlled taxpayers or in property leased or
licensed to controlled taxpayers or used by the
taxpayer in providing services to controlled
taxpayers; and that incurs no substantial expenses
other than expenses (including interest and other
costs of borrowing) incurred in connection with
the acquisition and holding of interests in
controlled taxpayers and in the provision of

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services to controlled taxpayers or in the leasing
or licensing of property to controlled taxpayers.
(ii) The income of a holding company which is a
member of more than one unitary business group
shall be included in each unitary business group of
which it is a member on a pro rata basis, by
including in each unitary business group that
portion of the base income of the holding company
that bears the same proportion to the total base
income of the holding company as the gross receipts
of the unitary business group bears to the combined
gross receipts of all unitary business groups (in
both cases without regard to the holding company)
or on any other reasonable basis, consistently
applied.
(iii) A holding company shall apportion its
business income under the subsection of Section
304 used by the other members of its unitary
business group. The apportionment factors of a
holding company which would be a member of more
than one unitary business group shall be included
with the apportionment factors of each unitary
business group of which it is a member on a pro
rata basis using the same method used in clause
(ii).
(iv) The provisions of this subparagraph (C)

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are intended to clarify existing law.
(D) If including the base income and factors of a
holding company in more than one unitary business group
under subparagraph (C) does not fairly reflect the
degree of integration between the holding company and
one or more of the unitary business groups, the
dependence of the holding company and one or more of
the unitary business groups upon each other, or the
contributions between the holding company and one or
more of the unitary business groups, the holding
company may petition the Director, under the
procedures provided under Section 304(f), for
permission to include all base income and factors of
the holding company only with members of a unitary
business group apportioning their business income
under one subsection of subsections (a), (b), (c), or
(d) of Section 304. If the petition is granted, the
holding company shall be included in a unitary business
group only with persons apportioning their business
income under the selected subsection of Section 304
until the Director grants a petition of the holding
company either to be included in more than one unitary
business group under subparagraph (C) or to include its
base income and factors only with members of a unitary
business group apportioning their business income
under a different subsection of Section 304.

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(E) If the unitary business group members'
accounting periods differ, the common parent's
accounting period or, if there is no common parent, the
accounting period of the member that is expected to
have, on a recurring basis, the greatest Illinois
income tax liability must be used to determine whether
to use the apportionment method provided in subsection
(a) or subsection (h) of Section 304. The prohibition
against membership in a unitary business group for
taxpayers ordinarily required to apportion income
under different subsections of Section 304 does not
apply to taxpayers required to apportion income under
subsection (a) and subsection (h) of Section 304. The
provisions of this amendatory Act of 1998 apply to tax
years ending on or after December 31, 1998.
(28) Subchapter S corporation. The term "Subchapter S
corporation" means a corporation for which there is in
effect an election under Section 1362 of the Internal
Revenue Code, or for which there is a federal election to
opt out of the provisions of the Subchapter S Revision Act
of 1982 and have applied instead the prior federal
Subchapter S rules as in effect on July 1, 1982.
(30) Foreign person. The term "foreign person" means
any person who is a nonresident alien individual and any
nonindividual entity, regardless of where created or
organized, whose business activity outside the United

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States is 80% or more of the entity's total business
activity.
(b) Other definitions.
(1) Words denoting number, gender, and so forth, when
used in this Act, where not otherwise distinctly expressed
or manifestly incompatible with the intent thereof:
(A) Words importing the singular include and apply
to several persons, parties or things;
(B) Words importing the plural include the
singular; and
(C) Words importing the masculine gender include
the feminine as well.
(2) "Company" or "association" as including successors
and assigns. The word "company" or "association", when used
in reference to a corporation, shall be deemed to embrace
the words "successors and assigns of such company or
association", and in like manner as if these last-named
words, or words of similar import, were expressed.
(3) Other terms. Any term used in any Section of this
Act with respect to the application of, or in connection
with, the provisions of any other Section of this Act shall
have the same meaning as in such other Section.
(Source: P.A. 99-213, eff. 7-31-15.)
ARTICLE 15. USE AND OCCUPATION TAXES; RAIL CARRIER

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Section 15-5. The Use Tax Act is amended by changing
Section 3-55 as follows:
(35 ILCS 105/3-55) (from Ch. 120, par. 439.3-55)
Sec. 3-55. Multistate exemption. To prevent actual or
likely multistate taxation, the tax imposed by this Act does
not apply to the use of tangible personal property in this
State under the following circumstances:
(a) The use, in this State, of tangible personal property
acquired outside this State by a nonresident individual and
brought into this State by the individual for his or her own
use while temporarily within this State or while passing
through this State.
(b) The use, in this State, of tangible personal property
by an interstate carrier for hire as rolling stock moving in
interstate commerce or by lessors under a lease of one year or
longer executed or in effect at the time of purchase of
tangible personal property by interstate carriers for-hire for
use as rolling stock moving in interstate commerce as long as
so used by the interstate carriers for-hire, and equipment
operated by a telecommunications provider, licensed as a common
carrier by the Federal Communications Commission, which is
permanently installed in or affixed to aircraft moving in
interstate commerce.
(c) The use, in this State, by owners, lessors, or shippers

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of tangible personal property that is utilized by interstate
carriers for hire for use as rolling stock moving in interstate
commerce as long as so used by the interstate carriers for
hire, and equipment operated by a telecommunications provider,
licensed as a common carrier by the Federal Communications
Commission, which is permanently installed in or affixed to
aircraft moving in interstate commerce.
(d) The use, in this State, of tangible personal property
that is acquired outside this State and caused to be brought
into this State by a person who has already paid a tax in
another State in respect to the sale, purchase, or use of that
property, to the extent of the amount of the tax properly due
and paid in the other State.
(e) The temporary storage, in this State, of tangible
personal property that is acquired outside this State and that,
after being brought into this State and stored here
temporarily, is used solely outside this State or is physically
attached to or incorporated into other tangible personal
property that is used solely outside this State, or is altered
by converting, fabricating, manufacturing, printing,
processing, or shaping, and, as altered, is used solely outside
this State.
(f) The temporary storage in this State of building
materials and fixtures that are acquired either in this State
or outside this State by an Illinois registered combination
retailer and construction contractor, and that the purchaser

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thereafter uses outside this State by incorporating that
property into real estate located outside this State.
(g) Through December 31, 2016, the The use or purchase of
tangible personal property by a common carrier by rail or motor
that receives the physical possession of the property in
Illinois, and that transports the property, or shares with
another common carrier in the transportation of the property,
out of Illinois on a standard uniform bill of lading showing
the seller of the property as the shipper or consignor of the
property to a destination outside Illinois, for use outside
Illinois.
(h) Except as provided in subsection (h-1), the use, in
this State, of a motor vehicle that was sold in this State to a
nonresident, even though the motor vehicle is delivered to the
nonresident in this State, if the motor vehicle is not to be
titled in this State, and if a drive-away permit is issued to
the motor vehicle as provided in Section 3-603 of the Illinois
Vehicle Code or if the nonresident purchaser has vehicle
registration plates to transfer to the motor vehicle upon
returning to his or her home state. The issuance of the
drive-away permit or having the out-of-state registration
plates to be transferred shall be prima facie evidence that the
motor vehicle will not be titled in this State.
(h-1) The exemption under subsection (h) does not apply if
the state in which the motor vehicle will be titled does not
allow a reciprocal exemption for the use in that state of a

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motor vehicle sold and delivered in that state to an Illinois
resident but titled in Illinois. The tax collected under this
Act on the sale of a motor vehicle in this State to a resident
of another state that does not allow a reciprocal exemption
shall be imposed at a rate equal to the state's rate of tax on
taxable property in the state in which the purchaser is a
resident, except that the tax shall not exceed the tax that
would otherwise be imposed under this Act. At the time of the
sale, the purchaser shall execute a statement, signed under
penalty of perjury, of his or her intent to title the vehicle
in the state in which the purchaser is a resident within 30
days after the sale and of the fact of the payment to the State
of Illinois of tax in an amount equivalent to the state's rate
of tax on taxable property in his or her state of residence and
shall submit the statement to the appropriate tax collection
agency in his or her state of residence. In addition, the
retailer must retain a signed copy of the statement in his or
her records. Nothing in this subsection shall be construed to
require the removal of the vehicle from this state following
the filing of an intent to title the vehicle in the purchaser's
state of residence if the purchaser titles the vehicle in his
or her state of residence within 30 days after the date of
sale. The tax collected under this Act in accordance with this
subsection (h-1) shall be proportionately distributed as if the
tax were collected at the 6.25% general rate imposed under this
Act.

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(h-2) The following exemptions apply with respect to
certain aircraft:
(1) Beginning on July 1, 2007, no tax is imposed under
this Act on the purchase of an aircraft, as defined in
Section 3 of the Illinois Aeronautics Act, if all of the
following conditions are met:
(A) the aircraft leaves this State within 15 days
after the later of either the issuance of the final
billing for the purchase of the aircraft or the
authorized approval for return to service, completion
of the maintenance record entry, and completion of the
test flight and ground test for inspection, as required
by 14 C.F.R. 91.407;
(B) the aircraft is not based or registered in this
State after the purchase of the aircraft; and
(C) the purchaser provides the Department with a
signed and dated certification, on a form prescribed by
the Department, certifying that the requirements of
this item (1) are met. The certificate must also
include the name and address of the purchaser, the
address of the location where the aircraft is to be
titled or registered, the address of the primary
physical location of the aircraft, and other
information that the Department may reasonably
require.
(2) Beginning on July 1, 2007, no tax is imposed under

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this Act on the use of an aircraft, as defined in Section 3
of the Illinois Aeronautics Act, that is temporarily
located in this State for the purpose of a prepurchase
evaluation if all of the following conditions are met:
(A) the aircraft is not based or registered in this
State after the prepurchase evaluation; and
(B) the purchaser provides the Department with a
signed and dated certification, on a form prescribed by
the Department, certifying that the requirements of
this item (2) are met. The certificate must also
include the name and address of the purchaser, the
address of the location where the aircraft is to be
titled or registered, the address of the primary
physical location of the aircraft, and other
information that the Department may reasonably
require.
(3) Beginning on July 1, 2007, no tax is imposed under
this Act on the use of an aircraft, as defined in Section 3
of the Illinois Aeronautics Act, that is temporarily
located in this State for the purpose of a post-sale
customization if all of the following conditions are met:
(A) the aircraft leaves this State within 15 days
after the authorized approval for return to service,
completion of the maintenance record entry, and
completion of the test flight and ground test for
inspection, as required by 14 C.F.R. 91.407;

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(B) the aircraft is not based or registered in this
State either before or after the post-sale
customization; and
(C) the purchaser provides the Department with a
signed and dated certification, on a form prescribed by
the Department, certifying that the requirements of
this item (3) are met. The certificate must also
include the name and address of the purchaser, the
address of the location where the aircraft is to be
titled or registered, the address of the primary
physical location of the aircraft, and other
information that the Department may reasonably
require.
If tax becomes due under this subsection (h-2) because of
the purchaser's use of the aircraft in this State, the
purchaser shall file a return with the Department and pay the
tax on the fair market value of the aircraft. This return and
payment of the tax must be made no later than 30 days after the
aircraft is used in a taxable manner in this State. The tax is
based on the fair market value of the aircraft on the date that
it is first used in a taxable manner in this State.
For purposes of this subsection (h-2):
"Based in this State" means hangared, stored, or otherwise
used, excluding post-sale customizations as defined in this
Section, for 10 or more days in each 12-month period
immediately following the date of the sale of the aircraft.

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"Post-sale customization" means any improvement,
maintenance, or repair that is performed on an aircraft
following a transfer of ownership of the aircraft.
"Prepurchase evaluation" means an examination of an
aircraft to provide a potential purchaser with information
relevant to the potential purchase.
"Registered in this State" means an aircraft registered
with the Department of Transportation, Aeronautics Division,
or titled or registered with the Federal Aviation
Administration to an address located in this State.
This subsection (h-2) is exempt from the provisions of
Section 3-90.
(i) Beginning July 1, 1999, the use, in this State, of fuel
acquired outside this State and brought into this State in the
fuel supply tanks of locomotives engaged in freight hauling and
passenger service for interstate commerce. This subsection is
exempt from the provisions of Section 3-90.
(j) Beginning on January 1, 2002 and through June 30, 2016,
the use of tangible personal property purchased from an
Illinois retailer by a taxpayer engaged in centralized
purchasing activities in Illinois who will, upon receipt of the
property in Illinois, temporarily store the property in
Illinois (i) for the purpose of subsequently transporting it
outside this State for use or consumption thereafter solely
outside this State or (ii) for the purpose of being processed,
fabricated, or manufactured into, attached to, or incorporated

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into other tangible personal property to be transported outside
this State and thereafter used or consumed solely outside this
State. The Director of Revenue shall, pursuant to rules adopted
in accordance with the Illinois Administrative Procedure Act,
issue a permit to any taxpayer in good standing with the
Department who is eligible for the exemption under this
subsection (j). The permit issued under this subsection (j)
shall authorize the holder, to the extent and in the manner
specified in the rules adopted under this Act, to purchase
tangible personal property from a retailer exempt from the
taxes imposed by this Act. Taxpayers shall maintain all
necessary books and records to substantiate the use and
consumption of all such tangible personal property outside of
the State of Illinois.
(Source: P.A. 97-73, eff. 6-30-11.)
Section 15-10. The Service Use Tax Act is amended by
changing Section 2 as follows:
(35 ILCS 110/2) (from Ch. 120, par. 439.32)
Sec. 2. Definitions.
"Use" means the exercise by any person of any right or
power over tangible personal property incident to the ownership
of that property, but does not include the sale or use for
demonstration by him of that property in any form as tangible
personal property in the regular course of business. "Use" does

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not mean the interim use of tangible personal property nor the
physical incorporation of tangible personal property, as an
ingredient or constituent, into other tangible personal
property, (a) which is sold in the regular course of business
or (b) which the person incorporating such ingredient or
constituent therein has undertaken at the time of such purchase
to cause to be transported in interstate commerce to
destinations outside the State of Illinois.
"Purchased from a serviceman" means the acquisition of the
ownership of, or title to, tangible personal property through a
sale of service.
"Purchaser" means any person who, through a sale of
service, acquires the ownership of, or title to, any tangible
personal property.
"Cost price" means the consideration paid by the serviceman
for a purchase valued in money, whether paid in money or
otherwise, including cash, credits and services, and shall be
determined without any deduction on account of the supplier's
cost of the property sold or on account of any other expense
incurred by the supplier. When a serviceman contracts out part
or all of the services required in his sale of service, it
shall be presumed that the cost price to the serviceman of the
property transferred to him or her by his or her subcontractor
is equal to 50% of the subcontractor's charges to the
serviceman in the absence of proof of the consideration paid by
the subcontractor for the purchase of such property.

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"Selling price" means the consideration for a sale valued
in money whether received in money or otherwise, including
cash, credits and service, and shall be determined without any
deduction on account of the serviceman's cost of the property
sold, the cost of materials used, labor or service cost or any
other expense whatsoever, but does not include interest or
finance charges which appear as separate items on the bill of
sale or sales contract nor charges that are added to prices by
sellers on account of the seller's duty to collect, from the
purchaser, the tax that is imposed by this Act.
"Department" means the Department of Revenue.
"Person" means any natural individual, firm, partnership,
association, joint stock company, joint venture, public or
private corporation, limited liability company, and any
receiver, executor, trustee, guardian or other representative
appointed by order of any court.
"Sale of service" means any transaction except:
(1) a retail sale of tangible personal property taxable
under the Retailers' Occupation Tax Act or under the Use
Tax Act.
(2) a sale of tangible personal property for the
purpose of resale made in compliance with Section 2c of the
Retailers' Occupation Tax Act.
(3) except as hereinafter provided, a sale or transfer
of tangible personal property as an incident to the
rendering of service for or by any governmental body, or

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for or by any corporation, society, association,
foundation or institution organized and operated
exclusively for charitable, religious or educational
purposes or any not-for-profit corporation, society,
association, foundation, institution or organization which
has no compensated officers or employees and which is
organized and operated primarily for the recreation of
persons 55 years of age or older. A limited liability
company may qualify for the exemption under this paragraph
only if the limited liability company is organized and
operated exclusively for educational purposes.
(4) a sale or transfer of tangible personal property as
an incident to the rendering of service for interstate
carriers for hire for use as rolling stock moving in
interstate commerce or by lessors under a lease of one year
or longer, executed or in effect at the time of purchase of
personal property, to interstate carriers for hire for use
as rolling stock moving in interstate commerce so long as
so used by such interstate carriers for hire, and equipment
operated by a telecommunications provider, licensed as a
common carrier by the Federal Communications Commission,
which is permanently installed in or affixed to aircraft
moving in interstate commerce.
(4a) a sale or transfer of tangible personal property
as an incident to the rendering of service for owners,
lessors, or shippers of tangible personal property which is

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utilized by interstate carriers for hire for use as rolling
stock moving in interstate commerce so long as so used by
interstate carriers for hire, and equipment operated by a
telecommunications provider, licensed as a common carrier
by the Federal Communications Commission, which is
permanently installed in or affixed to aircraft moving in
interstate commerce.
(4a-5) on and after July 1, 2003 and through June 30,
2004, a sale or transfer of a motor vehicle of the second
division with a gross vehicle weight in excess of 8,000
pounds as an incident to the rendering of service if that
motor vehicle is subject to the commercial distribution fee
imposed under Section 3-815.1 of the Illinois Vehicle Code.
Beginning on July 1, 2004 and through June 30, 2005, the
use in this State of motor vehicles of the second division:
(i) with a gross vehicle weight rating in excess of 8,000
pounds; (ii) that are subject to the commercial
distribution fee imposed under Section 3-815.1 of the
Illinois Vehicle Code; and (iii) that are primarily used
for commercial purposes. Through June 30, 2005, this
exemption applies to repair and replacement parts added
after the initial purchase of such a motor vehicle if that
motor vehicle is used in a manner that would qualify for
the rolling stock exemption otherwise provided for in this
Act. For purposes of this paragraph, "used for commercial
purposes" means the transportation of persons or property

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in furtherance of any commercial or industrial enterprise
whether for-hire or not.
(5) a sale or transfer of machinery and equipment used
primarily in the process of the manufacturing or
assembling, either in an existing, an expanded or a new
manufacturing facility, of tangible personal property for
wholesale or retail sale or lease, whether such sale or
lease is made directly by the manufacturer or by some other
person, whether the materials used in the process are owned
by the manufacturer or some other person, or whether such
sale or lease is made apart from or as an incident to the
seller's engaging in a service occupation and the
applicable tax is a Service Use Tax or Service Occupation
Tax, rather than Use Tax or Retailers' Occupation Tax. The
exemption provided by this paragraph (5) does not include
machinery and equipment used in (i) the generation of
electricity for wholesale or retail sale; (ii) the
generation or treatment of natural or artificial gas for
wholesale or retail sale that is delivered to customers
through pipes, pipelines, or mains; or (iii) the treatment
of water for wholesale or retail sale that is delivered to
customers through pipes, pipelines, or mains. The
provisions of this amendatory Act of the 98th General
Assembly are declaratory of existing law as to the meaning
and scope of this exemption.
(5a) through December 31, 2016, the repairing,

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reconditioning or remodeling, for a common carrier by rail,
of tangible personal property which belongs to such carrier
for hire, and as to which such carrier receives the
physical possession of the repaired, reconditioned or
remodeled item of tangible personal property in Illinois,
and which such carrier transports, or shares with another
common carrier in the transportation of such property, out
of Illinois on a standard uniform bill of lading showing
the person who repaired, reconditioned or remodeled the
property to a destination outside Illinois, for use outside
Illinois.
(5b) through December 31, 2016, a sale or transfer of
tangible personal property which is produced by the seller
thereof on special order in such a way as to have made the
applicable tax the Service Occupation Tax or the Service
Use Tax, rather than the Retailers' Occupation Tax or the
Use Tax, for an interstate carrier by rail which receives
the physical possession of such property in Illinois, and
which transports such property, or shares with another
common carrier in the transportation of such property, out
of Illinois on a standard uniform bill of lading showing
the seller of the property as the shipper or consignor of
such property to a destination outside Illinois, for use
outside Illinois.
(6) until July 1, 2003, a sale or transfer of
distillation machinery and equipment, sold as a unit or kit

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and assembled or installed by the retailer, which machinery
and equipment is certified by the user to be used only for
the production of ethyl alcohol that will be used for
consumption as motor fuel or as a component of motor fuel
for the personal use of such user and not subject to sale
or resale.
(7) at the election of any serviceman not required to
be otherwise registered as a retailer under Section 2a of
the Retailers' Occupation Tax Act, made for each fiscal
year sales of service in which the aggregate annual cost
price of tangible personal property transferred as an
incident to the sales of service is less than 35%, or 75%
in the case of servicemen transferring prescription drugs
or servicemen engaged in graphic arts production, of the
aggregate annual total gross receipts from all sales of
service. The purchase of such tangible personal property by
the serviceman shall be subject to tax under the Retailers'
Occupation Tax Act and the Use Tax Act. However, if a
primary serviceman who has made the election described in
this paragraph subcontracts service work to a secondary
serviceman who has also made the election described in this
paragraph, the primary serviceman does not incur a Use Tax
liability if the secondary serviceman (i) has paid or will
pay Use Tax on his or her cost price of any tangible
personal property transferred to the primary serviceman
and (ii) certifies that fact in writing to the primary

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serviceman.
Tangible personal property transferred incident to the
completion of a maintenance agreement is exempt from the tax
imposed pursuant to this Act.
Exemption (5) also includes machinery and equipment used in
the general maintenance or repair of such exempt machinery and
equipment or for in-house manufacture of exempt machinery and
equipment. The machinery and equipment exemption does not
include machinery and equipment used in (i) the generation of
electricity for wholesale or retail sale; (ii) the generation
or treatment of natural or artificial gas for wholesale or
retail sale that is delivered to customers through pipes,
pipelines, or mains; or (iii) the treatment of water for
wholesale or retail sale that is delivered to customers through
pipes, pipelines, or mains. The provisions of this amendatory
Act of the 98th General Assembly are declaratory of existing
law as to the meaning and scope of this exemption. For the
purposes of exemption (5), each of these terms shall have the
following meanings: (1) "manufacturing process" shall mean the
production of any article of tangible personal property,
whether such article is a finished product or an article for
use in the process of manufacturing or assembling a different
article of tangible personal property, by procedures commonly
regarded as manufacturing, processing, fabricating, or
refining which changes some existing material or materials into
a material with a different form, use or name. In relation to a

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recognized integrated business composed of a series of
operations which collectively constitute manufacturing, or
individually constitute manufacturing operations, the
manufacturing process shall be deemed to commence with the
first operation or stage of production in the series, and shall
not be deemed to end until the completion of the final product
in the last operation or stage of production in the series; and
further, for purposes of exemption (5), photoprocessing is
deemed to be a manufacturing process of tangible personal
property for wholesale or retail sale; (2) "assembling process"
shall mean the production of any article of tangible personal
property, whether such article is a finished product or an
article for use in the process of manufacturing or assembling a
different article of tangible personal property, by the
combination of existing materials in a manner commonly regarded
as assembling which results in a material of a different form,
use or name; (3) "machinery" shall mean major mechanical
machines or major components of such machines contributing to a
manufacturing or assembling process; and (4) "equipment" shall
include any independent device or tool separate from any
machinery but essential to an integrated manufacturing or
assembly process; including computers used primarily in a
manufacturer's computer assisted design, computer assisted
manufacturing (CAD/CAM) system; or any subunit or assembly
comprising a component of any machinery or auxiliary, adjunct
or attachment parts of machinery, such as tools, dies, jigs,

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fixtures, patterns and molds; or any parts which require
periodic replacement in the course of normal operation; but
shall not include hand tools. Equipment includes chemicals or
chemicals acting as catalysts but only if the chemicals or
chemicals acting as catalysts effect a direct and immediate
change upon a product being manufactured or assembled for
wholesale or retail sale or lease. The purchaser of such
machinery and equipment who has an active resale registration
number shall furnish such number to the seller at the time of
purchase. The user of such machinery and equipment and tools
without an active resale registration number shall prepare a
certificate of exemption for each transaction stating facts
establishing the exemption for that transaction, which
certificate shall be available to the Department for inspection
or audit. The Department shall prescribe the form of the
certificate.
Any informal rulings, opinions or letters issued by the
Department in response to an inquiry or request for any opinion
from any person regarding the coverage and applicability of
exemption (5) to specific devices shall be published,
maintained as a public record, and made available for public
inspection and copying. If the informal ruling, opinion or
letter contains trade secrets or other confidential
information, where possible the Department shall delete such
information prior to publication. Whenever such informal
rulings, opinions, or letters contain any policy of general

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applicability, the Department shall formulate and adopt such
policy as a rule in accordance with the provisions of the
Illinois Administrative Procedure Act.
On and after July 1, 1987, no entity otherwise eligible
under exemption (3) of this Section shall make tax free
purchases unless it has an active exemption identification
number issued by the Department.
The purchase, employment and transfer of such tangible
personal property as newsprint and ink for the primary purpose
of conveying news (with or without other information) is not a
purchase, use or sale of service or of tangible personal
property within the meaning of this Act.
"Serviceman" means any person who is engaged in the
occupation of making sales of service.
"Sale at retail" means "sale at retail" as defined in the
Retailers' Occupation Tax Act.
"Supplier" means any person who makes sales of tangible
personal property to servicemen for the purpose of resale as an
incident to a sale of service.
"Serviceman maintaining a place of business in this State",
or any like term, means and includes any serviceman:
1. having or maintaining within this State, directly or
by a subsidiary, an office, distribution house, sales
house, warehouse or other place of business, or any agent
or other representative operating within this State under
the authority of the serviceman or its subsidiary,

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irrespective of whether such place of business or agent or
other representative is located here permanently or
temporarily, or whether such serviceman or subsidiary is
licensed to do business in this State;
1.1. having a contract with a person located in this
State under which the person, for a commission or other
consideration based on the sale of service by the
serviceman, directly or indirectly refers potential
customers to the serviceman by providing to the potential
customers a promotional code or other mechanism that allows
the serviceman to track purchases referred by such persons.
Examples of mechanisms that allow the serviceman to track
purchases referred by such persons include but are not
limited to the use of a link on the person's Internet
website, promotional codes distributed through the
person's hand-delivered or mailed material, and
promotional codes distributed by the person through radio
or other broadcast media. The provisions of this paragraph
1.1 shall apply only if the cumulative gross receipts from
sales of service by the serviceman to customers who are
referred to the serviceman by all persons in this State
under such contracts exceed $10,000 during the preceding 4
quarterly periods ending on the last day of March, June,
September, and December; a serviceman meeting the
requirements of this paragraph 1.1 shall be presumed to be
maintaining a place of business in this State but may rebut

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this presumption by submitting proof that the referrals or
other activities pursued within this State by such persons
were not sufficient to meet the nexus standards of the
United States Constitution during the preceding 4
quarterly periods;
1.2. beginning July 1, 2011, having a contract with a
person located in this State under which:
A. the serviceman sells the same or substantially
similar line of services as the person located in this
State and does so using an identical or substantially
similar name, trade name, or trademark as the person
located in this State; and
B. the serviceman provides a commission or other
consideration to the person located in this State based
upon the sale of services by the serviceman.
The provisions of this paragraph 1.2 shall apply only if
the cumulative gross receipts from sales of service by the
serviceman to customers in this State under all such
contracts exceed $10,000 during the preceding 4 quarterly
periods ending on the last day of March, June, September,
and December;
2. soliciting orders for tangible personal property by
means of a telecommunication or television shopping system
(which utilizes toll free numbers) which is intended by the
retailer to be broadcast by cable television or other means
of broadcasting, to consumers located in this State;

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3. pursuant to a contract with a broadcaster or
publisher located in this State, soliciting orders for
tangible personal property by means of advertising which is
disseminated primarily to consumers located in this State
and only secondarily to bordering jurisdictions;
4. soliciting orders for tangible personal property by
mail if the solicitations are substantial and recurring and
if the retailer benefits from any banking, financing, debt
collection, telecommunication, or marketing activities
occurring in this State or benefits from the location in
this State of authorized installation, servicing, or
repair facilities;
5. being owned or controlled by the same interests
which own or control any retailer engaging in business in
the same or similar line of business in this State;
6. having a franchisee or licensee operating under its
trade name if the franchisee or licensee is required to
collect the tax under this Section;
7. pursuant to a contract with a cable television
operator located in this State, soliciting orders for
tangible personal property by means of advertising which is
transmitted or distributed over a cable television system
in this State; or
8. engaging in activities in Illinois, which
activities in the state in which the supply business
engaging in such activities is located would constitute

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maintaining a place of business in that state.
(Source: P.A. 98-583, eff. 1-1-14; 98-1089, eff. 1-1-15.)
Section 15-15. The Service Occupation Tax Act is amended by
changing Section 2 as follows:
(35 ILCS 115/2) (from Ch. 120, par. 439.102)
Sec. 2. "Transfer" means any transfer of the title to
property or of the ownership of property whether or not the
transferor retains title as security for the payment of amounts
due him from the transferee.
"Cost Price" means the consideration paid by the serviceman
for a purchase valued in money, whether paid in money or
otherwise, including cash, credits and services, and shall be
determined without any deduction on account of the supplier's
cost of the property sold or on account of any other expense
incurred by the supplier. When a serviceman contracts out part
or all of the services required in his sale of service, it
shall be presumed that the cost price to the serviceman of the
property transferred to him by his or her subcontractor is
equal to 50% of the subcontractor's charges to the serviceman
in the absence of proof of the consideration paid by the
subcontractor for the purchase of such property.
"Department" means the Department of Revenue.
"Person" means any natural individual, firm, partnership,
association, joint stock company, joint venture, public or

09900HB0293ham001 - 255 - LRB099 04265 HLH 51448 a
private corporation, limited liability company, and any
receiver, executor, trustee, guardian or other representative
appointed by order of any court.
"Sale of Service" means any transaction except:
(a) A retail sale of tangible personal property taxable
under the Retailers' Occupation Tax Act or under the Use Tax
Act.
(b) A sale of tangible personal property for the purpose of
resale made in compliance with Section 2c of the Retailers'
Occupation Tax Act.
(c) Except as hereinafter provided, a sale or transfer of
tangible personal property as an incident to the rendering of
service for or by any governmental body or for or by any
corporation, society, association, foundation or institution
organized and operated exclusively for charitable, religious
or educational purposes or any not-for-profit corporation,
society, association, foundation, institution or organization
which has no compensated officers or employees and which is
organized and operated primarily for the recreation of persons
55 years of age or older. A limited liability company may
qualify for the exemption under this paragraph only if the
limited liability company is organized and operated
exclusively for educational purposes.
(d) A sale or transfer of tangible personal property as an
incident to the rendering of service for interstate carriers
for hire for use as rolling stock moving in interstate commerce

09900HB0293ham001 - 256 - LRB099 04265 HLH 51448 a
or lessors under leases of one year or longer, executed or in
effect at the time of purchase, to interstate carriers for hire
for use as rolling stock moving in interstate commerce, and
equipment operated by a telecommunications provider, licensed
as a common carrier by the Federal Communications Commission,
which is permanently installed in or affixed to aircraft moving
in interstate commerce.
(d-1) A sale or transfer of tangible personal property as
an incident to the rendering of service for owners, lessors or
shippers of tangible personal property which is utilized by
interstate carriers for hire for use as rolling stock moving in
interstate commerce, and equipment operated by a
telecommunications provider, licensed as a common carrier by
the Federal Communications Commission, which is permanently
installed in or affixed to aircraft moving in interstate
commerce.
(d-1.1) On and after July 1, 2003 and through June 30,
2004, a sale or transfer of a motor vehicle of the second
division with a gross vehicle weight in excess of 8,000 pounds
as an incident to the rendering of service if that motor
vehicle is subject to the commercial distribution fee imposed
under Section 3-815.1 of the Illinois Vehicle Code. Beginning
on July 1, 2004 and through June 30, 2005, the use in this
State of motor vehicles of the second division: (i) with a
gross vehicle weight rating in excess of 8,000 pounds; (ii)
that are subject to the commercial distribution fee imposed

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under Section 3-815.1 of the Illinois Vehicle Code; and (iii)
that are primarily used for commercial purposes. Through June
30, 2005, this exemption applies to repair and replacement
parts added after the initial purchase of such a motor vehicle
if that motor vehicle is used in a manner that would qualify
for the rolling stock exemption otherwise provided for in this
Act. For purposes of this paragraph, "used for commercial
purposes" means the transportation of persons or property in
furtherance of any commercial or industrial enterprise whether
for-hire or not.
(d-2) Through December 31, 2016, the The repairing,
reconditioning or remodeling, for a common carrier by rail, of
tangible personal property which belongs to such carrier for
hire, and as to which such carrier receives the physical
possession of the repaired, reconditioned or remodeled item of
tangible personal property in Illinois, and which such carrier
transports, or shares with another common carrier in the
transportation of such property, out of Illinois on a standard
uniform bill of lading showing the person who repaired,
reconditioned or remodeled the property as the shipper or
consignor of such property to a destination outside Illinois,
for use outside Illinois.
(d-3) Through December 31, 2016, a A sale or transfer of
tangible personal property which is produced by the seller
thereof on special order in such a way as to have made the
applicable tax the Service Occupation Tax or the Service Use

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Tax, rather than the Retailers' Occupation Tax or the Use Tax,
for an interstate carrier by rail which receives the physical
possession of such property in Illinois, and which transports
such property, or shares with another common carrier in the
transportation of such property, out of Illinois on a standard
uniform bill of lading showing the seller of the property as
the shipper or consignor of such property to a destination
outside Illinois, for use outside Illinois.
(d-4) Until January 1, 1997, a sale, by a registered
serviceman paying tax under this Act to the Department, of
special order printed materials delivered outside Illinois and
which are not returned to this State, if delivery is made by
the seller or agent of the seller, including an agent who
causes the product to be delivered outside Illinois by a common
carrier or the U.S. postal service.
(e) A sale or transfer of machinery and equipment used
primarily in the process of the manufacturing or assembling,
either in an existing, an expanded or a new manufacturing
facility, of tangible personal property for wholesale or retail
sale or lease, whether such sale or lease is made directly by
the manufacturer or by some other person, whether the materials
used in the process are owned by the manufacturer or some other
person, or whether such sale or lease is made apart from or as
an incident to the seller's engaging in a service occupation
and the applicable tax is a Service Occupation Tax or Service
Use Tax, rather than Retailers' Occupation Tax or Use Tax. The

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exemption provided by this paragraph (e) does not include
machinery and equipment used in (i) the generation of
electricity for wholesale or retail sale; (ii) the generation
or treatment of natural or artificial gas for wholesale or
retail sale that is delivered to customers through pipes,
pipelines, or mains; or (iii) the treatment of water for
wholesale or retail sale that is delivered to customers through
pipes, pipelines, or mains. The provisions of this amendatory
Act of the 98th General Assembly are declaratory of existing
law as to the meaning and scope of this exemption.
(f) Until July 1, 2003, the sale or transfer of
distillation machinery and equipment, sold as a unit or kit and
assembled or installed by the retailer, which machinery and
equipment is certified by the user to be used only for the
production of ethyl alcohol that will be used for consumption
as motor fuel or as a component of motor fuel for the personal
use of such user and not subject to sale or resale.
(g) At the election of any serviceman not required to be
otherwise registered as a retailer under Section 2a of the
Retailers' Occupation Tax Act, made for each fiscal year sales
of service in which the aggregate annual cost price of tangible
personal property transferred as an incident to the sales of
service is less than 35% (75% in the case of servicemen
transferring prescription drugs or servicemen engaged in
graphic arts production) of the aggregate annual total gross
receipts from all sales of service. The purchase of such

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tangible personal property by the serviceman shall be subject
to tax under the Retailers' Occupation Tax Act and the Use Tax
Act. However, if a primary serviceman who has made the election
described in this paragraph subcontracts service work to a
secondary serviceman who has also made the election described
in this paragraph, the primary serviceman does not incur a Use
Tax liability if the secondary serviceman (i) has paid or will
pay Use Tax on his or her cost price of any tangible personal
property transferred to the primary serviceman and (ii)
certifies that fact in writing to the primary serviceman.
Tangible personal property transferred incident to the
completion of a maintenance agreement is exempt from the tax
imposed pursuant to this Act.
Exemption (e) also includes machinery and equipment used in
the general maintenance or repair of such exempt machinery and
equipment or for in-house manufacture of exempt machinery and
equipment. The machinery and equipment exemption does not
include machinery and equipment used in (i) the generation of
electricity for wholesale or retail sale; (ii) the generation
or treatment of natural or artificial gas for wholesale or
retail sale that is delivered to customers through pipes,
pipelines, or mains; or (iii) the treatment of water for
wholesale or retail sale that is delivered to customers through
pipes, pipelines, or mains. The provisions of this amendatory
Act of the 98th General Assembly are declaratory of existing
law as to the meaning and scope of this exemption. For the

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

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

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

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personal property to servicemen for the purpose of resale as an
incident to a sale of service.
(Source: P.A. 98-583, eff. 1-1-14.)
Section 15-20. The Retailers' Occupation Tax Act is amended
by changing Section 2-5 as follows:
(35 ILCS 120/2-5)
Sec. 2-5. Exemptions. Gross receipts from proceeds from the
sale of the following tangible personal property are exempt
from the tax imposed by this Act:
(1) Farm chemicals.
(2) Farm machinery and equipment, both new and used,
including that manufactured on special order, certified by the
purchaser to be used primarily for production agriculture or
State or federal agricultural programs, including individual
replacement parts for the machinery and equipment, including
machinery and equipment purchased for lease, and including
implements of husbandry defined in Section 1-130 of the
Illinois Vehicle Code, farm machinery and agricultural
chemical and fertilizer spreaders, and nurse wagons required to
be registered under Section 3-809 of the Illinois Vehicle Code,
but excluding other motor vehicles required to be registered
under the Illinois Vehicle Code. Horticultural polyhouses or
hoop houses used for propagating, growing, or overwintering
plants shall be considered farm machinery and equipment under

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this item (2). Agricultural chemical tender tanks and dry boxes
shall include units sold separately from a motor vehicle
required to be licensed and units sold mounted on a motor
vehicle required to be licensed, if the selling price of the
tender is separately stated.
Farm machinery and equipment shall include precision
farming equipment that is installed or purchased to be
installed on farm machinery and equipment including, but not
limited to, tractors, harvesters, sprayers, planters, seeders,
or spreaders. Precision farming equipment includes, but is not
limited to, soil testing sensors, computers, monitors,
software, global positioning and mapping systems, and other
such equipment.
Farm machinery and equipment also includes computers,
sensors, software, and related equipment used primarily in the
computer-assisted operation of production agriculture
facilities, equipment, and activities such as, but not limited
to, the collection, monitoring, and correlation of animal and
crop data for the purpose of formulating animal diets and
agricultural chemicals. This item (2) is exempt from the
provisions of Section 2-70.
(3) Until July 1, 2003, distillation machinery and
equipment, sold as a unit or kit, assembled or installed by the
retailer, certified by the user to be used only for the
production of ethyl alcohol that will be used for consumption
as motor fuel or as a component of motor fuel for the personal

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use of the user, and not subject to sale or resale.
(4) Until July 1, 2003 and beginning again September 1,
2004 through August 30, 2014, graphic arts machinery and
equipment, including repair and replacement parts, both new and
used, and including that manufactured on special order or
purchased for lease, certified by the purchaser to be used
primarily for graphic arts production. Equipment includes
chemicals or chemicals acting as catalysts but only if the
chemicals or chemicals acting as catalysts effect a direct and
immediate change upon a graphic arts product.
(5) A motor vehicle that is used for automobile renting, as
defined in the Automobile Renting Occupation and Use Tax Act.
This paragraph is exempt from the provisions of Section 2-70.
(6) Personal property sold by a teacher-sponsored student
organization affiliated with an elementary or secondary school
located in Illinois.
(7) Until July 1, 2003, proceeds of that portion of the
selling price of a passenger car the sale of which is subject
to the Replacement Vehicle Tax.
(8) Personal property sold to an Illinois county fair
association for use in conducting, operating, or promoting the
county fair.
(9) Personal property sold to a not-for-profit arts or
cultural organization that establishes, by proof required by
the Department by rule, that it has received an exemption under
Section 501(c)(3) of the Internal Revenue Code and that is

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organized and operated primarily for the presentation or
support of arts or cultural programming, activities, or
services. These organizations include, but are not limited to,
music and dramatic arts organizations such as symphony
orchestras and theatrical groups, arts and cultural service
organizations, local arts councils, visual arts organizations,
and media arts organizations. On and after the effective date
of this amendatory Act of the 92nd General Assembly, however,
an entity otherwise eligible for this exemption shall not make
tax-free purchases unless it has an active identification
number issued by the Department.
(10) Personal property sold by a corporation, society,
association, foundation, institution, or organization, other
than a limited liability company, that is organized and
operated as a not-for-profit service enterprise for the benefit
of persons 65 years of age or older if the personal property
was not purchased by the enterprise for the purpose of resale
by the enterprise.
(11) Personal property sold to a governmental body, to a
corporation, society, association, foundation, or institution
organized and operated exclusively for charitable, religious,
or educational purposes, or to a not-for-profit corporation,
society, association, foundation, institution, or organization
that has no compensated officers or employees and that is
organized and operated primarily for the recreation of persons
55 years of age or older. A limited liability company may

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qualify for the exemption under this paragraph only if the
limited liability company is organized and operated
exclusively for educational purposes. On and after July 1,
1987, however, no entity otherwise eligible for this exemption
shall make tax-free purchases unless it has an active
identification number issued by the Department.
(12) Tangible personal property sold to interstate
carriers for hire for use as rolling stock moving in interstate
commerce or to lessors under leases of one year or longer
executed or in effect at the time of purchase by interstate
carriers for hire for use as rolling stock moving in interstate
commerce and equipment operated by a telecommunications
provider, licensed as a common carrier by the Federal
Communications Commission, which is permanently installed in
or affixed to aircraft moving in interstate commerce.
(12-5) On and after July 1, 2003 and through June 30, 2004,
motor vehicles of the second division with a gross vehicle
weight in excess of 8,000 pounds that are subject to the
commercial distribution fee imposed under Section 3-815.1 of
the Illinois Vehicle Code. Beginning on July 1, 2004 and
through June 30, 2005, the use in this State of motor vehicles
of the second division: (i) with a gross vehicle weight rating
in excess of 8,000 pounds; (ii) that are subject to the
commercial distribution fee imposed under Section 3-815.1 of
the Illinois Vehicle Code; and (iii) that are primarily used
for commercial purposes. Through June 30, 2005, this exemption

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applies to repair and replacement parts added after the initial
purchase of such a motor vehicle if that motor vehicle is used
in a manner that would qualify for the rolling stock exemption
otherwise provided for in this Act. For purposes of this
paragraph, "used for commercial purposes" means the
transportation of persons or property in furtherance of any
commercial or industrial enterprise whether for-hire or not.
(13) Proceeds from sales to owners, lessors, or shippers of
tangible personal property that is utilized by interstate
carriers for hire for use as rolling stock moving in interstate
commerce and equipment operated by a telecommunications
provider, licensed as a common carrier by the Federal
Communications Commission, which is permanently installed in
or affixed to aircraft moving in interstate commerce.
(14) Machinery and equipment that will be used by the
purchaser, or a lessee of the purchaser, primarily in the
process of manufacturing or assembling tangible personal
property for wholesale or retail sale or lease, whether the
sale or lease is made directly by the manufacturer or by some
other person, whether the materials used in the process are
owned by the manufacturer or some other person, or whether the
sale or lease is made apart from or as an incident to the
seller's engaging in the service occupation of producing
machines, tools, dies, jigs, patterns, gauges, or other similar
items of no commercial value on special order for a particular
purchaser. The exemption provided by this paragraph (14) does

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not include machinery and equipment used in (i) the generation
of electricity for wholesale or retail sale; (ii) the
generation or treatment of natural or artificial gas for
wholesale or retail sale that is delivered to customers through
pipes, pipelines, or mains; or (iii) the treatment of water for
wholesale or retail sale that is delivered to customers through
pipes, pipelines, or mains. The provisions of Public Act 98-583
are declaratory of existing law as to the meaning and scope of
this exemption.
(15) Proceeds of mandatory service charges separately
stated on customers' bills for purchase and consumption of food
and beverages, to the extent that the proceeds of the service
charge are in fact turned over as tips or as a substitute for
tips to the employees who participate directly in preparing,
serving, hosting or cleaning up the food or beverage function
with respect to which the service charge is imposed.
(16) Petroleum products sold to a purchaser if the seller
is prohibited by federal law from charging tax to the
purchaser.
(17) Through December 31, 2016, tangible Tangible personal
property sold to a common carrier by rail or motor that
receives the physical possession of the property in Illinois
and that transports the property, or shares with another common
carrier in the transportation of the property, out of Illinois
on a standard uniform bill of lading showing the seller of the
property as the shipper or consignor of the property to a

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destination outside Illinois, for use outside Illinois.
(18) Legal tender, currency, medallions, or gold or silver
coinage issued by the State of Illinois, the government of the
United States of America, or the government of any foreign
country, and bullion.
(19) Until July 1 2003, oil field exploration, drilling,
and production equipment, including (i) rigs and parts of rigs,
rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
tubular goods, including casing and drill strings, (iii) pumps
and pump-jack units, (iv) storage tanks and flow lines, (v) any
individual replacement part for oil field exploration,
drilling, and production equipment, and (vi) machinery and
equipment purchased for lease; but excluding motor vehicles
required to be registered under the Illinois Vehicle Code.
(20) Photoprocessing machinery and equipment, including
repair and replacement parts, both new and used, including that
manufactured on special order, certified by the purchaser to be
used primarily for photoprocessing, and including
photoprocessing machinery and equipment purchased for lease.
(21) Coal and aggregate exploration, mining, off-highway
hauling, processing, maintenance, and reclamation equipment,
including replacement parts and equipment, and including
equipment purchased for lease, but excluding motor vehicles
required to be registered under the Illinois Vehicle Code. The
changes made to this Section by Public Act 97-767 apply on and
after July 1, 2003, but no claim for credit or refund is

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allowed on or after August 16, 2013 (the effective date of
Public Act 98-456) for such taxes paid during the period
beginning July 1, 2003 and ending on August 16, 2013 (the
effective date of Public Act 98-456).
(22) Until June 30, 2013, fuel and petroleum products sold
to or used by an air carrier, certified by the carrier to be
used for consumption, shipment, or storage in the conduct of
its business as an air common carrier, for a flight destined
for or returning from a location or locations outside the
United States without regard to previous or subsequent domestic
stopovers.
Beginning July 1, 2013, fuel and petroleum products sold to
or used by an air carrier, certified by the carrier to be used
for consumption, shipment, or storage in the conduct of its
business as an air common carrier, for a flight that (i) is
engaged in foreign trade or is engaged in trade between the
United States and any of its possessions and (ii) transports at
least one individual or package for hire from the city of
origination to the city of final destination on the same
aircraft, without regard to a change in the flight number of
that aircraft.
(23) A transaction in which the purchase order is received
by a florist who is located outside Illinois, but who has a
florist located in Illinois deliver the property to the
purchaser or the purchaser's donee in Illinois.
(24) Fuel consumed or used in the operation of ships,

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barges, or vessels that are used primarily in or for the
transportation of property or the conveyance of persons for
hire on rivers bordering on this State if the fuel is delivered
by the seller to the purchaser's barge, ship, or vessel while
it is afloat upon that bordering river.
(25) Except as provided in item (25-5) of this Section, a
motor vehicle sold in this State to a nonresident even though
the motor vehicle is delivered to the nonresident in this
State, if the motor vehicle is not to be titled in this State,
and if a drive-away permit is issued to the motor vehicle as
provided in Section 3-603 of the Illinois Vehicle Code or if
the nonresident purchaser has vehicle registration plates to
transfer to the motor vehicle upon returning to his or her home
state. The issuance of the drive-away permit or having the
out-of-state registration plates to be transferred is prima
facie evidence that the motor vehicle will not be titled in
this State.
(25-5) The exemption under item (25) does not apply if the
state in which the motor vehicle will be titled does not allow
a reciprocal exemption for a motor vehicle sold and delivered
in that state to an Illinois resident but titled in Illinois.
The tax collected under this Act on the sale of a motor vehicle
in this State to a resident of another state that does not
allow a reciprocal exemption shall be imposed at a rate equal
to the state's rate of tax on taxable property in the state in
which the purchaser is a resident, except that the tax shall

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not exceed the tax that would otherwise be imposed under this
Act. At the time of the sale, the purchaser shall execute a
statement, signed under penalty of perjury, of his or her
intent to title the vehicle in the state in which the purchaser
is a resident within 30 days after the sale and of the fact of
the payment to the State of Illinois of tax in an amount
equivalent to the state's rate of tax on taxable property in
his or her state of residence and shall submit the statement to
the appropriate tax collection agency in his or her state of
residence. In addition, the retailer must retain a signed copy
of the statement in his or her records. Nothing in this item
shall be construed to require the removal of the vehicle from
this state following the filing of an intent to title the
vehicle in the purchaser's state of residence if the purchaser
titles the vehicle in his or her state of residence within 30
days after the date of sale. The tax collected under this Act
in accordance with this item (25-5) shall be proportionately
distributed as if the tax were collected at the 6.25% general
rate imposed under this Act.
(25-7) Beginning on July 1, 2007, no tax is imposed under
this Act on the sale of an aircraft, as defined in Section 3 of
the Illinois Aeronautics Act, if all of the following
conditions are met:
(1) the aircraft leaves this State within 15 days after
the later of either the issuance of the final billing for
the sale of the aircraft, or the authorized approval for

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return to service, completion of the maintenance record
entry, and completion of the test flight and ground test
for inspection, as required by 14 C.F.R. 91.407;
(2) the aircraft is not based or registered in this
State after the sale of the aircraft; and
(3) the seller retains in his or her books and records
and provides to the Department a signed and dated
certification from the purchaser, on a form prescribed by
the Department, certifying that the requirements of this
item (25-7) are met. The certificate must also include the
name and address of the purchaser, the address of the
location where the aircraft is to be titled or registered,
the address of the primary physical location of the
aircraft, and other information that the Department may
reasonably require.
For purposes of this item (25-7):
"Based in this State" means hangared, stored, or otherwise
used, excluding post-sale customizations as defined in this
Section, for 10 or more days in each 12-month period
immediately following the date of the sale of the aircraft.
"Registered in this State" means an aircraft registered
with the Department of Transportation, Aeronautics Division,
or titled or registered with the Federal Aviation
Administration to an address located in this State.
This paragraph (25-7) is exempt from the provisions of
Section 2-70.

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

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by the Department under Section 1g of this Act.
(30) Beginning with taxable years ending on or after
December 31, 1995 and ending with taxable years ending on or
before December 31, 2004, personal property that is donated for
disaster relief to be used in a State or federally declared
disaster area in Illinois or bordering Illinois by a
manufacturer or retailer that is registered in this State to a
corporation, society, association, foundation, or institution
that has been issued a sales tax exemption identification
number by the Department that assists victims of the disaster
who reside within the declared disaster area.
(31) Beginning with taxable years ending on or after
December 31, 1995 and ending with taxable years ending on or
before December 31, 2004, personal property that is used in the
performance of infrastructure repairs in this State, including
but not limited to municipal roads and streets, access roads,
bridges, sidewalks, waste disposal systems, water and sewer
line extensions, water distribution and purification
facilities, storm water drainage and retention facilities, and
sewage treatment facilities, resulting from a State or
federally declared disaster in Illinois or bordering Illinois
when such repairs are initiated on facilities located in the
declared disaster area within 6 months after the disaster.
(32) Beginning July 1, 1999, game or game birds sold at a
"game breeding and hunting preserve area" as that term is used
in the Wildlife Code. This paragraph is exempt from the

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provisions of Section 2-70.
(33) A motor vehicle, as that term is defined in Section
1-146 of the Illinois Vehicle Code, that is donated to a
corporation, limited liability company, society, association,
foundation, or institution that is determined by the Department
to be organized and operated exclusively for educational
purposes. For purposes of this exemption, "a corporation,
limited liability company, society, association, foundation,
or institution organized and operated exclusively for
educational purposes" means all tax-supported public schools,
private schools that offer systematic instruction in useful
branches of learning by methods common to public schools and
that compare favorably in their scope and intensity with the
course of study presented in tax-supported schools, and
vocational or technical schools or institutes organized and
operated exclusively to provide a course of study of not less
than 6 weeks duration and designed to prepare individuals to
follow a trade or to pursue a manual, technical, mechanical,
industrial, business, or commercial occupation.
(34) Beginning January 1, 2000, personal property,
including food, purchased through fundraising events for the
benefit of a public or private elementary or secondary school,
a group of those schools, or one or more school districts if
the events are sponsored by an entity recognized by the school
district that consists primarily of volunteers and includes
parents and teachers of the school children. This paragraph

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does not apply to fundraising events (i) for the benefit of
private home instruction or (ii) for which the fundraising
entity purchases the personal property sold at the events from
another individual or entity that sold the property for the
purpose of resale by the fundraising entity and that profits
from the sale to the fundraising entity. This paragraph is
exempt from the provisions of Section 2-70.
(35) Beginning January 1, 2000 and through December 31,
2001, new or used automatic vending machines that prepare and
serve hot food and beverages, including coffee, soup, and other
items, and replacement parts for these machines. Beginning
January 1, 2002 and through June 30, 2003, machines and parts
for machines used in commercial, coin-operated amusement and
vending business if a use or occupation tax is paid on the
gross receipts derived from the use of the commercial,
coin-operated amusement and vending machines. This paragraph
is exempt from the provisions of Section 2-70.
(35-5) Beginning August 23, 2001 and through June 30, 2016,
food for human consumption that is to be consumed off the
premises where it is sold (other than alcoholic beverages, soft
drinks, and food that has been prepared for immediate
consumption) and prescription and nonprescription medicines,
drugs, medical appliances, and insulin, urine testing
materials, syringes, and needles used by diabetics, for human
use, when purchased for use by a person receiving medical
assistance under Article V of the Illinois Public Aid Code who

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resides in a licensed long-term care facility, as defined in
the Nursing Home Care Act, or a licensed facility as defined in
the ID/DD Community Care Act, the MC/DD Act, or the Specialized
Mental Health Rehabilitation Act of 2013.
(36) Beginning August 2, 2001, computers and
communications equipment utilized for any hospital purpose and
equipment used in the diagnosis, analysis, or treatment of
hospital patients sold to a lessor who leases the equipment,
under a lease of one year or longer executed or in effect at
the time of the purchase, to a hospital that has been issued an
active tax exemption identification number by the Department
under Section 1g of this Act. This paragraph is exempt from the
provisions of Section 2-70.
(37) Beginning August 2, 2001, personal property sold to a
lessor who leases the property, under a lease of one year or
longer executed or in effect at the time of the purchase, to a
governmental body that has been issued an active tax exemption
identification number by the Department under Section 1g of
this Act. This paragraph is exempt from the provisions of
Section 2-70.
(38) Beginning on January 1, 2002 and through June 30,
2016, tangible personal property purchased from an Illinois
retailer by a taxpayer engaged in centralized purchasing
activities in Illinois who will, upon receipt of the property
in Illinois, temporarily store the property in Illinois (i) for
the purpose of subsequently transporting it outside this State

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for use or consumption thereafter solely outside this State or
(ii) for the purpose of being processed, fabricated, or
manufactured into, attached to, or incorporated into other
tangible personal property to be transported outside this State
and thereafter used or consumed solely outside this State. The
Director of Revenue shall, pursuant to rules adopted in
accordance with the Illinois Administrative Procedure Act,
issue a permit to any taxpayer in good standing with the
Department who is eligible for the exemption under this
paragraph (38). The permit issued under this paragraph (38)
shall authorize the holder, to the extent and in the manner
specified in the rules adopted under this Act, to purchase
tangible personal property from a retailer exempt from the
taxes imposed by this Act. Taxpayers shall maintain all
necessary books and records to substantiate the use and
consumption of all such tangible personal property outside of
the State of Illinois.
(39) Beginning January 1, 2008, tangible personal property
used in the construction or maintenance of a community water
supply, as defined under Section 3.145 of the Environmental
Protection Act, that is operated by a not-for-profit
corporation that holds a valid water supply permit issued under
Title IV of the Environmental Protection Act. This paragraph is
exempt from the provisions of Section 2-70.
(40) Beginning January 1, 2010, materials, parts,
equipment, components, and furnishings incorporated into or

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upon an aircraft as part of the modification, refurbishment,
completion, replacement, repair, or maintenance of the
aircraft. This exemption includes consumable supplies used in
the modification, refurbishment, completion, replacement,
repair, and maintenance of aircraft, but excludes any
materials, parts, equipment, components, and consumable
supplies used in the modification, replacement, repair, and
maintenance of aircraft engines or power plants, whether such
engines or power plants are installed or uninstalled upon any
such aircraft. "Consumable supplies" include, but are not
limited to, adhesive, tape, sandpaper, general purpose
lubricants, cleaning solution, latex gloves, and protective
films. This exemption applies only to the sale of qualifying
tangible personal property to persons who modify, refurbish,
complete, replace, or maintain an aircraft and who (i) hold an
Air Agency Certificate and are empowered to operate an approved
repair station by the Federal Aviation Administration, (ii)
have a Class IV Rating, and (iii) conduct operations in
accordance with Part 145 of the Federal Aviation Regulations.
The exemption does not include aircraft operated by a
commercial air carrier providing scheduled passenger air
service pursuant to authority issued under Part 121 or Part 129
of the Federal Aviation Regulations. The changes made to this
paragraph (40) by Public Act 98-534 are declarative of existing
law.
(41) Tangible personal property sold to a

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public-facilities corporation, as described in Section
11-65-10 of the Illinois Municipal Code, for purposes of
constructing or furnishing a municipal convention hall, but
only if the legal title to the municipal convention hall is
transferred to the municipality without any further
consideration by or on behalf of the municipality at the time
of the completion of the municipal convention hall or upon the
retirement or redemption of any bonds or other debt instruments
issued by the public-facilities corporation in connection with
the development of the municipal convention hall. This
exemption includes existing public-facilities corporations as
provided in Section 11-65-25 of the Illinois Municipal Code.
This paragraph is exempt from the provisions of Section 2-70.
(42) Beginning January 1, 2017, menstrual pads, tampons,
and menstrual cups.
(Source: P.A. 98-104, eff. 7-22-13; 98-422, eff. 8-16-13;
98-456, eff. 8-16-13; 98-534, eff. 8-23-13; 98-574, eff.
1-1-14; 98-583, eff. 1-1-14; 98-756, eff. 7-16-14; 99-180, eff.
7-29-15; 99-855, eff. 8-19-16.)
ARTICLE 20. ROLLING STOCK
Section 20-5. The Use Tax Act is amended by changing
Sections 3-55 and 3-60 as follows:
(35 ILCS 105/3-55) (from Ch. 120, par. 439.3-55)

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Sec. 3-55. Multistate exemption. To prevent actual or
likely multistate taxation, the tax imposed by this Act does
not apply to the use of tangible personal property in this
State under the following circumstances:
(a) The use, in this State, of tangible personal property
acquired outside this State by a nonresident individual and
brought into this State by the individual for his or her own
use while temporarily within this State or while passing
through this State.
(b) Through December 31, 2016, the The use, in this State,
of tangible personal property by an interstate carrier for hire
as rolling stock moving in interstate commerce or by lessors
under a lease of one year or longer executed or in effect at
the time of purchase of tangible personal property by
interstate carriers for-hire for use as rolling stock moving in
interstate commerce as long as so used by the interstate
carriers for-hire, and equipment operated by a
telecommunications provider, licensed as a common carrier by
the Federal Communications Commission, which is permanently
installed in or affixed to aircraft moving in interstate
commerce.
(c) Through December 31, 2016, the The use, in this State,
by owners, lessors, or shippers of tangible personal property
that is utilized by interstate carriers for hire for use as
rolling stock moving in interstate commerce as long as so used
by the interstate carriers for hire, and equipment operated by

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a telecommunications provider, licensed as a common carrier by
the Federal Communications Commission, which is permanently
installed in or affixed to aircraft moving in interstate
commerce.
(d) The use, in this State, of tangible personal property
that is acquired outside this State and caused to be brought
into this State by a person who has already paid a tax in
another State in respect to the sale, purchase, or use of that
property, to the extent of the amount of the tax properly due
and paid in the other State.
(e) The temporary storage, in this State, of tangible
personal property that is acquired outside this State and that,
after being brought into this State and stored here
temporarily, is used solely outside this State or is physically
attached to or incorporated into other tangible personal
property that is used solely outside this State, or is altered
by converting, fabricating, manufacturing, printing,
processing, or shaping, and, as altered, is used solely outside
this State.
(f) The temporary storage in this State of building
materials and fixtures that are acquired either in this State
or outside this State by an Illinois registered combination
retailer and construction contractor, and that the purchaser
thereafter uses outside this State by incorporating that
property into real estate located outside this State.
(g) The use or purchase of tangible personal property by a

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common carrier by rail or motor that receives the physical
possession of the property in Illinois, and that transports the
property, or shares with another common carrier in the
transportation of the property, out of Illinois on a standard
uniform bill of lading showing the seller of the property as
the shipper or consignor of the property to a destination
outside Illinois, for use outside Illinois.
(h) Except as provided in subsection (h-1), the use, in
this State, of a motor vehicle that was sold in this State to a
nonresident, even though the motor vehicle is delivered to the
nonresident in this State, if the motor vehicle is not to be
titled in this State, and if a drive-away permit is issued to
the motor vehicle as provided in Section 3-603 of the Illinois
Vehicle Code or if the nonresident purchaser has vehicle
registration plates to transfer to the motor vehicle upon
returning to his or her home state. The issuance of the
drive-away permit or having the out-of-state registration
plates to be transferred shall be prima facie evidence that the
motor vehicle will not be titled in this State.
(h-1) The exemption under subsection (h) does not apply if
the state in which the motor vehicle will be titled does not
allow a reciprocal exemption for the use in that state of a
motor vehicle sold and delivered in that state to an Illinois
resident but titled in Illinois. The tax collected under this
Act on the sale of a motor vehicle in this State to a resident
of another state that does not allow a reciprocal exemption

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shall be imposed at a rate equal to the state's rate of tax on
taxable property in the state in which the purchaser is a
resident, except that the tax shall not exceed the tax that
would otherwise be imposed under this Act. At the time of the
sale, the purchaser shall execute a statement, signed under
penalty of perjury, of his or her intent to title the vehicle
in the state in which the purchaser is a resident within 30
days after the sale and of the fact of the payment to the State
of Illinois of tax in an amount equivalent to the state's rate
of tax on taxable property in his or her state of residence and
shall submit the statement to the appropriate tax collection
agency in his or her state of residence. In addition, the
retailer must retain a signed copy of the statement in his or
her records. Nothing in this subsection shall be construed to
require the removal of the vehicle from this state following
the filing of an intent to title the vehicle in the purchaser's
state of residence if the purchaser titles the vehicle in his
or her state of residence within 30 days after the date of
sale. The tax collected under this Act in accordance with this
subsection (h-1) shall be proportionately distributed as if the
tax were collected at the 6.25% general rate imposed under this
Act.
(h-2) The following exemptions apply with respect to
certain aircraft:
(1) Beginning on July 1, 2007, no tax is imposed under
this Act on the purchase of an aircraft, as defined in

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Section 3 of the Illinois Aeronautics Act, if all of the
following conditions are met:
(A) the aircraft leaves this State within 15 days
after the later of either the issuance of the final
billing for the purchase of the aircraft or the
authorized approval for return to service, completion
of the maintenance record entry, and completion of the
test flight and ground test for inspection, as required
by 14 C.F.R. 91.407;
(B) the aircraft is not based or registered in this
State after the purchase of the aircraft; and
(C) the purchaser provides the Department with a
signed and dated certification, on a form prescribed by
the Department, certifying that the requirements of
this item (1) are met. The certificate must also
include the name and address of the purchaser, the
address of the location where the aircraft is to be
titled or registered, the address of the primary
physical location of the aircraft, and other
information that the Department may reasonably
require.
(2) Beginning on July 1, 2007, no tax is imposed under
this Act on the use of an aircraft, as defined in Section 3
of the Illinois Aeronautics Act, that is temporarily
located in this State for the purpose of a prepurchase
evaluation if all of the following conditions are met:

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(A) the aircraft is not based or registered in this
State after the prepurchase evaluation; and
(B) the purchaser provides the Department with a
signed and dated certification, on a form prescribed by
the Department, certifying that the requirements of
this item (2) are met. The certificate must also
include the name and address of the purchaser, the
address of the location where the aircraft is to be
titled or registered, the address of the primary
physical location of the aircraft, and other
information that the Department may reasonably
require.
(3) Beginning on July 1, 2007, no tax is imposed under
this Act on the use of an aircraft, as defined in Section 3
of the Illinois Aeronautics Act, that is temporarily
located in this State for the purpose of a post-sale
customization if all of the following conditions are met:
(A) the aircraft leaves this State within 15 days
after the authorized approval for return to service,
completion of the maintenance record entry, and
completion of the test flight and ground test for
inspection, as required by 14 C.F.R. 91.407;
(B) the aircraft is not based or registered in this
State either before or after the post-sale
customization; and
(C) the purchaser provides the Department with a

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signed and dated certification, on a form prescribed by
the Department, certifying that the requirements of
this item (3) are met. The certificate must also
include the name and address of the purchaser, the
address of the location where the aircraft is to be
titled or registered, the address of the primary
physical location of the aircraft, and other
information that the Department may reasonably
require.
If tax becomes due under this subsection (h-2) because of
the purchaser's use of the aircraft in this State, the
purchaser shall file a return with the Department and pay the
tax on the fair market value of the aircraft. This return and
payment of the tax must be made no later than 30 days after the
aircraft is used in a taxable manner in this State. The tax is
based on the fair market value of the aircraft on the date that
it is first used in a taxable manner in this State.
For purposes of this subsection (h-2):
"Based in this State" means hangared, stored, or otherwise
used, excluding post-sale customizations as defined in this
Section, for 10 or more days in each 12-month period
immediately following the date of the sale of the aircraft.
"Post-sale customization" means any improvement,
maintenance, or repair that is performed on an aircraft
following a transfer of ownership of the aircraft.
"Prepurchase evaluation" means an examination of an

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aircraft to provide a potential purchaser with information
relevant to the potential purchase.
"Registered in this State" means an aircraft registered
with the Department of Transportation, Aeronautics Division,
or titled or registered with the Federal Aviation
Administration to an address located in this State.
This subsection (h-2) is exempt from the provisions of
Section 3-90.
(i) Beginning July 1, 1999, the use, in this State, of fuel
acquired outside this State and brought into this State in the
fuel supply tanks of locomotives engaged in freight hauling and
passenger service for interstate commerce. This subsection is
exempt from the provisions of Section 3-90.
(j) Beginning on January 1, 2002 and through June 30, 2016,
the use of tangible personal property purchased from an
Illinois retailer by a taxpayer engaged in centralized
purchasing activities in Illinois who will, upon receipt of the
property in Illinois, temporarily store the property in
Illinois (i) for the purpose of subsequently transporting it
outside this State for use or consumption thereafter solely
outside this State or (ii) for the purpose of being processed,
fabricated, or manufactured into, attached to, or incorporated
into other tangible personal property to be transported outside
this State and thereafter used or consumed solely outside this
State. The Director of Revenue shall, pursuant to rules adopted
in accordance with the Illinois Administrative Procedure Act,

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issue a permit to any taxpayer in good standing with the
Department who is eligible for the exemption under this
subsection (j). The permit issued under this subsection (j)
shall authorize the holder, to the extent and in the manner
specified in the rules adopted under this Act, to purchase
tangible personal property from a retailer exempt from the
taxes imposed by this Act. Taxpayers shall maintain all
necessary books and records to substantiate the use and
consumption of all such tangible personal property outside of
the State of Illinois.
(Source: P.A. 97-73, eff. 6-30-11.)
(35 ILCS 105/3-60) (from Ch. 120, par. 439.3-60)
Sec. 3-60. Rolling stock exemption. Except as provided in
Section 3-61 of this Act, through December 31, 2016, the
rolling stock exemption applies to rolling stock used by an
interstate carrier for hire, even just between points in
Illinois, if the rolling stock transports, for hire, persons
whose journeys or property whose shipments originate or
terminate outside Illinois.
(Source: P.A. 93-23, eff. 6-20-03.)
Section 20-10. The Service Use Tax Act is amended by
changing Sections 3-45 and 3-50 as follows:
(35 ILCS 110/3-45) (from Ch. 120, par. 439.33-45)

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Sec. 3-45. Multistate exemption. To prevent actual or
likely multistate taxation, the tax imposed by this Act does
not apply to the use of tangible personal property in this
State under the following circumstances:
(a) The use, in this State, of property acquired outside
this State by a nonresident individual and brought into this
State by the individual for his or her own use while
temporarily within this State or while passing through this
State.
(b) Through December 31, 2016, the The use, in this State,
of property that is acquired outside this State and that is
moved into this State for use as rolling stock moving in
interstate commerce.
(c) The use, in this State, of property that is acquired
outside this State and caused to be brought into this State by
a person who has already paid a tax in another state in respect
to the sale, purchase, or use of that property, to the extent
of the amount of the tax properly due and paid in the other
state.
(d) The temporary storage, in this State, of property that
is acquired outside this State and that after being brought
into this State and stored here temporarily, is used solely
outside this State or is physically attached to or incorporated
into other property that is used solely outside this State, or
is altered by converting, fabricating, manufacturing,
printing, processing, or shaping, and, as altered, is used

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solely outside this State.
(e) Beginning July 1, 1999, the use, in this State, of fuel
acquired outside this State and brought into this State in the
fuel supply tanks of locomotives engaged in freight hauling and
passenger service for interstate commerce. This subsection is
exempt from the provisions of Section 3-75.
(f) Beginning on January 1, 2002 and through June 30, 2016,
the use of tangible personal property purchased from an
Illinois retailer by a taxpayer engaged in centralized
purchasing activities in Illinois who will, upon receipt of the
property in Illinois, temporarily store the property in
Illinois (i) for the purpose of subsequently transporting it
outside this State for use or consumption thereafter solely
outside this State or (ii) for the purpose of being processed,
fabricated, or manufactured into, attached to, or incorporated
into other tangible personal property to be transported outside
this State and thereafter used or consumed solely outside this
State. The Director of Revenue shall, pursuant to rules adopted
in accordance with the Illinois Administrative Procedure Act,
issue a permit to any taxpayer in good standing with the
Department who is eligible for the exemption under this
subsection (f). The permit issued under this subsection (f)
shall authorize the holder, to the extent and in the manner
specified in the rules adopted under this Act, to purchase
tangible personal property from a retailer exempt from the
taxes imposed by this Act. Taxpayers shall maintain all

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necessary books and records to substantiate the use and
consumption of all such tangible personal property outside of
the State of Illinois.
(Source: P.A. 97-73, eff. 6-30-11.)
(35 ILCS 110/3-50) (from Ch. 120, par. 439.33-50)
Sec. 3-50. Rolling stock exemption. Except as provided in
Section 3-51 of this Act, through December 31, 2016, the
rolling stock exemption applies to rolling stock used by an
interstate carrier for hire, even just between points in
Illinois, if the rolling stock transports, for hire, persons
whose journeys or property whose shipments originate or
terminate outside Illinois.
(Source: P.A. 93-23, eff. 6-20-03.)
Section 20-15. The Service Occupation Tax Act is amended by
changing Section 2 as follows:
(35 ILCS 115/2) (from Ch. 120, par. 439.102)
Sec. 2. "Transfer" means any transfer of the title to
property or of the ownership of property whether or not the
transferor retains title as security for the payment of amounts
due him from the transferee.
"Cost Price" means the consideration paid by the serviceman
for a purchase valued in money, whether paid in money or
otherwise, including cash, credits and services, and shall be

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determined without any deduction on account of the supplier's
cost of the property sold or on account of any other expense
incurred by the supplier. When a serviceman contracts out part
or all of the services required in his sale of service, it
shall be presumed that the cost price to the serviceman of the
property transferred to him by his or her subcontractor is
equal to 50% of the subcontractor's charges to the serviceman
in the absence of proof of the consideration paid by the
subcontractor for the purchase of such property.
"Department" means the Department of Revenue.
"Person" means any natural individual, firm, partnership,
association, joint stock company, joint venture, public or
private corporation, limited liability company, and any
receiver, executor, trustee, guardian or other representative
appointed by order of any court.
"Sale of Service" means any transaction except:
(a) A retail sale of tangible personal property taxable
under the Retailers' Occupation Tax Act or under the Use Tax
Act.
(b) A sale of tangible personal property for the purpose of
resale made in compliance with Section 2c of the Retailers'
Occupation Tax Act.
(c) Except as hereinafter provided, a sale or transfer of
tangible personal property as an incident to the rendering of
service for or by any governmental body or for or by any
corporation, society, association, foundation or institution

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organized and operated exclusively for charitable, religious
or educational purposes or any not-for-profit corporation,
society, association, foundation, institution or organization
which has no compensated officers or employees and which is
organized and operated primarily for the recreation of persons
55 years of age or older. A limited liability company may
qualify for the exemption under this paragraph only if the
limited liability company is organized and operated
exclusively for educational purposes.
(d) Through December 31, 2016, a A sale or transfer of
tangible personal property as an incident to the rendering of
service for interstate carriers for hire for use as rolling
stock moving in interstate commerce or lessors under leases of
one year or longer, executed or in effect at the time of
purchase, to interstate carriers for hire for use as rolling
stock moving in interstate commerce, and equipment operated by
a telecommunications provider, licensed as a common carrier by
the Federal Communications Commission, which is permanently
installed in or affixed to aircraft moving in interstate
commerce.
(d-1) Through December 31, 2016, a A sale or transfer of
tangible personal property as an incident to the rendering of
service for owners, lessors or shippers of tangible personal
property which is utilized by interstate carriers for hire for
use as rolling stock moving in interstate commerce, and
equipment operated by a telecommunications provider, licensed

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as a common carrier by the Federal Communications Commission,
which is permanently installed in or affixed to aircraft moving
in interstate commerce.
(d-1.1) On and after July 1, 2003 and through June 30,
2004, a sale or transfer of a motor vehicle of the second
division with a gross vehicle weight in excess of 8,000 pounds
as an incident to the rendering of service if that motor
vehicle is subject to the commercial distribution fee imposed
under Section 3-815.1 of the Illinois Vehicle Code. Beginning
on July 1, 2004 and through June 30, 2005, the use in this
State of motor vehicles of the second division: (i) with a
gross vehicle weight rating in excess of 8,000 pounds; (ii)
that are subject to the commercial distribution fee imposed
under Section 3-815.1 of the Illinois Vehicle Code; and (iii)
that are primarily used for commercial purposes. Through June
30, 2005, this exemption applies to repair and replacement
parts added after the initial purchase of such a motor vehicle
if that motor vehicle is used in a manner that would qualify
for the rolling stock exemption otherwise provided for in this
Act. For purposes of this paragraph, "used for commercial
purposes" means the transportation of persons or property in
furtherance of any commercial or industrial enterprise whether
for-hire or not.
(d-2) The repairing, reconditioning or remodeling, for a
common carrier by rail, of tangible personal property which
belongs to such carrier for hire, and as to which such carrier

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receives the physical possession of the repaired,
reconditioned or remodeled item of tangible personal property
in Illinois, and which such carrier transports, or shares with
another common carrier in the transportation of such property,
out of Illinois on a standard uniform bill of lading showing
the person who repaired, reconditioned or remodeled the
property as the shipper or consignor of such property to a
destination outside Illinois, for use outside Illinois.
(d-3) A sale or transfer of tangible personal property
which is produced by the seller thereof on special order in
such a way as to have made the applicable tax the Service
Occupation Tax or the Service Use Tax, rather than the
Retailers' Occupation Tax or the Use Tax, for an interstate
carrier by rail which receives the physical possession of such
property in Illinois, and which transports such property, or
shares with another common carrier in the transportation of
such property, out of Illinois on a standard uniform bill of
lading showing the seller of the property as the shipper or
consignor of such property to a destination outside Illinois,
for use outside Illinois.
(d-4) Until January 1, 1997, a sale, by a registered
serviceman paying tax under this Act to the Department, of
special order printed materials delivered outside Illinois and
which are not returned to this State, if delivery is made by
the seller or agent of the seller, including an agent who
causes the product to be delivered outside Illinois by a common

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carrier or the U.S. postal service.
(e) A sale or transfer of machinery and equipment used
primarily in the process of the manufacturing or assembling,
either in an existing, an expanded or a new manufacturing
facility, of tangible personal property for wholesale or retail
sale or lease, whether such sale or lease is made directly by
the manufacturer or by some other person, whether the materials
used in the process are owned by the manufacturer or some other
person, or whether such sale or lease is made apart from or as
an incident to the seller's engaging in a service occupation
and the applicable tax is a Service Occupation Tax or Service
Use Tax, rather than Retailers' Occupation Tax or Use Tax. The
exemption provided by this paragraph (e) does not include
machinery and equipment used in (i) the generation of
electricity for wholesale or retail sale; (ii) the generation
or treatment of natural or artificial gas for wholesale or
retail sale that is delivered to customers through pipes,
pipelines, or mains; or (iii) the treatment of water for
wholesale or retail sale that is delivered to customers through
pipes, pipelines, or mains. The provisions of this amendatory
Act of the 98th General Assembly are declaratory of existing
law as to the meaning and scope of this exemption.
(f) Until July 1, 2003, the sale or transfer of
distillation machinery and equipment, sold as a unit or kit and
assembled or installed by the retailer, which machinery and
equipment is certified by the user to be used only for the

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production of ethyl alcohol that will be used for consumption
as motor fuel or as a component of motor fuel for the personal
use of such user and not subject to sale or resale.
(g) At the election of any serviceman not required to be
otherwise registered as a retailer under Section 2a of the
Retailers' Occupation Tax Act, made for each fiscal year sales
of service in which the aggregate annual cost price of tangible
personal property transferred as an incident to the sales of
service is less than 35% (75% in the case of servicemen
transferring prescription drugs or servicemen engaged in
graphic arts production) of the aggregate annual total gross
receipts from all sales of service. The purchase of such
tangible personal property by the serviceman shall be subject
to tax under the Retailers' Occupation Tax Act and the Use Tax
Act. However, if a primary serviceman who has made the election
described in this paragraph subcontracts service work to a
secondary serviceman who has also made the election described
in this paragraph, the primary serviceman does not incur a Use
Tax liability if the secondary serviceman (i) has paid or will
pay Use Tax on his or her cost price of any tangible personal
property transferred to the primary serviceman and (ii)
certifies that fact in writing to the primary serviceman.
Tangible personal property transferred incident to the
completion of a maintenance agreement is exempt from the tax
imposed pursuant to this Act.
Exemption (e) also includes machinery and equipment used in

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the general maintenance or repair of such exempt machinery and
equipment or for in-house manufacture of exempt machinery and
equipment. The machinery and equipment exemption does not
include machinery and equipment used in (i) the generation of
electricity for wholesale or retail sale; (ii) the generation
or treatment of natural or artificial gas for wholesale or
retail sale that is delivered to customers through pipes,
pipelines, or mains; or (iii) the treatment of water for
wholesale or retail sale that is delivered to customers through
pipes, pipelines, or mains. The provisions of this amendatory
Act of the 98th General Assembly are declaratory of existing
law as to the meaning and scope of this exemption. For the
purposes of exemption (e), each of these terms shall have the
following meanings: (1) "manufacturing process" shall mean the
production of any article of tangible personal property,
whether such article is a finished product or an article for
use in the process of manufacturing or assembling a different
article of tangible personal property, by procedures commonly
regarded as manufacturing, processing, fabricating, or
refining which changes some existing material or materials into
a material with a different form, use or name. In relation to a
recognized integrated business composed of a series of
operations which collectively constitute manufacturing, or
individually constitute manufacturing operations, the
manufacturing process shall be deemed to commence with the
first operation or stage of production in the series, and shall

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not be deemed to end until the completion of the final product
in the last operation or stage of production in the series; and
further for purposes of exemption (e), photoprocessing is
deemed to be a manufacturing process of tangible personal
property for wholesale or retail sale; (2) "assembling process"
shall mean the production of any article of tangible personal
property, whether such article is a finished product or an
article for use in the process of manufacturing or assembling a
different article of tangible personal property, by the
combination of existing materials in a manner commonly regarded
as assembling which results in a material of a different form,
use or name; (3) "machinery" shall mean major mechanical
machines or major components of such machines contributing to a
manufacturing or assembling process; and (4) "equipment" shall
include any independent device or tool separate from any
machinery but essential to an integrated manufacturing or
assembly process; including computers used primarily in a
manufacturer's computer assisted design, computer assisted
manufacturing (CAD/CAM) system; or any subunit or assembly
comprising a component of any machinery or auxiliary, adjunct
or attachment parts of machinery, such as tools, dies, jigs,
fixtures, patterns and molds; or any parts which require
periodic replacement in the course of normal operation; but
shall not include hand tools. Equipment includes chemicals or
chemicals acting as catalysts but only if the chemicals or
chemicals acting as catalysts effect a direct and immediate

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change upon a product being manufactured or assembled for
wholesale or retail sale or lease. The purchaser of such
machinery and equipment who has an active resale registration
number shall furnish such number to the seller at the time of
purchase. The purchaser of such machinery and equipment and
tools without an active resale registration number shall
furnish to the seller a certificate of exemption for each
transaction stating facts establishing the exemption for that
transaction, which certificate shall be available to the
Department for inspection or audit.
Except as provided in Section 2d of this Act, the rolling
stock exemption applies to rolling stock used by an interstate
carrier for hire, even just between points in Illinois, if such
rolling stock transports, for hire, persons whose journeys or
property whose shipments originate or terminate outside
Illinois.
Any informal rulings, opinions or letters issued by the
Department in response to an inquiry or request for any opinion
from any person regarding the coverage and applicability of
exemption (e) to specific devices shall be published,
maintained as a public record, and made available for public
inspection and copying. If the informal ruling, opinion or
letter contains trade secrets or other confidential
information, where possible the Department shall delete such
information prior to publication. Whenever such informal
rulings, opinions, or letters contain any policy of general

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applicability, the Department shall formulate and adopt such
policy as a rule in accordance with the provisions of the
Illinois Administrative Procedure Act.
On and after July 1, 1987, no entity otherwise eligible
under exemption (c) of this Section shall make tax free
purchases unless it has an active exemption identification
number issued by the Department.
"Serviceman" means any person who is engaged in the
occupation of making sales of service.
"Sale at Retail" means "sale at retail" as defined in the
Retailers' Occupation Tax Act.
"Supplier" means any person who makes sales of tangible
personal property to servicemen for the purpose of resale as an
incident to a sale of service.
(Source: P.A. 98-583, eff. 1-1-14.)
Section 20-20. The Retailers' Occupation Tax Act is amended
by changing Sections 2-5 and 2-50 as follows:
(35 ILCS 120/2-5)
Sec. 2-5. Exemptions. Gross receipts from proceeds from the
sale of the following tangible personal property are exempt
from the tax imposed by this Act:
(1) Farm chemicals.
(2) Farm machinery and equipment, both new and used,
including that manufactured on special order, certified by the

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purchaser to be used primarily for production agriculture or
State or federal agricultural programs, including individual
replacement parts for the machinery and equipment, including
machinery and equipment purchased for lease, and including
implements of husbandry defined in Section 1-130 of the
Illinois Vehicle Code, farm machinery and agricultural
chemical and fertilizer spreaders, and nurse wagons required to
be registered under Section 3-809 of the Illinois Vehicle Code,
but excluding other motor vehicles required to be registered
under the Illinois Vehicle Code. Horticultural polyhouses or
hoop houses used for propagating, growing, or overwintering
plants shall be considered farm machinery and equipment under
this item (2). Agricultural chemical tender tanks and dry boxes
shall include units sold separately from a motor vehicle
required to be licensed and units sold mounted on a motor
vehicle required to be licensed, if the selling price of the
tender is separately stated.
Farm machinery and equipment shall include precision
farming equipment that is installed or purchased to be
installed on farm machinery and equipment including, but not
limited to, tractors, harvesters, sprayers, planters, seeders,
or spreaders. Precision farming equipment includes, but is not
limited to, soil testing sensors, computers, monitors,
software, global positioning and mapping systems, and other
such equipment.
Farm machinery and equipment also includes computers,

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sensors, software, and related equipment used primarily in the
computer-assisted operation of production agriculture
facilities, equipment, and activities such as, but not limited
to, the collection, monitoring, and correlation of animal and
crop data for the purpose of formulating animal diets and
agricultural chemicals. This item (2) is exempt from the
provisions of Section 2-70.
(3) Until July 1, 2003, distillation machinery and
equipment, sold as a unit or kit, assembled or installed by the
retailer, certified by the user to be used only for the
production of ethyl alcohol that will be used for consumption
as motor fuel or as a component of motor fuel for the personal
use of the user, and not subject to sale or resale.
(4) Until July 1, 2003 and beginning again September 1,
2004 through August 30, 2014, graphic arts machinery and
equipment, including repair and replacement parts, both new and
used, and including that manufactured on special order or
purchased for lease, certified by the purchaser to be used
primarily for graphic arts production. Equipment includes
chemicals or chemicals acting as catalysts but only if the
chemicals or chemicals acting as catalysts effect a direct and
immediate change upon a graphic arts product.
(5) A motor vehicle that is used for automobile renting, as
defined in the Automobile Renting Occupation and Use Tax Act.
This paragraph is exempt from the provisions of Section 2-70.
(6) Personal property sold by a teacher-sponsored student

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organization affiliated with an elementary or secondary school
located in Illinois.
(7) Until July 1, 2003, proceeds of that portion of the
selling price of a passenger car the sale of which is subject
to the Replacement Vehicle Tax.
(8) Personal property sold to an Illinois county fair
association for use in conducting, operating, or promoting the
county fair.
(9) Personal property sold to a not-for-profit arts or
cultural organization that establishes, by proof required by
the Department by rule, that it has received an exemption under
Section 501(c)(3) of the Internal Revenue Code and that is
organized and operated primarily for the presentation or
support of arts or cultural programming, activities, or
services. These organizations include, but are not limited to,
music and dramatic arts organizations such as symphony
orchestras and theatrical groups, arts and cultural service
organizations, local arts councils, visual arts organizations,
and media arts organizations. On and after the effective date
of this amendatory Act of the 92nd General Assembly, however,
an entity otherwise eligible for this exemption shall not make
tax-free purchases unless it has an active identification
number issued by the Department.
(10) Personal property sold by a corporation, society,
association, foundation, institution, or organization, other
than a limited liability company, that is organized and

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operated as a not-for-profit service enterprise for the benefit
of persons 65 years of age or older if the personal property
was not purchased by the enterprise for the purpose of resale
by the enterprise.
(11) Personal property sold to a governmental body, to a
corporation, society, association, foundation, or institution
organized and operated exclusively for charitable, religious,
or educational purposes, or to a not-for-profit corporation,
society, association, foundation, institution, or organization
that has no compensated officers or employees and that is
organized and operated primarily for the recreation of persons
55 years of age or older. A limited liability company may
qualify for the exemption under this paragraph only if the
limited liability company is organized and operated
exclusively for educational purposes. On and after July 1,
1987, however, no entity otherwise eligible for this exemption
shall make tax-free purchases unless it has an active
identification number issued by the Department.
(12) Through December 31, 2016, tangible Tangible personal
property sold to interstate carriers for hire for use as
rolling stock moving in interstate commerce or to lessors under
leases of one year or longer executed or in effect at the time
of purchase by interstate carriers for hire for use as rolling
stock moving in interstate commerce and equipment operated by a
telecommunications provider, licensed as a common carrier by
the Federal Communications Commission, which is permanently

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installed in or affixed to aircraft moving in interstate
commerce.
(12-5) On and after July 1, 2003 and through June 30, 2004,
motor vehicles of the second division with a gross vehicle
weight in excess of 8,000 pounds that are subject to the
commercial distribution fee imposed under Section 3-815.1 of
the Illinois Vehicle Code. Beginning on July 1, 2004 and
through June 30, 2005, the use in this State of motor vehicles
of the second division: (i) with a gross vehicle weight rating
in excess of 8,000 pounds; (ii) that are subject to the
commercial distribution fee imposed under Section 3-815.1 of
the Illinois Vehicle Code; and (iii) that are primarily used
for commercial purposes. Through June 30, 2005, this exemption
applies to repair and replacement parts added after the initial
purchase of such a motor vehicle if that motor vehicle is used
in a manner that would qualify for the rolling stock exemption
otherwise provided for in this Act. For purposes of this
paragraph, "used for commercial purposes" means the
transportation of persons or property in furtherance of any
commercial or industrial enterprise whether for-hire or not.
(13) Through December 31, 2016, proceeds Proceeds from
sales to owners, lessors, or shippers of tangible personal
property that is utilized by interstate carriers for hire for
use as rolling stock moving in interstate commerce and
equipment operated by a telecommunications provider, licensed
as a common carrier by the Federal Communications Commission,

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which is permanently installed in or affixed to aircraft moving
in interstate commerce.
(14) Machinery and equipment that will be used by the
purchaser, or a lessee of the purchaser, primarily in the
process of manufacturing or assembling tangible personal
property for wholesale or retail sale or lease, whether the
sale or lease is made directly by the manufacturer or by some
other person, whether the materials used in the process are
owned by the manufacturer or some other person, or whether the
sale or lease is made apart from or as an incident to the
seller's engaging in the service occupation of producing
machines, tools, dies, jigs, patterns, gauges, or other similar
items of no commercial value on special order for a particular
purchaser. The exemption provided by this paragraph (14) does
not include machinery and equipment used in (i) the generation
of electricity for wholesale or retail sale; (ii) the
generation or treatment of natural or artificial gas for
wholesale or retail sale that is delivered to customers through
pipes, pipelines, or mains; or (iii) the treatment of water for
wholesale or retail sale that is delivered to customers through
pipes, pipelines, or mains. The provisions of Public Act 98-583
are declaratory of existing law as to the meaning and scope of
this exemption.
(15) Proceeds of mandatory service charges separately
stated on customers' bills for purchase and consumption of food
and beverages, to the extent that the proceeds of the service

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charge are in fact turned over as tips or as a substitute for
tips to the employees who participate directly in preparing,
serving, hosting or cleaning up the food or beverage function
with respect to which the service charge is imposed.
(16) Petroleum products sold to a purchaser if the seller
is prohibited by federal law from charging tax to the
purchaser.
(17) Tangible personal property sold to a common carrier by
rail or motor that receives the physical possession of the
property in Illinois and that transports the property, or
shares with another common carrier in the transportation of the
property, out of Illinois on a standard uniform bill of lading
showing the seller of the property as the shipper or consignor
of the property to a destination outside Illinois, for use
outside Illinois.
(18) Legal tender, currency, medallions, or gold or silver
coinage issued by the State of Illinois, the government of the
United States of America, or the government of any foreign
country, and bullion.
(19) Until July 1 2003, oil field exploration, drilling,
and production equipment, including (i) rigs and parts of rigs,
rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
tubular goods, including casing and drill strings, (iii) pumps
and pump-jack units, (iv) storage tanks and flow lines, (v) any
individual replacement part for oil field exploration,
drilling, and production equipment, and (vi) machinery and

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equipment purchased for lease; but excluding motor vehicles
required to be registered under the Illinois Vehicle Code.
(20) Photoprocessing machinery and equipment, including
repair and replacement parts, both new and used, including that
manufactured on special order, certified by the purchaser to be
used primarily for photoprocessing, and including
photoprocessing machinery and equipment purchased for lease.
(21) Coal and aggregate exploration, mining, off-highway
hauling, processing, maintenance, and reclamation equipment,
including replacement parts and equipment, and including
equipment purchased for lease, but excluding motor vehicles
required to be registered under the Illinois Vehicle Code. The
changes made to this Section by Public Act 97-767 apply on and
after July 1, 2003, but no claim for credit or refund is
allowed on or after August 16, 2013 (the effective date of
Public Act 98-456) for such taxes paid during the period
beginning July 1, 2003 and ending on August 16, 2013 (the
effective date of Public Act 98-456).
(22) Until June 30, 2013, fuel and petroleum products sold
to or used by an air carrier, certified by the carrier to be
used for consumption, shipment, or storage in the conduct of
its business as an air common carrier, for a flight destined
for or returning from a location or locations outside the
United States without regard to previous or subsequent domestic
stopovers.
Beginning July 1, 2013, fuel and petroleum products sold to

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or used by an air carrier, certified by the carrier to be used
for consumption, shipment, or storage in the conduct of its
business as an air common carrier, for a flight that (i) is
engaged in foreign trade or is engaged in trade between the
United States and any of its possessions and (ii) transports at
least one individual or package for hire from the city of
origination to the city of final destination on the same
aircraft, without regard to a change in the flight number of
that aircraft.
(23) A transaction in which the purchase order is received
by a florist who is located outside Illinois, but who has a
florist located in Illinois deliver the property to the
purchaser or the purchaser's donee in Illinois.
(24) Fuel consumed or used in the operation of ships,
barges, or vessels that are used primarily in or for the
transportation of property or the conveyance of persons for
hire on rivers bordering on this State if the fuel is delivered
by the seller to the purchaser's barge, ship, or vessel while
it is afloat upon that bordering river.
(25) Except as provided in item (25-5) of this Section, a
motor vehicle sold in this State to a nonresident even though
the motor vehicle is delivered to the nonresident in this
State, if the motor vehicle is not to be titled in this State,
and if a drive-away permit is issued to the motor vehicle as
provided in Section 3-603 of the Illinois Vehicle Code or if
the nonresident purchaser has vehicle registration plates to

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transfer to the motor vehicle upon returning to his or her home
state. The issuance of the drive-away permit or having the
out-of-state registration plates to be transferred is prima
facie evidence that the motor vehicle will not be titled in
this State.
(25-5) The exemption under item (25) does not apply if the
state in which the motor vehicle will be titled does not allow
a reciprocal exemption for a motor vehicle sold and delivered
in that state to an Illinois resident but titled in Illinois.
The tax collected under this Act on the sale of a motor vehicle
in this State to a resident of another state that does not
allow a reciprocal exemption shall be imposed at a rate equal
to the state's rate of tax on taxable property in the state in
which the purchaser is a resident, except that the tax shall
not exceed the tax that would otherwise be imposed under this
Act. At the time of the sale, the purchaser shall execute a
statement, signed under penalty of perjury, of his or her
intent to title the vehicle in the state in which the purchaser
is a resident within 30 days after the sale and of the fact of
the payment to the State of Illinois of tax in an amount
equivalent to the state's rate of tax on taxable property in
his or her state of residence and shall submit the statement to
the appropriate tax collection agency in his or her state of
residence. In addition, the retailer must retain a signed copy
of the statement in his or her records. Nothing in this item
shall be construed to require the removal of the vehicle from

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this state following the filing of an intent to title the
vehicle in the purchaser's state of residence if the purchaser
titles the vehicle in his or her state of residence within 30
days after the date of sale. The tax collected under this Act
in accordance with this item (25-5) shall be proportionately
distributed as if the tax were collected at the 6.25% general
rate imposed under this Act.
(25-7) Beginning on July 1, 2007, no tax is imposed under
this Act on the sale of an aircraft, as defined in Section 3 of
the Illinois Aeronautics Act, if all of the following
conditions are met:
(1) the aircraft leaves this State within 15 days after
the later of either the issuance of the final billing for
the sale of the aircraft, or the authorized approval for
return to service, completion of the maintenance record
entry, and completion of the test flight and ground test
for inspection, as required by 14 C.F.R. 91.407;
(2) the aircraft is not based or registered in this
State after the sale of the aircraft; and
(3) the seller retains in his or her books and records
and provides to the Department a signed and dated
certification from the purchaser, on a form prescribed by
the Department, certifying that the requirements of this
item (25-7) are met. The certificate must also include the
name and address of the purchaser, the address of the
location where the aircraft is to be titled or registered,

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the address of the primary physical location of the
aircraft, and other information that the Department may
reasonably require.
For purposes of this item (25-7):
"Based in this State" means hangared, stored, or otherwise
used, excluding post-sale customizations as defined in this
Section, for 10 or more days in each 12-month period
immediately following the date of the sale of the aircraft.
"Registered in this State" means an aircraft registered
with the Department of Transportation, Aeronautics Division,
or titled or registered with the Federal Aviation
Administration to an address located in this State.
This paragraph (25-7) is exempt from the provisions of
Section 2-70.
(26) Semen used for artificial insemination of livestock
for direct agricultural production.
(27) Horses, or interests in horses, registered with and
meeting the requirements of any of the Arabian Horse Club
Registry of America, Appaloosa Horse Club, American Quarter
Horse Association, United States Trotting Association, or
Jockey Club, as appropriate, used for purposes of breeding or
racing for prizes. This item (27) is exempt from the provisions
of Section 2-70, and the exemption provided for under this item
(27) applies for all periods beginning May 30, 1995, but no
claim for credit or refund is allowed on or after January 1,
2008 (the effective date of Public Act 95-88) for such taxes

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paid during the period beginning May 30, 2000 and ending on
January 1, 2008 (the effective date of Public Act 95-88).
(28) Computers and communications equipment utilized for
any hospital purpose and equipment used in the diagnosis,
analysis, or treatment of hospital patients sold to a lessor
who leases the equipment, under a lease of one year or longer
executed or in effect at the time of the purchase, to a
hospital that has been issued an active tax exemption
identification number by the Department under Section 1g of
this Act.
(29) Personal property sold to a lessor who leases the
property, under a lease of one year or longer executed or in
effect at the time of the purchase, to a governmental body that
has been issued an active tax exemption identification number
by the Department under Section 1g of this Act.
(30) Beginning with taxable years ending on or after
December 31, 1995 and ending with taxable years ending on or
before December 31, 2004, personal property that is donated for
disaster relief to be used in a State or federally declared
disaster area in Illinois or bordering Illinois by a
manufacturer or retailer that is registered in this State to a
corporation, society, association, foundation, or institution
that has been issued a sales tax exemption identification
number by the Department that assists victims of the disaster
who reside within the declared disaster area.
(31) Beginning with taxable years ending on or after

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December 31, 1995 and ending with taxable years ending on or
before December 31, 2004, personal property that is used in the
performance of infrastructure repairs in this State, including
but not limited to municipal roads and streets, access roads,
bridges, sidewalks, waste disposal systems, water and sewer
line extensions, water distribution and purification
facilities, storm water drainage and retention facilities, and
sewage treatment facilities, resulting from a State or
federally declared disaster in Illinois or bordering Illinois
when such repairs are initiated on facilities located in the
declared disaster area within 6 months after the disaster.
(32) Beginning July 1, 1999, game or game birds sold at a
"game breeding and hunting preserve area" as that term is used
in the Wildlife Code. This paragraph is exempt from the
provisions of Section 2-70.
(33) A motor vehicle, as that term is defined in Section
1-146 of the Illinois Vehicle Code, that is donated to a
corporation, limited liability company, society, association,
foundation, or institution that is determined by the Department
to be organized and operated exclusively for educational
purposes. For purposes of this exemption, "a corporation,
limited liability company, society, association, foundation,
or institution organized and operated exclusively for
educational purposes" means all tax-supported public schools,
private schools that offer systematic instruction in useful
branches of learning by methods common to public schools and

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that compare favorably in their scope and intensity with the
course of study presented in tax-supported schools, and
vocational or technical schools or institutes organized and
operated exclusively to provide a course of study of not less
than 6 weeks duration and designed to prepare individuals to
follow a trade or to pursue a manual, technical, mechanical,
industrial, business, or commercial occupation.
(34) Beginning January 1, 2000, personal property,
including food, purchased through fundraising events for the
benefit of a public or private elementary or secondary school,
a group of those schools, or one or more school districts if
the events are sponsored by an entity recognized by the school
district that consists primarily of volunteers and includes
parents and teachers of the school children. This paragraph
does not apply to fundraising events (i) for the benefit of
private home instruction or (ii) for which the fundraising
entity purchases the personal property sold at the events from
another individual or entity that sold the property for the
purpose of resale by the fundraising entity and that profits
from the sale to the fundraising entity. This paragraph is
exempt from the provisions of Section 2-70.
(35) Beginning January 1, 2000 and through December 31,
2001, new or used automatic vending machines that prepare and
serve hot food and beverages, including coffee, soup, and other
items, and replacement parts for these machines. Beginning
January 1, 2002 and through June 30, 2003, machines and parts

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for machines used in commercial, coin-operated amusement and
vending business if a use or occupation tax is paid on the
gross receipts derived from the use of the commercial,
coin-operated amusement and vending machines. This paragraph
is exempt from the provisions of Section 2-70.
(35-5) Beginning August 23, 2001 and through June 30, 2016,
food for human consumption that is to be consumed off the
premises where it is sold (other than alcoholic beverages, soft
drinks, and food that has been prepared for immediate
consumption) and prescription and nonprescription medicines,
drugs, medical appliances, and insulin, urine testing
materials, syringes, and needles used by diabetics, for human
use, when purchased for use by a person receiving medical
assistance under Article V of the Illinois Public Aid Code who
resides in a licensed long-term care facility, as defined in
the Nursing Home Care Act, or a licensed facility as defined in
the ID/DD Community Care Act, the MC/DD Act, or the Specialized
Mental Health Rehabilitation Act of 2013.
(36) Beginning August 2, 2001, computers and
communications equipment utilized for any hospital purpose and
equipment used in the diagnosis, analysis, or treatment of
hospital patients sold to a lessor who leases the equipment,
under a lease of one year or longer executed or in effect at
the time of the purchase, to a hospital that has been issued an
active tax exemption identification number by the Department
under Section 1g of this Act. This paragraph is exempt from the

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provisions of Section 2-70.
(37) Beginning August 2, 2001, personal property sold to a
lessor who leases the property, under a lease of one year or
longer executed or in effect at the time of the purchase, to a
governmental body that has been issued an active tax exemption
identification number by the Department under Section 1g of
this Act. This paragraph is exempt from the provisions of
Section 2-70.
(38) Beginning on January 1, 2002 and through June 30,
2016, tangible personal property purchased from an Illinois
retailer by a taxpayer engaged in centralized purchasing
activities in Illinois who will, upon receipt of the property
in Illinois, temporarily store the property in Illinois (i) for
the purpose of subsequently transporting it outside this State
for use or consumption thereafter solely outside this State or
(ii) for the purpose of being processed, fabricated, or
manufactured into, attached to, or incorporated into other
tangible personal property to be transported outside this State
and thereafter used or consumed solely outside this State. The
Director of Revenue shall, pursuant to rules adopted in
accordance with the Illinois Administrative Procedure Act,
issue a permit to any taxpayer in good standing with the
Department who is eligible for the exemption under this
paragraph (38). The permit issued under this paragraph (38)
shall authorize the holder, to the extent and in the manner
specified in the rules adopted under this Act, to purchase

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tangible personal property from a retailer exempt from the
taxes imposed by this Act. Taxpayers shall maintain all
necessary books and records to substantiate the use and
consumption of all such tangible personal property outside of
the State of Illinois.
(39) Beginning January 1, 2008, tangible personal property
used in the construction or maintenance of a community water
supply, as defined under Section 3.145 of the Environmental
Protection Act, that is operated by a not-for-profit
corporation that holds a valid water supply permit issued under
Title IV of the Environmental Protection Act. This paragraph is
exempt from the provisions of Section 2-70.
(40) Beginning January 1, 2010, materials, parts,
equipment, components, and furnishings incorporated into or
upon an aircraft as part of the modification, refurbishment,
completion, replacement, repair, or maintenance of the
aircraft. This exemption includes consumable supplies used in
the modification, refurbishment, completion, replacement,
repair, and maintenance of aircraft, but excludes any
materials, parts, equipment, components, and consumable
supplies used in the modification, replacement, repair, and
maintenance of aircraft engines or power plants, whether such
engines or power plants are installed or uninstalled upon any
such aircraft. "Consumable supplies" include, but are not
limited to, adhesive, tape, sandpaper, general purpose
lubricants, cleaning solution, latex gloves, and protective

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films. This exemption applies only to the sale of qualifying
tangible personal property to persons who modify, refurbish,
complete, replace, or maintain an aircraft and who (i) hold an
Air Agency Certificate and are empowered to operate an approved
repair station by the Federal Aviation Administration, (ii)
have a Class IV Rating, and (iii) conduct operations in
accordance with Part 145 of the Federal Aviation Regulations.
The exemption does not include aircraft operated by a
commercial air carrier providing scheduled passenger air
service pursuant to authority issued under Part 121 or Part 129
of the Federal Aviation Regulations. The changes made to this
paragraph (40) by Public Act 98-534 are declarative of existing
law.
(41) Tangible personal property sold to a
public-facilities corporation, as described in Section
11-65-10 of the Illinois Municipal Code, for purposes of
constructing or furnishing a municipal convention hall, but
only if the legal title to the municipal convention hall is
transferred to the municipality without any further
consideration by or on behalf of the municipality at the time
of the completion of the municipal convention hall or upon the
retirement or redemption of any bonds or other debt instruments
issued by the public-facilities corporation in connection with
the development of the municipal convention hall. This
exemption includes existing public-facilities corporations as
provided in Section 11-65-25 of the Illinois Municipal Code.

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This paragraph is exempt from the provisions of Section 2-70.
(42) Beginning January 1, 2017, menstrual pads, tampons,
and menstrual cups.
(Source: P.A. 98-104, eff. 7-22-13; 98-422, eff. 8-16-13;
98-456, eff. 8-16-13; 98-534, eff. 8-23-13; 98-574, eff.
1-1-14; 98-583, eff. 1-1-14; 98-756, eff. 7-16-14; 99-180, eff.
7-29-15; 99-855, eff. 8-19-16.)
(35 ILCS 120/2-50) (from Ch. 120, par. 441-50)
Sec. 2-50. Rolling stock exemption. Except as provided in
Section 2-51 of this Act, through June 30, 2016, the the
rolling stock exemption applies to rolling stock used by an
interstate carrier for hire, even just between points in
Illinois, if the rolling stock transports, for hire, persons
whose journeys or property whose shipments originate or
terminate outside Illinois.
(Source: P.A. 93-23, eff. 6-20-03.)
ARTICLE 25. GASOHOL
Section 25-5. The Use Tax Act is amended by changing
Section 3-10 as follows:
(35 ILCS 105/3-10)
Sec. 3-10. Rate of tax. Unless otherwise provided in this
Section, the tax imposed by this Act is at the rate of 6.25% of

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either the selling price or the fair market value, if any, of
the tangible personal property. In all cases where property
functionally used or consumed is the same as the property that
was purchased at retail, then the tax is imposed on the selling
price of the property. In all cases where property functionally
used or consumed is a by-product or waste product that has been
refined, manufactured, or produced from property purchased at
retail, then the tax is imposed on the lower of the fair market
value, if any, of the specific property so used in this State
or on the selling price of the property purchased at retail.
For purposes of this Section "fair market value" means the
price at which property would change hands between a willing
buyer and a willing seller, neither being under any compulsion
to buy or sell and both having reasonable knowledge of the
relevant facts. The fair market value shall be established by
Illinois sales by the taxpayer of the same property as that
functionally used or consumed, or if there are no such sales by
the taxpayer, then comparable sales or purchases of property of
like kind and character in Illinois.
Beginning on July 1, 2000 and through December 31, 2000,
with respect to motor fuel, as defined in Section 1.1 of the
Motor Fuel Tax Law, and gasohol, as defined in Section 3-40 of
the Use Tax Act, the tax is imposed at the rate of 1.25%.
Beginning on August 6, 2010 through August 15, 2010, with
respect to sales tax holiday items as defined in Section 3-6 of
this Act, the tax is imposed at the rate of 1.25%.

09900HB0293ham001 - 327 - LRB099 04265 HLH 51448 a
With respect to gasohol, the tax imposed by this Act
applies to (i) 70% of the proceeds of sales made on or after
January 1, 1990, and before July 1, 2003, (ii) 80% of the
proceeds of sales made on or after July 1, 2003 and on or
before December 31, 2016 December 31, 2018, and (iii) 100% of
the proceeds of sales made thereafter. If, at any time,
however, the tax under this Act on sales of gasohol is imposed
at the rate of 1.25%, then the tax imposed by this Act applies
to 100% of the proceeds of sales of gasohol made during that
time.
With respect to majority blended ethanol fuel, the tax
imposed by this Act does not apply to the proceeds of sales
made on or after July 1, 2003 and on or before December 31,
2018 but applies to 100% of the proceeds of sales made
thereafter.
With respect to biodiesel blends with no less than 1% and
no more than 10% biodiesel, the tax imposed by this Act applies
to (i) 80% of the proceeds of sales made on or after July 1,
2003 and on or before December 31, 2018 and (ii) 100% of the
proceeds of sales made thereafter. If, at any time, however,
the tax under this Act on sales of biodiesel blends with no
less than 1% and no more than 10% biodiesel is imposed at the
rate of 1.25%, then the tax imposed by this Act applies to 100%
of the proceeds of sales of biodiesel blends with no less than
1% and no more than 10% biodiesel made during that time.
With respect to 100% biodiesel and biodiesel blends with

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more than 10% but no more than 99% biodiesel, the tax imposed
by this Act does not apply to the proceeds of sales made on or
after July 1, 2003 and on or before December 31, 2018 but
applies to 100% of the proceeds of sales made thereafter.
With respect to food for human consumption that is to be
consumed off the premises where it is sold (other than
alcoholic beverages, soft drinks, and food that has been
prepared for immediate consumption) and prescription and
nonprescription medicines, drugs, medical appliances, products
classified as Class III medical devices by the United States
Food and Drug Administration that are used for cancer treatment
pursuant to a prescription, as well as any accessories and
components related to those devices, modifications to a motor
vehicle for the purpose of rendering it usable by a person with
a disability, and insulin, urine testing materials, syringes,
and needles used by diabetics, for human use, the tax is
imposed at the rate of 1%. For the purposes of this Section,
until September 1, 2009: the term "soft drinks" means any
complete, finished, ready-to-use, non-alcoholic drink, whether
carbonated or not, including but not limited to soda water,
cola, fruit juice, vegetable juice, carbonated water, and all
other preparations commonly known as soft drinks of whatever
kind or description that are contained in any closed or sealed
bottle, can, carton, or container, regardless of size; but
"soft drinks" does not include coffee, tea, non-carbonated
water, infant formula, milk or milk products as defined in the

09900HB0293ham001 - 329 - LRB099 04265 HLH 51448 a
Grade A Pasteurized Milk and Milk Products Act, or drinks
containing 50% or more natural fruit or vegetable juice.
Notwithstanding any other provisions of this Act,
beginning September 1, 2009, "soft drinks" means non-alcoholic
beverages that contain natural or artificial sweeteners. "Soft
drinks" do not include beverages that contain milk or milk
products, soy, rice or similar milk substitutes, or greater
than 50% of vegetable or fruit juice by volume.
Until August 1, 2009, and notwithstanding any other
provisions of this Act, "food for human consumption that is to
be consumed off the premises where it is sold" includes all
food sold through a vending machine, except soft drinks and
food products that are dispensed hot from a vending machine,
regardless of the location of the vending machine. Beginning
August 1, 2009, and notwithstanding any other provisions of
this Act, "food for human consumption that is to be consumed
off the premises where it is sold" includes all food sold
through a vending machine, except soft drinks, candy, and food
products that are dispensed hot from a vending machine,
regardless of the location of the vending machine.
Notwithstanding any other provisions of this Act,
beginning September 1, 2009, "food for human consumption that
is to be consumed off the premises where it is sold" does not
include candy. For purposes of this Section, "candy" means a
preparation of sugar, honey, or other natural or artificial
sweeteners in combination with chocolate, fruits, nuts or other

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ingredients or flavorings in the form of bars, drops, or
pieces. "Candy" does not include any preparation that contains
flour or requires refrigeration.
Notwithstanding any other provisions of this Act,
beginning September 1, 2009, "nonprescription medicines and
drugs" does not include grooming and hygiene products. For
purposes of this Section, "grooming and hygiene products"
includes, but is not limited to, soaps and cleaning solutions,
shampoo, toothpaste, mouthwash, antiperspirants, and sun tan
lotions and screens, unless those products are available by
prescription only, regardless of whether the products meet the
definition of "over-the-counter-drugs". For the purposes of
this paragraph, "over-the-counter-drug" means a drug for human
use that contains a label that identifies the product as a drug
as required by 21 C.F.R. § 201.66. The "over-the-counter-drug"
label includes:
(A) A "Drug Facts" panel; or
(B) A statement of the "active ingredient(s)" with a
list of those ingredients contained in the compound,
substance or preparation.
Beginning on the effective date of this amendatory Act of
the 98th General Assembly, "prescription and nonprescription
medicines and drugs" includes medical cannabis purchased from a
registered dispensing organization under the Compassionate Use
of Medical Cannabis Pilot Program Act.
If the property that is purchased at retail from a retailer

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is acquired outside Illinois and used outside Illinois before
being brought to Illinois for use here and is taxable under
this Act, the "selling price" on which the tax is computed
shall be reduced by an amount that represents a reasonable
allowance for depreciation for the period of prior out-of-state
use.
(Source: P.A. 98-122, eff. 1-1-14; 99-143, eff. 7-27-15;
99-858, eff. 8-19-16.)
Section 25-10. The Service Use Tax Act is amended by
changing Section 3-10 as follows:
(35 ILCS 110/3-10) (from Ch. 120, par. 439.33-10)
Sec. 3-10. Rate of tax. Unless otherwise provided in this
Section, the tax imposed by this Act is at the rate of 6.25% of
the selling price of tangible personal property transferred as
an incident to the sale of service, but, for the purpose of
computing this tax, in no event shall the selling price be less
than the cost price of the property to the serviceman.
Beginning on July 1, 2000 and through December 31, 2000,
with respect to motor fuel, as defined in Section 1.1 of the
Motor Fuel Tax Law, and gasohol, as defined in Section 3-40 of
the Use Tax Act, the tax is imposed at the rate of 1.25%.
With respect to gasohol, as defined in the Use Tax Act, the
tax imposed by this Act applies to (i) 70% of the selling price
of property transferred as an incident to the sale of service

09900HB0293ham001 - 332 - LRB099 04265 HLH 51448 a
on or after January 1, 1990, and before July 1, 2003, (ii) 80%
of the selling price of property transferred as an incident to
the sale of service on or after July 1, 2003 and on or before
December 31, 2016 December 31, 2018, and (iii) 100% of the
selling price thereafter. If, at any time, however, the tax
under this Act on sales of gasohol, as defined in the Use Tax
Act, is imposed at the rate of 1.25%, then the tax imposed by
this Act applies to 100% of the proceeds of sales of gasohol
made during that time.
With respect to majority blended ethanol fuel, as defined
in the Use Tax Act, the tax imposed by this Act does not apply
to the selling price of property transferred as an incident to
the sale of service on or after July 1, 2003 and on or before
December 31, 2018 but applies to 100% of the selling price
thereafter.
With respect to biodiesel blends, as defined in the Use Tax
Act, with no less than 1% and no more than 10% biodiesel, the
tax imposed by this Act applies to (i) 80% of the selling price
of property transferred as an incident to the sale of service
on or after July 1, 2003 and on or before December 31, 2018 and
(ii) 100% of the proceeds of the selling price thereafter. If,
at any time, however, the tax under this Act on sales of
biodiesel blends, as defined in the Use Tax Act, with no less
than 1% and no more than 10% biodiesel is imposed at the rate
of 1.25%, then the tax imposed by this Act applies to 100% of
the proceeds of sales of biodiesel blends with no less than 1%

09900HB0293ham001 - 333 - LRB099 04265 HLH 51448 a
and no more than 10% biodiesel made during that time.
With respect to 100% biodiesel, as defined in the Use Tax
Act, and biodiesel blends, as defined in the Use Tax Act, with
more than 10% but no more than 99% biodiesel, the tax imposed
by this Act does not apply to the proceeds of the selling price
of property transferred as an incident to the sale of service
on or after July 1, 2003 and on or before December 31, 2018 but
applies to 100% of the selling price thereafter.
At the election of any registered serviceman made for each
fiscal year, sales of service in which the aggregate annual
cost price of tangible personal property transferred as an
incident to the sales of service is less than 35%, or 75% in
the case of servicemen transferring prescription drugs or
servicemen engaged in graphic arts production, of the aggregate
annual total gross receipts from all sales of service, the tax
imposed by this Act shall be based on the serviceman's cost
price of the tangible personal property transferred as an
incident to the sale of those services.
The tax shall be imposed at the rate of 1% on food prepared
for immediate consumption and transferred incident to a sale of
service subject to this Act or the Service Occupation Tax Act
by an entity licensed under the Hospital Licensing Act, the
Nursing Home Care Act, the ID/DD Community Care Act, the MC/DD
Act, the Specialized Mental Health Rehabilitation Act of 2013,
or the Child Care Act of 1969. The tax shall also be imposed at
the rate of 1% on food for human consumption that is to be

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consumed off the premises where it is sold (other than
alcoholic beverages, soft drinks, and food that has been
prepared for immediate consumption and is not otherwise
included in this paragraph) and prescription and
nonprescription medicines, drugs, medical appliances, products
classified as Class III medical devices by the United States
Food and Drug Administration that are used for cancer treatment
pursuant to a prescription, as well as any accessories and
components related to those devices, modifications to a motor
vehicle for the purpose of rendering it usable by a person with
a disability, and insulin, urine testing materials, syringes,
and needles used by diabetics, for human use. For the purposes
of this Section, until September 1, 2009: the term "soft
drinks" means any complete, finished, ready-to-use,
non-alcoholic drink, whether carbonated or not, including but
not limited to soda water, cola, fruit juice, vegetable juice,
carbonated water, and all other preparations commonly known as
soft drinks of whatever kind or description that are contained
in any closed or sealed bottle, can, carton, or container,
regardless of size; but "soft drinks" does not include coffee,
tea, non-carbonated water, infant formula, milk or milk
products as defined in the Grade A Pasteurized Milk and Milk
Products Act, or drinks containing 50% or more natural fruit or
vegetable juice.
Notwithstanding any other provisions of this Act,
beginning September 1, 2009, "soft drinks" means non-alcoholic

09900HB0293ham001 - 335 - LRB099 04265 HLH 51448 a
beverages that contain natural or artificial sweeteners. "Soft
drinks" do not include beverages that contain milk or milk
products, soy, rice or similar milk substitutes, or greater
than 50% of vegetable or fruit juice by volume.
Until August 1, 2009, and notwithstanding any other
provisions of this Act, "food for human consumption that is to
be consumed off the premises where it is sold" includes all
food sold through a vending machine, except soft drinks and
food products that are dispensed hot from a vending machine,
regardless of the location of the vending machine. Beginning
August 1, 2009, and notwithstanding any other provisions of
this Act, "food for human consumption that is to be consumed
off the premises where it is sold" includes all food sold
through a vending machine, except soft drinks, candy, and food
products that are dispensed hot from a vending machine,
regardless of the location of the vending machine.
Notwithstanding any other provisions of this Act,
beginning September 1, 2009, "food for human consumption that
is to be consumed off the premises where it is sold" does not
include candy. For purposes of this Section, "candy" means a
preparation of sugar, honey, or other natural or artificial
sweeteners in combination with chocolate, fruits, nuts or other
ingredients or flavorings in the form of bars, drops, or
pieces. "Candy" does not include any preparation that contains
flour or requires refrigeration.
Notwithstanding any other provisions of this Act,

09900HB0293ham001 - 336 - LRB099 04265 HLH 51448 a
beginning September 1, 2009, "nonprescription medicines and
drugs" does not include grooming and hygiene products. For
purposes of this Section, "grooming and hygiene products"
includes, but is not limited to, soaps and cleaning solutions,
shampoo, toothpaste, mouthwash, antiperspirants, and sun tan
lotions and screens, unless those products are available by
prescription only, regardless of whether the products meet the
definition of "over-the-counter-drugs". For the purposes of
this paragraph, "over-the-counter-drug" means a drug for human
use that contains a label that identifies the product as a drug
as required by 21 C.F.R. § 201.66. The "over-the-counter-drug"
label includes:
(A) A "Drug Facts" panel; or
(B) A statement of the "active ingredient(s)" with a
list of those ingredients contained in the compound,
substance or preparation.
Beginning on January 1, 2014 (the effective date of Public
Act 98-122), "prescription and nonprescription medicines and
drugs" includes medical cannabis purchased from a registered
dispensing organization under the Compassionate Use of Medical
Cannabis Pilot Program Act.
If the property that is acquired from a serviceman is
acquired outside Illinois and used outside Illinois before
being brought to Illinois for use here and is taxable under
this Act, the "selling price" on which the tax is computed
shall be reduced by an amount that represents a reasonable

09900HB0293ham001 - 337 - LRB099 04265 HLH 51448 a
allowance for depreciation for the period of prior out-of-state
use.
(Source: P.A. 98-104, eff. 7-22-13; 98-122, eff. 1-1-14;
98-756, eff. 7-16-14; 99-143, eff. 7-27-15; 99-180, eff.
7-29-15; 99-642, eff. 7-28-16; 99-858, eff. 8-19-16.)
Section 25-15. The Service Occupation Tax Act is amended by
changing Section 3-10 as follows:
(35 ILCS 115/3-10) (from Ch. 120, par. 439.103-10)
Sec. 3-10. Rate of tax. Unless otherwise provided in this
Section, the tax imposed by this Act is at the rate of 6.25% of
the "selling price", as defined in Section 2 of the Service Use
Tax Act, of the tangible personal property. For the purpose of
computing this tax, in no event shall the "selling price" be
less than the cost price to the serviceman of the tangible
personal property transferred. The selling price of each item
of tangible personal property transferred as an incident of a
sale of service may be shown as a distinct and separate item on
the serviceman's billing to the service customer. If the
selling price is not so shown, the selling price of the
tangible personal property is deemed to be 50% of the
serviceman's entire billing to the service customer. When,
however, a serviceman contracts to design, develop, and produce
special order machinery or equipment, the tax imposed by this
Act shall be based on the serviceman's cost price of the

09900HB0293ham001 - 338 - LRB099 04265 HLH 51448 a
tangible personal property transferred incident to the
completion of the contract.
Beginning on July 1, 2000 and through December 31, 2000,
with respect to motor fuel, as defined in Section 1.1 of the
Motor Fuel Tax Law, and gasohol, as defined in Section 3-40 of
the Use Tax Act, the tax is imposed at the rate of 1.25%.
With respect to gasohol, as defined in the Use Tax Act, the
tax imposed by this Act shall apply to (i) 70% of the cost
price of property transferred as an incident to the sale of
service on or after January 1, 1990, and before July 1, 2003,
(ii) 80% of the selling price of property transferred as an
incident to the sale of service on or after July 1, 2003 and on
or before December 31, 2016 December 31, 2018, and (iii) 100%
of the cost price thereafter. If, at any time, however, the tax
under this Act on sales of gasohol, as defined in the Use Tax
Act, is imposed at the rate of 1.25%, then the tax imposed by
this Act applies to 100% of the proceeds of sales of gasohol
made during that time.
With respect to majority blended ethanol fuel, as defined
in the Use Tax Act, the tax imposed by this Act does not apply
to the selling price of property transferred as an incident to
the sale of service on or after July 1, 2003 and on or before
December 31, 2018 but applies to 100% of the selling price
thereafter.
With respect to biodiesel blends, as defined in the Use Tax
Act, with no less than 1% and no more than 10% biodiesel, the

09900HB0293ham001 - 339 - LRB099 04265 HLH 51448 a
tax imposed by this Act applies to (i) 80% of the selling price
of property transferred as an incident to the sale of service
on or after July 1, 2003 and on or before December 31, 2018 and
(ii) 100% of the proceeds of the selling price thereafter. If,
at any time, however, the tax under this Act on sales of
biodiesel blends, as defined in the Use Tax Act, with no less
than 1% and no more than 10% biodiesel is imposed at the rate
of 1.25%, then the tax imposed by this Act applies to 100% of
the proceeds of sales of biodiesel blends with no less than 1%
and no more than 10% biodiesel made during that time.
With respect to 100% biodiesel, as defined in the Use Tax
Act, and biodiesel blends, as defined in the Use Tax Act, with
more than 10% but no more than 99% biodiesel material, the tax
imposed by this Act does not apply to the proceeds of the
selling price of property transferred as an incident to the
sale of service on or after July 1, 2003 and on or before
December 31, 2018 but applies to 100% of the selling price
thereafter.
At the election of any registered serviceman made for each
fiscal year, sales of service in which the aggregate annual
cost price of tangible personal property transferred as an
incident to the sales of service is less than 35%, or 75% in
the case of servicemen transferring prescription drugs or
servicemen engaged in graphic arts production, of the aggregate
annual total gross receipts from all sales of service, the tax
imposed by this Act shall be based on the serviceman's cost

09900HB0293ham001 - 340 - LRB099 04265 HLH 51448 a
price of the tangible personal property transferred incident to
the sale of those services.
The tax shall be imposed at the rate of 1% on food prepared
for immediate consumption and transferred incident to a sale of
service subject to this Act or the Service Occupation Tax Act
by an entity licensed under the Hospital Licensing Act, the
Nursing Home Care Act, the ID/DD Community Care Act, the MC/DD
Act, the Specialized Mental Health Rehabilitation Act of 2013,
or the Child Care Act of 1969. The tax shall also be imposed at
the rate of 1% on food for human consumption that is to be
consumed off the premises where it is sold (other than
alcoholic beverages, soft drinks, and food that has been
prepared for immediate consumption and is not otherwise
included in this paragraph) and prescription and
nonprescription medicines, drugs, medical appliances, products
classified as Class III medical devices by the United States
Food and Drug Administration that are used for cancer treatment
pursuant to a prescription, as well as any accessories and
components related to those devices, modifications to a motor
vehicle for the purpose of rendering it usable by a person with
a disability, and insulin, urine testing materials, syringes,
and needles used by diabetics, for human use. For the purposes
of this Section, until September 1, 2009: the term "soft
drinks" means any complete, finished, ready-to-use,
non-alcoholic drink, whether carbonated or not, including but
not limited to soda water, cola, fruit juice, vegetable juice,

09900HB0293ham001 - 341 - LRB099 04265 HLH 51448 a
carbonated water, and all other preparations commonly known as
soft drinks of whatever kind or description that are contained
in any closed or sealed can, carton, or container, regardless
of size; but "soft drinks" does not include coffee, tea,
non-carbonated water, infant formula, milk or milk products as
defined in the Grade A Pasteurized Milk and Milk Products Act,
or drinks containing 50% or more natural fruit or vegetable
juice.
Notwithstanding any other provisions of this Act,
beginning September 1, 2009, "soft drinks" means non-alcoholic
beverages that contain natural or artificial sweeteners. "Soft
drinks" do not include beverages that contain milk or milk
products, soy, rice or similar milk substitutes, or greater
than 50% of vegetable or fruit juice by volume.
Until August 1, 2009, and notwithstanding any other
provisions of this Act, "food for human consumption that is to
be consumed off the premises where it is sold" includes all
food sold through a vending machine, except soft drinks and
food products that are dispensed hot from a vending machine,
regardless of the location of the vending machine. Beginning
August 1, 2009, and notwithstanding any other provisions of
this Act, "food for human consumption that is to be consumed
off the premises where it is sold" includes all food sold
through a vending machine, except soft drinks, candy, and food
products that are dispensed hot from a vending machine,
regardless of the location of the vending machine.

09900HB0293ham001 - 342 - LRB099 04265 HLH 51448 a
Notwithstanding any other provisions of this Act,
beginning September 1, 2009, "food for human consumption that
is to be consumed off the premises where it is sold" does not
include candy. For purposes of this Section, "candy" means a
preparation of sugar, honey, or other natural or artificial
sweeteners in combination with chocolate, fruits, nuts or other
ingredients or flavorings in the form of bars, drops, or
pieces. "Candy" does not include any preparation that contains
flour or requires refrigeration.
Notwithstanding any other provisions of this Act,
beginning September 1, 2009, "nonprescription medicines and
drugs" does not include grooming and hygiene products. For
purposes of this Section, "grooming and hygiene products"
includes, but is not limited to, soaps and cleaning solutions,
shampoo, toothpaste, mouthwash, antiperspirants, and sun tan
lotions and screens, unless those products are available by
prescription only, regardless of whether the products meet the
definition of "over-the-counter-drugs". For the purposes of
this paragraph, "over-the-counter-drug" means a drug for human
use that contains a label that identifies the product as a drug
as required by 21 C.F.R. § 201.66. The "over-the-counter-drug"
label includes:
(A) A "Drug Facts" panel; or
(B) A statement of the "active ingredient(s)" with a
list of those ingredients contained in the compound,
substance or preparation.

09900HB0293ham001 - 343 - LRB099 04265 HLH 51448 a
Beginning on January 1, 2014 (the effective date of Public
Act 98-122), "prescription and nonprescription medicines and
drugs" includes medical cannabis purchased from a registered
dispensing organization under the Compassionate Use of Medical
Cannabis Pilot Program Act.
(Source: P.A. 98-104, eff. 7-22-13; 98-122, eff. 1-1-14;
98-756, eff. 7-16-14; 99-143, eff. 7-27-15; 99-180, eff.
7-29-15; 99-642, eff. 7-28-16; 99-858, eff. 8-19-16.)
Section 25-20. The Retailers' Occupation Tax Act is amended
by changing Section 2-10 as follows:
(35 ILCS 120/2-10)
Sec. 2-10. Rate of tax. Unless otherwise provided in this
Section, the tax imposed by this Act is at the rate of 6.25% of
gross receipts from sales of tangible personal property made in
the course of business.
Beginning on July 1, 2000 and through December 31, 2000,
with respect to motor fuel, as defined in Section 1.1 of the
Motor Fuel Tax Law, and gasohol, as defined in Section 3-40 of
the Use Tax Act, the tax is imposed at the rate of 1.25%.
Beginning on August 6, 2010 through August 15, 2010, with
respect to sales tax holiday items as defined in Section 2-8 of
this Act, the tax is imposed at the rate of 1.25%.
Within 14 days after the effective date of this amendatory
Act of the 91st General Assembly, each retailer of motor fuel

09900HB0293ham001 - 344 - LRB099 04265 HLH 51448 a
and gasohol shall cause the following notice to be posted in a
prominently visible place on each retail dispensing device that
is used to dispense motor fuel or gasohol in the State of
Illinois: "As of July 1, 2000, the State of Illinois has
eliminated the State's share of sales tax on motor fuel and
gasohol through December 31, 2000. The price on this pump
should reflect the elimination of the tax." The notice shall be
printed in bold print on a sign that is no smaller than 4
inches by 8 inches. The sign shall be clearly visible to
customers. Any retailer who fails to post or maintain a
required sign through December 31, 2000 is guilty of a petty
offense for which the fine shall be $500 per day per each
retail premises where a violation occurs.
With respect to gasohol, as defined in the Use Tax Act, the
tax imposed by this Act applies to (i) 70% of the proceeds of
sales made on or after January 1, 1990, and before July 1,
2003, (ii) 80% of the proceeds of sales made on or after July
1, 2003 and on or before December 31, 2016 December 31, 2018,
and (iii) 100% of the proceeds of sales made thereafter. If, at
any time, however, the tax under this Act on sales of gasohol,
as defined in the Use Tax Act, is imposed at the rate of 1.25%,
then the tax imposed by this Act applies to 100% of the
proceeds of sales of gasohol made during that time.
With respect to majority blended ethanol fuel, as defined
in the Use Tax Act, the tax imposed by this Act does not apply
to the proceeds of sales made on or after July 1, 2003 and on or

09900HB0293ham001 - 345 - LRB099 04265 HLH 51448 a
before December 31, 2018 but applies to 100% of the proceeds of
sales made thereafter.
With respect to biodiesel blends, as defined in the Use Tax
Act, with no less than 1% and no more than 10% biodiesel, the
tax imposed by this Act applies to (i) 80% of the proceeds of
sales made on or after July 1, 2003 and on or before December
31, 2018 and (ii) 100% of the proceeds of sales made
thereafter. If, at any time, however, the tax under this Act on
sales of biodiesel blends, as defined in the Use Tax Act, with
no less than 1% and no more than 10% biodiesel is imposed at
the rate of 1.25%, then the tax imposed by this Act applies to
100% of the proceeds of sales of biodiesel blends with no less
than 1% and no more than 10% biodiesel made during that time.
With respect to 100% biodiesel, as defined in the Use Tax
Act, and biodiesel blends, as defined in the Use Tax Act, with
more than 10% but no more than 99% biodiesel, the tax imposed
by this Act does not apply to the proceeds of sales made on or
after July 1, 2003 and on or before December 31, 2018 but
applies to 100% of the proceeds of sales made thereafter.
With respect to food for human consumption that is to be
consumed off the premises where it is sold (other than
alcoholic beverages, soft drinks, and food that has been
prepared for immediate consumption) and prescription and
nonprescription medicines, drugs, medical appliances, products
classified as Class III medical devices by the United States
Food and Drug Administration that are used for cancer treatment

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pursuant to a prescription, as well as any accessories and
components related to those devices, modifications to a motor
vehicle for the purpose of rendering it usable by a person with
a disability, and insulin, urine testing materials, syringes,
and needles used by diabetics, for human use, the tax is
imposed at the rate of 1%. For the purposes of this Section,
until September 1, 2009: the term "soft drinks" means any
complete, finished, ready-to-use, non-alcoholic drink, whether
carbonated or not, including but not limited to soda water,
cola, fruit juice, vegetable juice, carbonated water, and all
other preparations commonly known as soft drinks of whatever
kind or description that are contained in any closed or sealed
bottle, can, carton, or container, regardless of size; but
"soft drinks" does not include coffee, tea, non-carbonated
water, infant formula, milk or milk products as defined in the
Grade A Pasteurized Milk and Milk Products Act, or drinks
containing 50% or more natural fruit or vegetable juice.
Notwithstanding any other provisions of this Act,
beginning September 1, 2009, "soft drinks" means non-alcoholic
beverages that contain natural or artificial sweeteners. "Soft
drinks" do not include beverages that contain milk or milk
products, soy, rice or similar milk substitutes, or greater
than 50% of vegetable or fruit juice by volume.
Until August 1, 2009, and notwithstanding any other
provisions of this Act, "food for human consumption that is to
be consumed off the premises where it is sold" includes all

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food sold through a vending machine, except soft drinks and
food products that are dispensed hot from a vending machine,
regardless of the location of the vending machine. Beginning
August 1, 2009, and notwithstanding any other provisions of
this Act, "food for human consumption that is to be consumed
off the premises where it is sold" includes all food sold
through a vending machine, except soft drinks, candy, and food
products that are dispensed hot from a vending machine,
regardless of the location of the vending machine.
Notwithstanding any other provisions of this Act,
beginning September 1, 2009, "food for human consumption that
is to be consumed off the premises where it is sold" does not
include candy. For purposes of this Section, "candy" means a
preparation of sugar, honey, or other natural or artificial
sweeteners in combination with chocolate, fruits, nuts or other
ingredients or flavorings in the form of bars, drops, or
pieces. "Candy" does not include any preparation that contains
flour or requires refrigeration.
Notwithstanding any other provisions of this Act,
beginning September 1, 2009, "nonprescription medicines and
drugs" does not include grooming and hygiene products. For
purposes of this Section, "grooming and hygiene products"
includes, but is not limited to, soaps and cleaning solutions,
shampoo, toothpaste, mouthwash, antiperspirants, and sun tan
lotions and screens, unless those products are available by
prescription only, regardless of whether the products meet the

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definition of "over-the-counter-drugs". For the purposes of
this paragraph, "over-the-counter-drug" means a drug for human
use that contains a label that identifies the product as a drug
as required by 21 C.F.R. § 201.66. The "over-the-counter-drug"
label includes:
(A) A "Drug Facts" panel; or
(B) A statement of the "active ingredient(s)" with a
list of those ingredients contained in the compound,
substance or preparation.
Beginning on the effective date of this amendatory Act of
the 98th General Assembly, "prescription and nonprescription
medicines and drugs" includes medical cannabis purchased from a
registered dispensing organization under the Compassionate Use
of Medical Cannabis Pilot Program Act.
(Source: P.A. 98-122, eff. 1-1-14; 99-143, eff. 7-27-15;
99-858, eff. 8-19-16.)
ARTICLE 30. MANUFACTURING AND ASSEMBLING EXEMPTION
Section 30-5. The Use Tax Act is amended by changing
Sections 3-5 and 3-50 as follows:
(35 ILCS 105/3-5)
Sec. 3-5. Exemptions. Use of the following tangible
personal property is exempt from the tax imposed by this Act:
(1) Personal property purchased from a corporation,

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society, association, foundation, institution, or
organization, other than a limited liability company, that is
organized and operated as a not-for-profit service enterprise
for the benefit of persons 65 years of age or older if the
personal property was not purchased by the enterprise for the
purpose of resale by the enterprise.
(2) Personal property purchased by a not-for-profit
Illinois county fair association for use in conducting,
operating, or promoting the county fair.
(3) Personal property purchased by a not-for-profit arts or
cultural organization that establishes, by proof required by
the Department by rule, that it has received an exemption under
Section 501(c)(3) of the Internal Revenue Code and that is
organized and operated primarily for the presentation or
support of arts or cultural programming, activities, or
services. These organizations include, but are not limited to,
music and dramatic arts organizations such as symphony
orchestras and theatrical groups, arts and cultural service
organizations, local arts councils, visual arts organizations,
and media arts organizations. On and after the effective date
of this amendatory Act of the 92nd General Assembly, however,
an entity otherwise eligible for this exemption shall not make
tax-free purchases unless it has an active identification
number issued by the Department.
(4) Personal property purchased by a governmental body, by
a corporation, society, association, foundation, or

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institution organized and operated exclusively for charitable,
religious, or educational purposes, or by a not-for-profit
corporation, society, association, foundation, institution, or
organization that has no compensated officers or employees and
that is organized and operated primarily for the recreation of
persons 55 years of age or older. A limited liability company
may qualify for the exemption under this paragraph only if the
limited liability company is organized and operated
exclusively for educational purposes. On and after July 1,
1987, however, no entity otherwise eligible for this exemption
shall make tax-free purchases unless it has an active exemption
identification number issued by the Department.
(5) Until July 1, 2003, a passenger car that is a
replacement vehicle to the extent that the purchase price of
the car is subject to the Replacement Vehicle Tax.
(6) Until July 1, 2003 and beginning again on September 1,
2004 through August 30, 2014, graphic arts machinery and
equipment, including repair and replacement parts, both new and
used, and including that manufactured on special order,
certified by the purchaser to be used primarily for graphic
arts production, and including machinery and equipment
purchased for lease. Equipment includes chemicals or chemicals
acting as catalysts but only if the chemicals or chemicals
acting as catalysts effect a direct and immediate change upon a
graphic arts product.
(7) Farm chemicals.

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(8) Legal tender, currency, medallions, or gold or silver
coinage issued by the State of Illinois, the government of the
United States of America, or the government of any foreign
country, and bullion.
(9) Personal property purchased from a teacher-sponsored
student organization affiliated with an elementary or
secondary school located in Illinois.
(10) A motor vehicle that is used for automobile renting,
as defined in the Automobile Renting Occupation and Use Tax
Act.
(11) Farm machinery and equipment, both new and used,
including that manufactured on special order, certified by the
purchaser to be used primarily for production agriculture or
State or federal agricultural programs, including individual
replacement parts for the machinery and equipment, including
machinery and equipment purchased for lease, and including
implements of husbandry defined in Section 1-130 of the
Illinois Vehicle Code, farm machinery and agricultural
chemical and fertilizer spreaders, and nurse wagons required to
be registered under Section 3-809 of the Illinois Vehicle Code,
but excluding other motor vehicles required to be registered
under the Illinois Vehicle Code. Horticultural polyhouses or
hoop houses used for propagating, growing, or overwintering
plants shall be considered farm machinery and equipment under
this item (11). Agricultural chemical tender tanks and dry
boxes shall include units sold separately from a motor vehicle

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required to be licensed and units sold mounted on a motor
vehicle required to be licensed if the selling price of the
tender is separately stated.
Farm machinery and equipment shall include precision
farming equipment that is installed or purchased to be
installed on farm machinery and equipment including, but not
limited to, tractors, harvesters, sprayers, planters, seeders,
or spreaders. Precision farming equipment includes, but is not
limited to, soil testing sensors, computers, monitors,
software, global positioning and mapping systems, and other
such equipment.
Farm machinery and equipment also includes computers,
sensors, software, and related equipment used primarily in the
computer-assisted operation of production agriculture
facilities, equipment, and activities such as, but not limited
to, the collection, monitoring, and correlation of animal and
crop data for the purpose of formulating animal diets and
agricultural chemicals. This item (11) is exempt from the
provisions of Section 3-90.
(12) Until June 30, 2013, fuel and petroleum products sold
to or used by an air common carrier, certified by the carrier
to be used for consumption, shipment, or storage in the conduct
of its business as an air common carrier, for a flight destined
for or returning from a location or locations outside the
United States without regard to previous or subsequent domestic
stopovers.

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Beginning July 1, 2013, fuel and petroleum products sold to
or used by an air carrier, certified by the carrier to be used
for consumption, shipment, or storage in the conduct of its
business as an air common carrier, for a flight that (i) is
engaged in foreign trade or is engaged in trade between the
United States and any of its possessions and (ii) transports at
least one individual or package for hire from the city of
origination to the city of final destination on the same
aircraft, without regard to a change in the flight number of
that aircraft.
(13) Proceeds of mandatory service charges separately
stated on customers' bills for the purchase and consumption of
food and beverages purchased at retail from a retailer, to the
extent that the proceeds of the service charge are in fact
turned over as tips or as a substitute for tips to the
employees who participate directly in preparing, serving,
hosting or cleaning up the food or beverage function with
respect to which the service charge is imposed.
(14) Until July 1, 2003, oil field exploration, drilling,
and production equipment, including (i) rigs and parts of rigs,
rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
tubular goods, including casing and drill strings, (iii) pumps
and pump-jack units, (iv) storage tanks and flow lines, (v) any
individual replacement part for oil field exploration,
drilling, and production equipment, and (vi) machinery and
equipment purchased for lease; but excluding motor vehicles

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required to be registered under the Illinois Vehicle Code.
(15) Photoprocessing machinery and equipment, including
repair and replacement parts, both new and used, including that
manufactured on special order, certified by the purchaser to be
used primarily for photoprocessing, and including
photoprocessing machinery and equipment purchased for lease.
(16) Coal and aggregate exploration, mining, off-highway
hauling, processing, maintenance, and reclamation equipment,
including replacement parts and equipment, and including
equipment purchased for lease, but excluding motor vehicles
required to be registered under the Illinois Vehicle Code. The
changes made to this Section by Public Act 97-767 apply on and
after July 1, 2003, but no claim for credit or refund is
allowed on or after August 16, 2013 (the effective date of
Public Act 98-456) for such taxes paid during the period
beginning July 1, 2003 and ending on August 16, 2013 (the
effective date of Public Act 98-456).
(17) Until July 1, 2003, distillation machinery and
equipment, sold as a unit or kit, assembled or installed by the
retailer, certified by the user to be used only for the
production of ethyl alcohol that will be used for consumption
as motor fuel or as a component of motor fuel for the personal
use of the user, and not subject to sale or resale.
(18) Until July 1, 2016, manufacturing Manufacturing and
assembling machinery and equipment used primarily in the
process of manufacturing or assembling tangible personal

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property for wholesale or retail sale or lease, whether that
sale or lease is made directly by the manufacturer or by some
other person, whether the materials used in the process are
owned by the manufacturer or some other person, or whether that
sale or lease is made apart from or as an incident to the
seller's engaging in the service occupation of producing
machines, tools, dies, jigs, patterns, gauges, or other similar
items of no commercial value on special order for a particular
purchaser. The exemption provided by this paragraph (18) does
not include machinery and equipment used in (i) the generation
of electricity for wholesale or retail sale; (ii) the
generation or treatment of natural or artificial gas for
wholesale or retail sale that is delivered to customers through
pipes, pipelines, or mains; or (iii) the treatment of water for
wholesale or retail sale that is delivered to customers through
pipes, pipelines, or mains. The provisions of Public Act 98-583
are declaratory of existing law as to the meaning and scope of
this exemption.
(19) Personal property delivered to a purchaser or
purchaser's donee inside Illinois when the purchase order for
that personal property was received by a florist located
outside Illinois who has a florist located inside Illinois
deliver the personal property.
(20) Semen used for artificial insemination of livestock
for direct agricultural production.
(21) Horses, or interests in horses, registered with and

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meeting the requirements of any of the Arabian Horse Club
Registry of America, Appaloosa Horse Club, American Quarter
Horse Association, United States Trotting Association, or
Jockey Club, as appropriate, used for purposes of breeding or
racing for prizes. This item (21) is exempt from the provisions
of Section 3-90, and the exemption provided for under this item
(21) applies for all periods beginning May 30, 1995, but no
claim for credit or refund is allowed on or after January 1,
2008 for such taxes paid during the period beginning May 30,
2000 and ending on January 1, 2008.
(22) Computers and communications equipment utilized for
any hospital purpose and equipment used in the diagnosis,
analysis, or treatment of hospital patients purchased by a
lessor who leases the equipment, under a lease of one year or
longer executed or in effect at the time the lessor would
otherwise be subject to the tax imposed by this Act, to a
hospital that has been issued an active tax exemption
identification number by the Department under Section 1g of the
Retailers' Occupation Tax Act. If the equipment is leased in a
manner that does not qualify for this exemption or is used in
any other non-exempt manner, the lessor shall be liable for the
tax imposed under this Act or the Service Use Tax Act, as the
case may be, based on the fair market value of the property at
the time the non-qualifying use occurs. No lessor shall collect
or attempt to collect an amount (however designated) that
purports to reimburse that lessor for the tax imposed by this

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

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lessor is liable to pay that amount to the Department.
(24) Beginning with taxable years ending on or after
December 31, 1995 and ending with taxable years ending on or
before December 31, 2004, personal property that is donated for
disaster relief to be used in a State or federally declared
disaster area in Illinois or bordering Illinois by a
manufacturer or retailer that is registered in this State to a
corporation, society, association, foundation, or institution
that has been issued a sales tax exemption identification
number by the Department that assists victims of the disaster
who reside within the declared disaster area.
(25) Beginning with taxable years ending on or after
December 31, 1995 and ending with taxable years ending on or
before December 31, 2004, personal property that is used in the
performance of infrastructure repairs in this State, including
but not limited to municipal roads and streets, access roads,
bridges, sidewalks, waste disposal systems, water and sewer
line extensions, water distribution and purification
facilities, storm water drainage and retention facilities, and
sewage treatment facilities, resulting from a State or
federally declared disaster in Illinois or bordering Illinois
when such repairs are initiated on facilities located in the
declared disaster area within 6 months after the disaster.
(26) Beginning July 1, 1999, game or game birds purchased
at a "game breeding and hunting preserve area" as that term is
used in the Wildlife Code. This paragraph is exempt from the

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provisions of Section 3-90.
(27) A motor vehicle, as that term is defined in Section
1-146 of the Illinois Vehicle Code, that is donated to a
corporation, limited liability company, society, association,
foundation, or institution that is determined by the Department
to be organized and operated exclusively for educational
purposes. For purposes of this exemption, "a corporation,
limited liability company, society, association, foundation,
or institution organized and operated exclusively for
educational purposes" means all tax-supported public schools,
private schools that offer systematic instruction in useful
branches of learning by methods common to public schools and
that compare favorably in their scope and intensity with the
course of study presented in tax-supported schools, and
vocational or technical schools or institutes organized and
operated exclusively to provide a course of study of not less
than 6 weeks duration and designed to prepare individuals to
follow a trade or to pursue a manual, technical, mechanical,
industrial, business, or commercial occupation.
(28) Beginning January 1, 2000, personal property,
including food, purchased through fundraising events for the
benefit of a public or private elementary or secondary school,
a group of those schools, or one or more school districts if
the events are sponsored by an entity recognized by the school
district that consists primarily of volunteers and includes
parents and teachers of the school children. This paragraph

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does not apply to fundraising events (i) for the benefit of
private home instruction or (ii) for which the fundraising
entity purchases the personal property sold at the events from
another individual or entity that sold the property for the
purpose of resale by the fundraising entity and that profits
from the sale to the fundraising entity. This paragraph is
exempt from the provisions of Section 3-90.
(29) Beginning January 1, 2000 and through December 31,
2001, new or used automatic vending machines that prepare and
serve hot food and beverages, including coffee, soup, and other
items, and replacement parts for these machines. Beginning
January 1, 2002 and through June 30, 2003, machines and parts
for machines used in commercial, coin-operated amusement and
vending business if a use or occupation tax is paid on the
gross receipts derived from the use of the commercial,
coin-operated amusement and vending machines. This paragraph
is exempt from the provisions of Section 3-90.
(30) Beginning January 1, 2001 and through June 30, 2016,
food for human consumption that is to be consumed off the
premises where it is sold (other than alcoholic beverages, soft
drinks, and food that has been prepared for immediate
consumption) and prescription and nonprescription medicines,
drugs, medical appliances, and insulin, urine testing
materials, syringes, and needles used by diabetics, for human
use, when purchased for use by a person receiving medical
assistance under Article V of the Illinois Public Aid Code who

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resides in a licensed long-term care facility, as defined in
the Nursing Home Care Act, or in a licensed facility as defined
in the ID/DD Community Care Act, the MC/DD Act, or the
Specialized Mental Health Rehabilitation Act of 2013.
(31) Beginning on the effective date of this amendatory Act
of the 92nd General Assembly, computers and communications
equipment utilized for any hospital purpose and equipment used
in the diagnosis, analysis, or treatment of hospital patients
purchased by a lessor who leases the equipment, under a lease
of one year or longer executed or in effect at the time the
lessor would otherwise be subject to the tax imposed by this
Act, to a hospital that has been issued an active tax exemption
identification number by the Department under Section 1g of the
Retailers' Occupation Tax Act. If the equipment is leased in a
manner that does not qualify for this exemption or is used in
any other nonexempt manner, the lessor shall be liable for the
tax imposed under this Act or the Service Use Tax Act, as the
case may be, based on the fair market value of the property at
the time the nonqualifying use occurs. No lessor shall collect
or attempt to collect an amount (however designated) that
purports to reimburse that lessor for the tax imposed by this
Act or the Service Use Tax Act, as the case may be, if the tax
has not been paid by the lessor. If a lessor improperly
collects any such amount from the lessee, the lessee shall have
a legal right to claim a refund of that amount from the lessor.
If, however, that amount is not refunded to the lessee for any

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reason, the lessor is liable to pay that amount to the
Department. This paragraph is exempt from the provisions of
Section 3-90.
(32) Beginning on the effective date of this amendatory Act
of the 92nd General Assembly, personal property purchased by a
lessor who leases the property, under a lease of one year or
longer executed or in effect at the time the lessor would
otherwise be subject to the tax imposed by this Act, to a
governmental body that has been issued an active sales tax
exemption identification number by the Department under
Section 1g of the Retailers' Occupation Tax Act. If the
property is leased in a manner that does not qualify for this
exemption or used in any other nonexempt manner, the lessor
shall be liable for the tax imposed under this Act or the
Service Use Tax Act, as the case may be, based on the fair
market value of the property at the time the nonqualifying use
occurs. No lessor shall collect or attempt to collect an amount
(however designated) that purports to reimburse that lessor for
the tax imposed by this Act or the Service Use Tax Act, as the
case may be, if the tax has not been paid by the lessor. If a
lessor improperly collects any such amount from the lessee, the
lessee shall have a legal right to claim a refund of that
amount from the lessor. If, however, that amount is not
refunded to the lessee for any reason, the lessor is liable to
pay that amount to the Department. This paragraph is exempt
from the provisions of Section 3-90.

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(33) On and after July 1, 2003 and through June 30, 2004,
the use in this State of motor vehicles of the second division
with a gross vehicle weight in excess of 8,000 pounds and that
are subject to the commercial distribution fee imposed under
Section 3-815.1 of the Illinois Vehicle Code. Beginning on July
1, 2004 and through June 30, 2005, the use in this State of
motor vehicles of the second division: (i) with a gross vehicle
weight rating in excess of 8,000 pounds; (ii) that are subject
to the commercial distribution fee imposed under Section
3-815.1 of the Illinois Vehicle Code; and (iii) that are
primarily used for commercial purposes. Through June 30, 2005,
this exemption applies to repair and replacement parts added
after the initial purchase of such a motor vehicle if that
motor vehicle is used in a manner that would qualify for the
rolling stock exemption otherwise provided for in this Act. For
purposes of this paragraph, the term "used for commercial
purposes" means the transportation of persons or property in
furtherance of any commercial or industrial enterprise,
whether for-hire or not.
(34) Beginning January 1, 2008, tangible personal property
used in the construction or maintenance of a community water
supply, as defined under Section 3.145 of the Environmental
Protection Act, that is operated by a not-for-profit
corporation that holds a valid water supply permit issued under
Title IV of the Environmental Protection Act. This paragraph is
exempt from the provisions of Section 3-90.

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(35) Beginning January 1, 2010, materials, parts,
equipment, components, and furnishings incorporated into or
upon an aircraft as part of the modification, refurbishment,
completion, replacement, repair, or maintenance of the
aircraft. This exemption includes consumable supplies used in
the modification, refurbishment, completion, replacement,
repair, and maintenance of aircraft, but excludes any
materials, parts, equipment, components, and consumable
supplies used in the modification, replacement, repair, and
maintenance of aircraft engines or power plants, whether such
engines or power plants are installed or uninstalled upon any
such aircraft. "Consumable supplies" include, but are not
limited to, adhesive, tape, sandpaper, general purpose
lubricants, cleaning solution, latex gloves, and protective
films. This exemption applies only to the use of qualifying
tangible personal property by persons who modify, refurbish,
complete, repair, replace, or maintain aircraft and who (i)
hold an Air Agency Certificate and are empowered to operate an
approved repair station by the Federal Aviation
Administration, (ii) have a Class IV Rating, and (iii) conduct
operations in accordance with Part 145 of the Federal Aviation
Regulations. The exemption does not include aircraft operated
by a commercial air carrier providing scheduled passenger air
service pursuant to authority issued under Part 121 or Part 129
of the Federal Aviation Regulations. The changes made to this
paragraph (35) by Public Act 98-534 are declarative of existing

09900HB0293ham001 - 365 - LRB099 04265 HLH 51448 a
law.
(36) Tangible personal property purchased by a
public-facilities corporation, as described in Section
11-65-10 of the Illinois Municipal Code, for purposes of
constructing or furnishing a municipal convention hall, but
only if the legal title to the municipal convention hall is
transferred to the municipality without any further
consideration by or on behalf of the municipality at the time
of the completion of the municipal convention hall or upon the
retirement or redemption of any bonds or other debt instruments
issued by the public-facilities corporation in connection with
the development of the municipal convention hall. This
exemption includes existing public-facilities corporations as
provided in Section 11-65-25 of the Illinois Municipal Code.
This paragraph is exempt from the provisions of Section 3-90.
(37) Beginning January 1, 2017, menstrual pads, tampons,
and menstrual cups.
(Source: P.A. 98-104, eff. 7-22-13; 98-422, eff. 8-16-13;
98-456, eff. 8-16-13; 98-534, eff. 8-23-13; 98-574, eff.
1-1-14; 98-583, eff. 1-1-14; 98-756, eff. 7-16-14; 99-180, eff.
7-29-15; 99-855, eff. 8-19-16.)
(35 ILCS 105/3-50) (from Ch. 120, par. 439.3-50)
Sec. 3-50. Manufacturing and assembly exemption. The
manufacturing and assembling machinery and equipment exemption
includes machinery and equipment that replaces machinery and

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equipment in an existing manufacturing facility as well as
machinery and equipment that are for use in an expanded or new
manufacturing facility. The machinery and equipment exemption
also includes machinery and equipment used in the general
maintenance or repair of exempt machinery and equipment or for
in-house manufacture of exempt machinery and equipment. The
machinery and equipment exemption does not include machinery
and equipment used in (i) the generation of electricity for
wholesale or retail sale; (ii) the generation or treatment of
natural or artificial gas for wholesale or retail sale that is
delivered to customers through pipes, pipelines, or mains; or
(iii) the treatment of water for wholesale or retail sale that
is delivered to customers through pipes, pipelines, or mains.
The provisions of this amendatory Act of the 98th General
Assembly are declaratory of existing law as to the meaning and
scope of this exemption. For the purposes of this exemption,
terms have the following meanings:
(1) "Manufacturing process" means the production of an
article of tangible personal property, whether the article
is a finished product or an article for use in the process
of manufacturing or assembling a different article of
tangible personal property, by a procedure commonly
regarded as manufacturing, processing, fabricating, or
refining that changes some existing material into a
material with a different form, use, or name. In relation
to a recognized integrated business composed of a series of

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operations that collectively constitute manufacturing, or
individually constitute manufacturing operations, the
manufacturing process commences with the first operation
or stage of production in the series and does not end until
the completion of the final product in the last operation
or stage of production in the series. For purposes of this
exemption, photoprocessing is a manufacturing process of
tangible personal property for wholesale or retail sale.
(2) "Assembling process" means the production of an
article of tangible personal property, whether the article
is a finished product or an article for use in the process
of manufacturing or assembling a different article of
tangible personal property, by the combination of existing
materials in a manner commonly regarded as assembling that
results in an article or material of a different form, use,
or name.
(3) "Machinery" means major mechanical machines or
major components of those machines contributing to a
manufacturing or assembling process.
(4) "Equipment" includes an independent device or tool
separate from machinery but essential to an integrated
manufacturing or assembly process; including computers
used primarily in a manufacturer's computer assisted
design, computer assisted manufacturing (CAD/CAM) system;
any subunit or assembly comprising a component of any
machinery or auxiliary, adjunct, or attachment parts of

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machinery, such as tools, dies, jigs, fixtures, patterns,
and molds; and any parts that require periodic replacement
in the course of normal operation; but does not include
hand tools. Equipment includes chemicals or chemicals
acting as catalysts but only if the chemicals or chemicals
acting as catalysts effect a direct and immediate change
upon a product being manufactured or assembled for
wholesale or retail sale or lease.
(5) "Production related tangible personal property"
means all tangible personal property that is used or
consumed by the purchaser in a manufacturing facility in
which a manufacturing process takes place and includes,
without limitation, tangible personal property that is
purchased for incorporation into real estate within a
manufacturing facility and tangible personal property that
is used or consumed in activities such as research and
development, preproduction material handling, receiving,
quality control, inventory control, storage, staging, and
packaging for shipping and transportation purposes.
"Production related tangible personal property" does not
include (i) tangible personal property that is used, within
or without a manufacturing facility, in sales, purchasing,
accounting, fiscal management, marketing, personnel
recruitment or selection, or landscaping or (ii) tangible
personal property that is required to be titled or
registered with a department, agency, or unit of federal,

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State, or local government.
The manufacturing and assembling machinery and equipment
exemption includes production related tangible personal
property that is purchased on or after July 1, 2007 and on or
before June 30, 2008. The exemption for production related
tangible personal property is subject to both of the following
limitations:
(1) The maximum amount of the exemption for any one
taxpayer may not exceed 5% of the purchase price of
production related tangible personal property that is
purchased on or after July 1, 2007 and on or before June
30, 2008. A credit under Section 3-85 of this Act may not
be earned by the purchase of production related tangible
personal property for which an exemption is received under
this Section.
(2) The maximum aggregate amount of the exemptions for
production related tangible personal property awarded
under this Act and the Retailers' Occupation Tax Act to all
taxpayers may not exceed $10,000,000. If the claims for the
exemption exceed $10,000,000, then the Department shall
reduce the amount of the exemption to each taxpayer on a
pro rata basis.
The Department may adopt rules to implement and administer the
exemption for production related tangible personal property.
The manufacturing and assembling machinery and equipment
exemption includes the sale of materials to a purchaser who

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produces exempted types of machinery, equipment, or tools and
who rents or leases that machinery, equipment, or tools to a
manufacturer of tangible personal property. This exemption
also includes the sale of materials to a purchaser who
manufactures those materials into an exempted type of
machinery, equipment, or tools that the purchaser uses himself
or herself in the manufacturing of tangible personal property.
This exemption includes the sale of exempted types of machinery
or equipment to a purchaser who is not the manufacturer, but
who rents or leases the use of the property to a manufacturer.
The purchaser of the machinery and equipment who has an active
resale registration number shall furnish that number to the
seller at the time of purchase. A user of the machinery,
equipment, or tools without an active resale registration
number shall prepare a certificate of exemption for each
transaction stating facts establishing the exemption for that
transaction, and that certificate shall be available to the
Department for inspection or audit. The Department shall
prescribe the form of the certificate. Informal rulings,
opinions, or letters issued by the Department in response to an
inquiry or request for an opinion from any person regarding the
coverage and applicability of this exemption to specific
devices shall be published, maintained as a public record, and
made available for public inspection and copying. If the
informal ruling, opinion, or letter contains trade secrets or
other confidential information, where possible, the Department

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shall delete that information before publication. Whenever
informal rulings, opinions, or letters contain a policy of
general applicability, the Department shall formulate and
adopt that policy as a rule in accordance with the Illinois
Administrative Procedure Act.
The manufacturing and assembling machinery and equipment
exemption applies only until December 31, 2016.
(Source: P.A. 98-583, eff. 1-1-14.)
Section 30-10. The Service Use Tax Act is amended by
changing Section 2 as follows:
(35 ILCS 110/2) (from Ch. 120, par. 439.32)
Sec. 2. Definitions.
"Use" means the exercise by any person of any right or
power over tangible personal property incident to the ownership
of that property, but does not include the sale or use for
demonstration by him of that property in any form as tangible
personal property in the regular course of business. "Use" does
not mean the interim use of tangible personal property nor the
physical incorporation of tangible personal property, as an
ingredient or constituent, into other tangible personal
property, (a) which is sold in the regular course of business
or (b) which the person incorporating such ingredient or
constituent therein has undertaken at the time of such purchase
to cause to be transported in interstate commerce to

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destinations outside the State of Illinois.
"Purchased from a serviceman" means the acquisition of the
ownership of, or title to, tangible personal property through a
sale of service.
"Purchaser" means any person who, through a sale of
service, acquires the ownership of, or title to, any tangible
personal property.
"Cost price" means the consideration paid by the serviceman
for a purchase valued in money, whether paid in money or
otherwise, including cash, credits and services, and shall be
determined without any deduction on account of the supplier's
cost of the property sold or on account of any other expense
incurred by the supplier. When a serviceman contracts out part
or all of the services required in his sale of service, it
shall be presumed that the cost price to the serviceman of the
property transferred to him or her by his or her subcontractor
is equal to 50% of the subcontractor's charges to the
serviceman in the absence of proof of the consideration paid by
the subcontractor for the purchase of such property.
"Selling price" means the consideration for a sale valued
in money whether received in money or otherwise, including
cash, credits and service, and shall be determined without any
deduction on account of the serviceman's cost of the property
sold, the cost of materials used, labor or service cost or any
other expense whatsoever, but does not include interest or
finance charges which appear as separate items on the bill of

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sale or sales contract nor charges that are added to prices by
sellers on account of the seller's duty to collect, from the
purchaser, the tax that is imposed by this Act.
"Department" means the Department of Revenue.
"Person" means any natural individual, firm, partnership,
association, joint stock company, joint venture, public or
private corporation, limited liability company, and any
receiver, executor, trustee, guardian or other representative
appointed by order of any court.
"Sale of service" means any transaction except:
(1) a retail sale of tangible personal property taxable
under the Retailers' Occupation Tax Act or under the Use
Tax Act.
(2) a sale of tangible personal property for the
purpose of resale made in compliance with Section 2c of the
Retailers' Occupation Tax Act.
(3) except as hereinafter provided, a sale or transfer
of tangible personal property as an incident to the
rendering of service for or by any governmental body, or
for or by any corporation, society, association,
foundation or institution organized and operated
exclusively for charitable, religious or educational
purposes or any not-for-profit corporation, society,
association, foundation, institution or organization which
has no compensated officers or employees and which is
organized and operated primarily for the recreation of

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persons 55 years of age or older. A limited liability
company may qualify for the exemption under this paragraph
only if the limited liability company is organized and
operated exclusively for educational purposes.
(4) a sale or transfer of tangible personal property as
an incident to the rendering of service for interstate
carriers for hire for use as rolling stock moving in
interstate commerce or by lessors under a lease of one year
or longer, executed or in effect at the time of purchase of
personal property, to interstate carriers for hire for use
as rolling stock moving in interstate commerce so long as
so used by such interstate carriers for hire, and equipment
operated by a telecommunications provider, licensed as a
common carrier by the Federal Communications Commission,
which is permanently installed in or affixed to aircraft
moving in interstate commerce.
(4a) a sale or transfer of tangible personal property
as an incident to the rendering of service for owners,
lessors, or shippers of tangible personal property which is
utilized by interstate carriers for hire for use as rolling
stock moving in interstate commerce so long as so used by
interstate carriers for hire, and equipment operated by a
telecommunications provider, licensed as a common carrier
by the Federal Communications Commission, which is
permanently installed in or affixed to aircraft moving in
interstate commerce.

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(4a-5) on and after July 1, 2003 and through June 30,
2004, a sale or transfer of a motor vehicle of the second
division with a gross vehicle weight in excess of 8,000
pounds as an incident to the rendering of service if that
motor vehicle is subject to the commercial distribution fee
imposed under Section 3-815.1 of the Illinois Vehicle Code.
Beginning on July 1, 2004 and through June 30, 2005, the
use in this State of motor vehicles of the second division:
(i) with a gross vehicle weight rating in excess of 8,000
pounds; (ii) that are subject to the commercial
distribution fee imposed under Section 3-815.1 of the
Illinois Vehicle Code; and (iii) that are primarily used
for commercial purposes. Through June 30, 2005, this
exemption applies to repair and replacement parts added
after the initial purchase of such a motor vehicle if that
motor vehicle is used in a manner that would qualify for
the rolling stock exemption otherwise provided for in this
Act. For purposes of this paragraph, "used for commercial
purposes" means the transportation of persons or property
in furtherance of any commercial or industrial enterprise
whether for-hire or not.
(5) until July 1, 2016, a sale or transfer of machinery
and equipment used primarily in the process of the
manufacturing or assembling, either in an existing, an
expanded or a new manufacturing facility, of tangible
personal property for wholesale or retail sale or lease,

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whether such sale or lease is made directly by the
manufacturer or by some other person, whether the materials
used in the process are owned by the manufacturer or some
other person, or whether such sale or lease is made apart
from or as an incident to the seller's engaging in a
service occupation and the applicable tax is a Service Use
Tax or Service Occupation Tax, rather than Use Tax or
Retailers' Occupation Tax. The exemption provided by this
paragraph (5) does not include machinery and equipment used
in (i) the generation of electricity for wholesale or
retail sale; (ii) the generation or treatment of natural or
artificial gas for wholesale or retail sale that is
delivered to customers through pipes, pipelines, or mains;
or (iii) the treatment of water for wholesale or retail
sale that is delivered to customers through pipes,
pipelines, or mains. The provisions of this amendatory Act
of the 98th General Assembly are declaratory of existing
law as to the meaning and scope of this exemption.
(5a) the repairing, reconditioning or remodeling, for
a common carrier by rail, of tangible personal property
which belongs to such carrier for hire, and as to which
such carrier receives the physical possession of the
repaired, reconditioned or remodeled item of tangible
personal property in Illinois, and which such carrier
transports, or shares with another common carrier in the
transportation of such property, out of Illinois on a

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standard uniform bill of lading showing the person who
repaired, reconditioned or remodeled the property to a
destination outside Illinois, for use outside Illinois.
(5b) a sale or transfer of tangible personal property
which is produced by the seller thereof on special order in
such a way as to have made the applicable tax the Service
Occupation Tax or the Service Use Tax, rather than the
Retailers' Occupation Tax or the Use Tax, for an interstate
carrier by rail which receives the physical possession of
such property in Illinois, and which transports such
property, or shares with another common carrier in the
transportation of such property, out of Illinois on a
standard uniform bill of lading showing the seller of the
property as the shipper or consignor of such property to a
destination outside Illinois, for use outside Illinois.
(6) until July 1, 2003, a sale or transfer of
distillation machinery and equipment, sold as a unit or kit
and assembled or installed by the retailer, which machinery
and equipment is certified by the user to be used only for
the production of ethyl alcohol that will be used for
consumption as motor fuel or as a component of motor fuel
for the personal use of such user and not subject to sale
or resale.
(7) at the election of any serviceman not required to
be otherwise registered as a retailer under Section 2a of
the Retailers' Occupation Tax Act, made for each fiscal

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year sales of service in which the aggregate annual cost
price of tangible personal property transferred as an
incident to the sales of service is less than 35%, or 75%
in the case of servicemen transferring prescription drugs
or servicemen engaged in graphic arts production, of the
aggregate annual total gross receipts from all sales of
service. The purchase of such tangible personal property by
the serviceman shall be subject to tax under the Retailers'
Occupation Tax Act and the Use Tax Act. However, if a
primary serviceman who has made the election described in
this paragraph subcontracts service work to a secondary
serviceman who has also made the election described in this
paragraph, the primary serviceman does not incur a Use Tax
liability if the secondary serviceman (i) has paid or will
pay Use Tax on his or her cost price of any tangible
personal property transferred to the primary serviceman
and (ii) certifies that fact in writing to the primary
serviceman.
Tangible personal property transferred incident to the
completion of a maintenance agreement is exempt from the tax
imposed pursuant to this Act.
Exemption (5) also includes machinery and equipment used in
the general maintenance or repair of such exempt machinery and
equipment or for in-house manufacture of exempt machinery and
equipment. The machinery and equipment exemption does not
include machinery and equipment used in (i) the generation of

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electricity for wholesale or retail sale; (ii) the generation
or treatment of natural or artificial gas for wholesale or
retail sale that is delivered to customers through pipes,
pipelines, or mains; or (iii) the treatment of water for
wholesale or retail sale that is delivered to customers through
pipes, pipelines, or mains. The provisions of this amendatory
Act of the 98th General Assembly are declaratory of existing
law as to the meaning and scope of this exemption. For the
purposes of exemption (5), each of these terms shall have the
following meanings: (1) "manufacturing process" shall mean the
production of any article of tangible personal property,
whether such article is a finished product or an article for
use in the process of manufacturing or assembling a different
article of tangible personal property, by procedures commonly
regarded as manufacturing, processing, fabricating, or
refining which changes some existing material or materials into
a material with a different form, use or name. In relation to a
recognized integrated business composed of a series of
operations which collectively constitute manufacturing, or
individually constitute manufacturing operations, the
manufacturing process shall be deemed to commence with the
first operation or stage of production in the series, and shall
not be deemed to end until the completion of the final product
in the last operation or stage of production in the series; and
further, for purposes of exemption (5), photoprocessing is
deemed to be a manufacturing process of tangible personal

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property for wholesale or retail sale; (2) "assembling process"
shall mean the production of any article of tangible personal
property, whether such article is a finished product or an
article for use in the process of manufacturing or assembling a
different article of tangible personal property, by the
combination of existing materials in a manner commonly regarded
as assembling which results in a material of a different form,
use or name; (3) "machinery" shall mean major mechanical
machines or major components of such machines contributing to a
manufacturing or assembling process; and (4) "equipment" shall
include any independent device or tool separate from any
machinery but essential to an integrated manufacturing or
assembly process; including computers used primarily in a
manufacturer's computer assisted design, computer assisted
manufacturing (CAD/CAM) system; or any subunit or assembly
comprising a component of any machinery or auxiliary, adjunct
or attachment parts of machinery, such as tools, dies, jigs,
fixtures, patterns and molds; or any parts which require
periodic replacement in the course of normal operation; but
shall not include hand tools. Equipment includes chemicals or
chemicals acting as catalysts but only if the chemicals or
chemicals acting as catalysts effect a direct and immediate
change upon a product being manufactured or assembled for
wholesale or retail sale or lease. The purchaser of such
machinery and equipment who has an active resale registration
number shall furnish such number to the seller at the time of

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purchase. The user of such machinery and equipment and tools
without an active resale registration number shall prepare a
certificate of exemption for each transaction stating facts
establishing the exemption for that transaction, which
certificate shall be available to the Department for inspection
or audit. The Department shall prescribe the form of the
certificate.
Any informal rulings, opinions or letters issued by the
Department in response to an inquiry or request for any opinion
from any person regarding the coverage and applicability of
exemption (5) to specific devices shall be published,
maintained as a public record, and made available for public
inspection and copying. If the informal ruling, opinion or
letter contains trade secrets or other confidential
information, where possible the Department shall delete such
information prior to publication. Whenever such informal
rulings, opinions, or letters contain any policy of general
applicability, the Department shall formulate and adopt such
policy as a rule in accordance with the provisions of the
Illinois Administrative Procedure Act.
On and after July 1, 1987, no entity otherwise eligible
under exemption (3) of this Section shall make tax free
purchases unless it has an active exemption identification
number issued by the Department.
The purchase, employment and transfer of such tangible
personal property as newsprint and ink for the primary purpose

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of conveying news (with or without other information) is not a
purchase, use or sale of service or of tangible personal
property within the meaning of this Act.
"Serviceman" means any person who is engaged in the
occupation of making sales of service.
"Sale at retail" means "sale at retail" as defined in the
Retailers' Occupation Tax Act.
"Supplier" means any person who makes sales of tangible
personal property to servicemen for the purpose of resale as an
incident to a sale of service.
"Serviceman maintaining a place of business in this State",
or any like term, means and includes any serviceman:
1. having or maintaining within this State, directly or
by a subsidiary, an office, distribution house, sales
house, warehouse or other place of business, or any agent
or other representative operating within this State under
the authority of the serviceman or its subsidiary,
irrespective of whether such place of business or agent or
other representative is located here permanently or
temporarily, or whether such serviceman or subsidiary is
licensed to do business in this State;
1.1. having a contract with a person located in this
State under which the person, for a commission or other
consideration based on the sale of service by the
serviceman, directly or indirectly refers potential
customers to the serviceman by providing to the potential

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customers a promotional code or other mechanism that allows
the serviceman to track purchases referred by such persons.
Examples of mechanisms that allow the serviceman to track
purchases referred by such persons include but are not
limited to the use of a link on the person's Internet
website, promotional codes distributed through the
person's hand-delivered or mailed material, and
promotional codes distributed by the person through radio
or other broadcast media. The provisions of this paragraph
1.1 shall apply only if the cumulative gross receipts from
sales of service by the serviceman to customers who are
referred to the serviceman by all persons in this State
under such contracts exceed $10,000 during the preceding 4
quarterly periods ending on the last day of March, June,
September, and December; a serviceman meeting the
requirements of this paragraph 1.1 shall be presumed to be
maintaining a place of business in this State but may rebut
this presumption by submitting proof that the referrals or
other activities pursued within this State by such persons
were not sufficient to meet the nexus standards of the
United States Constitution during the preceding 4
quarterly periods;
1.2. beginning July 1, 2011, having a contract with a
person located in this State under which:
A. the serviceman sells the same or substantially
similar line of services as the person located in this

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State and does so using an identical or substantially
similar name, trade name, or trademark as the person
located in this State; and
B. the serviceman provides a commission or other
consideration to the person located in this State based
upon the sale of services by the serviceman.
The provisions of this paragraph 1.2 shall apply only if
the cumulative gross receipts from sales of service by the
serviceman to customers in this State under all such
contracts exceed $10,000 during the preceding 4 quarterly
periods ending on the last day of March, June, September,
and December;
2. soliciting orders for tangible personal property by
means of a telecommunication or television shopping system
(which utilizes toll free numbers) which is intended by the
retailer to be broadcast by cable television or other means
of broadcasting, to consumers located in this State;
3. pursuant to a contract with a broadcaster or
publisher located in this State, soliciting orders for
tangible personal property by means of advertising which is
disseminated primarily to consumers located in this State
and only secondarily to bordering jurisdictions;
4. soliciting orders for tangible personal property by
mail if the solicitations are substantial and recurring and
if the retailer benefits from any banking, financing, debt
collection, telecommunication, or marketing activities

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occurring in this State or benefits from the location in
this State of authorized installation, servicing, or
repair facilities;
5. being owned or controlled by the same interests
which own or control any retailer engaging in business in
the same or similar line of business in this State;
6. having a franchisee or licensee operating under its
trade name if the franchisee or licensee is required to
collect the tax under this Section;
7. pursuant to a contract with a cable television
operator located in this State, soliciting orders for
tangible personal property by means of advertising which is
transmitted or distributed over a cable television system
in this State; or
8. engaging in activities in Illinois, which
activities in the state in which the supply business
engaging in such activities is located would constitute
maintaining a place of business in that state.
(Source: P.A. 98-583, eff. 1-1-14; 98-1089, eff. 1-1-15.)
Section 30-15. The Service Occupation Tax Act is amended by
changing Section 2 as follows:
(35 ILCS 115/2) (from Ch. 120, par. 439.102)
Sec. 2. "Transfer" means any transfer of the title to
property or of the ownership of property whether or not the

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transferor retains title as security for the payment of amounts
due him from the transferee.
"Cost Price" means the consideration paid by the serviceman
for a purchase valued in money, whether paid in money or
otherwise, including cash, credits and services, and shall be
determined without any deduction on account of the supplier's
cost of the property sold or on account of any other expense
incurred by the supplier. When a serviceman contracts out part
or all of the services required in his sale of service, it
shall be presumed that the cost price to the serviceman of the
property transferred to him by his or her subcontractor is
equal to 50% of the subcontractor's charges to the serviceman
in the absence of proof of the consideration paid by the
subcontractor for the purchase of such property.
"Department" means the Department of Revenue.
"Person" means any natural individual, firm, partnership,
association, joint stock company, joint venture, public or
private corporation, limited liability company, and any
receiver, executor, trustee, guardian or other representative
appointed by order of any court.
"Sale of Service" means any transaction except:
(a) A retail sale of tangible personal property taxable
under the Retailers' Occupation Tax Act or under the Use Tax
Act.
(b) A sale of tangible personal property for the purpose of
resale made in compliance with Section 2c of the Retailers'

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Occupation Tax Act.
(c) Except as hereinafter provided, a sale or transfer of
tangible personal property as an incident to the rendering of
service for or by any governmental body or for or by any
corporation, society, association, foundation or institution
organized and operated exclusively for charitable, religious
or educational purposes or any not-for-profit corporation,
society, association, foundation, institution or organization
which has no compensated officers or employees and which is
organized and operated primarily for the recreation of persons
55 years of age or older. A limited liability company may
qualify for the exemption under this paragraph only if the
limited liability company is organized and operated
exclusively for educational purposes.
(d) A sale or transfer of tangible personal property as an
incident to the rendering of service for interstate carriers
for hire for use as rolling stock moving in interstate commerce
or lessors under leases of one year or longer, executed or in
effect at the time of purchase, to interstate carriers for hire
for use as rolling stock moving in interstate commerce, and
equipment operated by a telecommunications provider, licensed
as a common carrier by the Federal Communications Commission,
which is permanently installed in or affixed to aircraft moving
in interstate commerce.
(d-1) A sale or transfer of tangible personal property as
an incident to the rendering of service for owners, lessors or

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shippers of tangible personal property which is utilized by
interstate carriers for hire for use as rolling stock moving in
interstate commerce, and equipment operated by a
telecommunications provider, licensed as a common carrier by
the Federal Communications Commission, which is permanently
installed in or affixed to aircraft moving in interstate
commerce.
(d-1.1) On and after July 1, 2003 and through June 30,
2004, a sale or transfer of a motor vehicle of the second
division with a gross vehicle weight in excess of 8,000 pounds
as an incident to the rendering of service if that motor
vehicle is subject to the commercial distribution fee imposed
under Section 3-815.1 of the Illinois Vehicle Code. Beginning
on July 1, 2004 and through June 30, 2005, the use in this
State of motor vehicles of the second division: (i) with a
gross vehicle weight rating in excess of 8,000 pounds; (ii)
that are subject to the commercial distribution fee imposed
under Section 3-815.1 of the Illinois Vehicle Code; and (iii)
that are primarily used for commercial purposes. Through June
30, 2005, this exemption applies to repair and replacement
parts added after the initial purchase of such a motor vehicle
if that motor vehicle is used in a manner that would qualify
for the rolling stock exemption otherwise provided for in this
Act. For purposes of this paragraph, "used for commercial
purposes" means the transportation of persons or property in
furtherance of any commercial or industrial enterprise whether

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for-hire or not.
(d-2) The repairing, reconditioning or remodeling, for a
common carrier by rail, of tangible personal property which
belongs to such carrier for hire, and as to which such carrier
receives the physical possession of the repaired,
reconditioned or remodeled item of tangible personal property
in Illinois, and which such carrier transports, or shares with
another common carrier in the transportation of such property,
out of Illinois on a standard uniform bill of lading showing
the person who repaired, reconditioned or remodeled the
property as the shipper or consignor of such property to a
destination outside Illinois, for use outside Illinois.
(d-3) A sale or transfer of tangible personal property
which is produced by the seller thereof on special order in
such a way as to have made the applicable tax the Service
Occupation Tax or the Service Use Tax, rather than the
Retailers' Occupation Tax or the Use Tax, for an interstate
carrier by rail which receives the physical possession of such
property in Illinois, and which transports such property, or
shares with another common carrier in the transportation of
such property, out of Illinois on a standard uniform bill of
lading showing the seller of the property as the shipper or
consignor of such property to a destination outside Illinois,
for use outside Illinois.
(d-4) Until January 1, 1997, a sale, by a registered
serviceman paying tax under this Act to the Department, of

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special order printed materials delivered outside Illinois and
which are not returned to this State, if delivery is made by
the seller or agent of the seller, including an agent who
causes the product to be delivered outside Illinois by a common
carrier or the U.S. postal service.
(e) Until January 1, 2017, a A sale or transfer of
machinery and equipment used primarily in the process of the
manufacturing or assembling, either in an existing, an expanded
or a new manufacturing facility, of tangible personal property
for wholesale or retail sale or lease, whether such sale or
lease is made directly by the manufacturer or by some other
person, whether the materials used in the process are owned by
the manufacturer or some other person, or whether such sale or
lease is made apart from or as an incident to the seller's
engaging in a service occupation and the applicable tax is a
Service Occupation Tax or Service Use Tax, rather than
Retailers' Occupation Tax or Use Tax. The exemption provided by
this paragraph (e) does not include machinery and equipment
used in (i) the generation of electricity for wholesale or
retail sale; (ii) the generation or treatment of natural or
artificial gas for wholesale or retail sale that is delivered
to customers through pipes, pipelines, or mains; or (iii) the
treatment of water for wholesale or retail sale that is
delivered to customers through pipes, pipelines, or mains. The
provisions of this amendatory Act of the 98th General Assembly
are declaratory of existing law as to the meaning and scope of

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this exemption.
(f) Until July 1, 2003, the sale or transfer of
distillation machinery and equipment, sold as a unit or kit and
assembled or installed by the retailer, which machinery and
equipment is certified by the user to be used only for the
production of ethyl alcohol that will be used for consumption
as motor fuel or as a component of motor fuel for the personal
use of such user and not subject to sale or resale.
(g) At the election of any serviceman not required to be
otherwise registered as a retailer under Section 2a of the
Retailers' Occupation Tax Act, made for each fiscal year sales
of service in which the aggregate annual cost price of tangible
personal property transferred as an incident to the sales of
service is less than 35% (75% in the case of servicemen
transferring prescription drugs or servicemen engaged in
graphic arts production) of the aggregate annual total gross
receipts from all sales of service. The purchase of such
tangible personal property by the serviceman shall be subject
to tax under the Retailers' Occupation Tax Act and the Use Tax
Act. However, if a primary serviceman who has made the election
described in this paragraph subcontracts service work to a
secondary serviceman who has also made the election described
in this paragraph, the primary serviceman does not incur a Use
Tax liability if the secondary serviceman (i) has paid or will
pay Use Tax on his or her cost price of any tangible personal
property transferred to the primary serviceman and (ii)

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certifies that fact in writing to the primary serviceman.
Tangible personal property transferred incident to the
completion of a maintenance agreement is exempt from the tax
imposed pursuant to this Act.
Exemption (e) also includes machinery and equipment used in
the general maintenance or repair of such exempt machinery and
equipment or for in-house manufacture of exempt machinery and
equipment. The machinery and equipment exemption does not
include machinery and equipment used in (i) the generation of
electricity for wholesale or retail sale; (ii) the generation
or treatment of natural or artificial gas for wholesale or
retail sale that is delivered to customers through pipes,
pipelines, or mains; or (iii) the treatment of water for
wholesale or retail sale that is delivered to customers through
pipes, pipelines, or mains. The provisions of this amendatory
Act of the 98th General Assembly are declaratory of existing
law as to the meaning and scope of this exemption. For the
purposes of exemption (e), each of these terms shall have the
following meanings: (1) "manufacturing process" shall mean the
production of any article of tangible personal property,
whether such article is a finished product or an article for
use in the process of manufacturing or assembling a different
article of tangible personal property, by procedures commonly
regarded as manufacturing, processing, fabricating, or
refining which changes some existing material or materials into
a material with a different form, use or name. In relation to a

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recognized integrated business composed of a series of
operations which collectively constitute manufacturing, or
individually constitute manufacturing operations, the
manufacturing process shall be deemed to commence with the
first operation or stage of production in the series, and shall
not be deemed to end until the completion of the final product
in the last operation or stage of production in the series; and
further for purposes of exemption (e), photoprocessing is
deemed to be a manufacturing process of tangible personal
property for wholesale or retail sale; (2) "assembling process"
shall mean the production of any article of tangible personal
property, whether such article is a finished product or an
article for use in the process of manufacturing or assembling a
different article of tangible personal property, by the
combination of existing materials in a manner commonly regarded
as assembling which results in a material of a different form,
use or name; (3) "machinery" shall mean major mechanical
machines or major components of such machines contributing to a
manufacturing or assembling process; and (4) "equipment" shall
include any independent device or tool separate from any
machinery but essential to an integrated manufacturing or
assembly process; including computers used primarily in a
manufacturer's computer assisted design, computer assisted
manufacturing (CAD/CAM) system; or any subunit or assembly
comprising a component of any machinery or auxiliary, adjunct
or attachment parts of machinery, such as tools, dies, jigs,

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fixtures, patterns and molds; or any parts which require
periodic replacement in the course of normal operation; but
shall not include hand tools. Equipment includes chemicals or
chemicals acting as catalysts but only if the chemicals or
chemicals acting as catalysts effect a direct and immediate
change upon a product being manufactured or assembled for
wholesale or retail sale or lease. The purchaser of such
machinery and equipment who has an active resale registration
number shall furnish such number to the seller at the time of
purchase. The purchaser of such machinery and equipment and
tools without an active resale registration number shall
furnish to the seller a certificate of exemption for each
transaction stating facts establishing the exemption for that
transaction, which certificate shall be available to the
Department for inspection or audit.
Except as provided in Section 2d of this Act, the rolling
stock exemption applies to rolling stock used by an interstate
carrier for hire, even just between points in Illinois, if such
rolling stock transports, for hire, persons whose journeys or
property whose shipments originate or terminate outside
Illinois.
Any informal rulings, opinions or letters issued by the
Department in response to an inquiry or request for any opinion
from any person regarding the coverage and applicability of
exemption (e) to specific devices shall be published,
maintained as a public record, and made available for public

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inspection and copying. If the informal ruling, opinion or
letter contains trade secrets or other confidential
information, where possible the Department shall delete such
information prior to publication. Whenever such informal
rulings, opinions, or letters contain any policy of general
applicability, the Department shall formulate and adopt such
policy as a rule in accordance with the provisions of the
Illinois Administrative Procedure Act.
On and after July 1, 1987, no entity otherwise eligible
under exemption (c) of this Section shall make tax free
purchases unless it has an active exemption identification
number issued by the Department.
"Serviceman" means any person who is engaged in the
occupation of making sales of service.
"Sale at Retail" means "sale at retail" as defined in the
Retailers' Occupation Tax Act.
"Supplier" means any person who makes sales of tangible
personal property to servicemen for the purpose of resale as an
incident to a sale of service.
(Source: P.A. 98-583, eff. 1-1-14.)
Section 30-20. The Retailers' Occupation Tax Act is amended
by changing Sections 2-5 and 2-45 as follows:
(35 ILCS 120/2-5)
Sec. 2-5. Exemptions. Gross receipts from proceeds from the

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sale of the following tangible personal property are exempt
from the tax imposed by this Act:
(1) Farm chemicals.
(2) Farm machinery and equipment, both new and used,
including that manufactured on special order, certified by the
purchaser to be used primarily for production agriculture or
State or federal agricultural programs, including individual
replacement parts for the machinery and equipment, including
machinery and equipment purchased for lease, and including
implements of husbandry defined in Section 1-130 of the
Illinois Vehicle Code, farm machinery and agricultural
chemical and fertilizer spreaders, and nurse wagons required to
be registered under Section 3-809 of the Illinois Vehicle Code,
but excluding other motor vehicles required to be registered
under the Illinois Vehicle Code. Horticultural polyhouses or
hoop houses used for propagating, growing, or overwintering
plants shall be considered farm machinery and equipment under
this item (2). Agricultural chemical tender tanks and dry boxes
shall include units sold separately from a motor vehicle
required to be licensed and units sold mounted on a motor
vehicle required to be licensed, if the selling price of the
tender is separately stated.
Farm machinery and equipment shall include precision
farming equipment that is installed or purchased to be
installed on farm machinery and equipment including, but not
limited to, tractors, harvesters, sprayers, planters, seeders,

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or spreaders. Precision farming equipment includes, but is not
limited to, soil testing sensors, computers, monitors,
software, global positioning and mapping systems, and other
such equipment.
Farm machinery and equipment also includes computers,
sensors, software, and related equipment used primarily in the
computer-assisted operation of production agriculture
facilities, equipment, and activities such as, but not limited
to, the collection, monitoring, and correlation of animal and
crop data for the purpose of formulating animal diets and
agricultural chemicals. This item (2) is exempt from the
provisions of Section 2-70.
(3) Until July 1, 2003, distillation machinery and
equipment, sold as a unit or kit, assembled or installed by the
retailer, certified by the user to be used only for the
production of ethyl alcohol that will be used for consumption
as motor fuel or as a component of motor fuel for the personal
use of the user, and not subject to sale or resale.
(4) Until July 1, 2003 and beginning again September 1,
2004 through August 30, 2014, graphic arts machinery and
equipment, including repair and replacement parts, both new and
used, and including that manufactured on special order or
purchased for lease, certified by the purchaser to be used
primarily for graphic arts production. Equipment includes
chemicals or chemicals acting as catalysts but only if the
chemicals or chemicals acting as catalysts effect a direct and

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immediate change upon a graphic arts product.
(5) A motor vehicle that is used for automobile renting, as
defined in the Automobile Renting Occupation and Use Tax Act.
This paragraph is exempt from the provisions of Section 2-70.
(6) Personal property sold by a teacher-sponsored student
organization affiliated with an elementary or secondary school
located in Illinois.
(7) Until July 1, 2003, proceeds of that portion of the
selling price of a passenger car the sale of which is subject
to the Replacement Vehicle Tax.
(8) Personal property sold to an Illinois county fair
association for use in conducting, operating, or promoting the
county fair.
(9) Personal property sold to a not-for-profit arts or
cultural organization that establishes, by proof required by
the Department by rule, that it has received an exemption under
Section 501(c)(3) of the Internal Revenue Code and that is
organized and operated primarily for the presentation or
support of arts or cultural programming, activities, or
services. These organizations include, but are not limited to,
music and dramatic arts organizations such as symphony
orchestras and theatrical groups, arts and cultural service
organizations, local arts councils, visual arts organizations,
and media arts organizations. On and after the effective date
of this amendatory Act of the 92nd General Assembly, however,
an entity otherwise eligible for this exemption shall not make

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tax-free purchases unless it has an active identification
number issued by the Department.
(10) Personal property sold by a corporation, society,
association, foundation, institution, or organization, other
than a limited liability company, that is organized and
operated as a not-for-profit service enterprise for the benefit
of persons 65 years of age or older if the personal property
was not purchased by the enterprise for the purpose of resale
by the enterprise.
(11) Personal property sold to a governmental body, to a
corporation, society, association, foundation, or institution
organized and operated exclusively for charitable, religious,
or educational purposes, or to a not-for-profit corporation,
society, association, foundation, institution, or organization
that has no compensated officers or employees and that is
organized and operated primarily for the recreation of persons
55 years of age or older. A limited liability company may
qualify for the exemption under this paragraph only if the
limited liability company is organized and operated
exclusively for educational purposes. On and after July 1,
1987, however, no entity otherwise eligible for this exemption
shall make tax-free purchases unless it has an active
identification number issued by the Department.
(12) Tangible personal property sold to interstate
carriers for hire for use as rolling stock moving in interstate
commerce or to lessors under leases of one year or longer

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executed or in effect at the time of purchase by interstate
carriers for hire for use as rolling stock moving in interstate
commerce and equipment operated by a telecommunications
provider, licensed as a common carrier by the Federal
Communications Commission, which is permanently installed in
or affixed to aircraft moving in interstate commerce.
(12-5) On and after July 1, 2003 and through June 30, 2004,
motor vehicles of the second division with a gross vehicle
weight in excess of 8,000 pounds that are subject to the
commercial distribution fee imposed under Section 3-815.1 of
the Illinois Vehicle Code. Beginning on July 1, 2004 and
through June 30, 2005, the use in this State of motor vehicles
of the second division: (i) with a gross vehicle weight rating
in excess of 8,000 pounds; (ii) that are subject to the
commercial distribution fee imposed under Section 3-815.1 of
the Illinois Vehicle Code; and (iii) that are primarily used
for commercial purposes. Through June 30, 2005, this exemption
applies to repair and replacement parts added after the initial
purchase of such a motor vehicle if that motor vehicle is used
in a manner that would qualify for the rolling stock exemption
otherwise provided for in this Act. For purposes of this
paragraph, "used for commercial purposes" means the
transportation of persons or property in furtherance of any
commercial or industrial enterprise whether for-hire or not.
(13) Proceeds from sales to owners, lessors, or shippers of
tangible personal property that is utilized by interstate

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carriers for hire for use as rolling stock moving in interstate
commerce and equipment operated by a telecommunications
provider, licensed as a common carrier by the Federal
Communications Commission, which is permanently installed in
or affixed to aircraft moving in interstate commerce.
(14) Until January 1, 2017, machinery Machinery and
equipment that will be used by the purchaser, or a lessee of
the purchaser, primarily in the process of manufacturing or
assembling tangible personal property for wholesale or retail
sale or lease, whether the sale or lease is made directly by
the manufacturer or by some other person, whether the materials
used in the process are owned by the manufacturer or some other
person, or whether the sale or lease is made apart from or as
an incident to the seller's engaging in the service occupation
of producing machines, tools, dies, jigs, patterns, gauges, or
other similar items of no commercial value on special order for
a particular purchaser. The exemption provided by this
paragraph (14) does not include machinery and equipment used in
(i) the generation of electricity for wholesale or retail sale;
(ii) the generation or treatment of natural or artificial gas
for wholesale or retail sale that is delivered to customers
through pipes, pipelines, or mains; or (iii) the treatment of
water for wholesale or retail sale that is delivered to
customers through pipes, pipelines, or mains. The provisions of
Public Act 98-583 are declaratory of existing law as to the
meaning and scope of this exemption.

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(15) Proceeds of mandatory service charges separately
stated on customers' bills for purchase and consumption of food
and beverages, to the extent that the proceeds of the service
charge are in fact turned over as tips or as a substitute for
tips to the employees who participate directly in preparing,
serving, hosting or cleaning up the food or beverage function
with respect to which the service charge is imposed.
(16) Petroleum products sold to a purchaser if the seller
is prohibited by federal law from charging tax to the
purchaser.
(17) Tangible personal property sold to a common carrier by
rail or motor that receives the physical possession of the
property in Illinois and that transports the property, or
shares with another common carrier in the transportation of the
property, out of Illinois on a standard uniform bill of lading
showing the seller of the property as the shipper or consignor
of the property to a destination outside Illinois, for use
outside Illinois.
(18) Legal tender, currency, medallions, or gold or silver
coinage issued by the State of Illinois, the government of the
United States of America, or the government of any foreign
country, and bullion.
(19) Until July 1 2003, oil field exploration, drilling,
and production equipment, including (i) rigs and parts of rigs,
rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
tubular goods, including casing and drill strings, (iii) pumps

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and pump-jack units, (iv) storage tanks and flow lines, (v) any
individual replacement part for oil field exploration,
drilling, and production equipment, and (vi) machinery and
equipment purchased for lease; but excluding motor vehicles
required to be registered under the Illinois Vehicle Code.
(20) Photoprocessing machinery and equipment, including
repair and replacement parts, both new and used, including that
manufactured on special order, certified by the purchaser to be
used primarily for photoprocessing, and including
photoprocessing machinery and equipment purchased for lease.
(21) Coal and aggregate exploration, mining, off-highway
hauling, processing, maintenance, and reclamation equipment,
including replacement parts and equipment, and including
equipment purchased for lease, but excluding motor vehicles
required to be registered under the Illinois Vehicle Code. The
changes made to this Section by Public Act 97-767 apply on and
after July 1, 2003, but no claim for credit or refund is
allowed on or after August 16, 2013 (the effective date of
Public Act 98-456) for such taxes paid during the period
beginning July 1, 2003 and ending on August 16, 2013 (the
effective date of Public Act 98-456).
(22) Until June 30, 2013, fuel and petroleum products sold
to or used by an air carrier, certified by the carrier to be
used for consumption, shipment, or storage in the conduct of
its business as an air common carrier, for a flight destined
for or returning from a location or locations outside the

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United States without regard to previous or subsequent domestic
stopovers.
Beginning July 1, 2013, fuel and petroleum products sold to
or used by an air carrier, certified by the carrier to be used
for consumption, shipment, or storage in the conduct of its
business as an air common carrier, for a flight that (i) is
engaged in foreign trade or is engaged in trade between the
United States and any of its possessions and (ii) transports at
least one individual or package for hire from the city of
origination to the city of final destination on the same
aircraft, without regard to a change in the flight number of
that aircraft.
(23) A transaction in which the purchase order is received
by a florist who is located outside Illinois, but who has a
florist located in Illinois deliver the property to the
purchaser or the purchaser's donee in Illinois.
(24) Fuel consumed or used in the operation of ships,
barges, or vessels that are used primarily in or for the
transportation of property or the conveyance of persons for
hire on rivers bordering on this State if the fuel is delivered
by the seller to the purchaser's barge, ship, or vessel while
it is afloat upon that bordering river.
(25) Except as provided in item (25-5) of this Section, a
motor vehicle sold in this State to a nonresident even though
the motor vehicle is delivered to the nonresident in this
State, if the motor vehicle is not to be titled in this State,

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and if a drive-away permit is issued to the motor vehicle as
provided in Section 3-603 of the Illinois Vehicle Code or if
the nonresident purchaser has vehicle registration plates to
transfer to the motor vehicle upon returning to his or her home
state. The issuance of the drive-away permit or having the
out-of-state registration plates to be transferred is prima
facie evidence that the motor vehicle will not be titled in
this State.
(25-5) The exemption under item (25) does not apply if the
state in which the motor vehicle will be titled does not allow
a reciprocal exemption for a motor vehicle sold and delivered
in that state to an Illinois resident but titled in Illinois.
The tax collected under this Act on the sale of a motor vehicle
in this State to a resident of another state that does not
allow a reciprocal exemption shall be imposed at a rate equal
to the state's rate of tax on taxable property in the state in
which the purchaser is a resident, except that the tax shall
not exceed the tax that would otherwise be imposed under this
Act. At the time of the sale, the purchaser shall execute a
statement, signed under penalty of perjury, of his or her
intent to title the vehicle in the state in which the purchaser
is a resident within 30 days after the sale and of the fact of
the payment to the State of Illinois of tax in an amount
equivalent to the state's rate of tax on taxable property in
his or her state of residence and shall submit the statement to
the appropriate tax collection agency in his or her state of

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residence. In addition, the retailer must retain a signed copy
of the statement in his or her records. Nothing in this item
shall be construed to require the removal of the vehicle from
this state following the filing of an intent to title the
vehicle in the purchaser's state of residence if the purchaser
titles the vehicle in his or her state of residence within 30
days after the date of sale. The tax collected under this Act
in accordance with this item (25-5) shall be proportionately
distributed as if the tax were collected at the 6.25% general
rate imposed under this Act.
(25-7) Beginning on July 1, 2007, no tax is imposed under
this Act on the sale of an aircraft, as defined in Section 3 of
the Illinois Aeronautics Act, if all of the following
conditions are met:
(1) the aircraft leaves this State within 15 days after
the later of either the issuance of the final billing for
the sale of the aircraft, or the authorized approval for
return to service, completion of the maintenance record
entry, and completion of the test flight and ground test
for inspection, as required by 14 C.F.R. 91.407;
(2) the aircraft is not based or registered in this
State after the sale of the aircraft; and
(3) the seller retains in his or her books and records
and provides to the Department a signed and dated
certification from the purchaser, on a form prescribed by
the Department, certifying that the requirements of this

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item (25-7) are met. The certificate must also include the
name and address of the purchaser, the address of the
location where the aircraft is to be titled or registered,
the address of the primary physical location of the
aircraft, and other information that the Department may
reasonably require.
For purposes of this item (25-7):
"Based in this State" means hangared, stored, or otherwise
used, excluding post-sale customizations as defined in this
Section, for 10 or more days in each 12-month period
immediately following the date of the sale of the aircraft.
"Registered in this State" means an aircraft registered
with the Department of Transportation, Aeronautics Division,
or titled or registered with the Federal Aviation
Administration to an address located in this State.
This paragraph (25-7) is exempt from the provisions of
Section 2-70.
(26) Semen used for artificial insemination of livestock
for direct agricultural production.
(27) Horses, or interests in horses, registered with and
meeting the requirements of any of the Arabian Horse Club
Registry of America, Appaloosa Horse Club, American Quarter
Horse Association, United States Trotting Association, or
Jockey Club, as appropriate, used for purposes of breeding or
racing for prizes. This item (27) is exempt from the provisions
of Section 2-70, and the exemption provided for under this item

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(27) applies for all periods beginning May 30, 1995, but no
claim for credit or refund is allowed on or after January 1,
2008 (the effective date of Public Act 95-88) for such taxes
paid during the period beginning May 30, 2000 and ending on
January 1, 2008 (the effective date of Public Act 95-88).
(28) Computers and communications equipment utilized for
any hospital purpose and equipment used in the diagnosis,
analysis, or treatment of hospital patients sold to a lessor
who leases the equipment, under a lease of one year or longer
executed or in effect at the time of the purchase, to a
hospital that has been issued an active tax exemption
identification number by the Department under Section 1g of
this Act.
(29) Personal property sold to a lessor who leases the
property, under a lease of one year or longer executed or in
effect at the time of the purchase, to a governmental body that
has been issued an active tax exemption identification number
by the Department under Section 1g of this Act.
(30) Beginning with taxable years ending on or after
December 31, 1995 and ending with taxable years ending on or
before December 31, 2004, personal property that is donated for
disaster relief to be used in a State or federally declared
disaster area in Illinois or bordering Illinois by a
manufacturer or retailer that is registered in this State to a
corporation, society, association, foundation, or institution
that has been issued a sales tax exemption identification

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number by the Department that assists victims of the disaster
who reside within the declared disaster area.
(31) Beginning with taxable years ending on or after
December 31, 1995 and ending with taxable years ending on or
before December 31, 2004, personal property that is used in the
performance of infrastructure repairs in this State, including
but not limited to municipal roads and streets, access roads,
bridges, sidewalks, waste disposal systems, water and sewer
line extensions, water distribution and purification
facilities, storm water drainage and retention facilities, and
sewage treatment facilities, resulting from a State or
federally declared disaster in Illinois or bordering Illinois
when such repairs are initiated on facilities located in the
declared disaster area within 6 months after the disaster.
(32) Beginning July 1, 1999, game or game birds sold at a
"game breeding and hunting preserve area" as that term is used
in the Wildlife Code. This paragraph is exempt from the
provisions of Section 2-70.
(33) A motor vehicle, as that term is defined in Section
1-146 of the Illinois Vehicle Code, that is donated to a
corporation, limited liability company, society, association,
foundation, or institution that is determined by the Department
to be organized and operated exclusively for educational
purposes. For purposes of this exemption, "a corporation,
limited liability company, society, association, foundation,
or institution organized and operated exclusively for

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educational purposes" means all tax-supported public schools,
private schools that offer systematic instruction in useful
branches of learning by methods common to public schools and
that compare favorably in their scope and intensity with the
course of study presented in tax-supported schools, and
vocational or technical schools or institutes organized and
operated exclusively to provide a course of study of not less
than 6 weeks duration and designed to prepare individuals to
follow a trade or to pursue a manual, technical, mechanical,
industrial, business, or commercial occupation.
(34) Beginning January 1, 2000, personal property,
including food, purchased through fundraising events for the
benefit of a public or private elementary or secondary school,
a group of those schools, or one or more school districts if
the events are sponsored by an entity recognized by the school
district that consists primarily of volunteers and includes
parents and teachers of the school children. This paragraph
does not apply to fundraising events (i) for the benefit of
private home instruction or (ii) for which the fundraising
entity purchases the personal property sold at the events from
another individual or entity that sold the property for the
purpose of resale by the fundraising entity and that profits
from the sale to the fundraising entity. This paragraph is
exempt from the provisions of Section 2-70.
(35) Beginning January 1, 2000 and through December 31,
2001, new or used automatic vending machines that prepare and

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serve hot food and beverages, including coffee, soup, and other
items, and replacement parts for these machines. Beginning
January 1, 2002 and through June 30, 2003, machines and parts
for machines used in commercial, coin-operated amusement and
vending business if a use or occupation tax is paid on the
gross receipts derived from the use of the commercial,
coin-operated amusement and vending machines. This paragraph
is exempt from the provisions of Section 2-70.
(35-5) Beginning August 23, 2001 and through June 30, 2016,
food for human consumption that is to be consumed off the
premises where it is sold (other than alcoholic beverages, soft
drinks, and food that has been prepared for immediate
consumption) and prescription and nonprescription medicines,
drugs, medical appliances, and insulin, urine testing
materials, syringes, and needles used by diabetics, for human
use, when purchased for use by a person receiving medical
assistance under Article V of the Illinois Public Aid Code who
resides in a licensed long-term care facility, as defined in
the Nursing Home Care Act, or a licensed facility as defined in
the ID/DD Community Care Act, the MC/DD Act, or the Specialized
Mental Health Rehabilitation Act of 2013.
(36) Beginning August 2, 2001, computers and
communications equipment utilized for any hospital purpose and
equipment used in the diagnosis, analysis, or treatment of
hospital patients sold to a lessor who leases the equipment,
under a lease of one year or longer executed or in effect at

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the time of the purchase, to a hospital that has been issued an
active tax exemption identification number by the Department
under Section 1g of this Act. This paragraph is exempt from the
provisions of Section 2-70.
(37) Beginning August 2, 2001, personal property sold to a
lessor who leases the property, under a lease of one year or
longer executed or in effect at the time of the purchase, to a
governmental body that has been issued an active tax exemption
identification number by the Department under Section 1g of
this Act. This paragraph is exempt from the provisions of
Section 2-70.
(38) Beginning on January 1, 2002 and through June 30,
2016, tangible personal property purchased from an Illinois
retailer by a taxpayer engaged in centralized purchasing
activities in Illinois who will, upon receipt of the property
in Illinois, temporarily store the property in Illinois (i) for
the purpose of subsequently transporting it outside this State
for use or consumption thereafter solely outside this State or
(ii) for the purpose of being processed, fabricated, or
manufactured into, attached to, or incorporated into other
tangible personal property to be transported outside this State
and thereafter used or consumed solely outside this State. The
Director of Revenue shall, pursuant to rules adopted in
accordance with the Illinois Administrative Procedure Act,
issue a permit to any taxpayer in good standing with the
Department who is eligible for the exemption under this

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paragraph (38). The permit issued under this paragraph (38)
shall authorize the holder, to the extent and in the manner
specified in the rules adopted under this Act, to purchase
tangible personal property from a retailer exempt from the
taxes imposed by this Act. Taxpayers shall maintain all
necessary books and records to substantiate the use and
consumption of all such tangible personal property outside of
the State of Illinois.
(39) Beginning January 1, 2008, tangible personal property
used in the construction or maintenance of a community water
supply, as defined under Section 3.145 of the Environmental
Protection Act, that is operated by a not-for-profit
corporation that holds a valid water supply permit issued under
Title IV of the Environmental Protection Act. This paragraph is
exempt from the provisions of Section 2-70.
(40) Beginning January 1, 2010, materials, parts,
equipment, components, and furnishings incorporated into or
upon an aircraft as part of the modification, refurbishment,
completion, replacement, repair, or maintenance of the
aircraft. This exemption includes consumable supplies used in
the modification, refurbishment, completion, replacement,
repair, and maintenance of aircraft, but excludes any
materials, parts, equipment, components, and consumable
supplies used in the modification, replacement, repair, and
maintenance of aircraft engines or power plants, whether such
engines or power plants are installed or uninstalled upon any

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such aircraft. "Consumable supplies" include, but are not
limited to, adhesive, tape, sandpaper, general purpose
lubricants, cleaning solution, latex gloves, and protective
films. This exemption applies only to the sale of qualifying
tangible personal property to persons who modify, refurbish,
complete, replace, or maintain an aircraft and who (i) hold an
Air Agency Certificate and are empowered to operate an approved
repair station by the Federal Aviation Administration, (ii)
have a Class IV Rating, and (iii) conduct operations in
accordance with Part 145 of the Federal Aviation Regulations.
The exemption does not include aircraft operated by a
commercial air carrier providing scheduled passenger air
service pursuant to authority issued under Part 121 or Part 129
of the Federal Aviation Regulations. The changes made to this
paragraph (40) by Public Act 98-534 are declarative of existing
law.
(41) Tangible personal property sold to a
public-facilities corporation, as described in Section
11-65-10 of the Illinois Municipal Code, for purposes of
constructing or furnishing a municipal convention hall, but
only if the legal title to the municipal convention hall is
transferred to the municipality without any further
consideration by or on behalf of the municipality at the time
of the completion of the municipal convention hall or upon the
retirement or redemption of any bonds or other debt instruments
issued by the public-facilities corporation in connection with

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the development of the municipal convention hall. This
exemption includes existing public-facilities corporations as
provided in Section 11-65-25 of the Illinois Municipal Code.
This paragraph is exempt from the provisions of Section 2-70.
(42) Beginning January 1, 2017, menstrual pads, tampons,
and menstrual cups.
(Source: P.A. 98-104, eff. 7-22-13; 98-422, eff. 8-16-13;
98-456, eff. 8-16-13; 98-534, eff. 8-23-13; 98-574, eff.
1-1-14; 98-583, eff. 1-1-14; 98-756, eff. 7-16-14; 99-180, eff.
7-29-15; 99-855, eff. 8-19-16.)
(35 ILCS 120/2-45) (from Ch. 120, par. 441-45)
Sec. 2-45. Manufacturing and assembly exemption. The
manufacturing and assembly machinery and equipment exemption
includes machinery and equipment that replaces machinery and
equipment in an existing manufacturing facility as well as
machinery and equipment that are for use in an expanded or new
manufacturing facility.
The machinery and equipment exemption also includes
machinery and equipment used in the general maintenance or
repair of exempt machinery and equipment or for in-house
manufacture of exempt machinery and equipment. The machinery
and equipment exemption does not include machinery and
equipment used in (i) the generation of electricity for
wholesale or retail sale; (ii) the generation or treatment of
natural or artificial gas for wholesale or retail sale that is

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delivered to customers through pipes, pipelines, or mains; or
(iii) the treatment of water for wholesale or retail sale that
is delivered to customers through pipes, pipelines, or mains.
The provisions of this amendatory Act of the 98th General
Assembly are declaratory of existing law as to the meaning and
scope of this exemption. For the purposes of this exemption,
terms have the following meanings:
(1) "Manufacturing process" means the production of an
article of tangible personal property, whether the article
is a finished product or an article for use in the process
of manufacturing or assembling a different article of
tangible personal property, by a procedure commonly
regarded as manufacturing, processing, fabricating, or
refining that changes some existing material or materials
into a material with a different form, use, or name. In
relation to a recognized integrated business composed of a
series of operations that collectively constitute
manufacturing, or individually constitute manufacturing
operations, the manufacturing process commences with the
first operation or stage of production in the series and
does not end until the completion of the final product in
the last operation or stage of production in the series.
For purposes of this exemption, photoprocessing is a
manufacturing process of tangible personal property for
wholesale or retail sale.
(2) "Assembling process" means the production of an

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article of tangible personal property, whether the article
is a finished product or an article for use in the process
of manufacturing or assembling a different article of
tangible personal property, by the combination of existing
materials in a manner commonly regarded as assembling that
results in a material of a different form, use, or name.
(3) "Machinery" means major mechanical machines or
major components of those machines contributing to a
manufacturing or assembling process.
(4) "Equipment" includes an independent device or tool
separate from machinery but essential to an integrated
manufacturing or assembly process; including computers
used primarily in a manufacturer's computer assisted
design, computer assisted manufacturing (CAD/CAM) system;
any subunit or assembly comprising a component of any
machinery or auxiliary, adjunct, or attachment parts of
machinery, such as tools, dies, jigs, fixtures, patterns,
and molds; and any parts that require periodic replacement
in the course of normal operation; but does not include
hand tools. Equipment includes chemicals or chemicals
acting as catalysts but only if the chemicals or chemicals
acting as catalysts effect a direct and immediate change
upon a product being manufactured or assembled for
wholesale or retail sale or lease.
(5) "Production related tangible personal property"
means all tangible personal property that is used or

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consumed by the purchaser in a manufacturing facility in
which a manufacturing process takes place and includes,
without limitation, tangible personal property that is
purchased for incorporation into real estate within a
manufacturing facility and tangible personal property that
is used or consumed in activities such as research and
development, preproduction material handling, receiving,
quality control, inventory control, storage, staging, and
packaging for shipping and transportation purposes.
"Production related tangible personal property" does not
include (i) tangible personal property that is used, within
or without a manufacturing facility, in sales, purchasing,
accounting, fiscal management, marketing, personnel
recruitment or selection, or landscaping or (ii) tangible
personal property that is required to be titled or
registered with a department, agency, or unit of federal,
State, or local government.
The manufacturing and assembling machinery and equipment
exemption includes production related tangible personal
property that is purchased on or after July 1, 2007 and on or
before June 30, 2008. The exemption for production related
tangible personal property is subject to both of the following
limitations:
(1) The maximum amount of the exemption for any one
taxpayer may not exceed 5% of the purchase price of
production related tangible personal property that is

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purchased on or after July 1, 2007 and on or before June
30, 2008. A credit under Section 3-85 of this Act may not
be earned by the purchase of production related tangible
personal property for which an exemption is received under
this Section.
(2) The maximum aggregate amount of the exemptions for
production related tangible personal property awarded
under this Act and the Use Tax Act to all taxpayers may not
exceed $10,000,000. If the claims for the exemption exceed
$10,000,000, then the Department shall reduce the amount of
the exemption to each taxpayer on a pro rata basis.
The Department may adopt rules to implement and administer the
exemption for production related tangible personal property.
The manufacturing and assembling machinery and equipment
exemption includes the sale of materials to a purchaser who
produces exempted types of machinery, equipment, or tools and
who rents or leases that machinery, equipment, or tools to a
manufacturer of tangible personal property. This exemption
also includes the sale of materials to a purchaser who
manufactures those materials into an exempted type of
machinery, equipment, or tools that the purchaser uses himself
or herself in the manufacturing of tangible personal property.
The purchaser of the machinery and equipment who has an active
resale registration number shall furnish that number to the
seller at the time of purchase. A purchaser of the machinery,
equipment, and tools without an active resale registration

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number shall furnish to the seller a certificate of exemption
for each transaction stating facts establishing the exemption
for that transaction, and that certificate shall be available
to the Department for inspection or audit. Informal rulings,
opinions, or letters issued by the Department in response to an
inquiry or request for an opinion from any person regarding the
coverage and applicability of this exemption to specific
devices shall be published, maintained as a public record, and
made available for public inspection and copying. If the
informal ruling, opinion, or letter contains trade secrets or
other confidential information, where possible, the Department
shall delete that information before publication. Whenever
informal rulings, opinions, or letters contain a policy of
general applicability, the Department shall formulate and
adopt that policy as a rule in accordance with the Illinois
Administrative Procedure Act.
The manufacturing and assembling machinery and equipment
exemption applies only until December 31, 2016.
(Source: P.A. 98-583, eff. 1-1-14.)
ARTICLE 35. VENDOR DISCOUNTS
Section 35-5. The Use Tax Act is amended by changing
Section 9 as follows:
(35 ILCS 105/9) (from Ch. 120, par. 439.9)

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Sec. 9. Except as to motor vehicles, watercraft, aircraft,
and trailers that are required to be registered with an agency
of this State, each retailer required or authorized to collect
the tax imposed by this Act shall pay to the Department the
amount of such tax (except as otherwise provided) at the time
when he is required to file his return for the period during
which such tax was collected, less the vendor discount amount a
discount of 2.1% prior to January 1, 1990, and 1.75% on and
after January 1, 1990, or $5 per calendar year, whichever is
greater, which is allowed to reimburse the retailer for
expenses incurred in collecting the tax, keeping records,
preparing and filing returns, remitting the tax and supplying
data to the Department on request. On and after January 1, 1990
and prior to January 1, 2017, the vendor discount amount shall
be 1.75% or $5 per calendar year, whichever is greater. On and
after January 1, 2017, the vendor discount amount shall be the
sum of (i) 1.75% of the first $1,000 collected during the
calendar year and (ii) 1% of the amount of proceeds collected
during the calendar year that exceeds $1,000; however, on and
after January 1, 2017, in no event shall the discount allowed
to any vendor be less than $5 in any calendar year or more than
$1,500 in any calendar year. In the case of retailers who
report and pay the tax on a transaction by transaction basis,
as provided in this Section, such discount shall be taken with
each such tax remittance instead of when such retailer files
his periodic return. The Department may disallow the discount

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for retailers whose certificate of registration is revoked at
the time the return is filed, but only if the Department's
decision to revoke the certificate of registration has become
final. A retailer need not remit that part of any tax collected
by him to the extent that he is required to remit and does
remit the tax imposed by the Retailers' Occupation Tax Act,
with respect to the sale of the same property.
Where such tangible personal property is sold under a
conditional sales contract, or under any other form of sale
wherein the payment of the principal sum, or a part thereof, is
extended beyond the close of the period for which the return is
filed, the retailer, in collecting the tax (except as to motor
vehicles, watercraft, aircraft, and trailers that are required
to be registered with an agency of this State), may collect for
each tax return period, only the tax applicable to that part of
the selling price actually received during such tax return
period.
Except as provided in this Section, on or before the
twentieth day of each calendar month, such retailer shall file
a return for the preceding calendar month. Such return shall be
filed on forms prescribed by the Department and shall furnish
such information as the Department may reasonably require.
The Department may require returns to be filed on a
quarterly basis. If so required, a return for each calendar
quarter shall be filed on or before the twentieth day of the
calendar month following the end of such calendar quarter. The

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taxpayer shall also file a return with the Department for each
of the first two months of each calendar quarter, on or before
the twentieth day of the following calendar month, stating:
1. The name of the seller;
2. The address of the principal place of business from
which he engages in the business of selling tangible
personal property at retail in this State;
3. The total amount of taxable receipts received by him
during the preceding calendar month from sales of tangible
personal property by him during such preceding calendar
month, including receipts from charge and time sales, but
less all deductions allowed by law;
4. The amount of credit provided in Section 2d of this
Act;
5. The amount of tax due;
5-5. The signature of the taxpayer; and
6. Such other reasonable information as the Department
may require.
If a taxpayer fails to sign a return within 30 days after
the proper notice and demand for signature by the Department,
the return shall be considered valid and any amount shown to be
due on the return shall be deemed assessed.
Beginning October 1, 1993, a taxpayer who has an average
monthly tax liability of $150,000 or more shall make all
payments required by rules of the Department by electronic
funds transfer. Beginning October 1, 1994, a taxpayer who has

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an average monthly tax liability of $100,000 or more shall make
all payments required by rules of the Department by electronic
funds transfer. Beginning October 1, 1995, a taxpayer who has
an average monthly tax liability of $50,000 or more shall make
all payments required by rules of the Department by electronic
funds transfer. Beginning October 1, 2000, a taxpayer who has
an annual tax liability of $200,000 or more shall make all
payments required by rules of the Department by electronic
funds transfer. The term "annual tax liability" shall be the
sum of the taxpayer's liabilities under this Act, and under all
other State and local occupation and use tax laws administered
by the Department, for the immediately preceding calendar year.
The term "average monthly tax liability" means the sum of the
taxpayer's liabilities under this Act, and under all other
State and local occupation and use tax laws administered by the
Department, for the immediately preceding calendar year
divided by 12. Beginning on October 1, 2002, a taxpayer who has
a tax liability in the amount set forth in subsection (b) of
Section 2505-210 of the Department of Revenue Law shall make
all payments required by rules of the Department by electronic
funds transfer.
Before August 1 of each year beginning in 1993, the
Department shall notify all taxpayers required to make payments
by electronic funds transfer. All taxpayers required to make
payments by electronic funds transfer shall make those payments
for a minimum of one year beginning on October 1.

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Any taxpayer not required to make payments by electronic
funds transfer may make payments by electronic funds transfer
with the permission of the Department.
All taxpayers required to make payment by electronic funds
transfer and any taxpayers authorized to voluntarily make
payments by electronic funds transfer shall make those payments
in the manner authorized by the Department.
The Department shall adopt such rules as are necessary to
effectuate a program of electronic funds transfer and the
requirements of this Section.
Before October 1, 2000, if the taxpayer's average monthly
tax liability to the Department under this Act, the Retailers'
Occupation Tax Act, the Service Occupation Tax Act, the Service
Use Tax Act was $10,000 or more during the preceding 4 complete
calendar quarters, he shall file a return with the Department
each month by the 20th day of the month next following the
month during which such tax liability is incurred and shall
make payments to the Department on or before the 7th, 15th,
22nd and last day of the month during which such liability is
incurred. On and after October 1, 2000, if the taxpayer's
average monthly tax liability to the Department under this Act,
the Retailers' Occupation Tax Act, the Service Occupation Tax
Act, and the Service Use Tax Act was $20,000 or more during the
preceding 4 complete calendar quarters, he shall file a return
with the Department each month by the 20th day of the month
next following the month during which such tax liability is

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incurred and shall make payment to the Department on or before
the 7th, 15th, 22nd and last day of the month during which such
liability is incurred. If the month during which such tax
liability is incurred began prior to January 1, 1985, each
payment shall be in an amount equal to 1/4 of the taxpayer's
actual liability for the month or an amount set by the
Department not to exceed 1/4 of the average monthly liability
of the taxpayer to the Department for the preceding 4 complete
calendar quarters (excluding the month of highest liability and
the month of lowest liability in such 4 quarter period). If the
month during which such tax liability is incurred begins on or
after January 1, 1985, and prior to January 1, 1987, each
payment shall be in an amount equal to 22.5% of the taxpayer's
actual liability for the month or 27.5% of the taxpayer's
liability for the same calendar month of the preceding year. If
the month during which such tax liability is incurred begins on
or after January 1, 1987, and prior to January 1, 1988, each
payment shall be in an amount equal to 22.5% of the taxpayer's
actual liability for the month or 26.25% of the taxpayer's
liability for the same calendar month of the preceding year. If
the month during which such tax liability is incurred begins on
or after January 1, 1988, and prior to January 1, 1989, or
begins on or after January 1, 1996, each payment shall be in an
amount equal to 22.5% of the taxpayer's actual liability for
the month or 25% of the taxpayer's liability for the same
calendar month of the preceding year. If the month during which

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such tax liability is incurred begins on or after January 1,
1989, and prior to January 1, 1996, each payment shall be in an
amount equal to 22.5% of the taxpayer's actual liability for
the month or 25% of the taxpayer's liability for the same
calendar month of the preceding year or 100% of the taxpayer's
actual liability for the quarter monthly reporting period. The
amount of such quarter monthly payments shall be credited
against the final tax liability of the taxpayer's return for
that month. Before October 1, 2000, once applicable, the
requirement of the making of quarter monthly payments to the
Department shall continue until such taxpayer's average
monthly liability to the Department during the preceding 4
complete calendar quarters (excluding the month of highest
liability and the month of lowest liability) is less than
$9,000, or until such taxpayer's average monthly liability to
the Department as computed for each calendar quarter of the 4
preceding complete calendar quarter period is less than
$10,000. However, if a taxpayer can show the Department that a
substantial change in the taxpayer's business has occurred
which causes the taxpayer to anticipate that his average
monthly tax liability for the reasonably foreseeable future
will fall below the $10,000 threshold stated above, then such
taxpayer may petition the Department for change in such
taxpayer's reporting status. On and after October 1, 2000, once
applicable, the requirement of the making of quarter monthly
payments to the Department shall continue until such taxpayer's

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average monthly liability to the Department during the
preceding 4 complete calendar quarters (excluding the month of
highest liability and the month of lowest liability) is less
than $19,000 or until such taxpayer's average monthly liability
to the Department as computed for each calendar quarter of the
4 preceding complete calendar quarter period is less than
$20,000. However, if a taxpayer can show the Department that a
substantial change in the taxpayer's business has occurred
which causes the taxpayer to anticipate that his average
monthly tax liability for the reasonably foreseeable future
will fall below the $20,000 threshold stated above, then such
taxpayer may petition the Department for a change in such
taxpayer's reporting status. The Department shall change such
taxpayer's reporting status unless it finds that such change is
seasonal in nature and not likely to be long term. If any such
quarter monthly payment is not paid at the time or in the
amount required by this Section, then the taxpayer shall be
liable for penalties and interest on the difference between the
minimum amount due and the amount of such quarter monthly
payment actually and timely paid, except insofar as the
taxpayer has previously made payments for that month to the
Department in excess of the minimum payments previously due as
provided in this Section. The Department shall make reasonable
rules and regulations to govern the quarter monthly payment
amount and quarter monthly payment dates for taxpayers who file
on other than a calendar monthly basis.

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If any such payment provided for in this Section exceeds
the taxpayer's liabilities under this Act, the Retailers'
Occupation Tax Act, the Service Occupation Tax Act and the
Service Use Tax Act, as shown by an original monthly return,
the Department shall issue to the taxpayer a credit memorandum
no later than 30 days after the date of payment, which
memorandum may be submitted by the taxpayer to the Department
in payment of tax liability subsequently to be remitted by the
taxpayer to the Department or be assigned by the taxpayer to a
similar taxpayer under this Act, the Retailers' Occupation Tax
Act, the Service Occupation Tax Act or the Service Use Tax Act,
in accordance with reasonable rules and regulations to be
prescribed by the Department, except that if such excess
payment is shown on an original monthly return and is made
after December 31, 1986, no credit memorandum shall be issued,
unless requested by the taxpayer. If no such request is made,
the taxpayer may credit such excess payment against tax
liability subsequently to be remitted by the taxpayer to the
Department under this Act, the Retailers' Occupation Tax Act,
the Service Occupation Tax Act or the Service Use Tax Act, in
accordance with reasonable rules and regulations prescribed by
the Department. If the Department subsequently determines that
all or any part of the credit taken was not actually due to the
taxpayer, the taxpayer's 2.1% or 1.75% vendor's discount shall
be reduced by 2.1% or 1.75% of the difference between the
credit taken and that actually due multiplied by the vendor

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discount amount, and the taxpayer shall be liable for penalties
and interest on such difference.
If the retailer is otherwise required to file a monthly
return and if the retailer's average monthly tax liability to
the Department does not exceed $200, the Department may
authorize his returns to be filed on a quarter annual basis,
with the return for January, February, and March of a given
year being due by April 20 of such year; with the return for
April, May and June of a given year being due by July 20 of such
year; with the return for July, August and September of a given
year being due by October 20 of such year, and with the return
for October, November and December of a given year being due by
January 20 of the following year.
If the retailer is otherwise required to file a monthly or
quarterly return and if the retailer's average monthly tax
liability to the Department does not exceed $50, the Department
may authorize his returns to be filed on an annual basis, with
the return for a given year being due by January 20 of the
following year.
Such quarter annual and annual returns, as to form and
substance, shall be subject to the same requirements as monthly
returns.
Notwithstanding any other provision in this Act concerning
the time within which a retailer may file his return, in the
case of any retailer who ceases to engage in a kind of business
which makes him responsible for filing returns under this Act,

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such retailer shall file a final return under this Act with the
Department not more than one month after discontinuing such
business.
In addition, with respect to motor vehicles, watercraft,
aircraft, and trailers that are required to be registered with
an agency of this State, every retailer selling this kind of
tangible personal property shall file, with the Department,
upon a form to be prescribed and supplied by the Department, a
separate return for each such item of tangible personal
property which the retailer sells, except that if, in the same
transaction, (i) a retailer of aircraft, watercraft, motor
vehicles or trailers transfers more than one aircraft,
watercraft, motor vehicle or trailer to another aircraft,
watercraft, motor vehicle or trailer retailer for the purpose
of resale or (ii) a retailer of aircraft, watercraft, motor
vehicles, or trailers transfers more than one aircraft,
watercraft, motor vehicle, or trailer to a purchaser for use as
a qualifying rolling stock as provided in Section 3-55 of this
Act, then that seller may report the transfer of all the
aircraft, watercraft, motor vehicles or trailers involved in
that transaction to the Department on the same uniform
invoice-transaction reporting return form. For purposes of
this Section, "watercraft" means a Class 2, Class 3, or Class 4
watercraft as defined in Section 3-2 of the Boat Registration
and Safety Act, a personal watercraft, or any boat equipped
with an inboard motor.

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The transaction reporting return in the case of motor
vehicles or trailers that are required to be registered with an
agency of this State, shall be the same document as the Uniform
Invoice referred to in Section 5-402 of the Illinois Vehicle
Code and must show the name and address of the seller; the name
and address of the purchaser; the amount of the selling price
including the amount allowed by the retailer for traded-in
property, if any; the amount allowed by the retailer for the
traded-in tangible personal property, if any, to the extent to
which Section 2 of this Act allows an exemption for the value
of traded-in property; the balance payable after deducting such
trade-in allowance from the total selling price; the amount of
tax due from the retailer with respect to such transaction; the
amount of tax collected from the purchaser by the retailer on
such transaction (or satisfactory evidence that such tax is not
due in that particular instance, if that is claimed to be the
fact); the place and date of the sale; a sufficient
identification of the property sold; such other information as
is required in Section 5-402 of the Illinois Vehicle Code, and
such other information as the Department may reasonably
require.
The transaction reporting return in the case of watercraft
and aircraft must show the name and address of the seller; the
name and address of the purchaser; the amount of the selling
price including the amount allowed by the retailer for
traded-in property, if any; the amount allowed by the retailer

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for the traded-in tangible personal property, if any, to the
extent to which Section 2 of this Act allows an exemption for
the value of traded-in property; the balance payable after
deducting such trade-in allowance from the total selling price;
the amount of tax due from the retailer with respect to such
transaction; the amount of tax collected from the purchaser by
the retailer on such transaction (or satisfactory evidence that
such tax is not due in that particular instance, if that is
claimed to be the fact); the place and date of the sale, a
sufficient identification of the property sold, and such other
information as the Department may reasonably require.
Such transaction reporting return shall be filed not later
than 20 days after the date of delivery of the item that is
being sold, but may be filed by the retailer at any time sooner
than that if he chooses to do so. The transaction reporting
return and tax remittance or proof of exemption from the tax
that is imposed by this Act may be transmitted to the
Department by way of the State agency with which, or State
officer with whom, the tangible personal property must be
titled or registered (if titling or registration is required)
if the Department and such agency or State officer determine
that this procedure will expedite the processing of
applications for title or registration.
With each such transaction reporting return, the retailer
shall remit the proper amount of tax due (or shall submit
satisfactory evidence that the sale is not taxable if that is

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the case), to the Department or its agents, whereupon the
Department shall issue, in the purchaser's name, a tax receipt
(or a certificate of exemption if the Department is satisfied
that the particular sale is tax exempt) which such purchaser
may submit to the agency with which, or State officer with
whom, he must title or register the tangible personal property
that is involved (if titling or registration is required) in
support of such purchaser's application for an Illinois
certificate or other evidence of title or registration to such
tangible personal property.
No retailer's failure or refusal to remit tax under this
Act precludes a user, who has paid the proper tax to the
retailer, from obtaining his certificate of title or other
evidence of title or registration (if titling or registration
is required) upon satisfying the Department that such user has
paid the proper tax (if tax is due) to the retailer. The
Department shall adopt appropriate rules to carry out the
mandate of this paragraph.
If the user who would otherwise pay tax to the retailer
wants the transaction reporting return filed and the payment of
tax or proof of exemption made to the Department before the
retailer is willing to take these actions and such user has not
paid the tax to the retailer, such user may certify to the fact
of such delay by the retailer, and may (upon the Department
being satisfied of the truth of such certification) transmit
the information required by the transaction reporting return

09900HB0293ham001 - 435 - LRB099 04265 HLH 51448 a
and the remittance for tax or proof of exemption directly to
the Department and obtain his tax receipt or exemption
determination, in which event the transaction reporting return
and tax remittance (if a tax payment was required) shall be
credited by the Department to the proper retailer's account
with the Department, but without the vendor's 2.1% or 1.75%
discount provided for in this Section being allowed. When the
user pays the tax directly to the Department, he shall pay the
tax in the same amount and in the same form in which it would be
remitted if the tax had been remitted to the Department by the
retailer.
Where a retailer collects the tax with respect to the
selling price of tangible personal property which he sells and
the purchaser thereafter returns such tangible personal
property and the retailer refunds the selling price thereof to
the purchaser, such retailer shall also refund, to the
purchaser, the tax so collected from the purchaser. When filing
his return for the period in which he refunds such tax to the
purchaser, the retailer may deduct the amount of the tax so
refunded by him to the purchaser from any other use tax which
such retailer may be required to pay or remit to the
Department, as shown by such return, if the amount of the tax
to be deducted was previously remitted to the Department by
such retailer. If the retailer has not previously remitted the
amount of such tax to the Department, he is entitled to no
deduction under this Act upon refunding such tax to the

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purchaser.
Any retailer filing a return under this Section shall also
include (for the purpose of paying tax thereon) the total tax
covered by such return upon the selling price of tangible
personal property purchased by him at retail from a retailer,
but as to which the tax imposed by this Act was not collected
from the retailer filing such return, and such retailer shall
remit the amount of such tax to the Department when filing such
return.
If experience indicates such action to be practicable, the
Department may prescribe and furnish a combination or joint
return which will enable retailers, who are required to file
returns hereunder and also under the Retailers' Occupation Tax
Act, to furnish all the return information required by both
Acts on the one form.
Where the retailer has more than one business registered
with the Department under separate registration under this Act,
such retailer may not file each return that is due as a single
return covering all such registered businesses, but shall file
separate returns for each such registered business.
Beginning January 1, 1990, each month the Department shall
pay into the State and Local Sales Tax Reform Fund, a special
fund in the State Treasury which is hereby created, the net
revenue realized for the preceding month from the 1% tax on
sales of food for human consumption which is to be consumed off
the premises where it is sold (other than alcoholic beverages,

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soft drinks and food which has been prepared for immediate
consumption) and prescription and nonprescription medicines,
drugs, medical appliances, products classified as Class III
medical devices by the United States Food and Drug
Administration that are used for cancer treatment pursuant to a
prescription, as well as any accessories and components related
to those devices, and insulin, urine testing materials,
syringes and needles used by diabetics.
Beginning January 1, 1990, each month the Department shall
pay into the County and Mass Transit District Fund 4% of the
net revenue realized for the preceding month from the 6.25%
general rate on the selling price of tangible personal property
which is purchased outside Illinois at retail from a retailer
and which is titled or registered by an agency of this State's
government.
Beginning January 1, 1990, each month the Department shall
pay into the State and Local Sales Tax Reform Fund, a special
fund in the State Treasury, 20% of the net revenue realized for
the preceding month from the 6.25% general rate on the selling
price of tangible personal property, other than tangible
personal property which is purchased outside Illinois at retail
from a retailer and which is titled or registered by an agency
of this State's government.
Beginning August 1, 2000, each month the Department shall
pay into the State and Local Sales Tax Reform Fund 100% of the
net revenue realized for the preceding month from the 1.25%

09900HB0293ham001 - 438 - LRB099 04265 HLH 51448 a
rate on the selling price of motor fuel and gasohol. Beginning
September 1, 2010, each month the Department shall pay into the
State and Local Sales Tax Reform Fund 100% of the net revenue
realized for the preceding month from the 1.25% rate on the
selling price of sales tax holiday items.
Beginning January 1, 1990, each month the Department shall
pay into the Local Government Tax Fund 16% of the net revenue
realized for the preceding month from the 6.25% general rate on
the selling price of tangible personal property which is
purchased outside Illinois at retail from a retailer and which
is titled or registered by an agency of this State's
government.
Beginning October 1, 2009, each month the Department shall
pay into the Capital Projects Fund an amount that is equal to
an amount estimated by the Department to represent 80% of the
net revenue realized for the preceding month from the sale of
candy, grooming and hygiene products, and soft drinks that had
been taxed at a rate of 1% prior to September 1, 2009 but that
are now taxed at 6.25%.
Beginning July 1, 2011, each month the Department shall pay
into the Clean Air Act (CAA) Permit Fund 80% of the net revenue
realized for the preceding month from the 6.25% general rate on
the selling price of sorbents used in Illinois in the process
of sorbent injection as used to comply with the Environmental
Protection Act or the federal Clean Air Act, but the total
payment into the Clean Air Act (CAA) Permit Fund under this Act

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and the Retailers' Occupation Tax Act shall not exceed
$2,000,000 in any fiscal year.
Beginning July 1, 2013, each month the Department shall pay
into the Underground Storage Tank Fund from the proceeds
collected under this Act, the Service Use Tax Act, the Service
Occupation Tax Act, and the Retailers' Occupation Tax Act an
amount equal to the average monthly deficit in the Underground
Storage Tank Fund during the prior year, as certified annually
by the Illinois Environmental Protection Agency, but the total
payment into the Underground Storage Tank Fund under this Act,
the Service Use Tax Act, the Service Occupation Tax Act, and
the Retailers' Occupation Tax Act shall not exceed $18,000,000
in any State fiscal year. As used in this paragraph, the
"average monthly deficit" shall be equal to the difference
between the average monthly claims for payment by the fund and
the average monthly revenues deposited into the fund, excluding
payments made pursuant to this paragraph.
Beginning July 1, 2015, of the remainder of the moneys
received by the Department under this Act, the Service Use Tax
Act, the Service Occupation Tax Act, and the Retailers'
Occupation Tax Act, each month the Department shall deposit
$500,000 into the State Crime Laboratory Fund.
Of the remainder of the moneys received by the Department
pursuant to this Act, (a) 1.75% thereof shall be paid into the
Build Illinois Fund and (b) prior to July 1, 1989, 2.2% and on
and after July 1, 1989, 3.8% thereof shall be paid into the

09900HB0293ham001 - 440 - LRB099 04265 HLH 51448 a
Build Illinois Fund; provided, however, that if in any fiscal
year the sum of (1) the aggregate of 2.2% or 3.8%, as the case
may be, of the moneys received by the Department and required
to be paid into the Build Illinois Fund pursuant to Section 3
of the Retailers' Occupation Tax Act, Section 9 of the Use Tax
Act, Section 9 of the Service Use Tax Act, and Section 9 of the
Service Occupation Tax Act, such Acts being hereinafter called
the "Tax Acts" and such aggregate of 2.2% or 3.8%, as the case
may be, of moneys being hereinafter called the "Tax Act
Amount", and (2) the amount transferred to the Build Illinois
Fund from the State and Local Sales Tax Reform Fund shall be
less than the Annual Specified Amount (as defined in Section 3
of the Retailers' Occupation Tax Act), an amount equal to the
difference shall be immediately paid into the Build Illinois
Fund from other moneys received by the Department pursuant to
the Tax Acts; and further provided, that if on the last
business day of any month the sum of (1) the Tax Act Amount
required to be deposited into the Build Illinois Bond Account
in the Build Illinois Fund during such month and (2) the amount
transferred during such month to the Build Illinois Fund from
the State and Local Sales Tax Reform Fund shall have been less
than 1/12 of the Annual Specified Amount, an amount equal to
the difference shall be immediately paid into the Build
Illinois Fund from other moneys received by the Department
pursuant to the Tax Acts; and, further provided, that in no
event shall the payments required under the preceding proviso

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result in aggregate payments into the Build Illinois Fund
pursuant to this clause (b) for any fiscal year in excess of
the greater of (i) the Tax Act Amount or (ii) the Annual
Specified Amount for such fiscal year; and, further provided,
that the amounts payable into the Build Illinois Fund under
this clause (b) shall be payable only until such time as the
aggregate amount on deposit under each trust indenture securing
Bonds issued and outstanding pursuant to the Build Illinois
Bond Act is sufficient, taking into account any future
investment income, to fully provide, in accordance with such
indenture, for the defeasance of or the payment of the
principal of, premium, if any, and interest on the Bonds
secured by such indenture and on any Bonds expected to be
issued thereafter and all fees and costs payable with respect
thereto, all as certified by the Director of the Bureau of the
Budget (now Governor's Office of Management and Budget). If on
the last business day of any month in which Bonds are
outstanding pursuant to the Build Illinois Bond Act, the
aggregate of the moneys deposited in the Build Illinois Bond
Account in the Build Illinois Fund in such month shall be less
than the amount required to be transferred in such month from
the Build Illinois Bond Account to the Build Illinois Bond
Retirement and Interest Fund pursuant to Section 13 of the
Build Illinois Bond Act, an amount equal to such deficiency
shall be immediately paid from other moneys received by the
Department pursuant to the Tax Acts to the Build Illinois Fund;

09900HB0293ham001 - 442 - LRB099 04265 HLH 51448 a
provided, however, that any amounts paid to the Build Illinois
Fund in any fiscal year pursuant to this sentence shall be
deemed to constitute payments pursuant to clause (b) of the
preceding sentence and shall reduce the amount otherwise
payable for such fiscal year pursuant to clause (b) of the
preceding sentence. The moneys received by the Department
pursuant to this Act and required to be deposited into the
Build Illinois Fund are subject to the pledge, claim and charge
set forth in Section 12 of the Build Illinois Bond Act.
Subject to payment of amounts into the Build Illinois Fund
as provided in the preceding paragraph or in any amendment
thereto hereafter enacted, the following specified monthly
installment of the amount requested in the certificate of the
Chairman of the Metropolitan Pier and Exposition Authority
provided under Section 8.25f of the State Finance Act, but not
in excess of the sums designated as "Total Deposit", shall be
deposited in the aggregate from collections under Section 9 of
the Use Tax Act, Section 9 of the Service Use Tax Act, Section
9 of the Service Occupation Tax Act, and Section 3 of the
Retailers' Occupation Tax Act into the McCormick Place
Expansion Project Fund in the specified fiscal years.
Fiscal Year Total Deposit
1993 $0
1994 53,000,000
1995 58,000,000
1996 61,000,000

09900HB0293ham001 - 443 - LRB099 04265 HLH 51448 a
1997 64,000,000
1998 68,000,000
1999 71,000,000
2000 75,000,000
2001 80,000,000
2002 93,000,000
2003 99,000,000
2004 103,000,000
2005 108,000,000
2006 113,000,000
2007 119,000,000
2008 126,000,000
2009 132,000,000
2010 139,000,000
2011 146,000,000
2012 153,000,000
2013 161,000,000
2014 170,000,000
2015 179,000,000
2016 189,000,000
2017 199,000,000
2018 210,000,000
2019 221,000,000
2020 233,000,000
2021 246,000,000
2022 260,000,000

09900HB0293ham001 - 444 - LRB099 04265 HLH 51448 a
2023 275,000,000
2024 275,000,000
2025 275,000,000
2026 279,000,000
2027 292,000,000
2028 307,000,000
2029 322,000,000
2030 338,000,000
2031 350,000,000
2032 350,000,000
and
each fiscal year
thereafter that bonds
are outstanding under
Section 13.2 of the
Metropolitan Pier and
Exposition Authority Act,
but not after fiscal year 2060.
Beginning July 20, 1993 and in each month of each fiscal
year thereafter, one-eighth of the amount requested in the
certificate of the Chairman of the Metropolitan Pier and
Exposition Authority for that fiscal year, less the amount
deposited into the McCormick Place Expansion Project Fund by
the State Treasurer in the respective month under subsection
(g) of Section 13 of the Metropolitan Pier and Exposition
Authority Act, plus cumulative deficiencies in the deposits

09900HB0293ham001 - 445 - LRB099 04265 HLH 51448 a
required under this Section for previous months and years,
shall be deposited into the McCormick Place Expansion Project
Fund, until the full amount requested for the fiscal year, but
not in excess of the amount specified above as "Total Deposit",
has been deposited.
Subject to payment of amounts into the Build Illinois Fund
and the McCormick Place Expansion Project Fund pursuant to the
preceding paragraphs or in any amendments thereto hereafter
enacted, beginning July 1, 1993 and ending on September 30,
2013, the Department shall each month pay into the Illinois Tax
Increment Fund 0.27% of 80% of the net revenue realized for the
preceding month from the 6.25% general rate on the selling
price of tangible personal property.
Subject to payment of amounts into the Build Illinois Fund
and the McCormick Place Expansion Project Fund pursuant to the
preceding paragraphs or in any amendments thereto hereafter
enacted, beginning with the receipt of the first report of
taxes paid by an eligible business and continuing for a 25-year
period, the Department shall each month pay into the Energy
Infrastructure Fund 80% of the net revenue realized from the
6.25% general rate on the selling price of Illinois-mined coal
that was sold to an eligible business. For purposes of this
paragraph, the term "eligible business" means a new electric
generating facility certified pursuant to Section 605-332 of
the Department of Commerce and Economic Opportunity Law of the
Civil Administrative Code of Illinois.

09900HB0293ham001 - 446 - LRB099 04265 HLH 51448 a
Subject to payment of amounts into the Build Illinois Fund,
the McCormick Place Expansion Project Fund, the Illinois Tax
Increment Fund, and the Energy Infrastructure Fund pursuant to
the preceding paragraphs or in any amendments to this Section
hereafter enacted, beginning on the first day of the first
calendar month to occur on or after the effective date of this
amendatory Act of the 98th General Assembly, each month, from
the collections made under Section 9 of the Use Tax Act,
Section 9 of the Service Use Tax Act, Section 9 of the Service
Occupation Tax Act, and Section 3 of the Retailers' Occupation
Tax Act, the Department shall pay into the Tax Compliance and
Administration Fund, to be used, subject to appropriation, to
fund additional auditors and compliance personnel at the
Department of Revenue, an amount equal to 1/12 of 5% of 80% of
the cash receipts collected during the preceding fiscal year by
the Audit Bureau of the Department under the Use Tax Act, the
Service Use Tax Act, the Service Occupation Tax Act, the
Retailers' Occupation Tax Act, and associated local occupation
and use taxes administered by the Department.
Of the remainder of the moneys received by the Department
pursuant to this Act, 75% thereof shall be paid into the State
Treasury and 25% shall be reserved in a special account and
used only for the transfer to the Common School Fund as part of
the monthly transfer from the General Revenue Fund in
accordance with Section 8a of the State Finance Act.
As soon as possible after the first day of each month, upon

09900HB0293ham001 - 447 - LRB099 04265 HLH 51448 a
certification of the Department of Revenue, the Comptroller
shall order transferred and the Treasurer shall transfer from
the General Revenue Fund to the Motor Fuel Tax Fund an amount
equal to 1.7% of 80% of the net revenue realized under this Act
for the second preceding month. Beginning April 1, 2000, this
transfer is no longer required and shall not be made.
Net revenue realized for a month shall be the revenue
collected by the State pursuant to this Act, less the amount
paid out during that month as refunds to taxpayers for
overpayment of liability.
For greater simplicity of administration, manufacturers,
importers and wholesalers whose products are sold at retail in
Illinois by numerous retailers, and who wish to do so, may
assume the responsibility for accounting and paying to the
Department all tax accruing under this Act with respect to such
sales, if the retailers who are affected do not make written
objection to the Department to this arrangement.
(Source: P.A. 98-24, eff. 6-19-13; 98-109, eff. 7-25-13;
98-496, eff. 1-1-14; 98-756, eff. 7-16-14; 98-1098, eff.
8-26-14; 99-352, eff. 8-12-15; 99-858, eff. 8-19-16.)
Section 35-10. The Service Use Tax Act is amended by
changing Section 9 as follows:
(35 ILCS 110/9) (from Ch. 120, par. 439.39)
Sec. 9. Each serviceman required or authorized to collect

09900HB0293ham001 - 448 - LRB099 04265 HLH 51448 a
the tax herein imposed shall pay to the Department the amount
of such tax (except as otherwise provided) at the time when he
is required to file his return for the period during which such
tax was collected, less the vendor discount amount a discount
of 2.1% prior to January 1, 1990 and 1.75% on and after January
1, 1990, or $5 per calendar year, whichever is greater, which
is allowed to reimburse the serviceman for expenses incurred in
collecting the tax, keeping records, preparing and filing
returns, remitting the tax and supplying data to the Department
on request. On and after January 1, 1990 and prior to January
1, 2017, the vendor discount amount shall be 1.75% or $5 per
calendar year, whichever is greater. On and after January 1,
2017, the vendor discount amount shall be the sum of (i) 1.75%
of the first $1,000 collected during the calendar year and (ii)
1% of the amount of proceeds collected during the calendar year
that exceeds $1,000; however, on and after January 1, 2017, in
no event shall the discount allowed to any vendor be less than
$5 in any calendar year or more than $1,500 in any calendar
year. The Department may disallow the discount for servicemen
whose certificate of registration is revoked at the time the
return is filed, but only if the Department's decision to
revoke the certificate of registration has become final. A
serviceman need not remit that part of any tax collected by him
to the extent that he is required to pay and does pay the tax
imposed by the Service Occupation Tax Act with respect to his
sale of service involving the incidental transfer by him of the

09900HB0293ham001 - 449 - LRB099 04265 HLH 51448 a
same property.
Except as provided hereinafter in this Section, on or
before the twentieth day of each calendar month, such
serviceman shall file a return for the preceding calendar month
in accordance with reasonable Rules and Regulations to be
promulgated by the Department. Such return shall be filed on a
form prescribed by the Department and shall contain such
information as the Department may reasonably require.
The Department may require returns to be filed on a
quarterly basis. If so required, a return for each calendar
quarter shall be filed on or before the twentieth day of the
calendar month following the end of such calendar quarter. The
taxpayer shall also file a return with the Department for each
of the first two months of each calendar quarter, on or before
the twentieth day of the following calendar month, stating:
1. The name of the seller;
2. The address of the principal place of business from
which he engages in business as a serviceman in this State;
3. The total amount of taxable receipts received by him
during the preceding calendar month, including receipts
from charge and time sales, but less all deductions allowed
by law;
4. The amount of credit provided in Section 2d of this
Act;
5. The amount of tax due;
5-5. The signature of the taxpayer; and

09900HB0293ham001 - 450 - LRB099 04265 HLH 51448 a
6. Such other reasonable information as the Department
may require.
If a taxpayer fails to sign a return within 30 days after
the proper notice and demand for signature by the Department,
the return shall be considered valid and any amount shown to be
due on the return shall be deemed assessed.
Beginning October 1, 1993, a taxpayer who has an average
monthly tax liability of $150,000 or more shall make all
payments required by rules of the Department by electronic
funds transfer. Beginning October 1, 1994, a taxpayer who has
an average monthly tax liability of $100,000 or more shall make
all payments required by rules of the Department by electronic
funds transfer. Beginning October 1, 1995, a taxpayer who has
an average monthly tax liability of $50,000 or more shall make
all payments required by rules of the Department by electronic
funds transfer. Beginning October 1, 2000, a taxpayer who has
an annual tax liability of $200,000 or more shall make all
payments required by rules of the Department by electronic
funds transfer. The term "annual tax liability" shall be the
sum of the taxpayer's liabilities under this Act, and under all
other State and local occupation and use tax laws administered
by the Department, for the immediately preceding calendar year.
The term "average monthly tax liability" means the sum of the
taxpayer's liabilities under this Act, and under all other
State and local occupation and use tax laws administered by the
Department, for the immediately preceding calendar year

09900HB0293ham001 - 451 - LRB099 04265 HLH 51448 a
divided by 12. Beginning on October 1, 2002, a taxpayer who has
a tax liability in the amount set forth in subsection (b) of
Section 2505-210 of the Department of Revenue Law shall make
all payments required by rules of the Department by electronic
funds transfer.
Before August 1 of each year beginning in 1993, the
Department shall notify all taxpayers required to make payments
by electronic funds transfer. All taxpayers required to make
payments by electronic funds transfer shall make those payments
for a minimum of one year beginning on October 1.
Any taxpayer not required to make payments by electronic
funds transfer may make payments by electronic funds transfer
with the permission of the Department.
All taxpayers required to make payment by electronic funds
transfer and any taxpayers authorized to voluntarily make
payments by electronic funds transfer shall make those payments
in the manner authorized by the Department.
The Department shall adopt such rules as are necessary to
effectuate a program of electronic funds transfer and the
requirements of this Section.
If the serviceman is otherwise required to file a monthly
return and if the serviceman's average monthly tax liability to
the Department does not exceed $200, the Department may
authorize his returns to be filed on a quarter annual basis,
with the return for January, February and March of a given year
being due by April 20 of such year; with the return for April,

09900HB0293ham001 - 452 - LRB099 04265 HLH 51448 a
May and June of a given year being due by July 20 of such year;
with the return for July, August and September of a given year
being due by October 20 of such year, and with the return for
October, November and December of a given year being due by
January 20 of the following year.
If the serviceman is otherwise required to file a monthly
or quarterly return and if the serviceman's average monthly tax
liability to the Department does not exceed $50, the Department
may authorize his returns to be filed on an annual basis, with
the return for a given year being due by January 20 of the
following year.
Such quarter annual and annual returns, as to form and
substance, shall be subject to the same requirements as monthly
returns.
Notwithstanding any other provision in this Act concerning
the time within which a serviceman may file his return, in the
case of any serviceman who ceases to engage in a kind of
business which makes him responsible for filing returns under
this Act, such serviceman shall file a final return under this
Act with the Department not more than 1 month after
discontinuing such business.
Where a serviceman collects the tax with respect to the
selling price of property which he sells and the purchaser
thereafter returns such property and the serviceman refunds the
selling price thereof to the purchaser, such serviceman shall
also refund, to the purchaser, the tax so collected from the

09900HB0293ham001 - 453 - LRB099 04265 HLH 51448 a
purchaser. When filing his return for the period in which he
refunds such tax to the purchaser, the serviceman may deduct
the amount of the tax so refunded by him to the purchaser from
any other Service Use Tax, Service Occupation Tax, retailers'
occupation tax or use tax which such serviceman may be required
to pay or remit to the Department, as shown by such return,
provided that the amount of the tax to be deducted shall
previously have been remitted to the Department by such
serviceman. If the serviceman shall not previously have
remitted the amount of such tax to the Department, he shall be
entitled to no deduction hereunder upon refunding such tax to
the purchaser.
Any serviceman filing a return hereunder shall also include
the total tax upon the selling price of tangible personal
property purchased for use by him as an incident to a sale of
service, and such serviceman shall remit the amount of such tax
to the Department when filing such return.
If experience indicates such action to be practicable, the
Department may prescribe and furnish a combination or joint
return which will enable servicemen, who are required to file
returns hereunder and also under the Service Occupation Tax
Act, to furnish all the return information required by both
Acts on the one form.
Where the serviceman has more than one business registered
with the Department under separate registration hereunder,
such serviceman shall not file each return that is due as a

09900HB0293ham001 - 454 - LRB099 04265 HLH 51448 a
single return covering all such registered businesses, but
shall file separate returns for each such registered business.
Beginning January 1, 1990, each month the Department shall
pay into the State and Local Tax Reform Fund, a special fund in
the State Treasury, the net revenue realized for the preceding
month from the 1% tax on sales of food for human consumption
which is to be consumed off the premises where it is sold
(other than alcoholic beverages, soft drinks and food which has
been prepared for immediate consumption) and prescription and
nonprescription medicines, drugs, medical appliances, products
classified as Class III medical devices, by the United States
Food and Drug Administration that are used for cancer treatment
pursuant to a prescription, as well as any accessories and
components related to those devices, and insulin, urine testing
materials, syringes and needles used by diabetics.
Beginning January 1, 1990, each month the Department shall
pay into the State and Local Sales Tax Reform Fund 20% of the
net revenue realized for the preceding month from the 6.25%
general rate on transfers of tangible personal property, other
than tangible personal property which is purchased outside
Illinois at retail from a retailer and which is titled or
registered by an agency of this State's government.
Beginning August 1, 2000, each month the Department shall
pay into the State and Local Sales Tax Reform Fund 100% of the
net revenue realized for the preceding month from the 1.25%
rate on the selling price of motor fuel and gasohol.

09900HB0293ham001 - 455 - LRB099 04265 HLH 51448 a
Beginning October 1, 2009, each month the Department shall
pay into the Capital Projects Fund an amount that is equal to
an amount estimated by the Department to represent 80% of the
net revenue realized for the preceding month from the sale of
candy, grooming and hygiene products, and soft drinks that had
been taxed at a rate of 1% prior to September 1, 2009 but that
are now taxed at 6.25%.
Beginning July 1, 2013, each month the Department shall pay
into the Underground Storage Tank Fund from the proceeds
collected under this Act, the Use Tax Act, the Service
Occupation Tax Act, and the Retailers' Occupation Tax Act an
amount equal to the average monthly deficit in the Underground
Storage Tank Fund during the prior year, as certified annually
by the Illinois Environmental Protection Agency, but the total
payment into the Underground Storage Tank Fund under this Act,
the Use Tax Act, the Service Occupation Tax Act, and the
Retailers' Occupation Tax Act shall not exceed $18,000,000 in
any State fiscal year. As used in this paragraph, the "average
monthly deficit" shall be equal to the difference between the
average monthly claims for payment by the fund and the average
monthly revenues deposited into the fund, excluding payments
made pursuant to this paragraph.
Beginning July 1, 2015, of the remainder of the moneys
received by the Department under the Use Tax Act, this Act, the
Service Occupation Tax Act, and the Retailers' Occupation Tax
Act, each month the Department shall deposit $500,000 into the

09900HB0293ham001 - 456 - LRB099 04265 HLH 51448 a
State Crime Laboratory Fund.
Of the remainder of the moneys received by the Department
pursuant to this Act, (a) 1.75% thereof shall be paid into the
Build Illinois Fund and (b) prior to July 1, 1989, 2.2% and on
and after July 1, 1989, 3.8% thereof shall be paid into the
Build Illinois Fund; provided, however, that if in any fiscal
year the sum of (1) the aggregate of 2.2% or 3.8%, as the case
may be, of the moneys received by the Department and required
to be paid into the Build Illinois Fund pursuant to Section 3
of the Retailers' Occupation Tax Act, Section 9 of the Use Tax
Act, Section 9 of the Service Use Tax Act, and Section 9 of the
Service Occupation Tax Act, such Acts being hereinafter called
the "Tax Acts" and such aggregate of 2.2% or 3.8%, as the case
may be, of moneys being hereinafter called the "Tax Act
Amount", and (2) the amount transferred to the Build Illinois
Fund from the State and Local Sales Tax Reform Fund shall be
less than the Annual Specified Amount (as defined in Section 3
of the Retailers' Occupation Tax Act), an amount equal to the
difference shall be immediately paid into the Build Illinois
Fund from other moneys received by the Department pursuant to
the Tax Acts; and further provided, that if on the last
business day of any month the sum of (1) the Tax Act Amount
required to be deposited into the Build Illinois Bond Account
in the Build Illinois Fund during such month and (2) the amount
transferred during such month to the Build Illinois Fund from
the State and Local Sales Tax Reform Fund shall have been less

09900HB0293ham001 - 457 - LRB099 04265 HLH 51448 a
than 1/12 of the Annual Specified Amount, an amount equal to
the difference shall be immediately paid into the Build
Illinois Fund from other moneys received by the Department
pursuant to the Tax Acts; and, further provided, that in no
event shall the payments required under the preceding proviso
result in aggregate payments into the Build Illinois Fund
pursuant to this clause (b) for any fiscal year in excess of
the greater of (i) the Tax Act Amount or (ii) the Annual
Specified Amount for such fiscal year; and, further provided,
that the amounts payable into the Build Illinois Fund under
this clause (b) shall be payable only until such time as the
aggregate amount on deposit under each trust indenture securing
Bonds issued and outstanding pursuant to the Build Illinois
Bond Act is sufficient, taking into account any future
investment income, to fully provide, in accordance with such
indenture, for the defeasance of or the payment of the
principal of, premium, if any, and interest on the Bonds
secured by such indenture and on any Bonds expected to be
issued thereafter and all fees and costs payable with respect
thereto, all as certified by the Director of the Bureau of the
Budget (now Governor's Office of Management and Budget). If on
the last business day of any month in which Bonds are
outstanding pursuant to the Build Illinois Bond Act, the
aggregate of the moneys deposited in the Build Illinois Bond
Account in the Build Illinois Fund in such month shall be less
than the amount required to be transferred in such month from

09900HB0293ham001 - 458 - LRB099 04265 HLH 51448 a
the Build Illinois Bond Account to the Build Illinois Bond
Retirement and Interest Fund pursuant to Section 13 of the
Build Illinois Bond Act, an amount equal to such deficiency
shall be immediately paid from other moneys received by the
Department pursuant to the Tax Acts to the Build Illinois Fund;
provided, however, that any amounts paid to the Build Illinois
Fund in any fiscal year pursuant to this sentence shall be
deemed to constitute payments pursuant to clause (b) of the
preceding sentence and shall reduce the amount otherwise
payable for such fiscal year pursuant to clause (b) of the
preceding sentence. The moneys received by the Department
pursuant to this Act and required to be deposited into the
Build Illinois Fund are subject to the pledge, claim and charge
set forth in Section 12 of the Build Illinois Bond Act.
Subject to payment of amounts into the Build Illinois Fund
as provided in the preceding paragraph or in any amendment
thereto hereafter enacted, the following specified monthly
installment of the amount requested in the certificate of the
Chairman of the Metropolitan Pier and Exposition Authority
provided under Section 8.25f of the State Finance Act, but not
in excess of the sums designated as "Total Deposit", shall be
deposited in the aggregate from collections under Section 9 of
the Use Tax Act, Section 9 of the Service Use Tax Act, Section
9 of the Service Occupation Tax Act, and Section 3 of the
Retailers' Occupation Tax Act into the McCormick Place
Expansion Project Fund in the specified fiscal years.

09900HB0293ham001 - 459 - LRB099 04265 HLH 51448 a
Fiscal Year Total Deposit
1993 $0
1994 53,000,000
1995 58,000,000
1996 61,000,000
1997 64,000,000
1998 68,000,000
1999 71,000,000
2000 75,000,000
2001 80,000,000
2002 93,000,000
2003 99,000,000
2004 103,000,000
2005 108,000,000
2006 113,000,000
2007 119,000,000
2008 126,000,000
2009 132,000,000
2010 139,000,000
2011 146,000,000
2012 153,000,000
2013 161,000,000
2014 170,000,000
2015 179,000,000
2016 189,000,000

09900HB0293ham001 - 460 - LRB099 04265 HLH 51448 a
2017 199,000,000
2018 210,000,000
2019 221,000,000
2020 233,000,000
2021 246,000,000
2022 260,000,000
2023 275,000,000
2024 275,000,000
2025 275,000,000
2026 279,000,000
2027 292,000,000
2028 307,000,000
2029 322,000,000
2030 338,000,000
2031 350,000,000
2032 350,000,000
and
each fiscal year
thereafter that bonds
are outstanding under
Section 13.2 of the
Metropolitan Pier and
Exposition Authority Act,
but not after fiscal year 2060.
Beginning July 20, 1993 and in each month of each fiscal
year thereafter, one-eighth of the amount requested in the

09900HB0293ham001 - 461 - LRB099 04265 HLH 51448 a
certificate of the Chairman of the Metropolitan Pier and
Exposition Authority for that fiscal year, less the amount
deposited into the McCormick Place Expansion Project Fund by
the State Treasurer in the respective month under subsection
(g) of Section 13 of the Metropolitan Pier and Exposition
Authority Act, plus cumulative deficiencies in the deposits
required under this Section for previous months and years,
shall be deposited into the McCormick Place Expansion Project
Fund, until the full amount requested for the fiscal year, but
not in excess of the amount specified above as "Total Deposit",
has been deposited.
Subject to payment of amounts into the Build Illinois Fund
and the McCormick Place Expansion Project Fund pursuant to the
preceding paragraphs or in any amendments thereto hereafter
enacted, beginning July 1, 1993 and ending on September 30,
2013, the Department shall each month pay into the Illinois Tax
Increment Fund 0.27% of 80% of the net revenue realized for the
preceding month from the 6.25% general rate on the selling
price of tangible personal property.
Subject to payment of amounts into the Build Illinois Fund
and the McCormick Place Expansion Project Fund pursuant to the
preceding paragraphs or in any amendments thereto hereafter
enacted, beginning with the receipt of the first report of
taxes paid by an eligible business and continuing for a 25-year
period, the Department shall each month pay into the Energy
Infrastructure Fund 80% of the net revenue realized from the

09900HB0293ham001 - 462 - LRB099 04265 HLH 51448 a
6.25% general rate on the selling price of Illinois-mined coal
that was sold to an eligible business. For purposes of this
paragraph, the term "eligible business" means a new electric
generating facility certified pursuant to Section 605-332 of
the Department of Commerce and Economic Opportunity Law of the
Civil Administrative Code of Illinois.
Subject to payment of amounts into the Build Illinois Fund,
the McCormick Place Expansion Project Fund, the Illinois Tax
Increment Fund, and the Energy Infrastructure Fund pursuant to
the preceding paragraphs or in any amendments to this Section
hereafter enacted, beginning on the first day of the first
calendar month to occur on or after the effective date of this
amendatory Act of the 98th General Assembly, each month, from
the collections made under Section 9 of the Use Tax Act,
Section 9 of the Service Use Tax Act, Section 9 of the Service
Occupation Tax Act, and Section 3 of the Retailers' Occupation
Tax Act, the Department shall pay into the Tax Compliance and
Administration Fund, to be used, subject to appropriation, to
fund additional auditors and compliance personnel at the
Department of Revenue, an amount equal to 1/12 of 5% of 80% of
the cash receipts collected during the preceding fiscal year by
the Audit Bureau of the Department under the Use Tax Act, the
Service Use Tax Act, the Service Occupation Tax Act, the
Retailers' Occupation Tax Act, and associated local occupation
and use taxes administered by the Department.
Of the remainder of the moneys received by the Department

09900HB0293ham001 - 463 - LRB099 04265 HLH 51448 a
pursuant to this Act, 75% thereof shall be paid into the
General Revenue Fund of the State Treasury and 25% shall be
reserved in a special account and used only for the transfer to
the Common School Fund as part of the monthly transfer from the
General Revenue Fund in accordance with Section 8a of the State
Finance Act.
As soon as possible after the first day of each month, upon
certification of the Department of Revenue, the Comptroller
shall order transferred and the Treasurer shall transfer from
the General Revenue Fund to the Motor Fuel Tax Fund an amount
equal to 1.7% of 80% of the net revenue realized under this Act
for the second preceding month. Beginning April 1, 2000, this
transfer is no longer required and shall not be made.
Net revenue realized for a month shall be the revenue
collected by the State pursuant to this Act, less the amount
paid out during that month as refunds to taxpayers for
overpayment of liability.
(Source: P.A. 98-24, eff. 6-19-13; 98-109, eff. 7-25-13;
98-298, eff. 8-9-13; 98-496, eff. 1-1-14; 98-756, eff. 7-16-14;
98-1098, eff. 8-26-14; 99-352, eff. 8-12-15; 99-858, eff.
8-19-16.)
Section 35-15. The Service Occupation Tax Act is amended by
changing Section 9 as follows:
(35 ILCS 115/9) (from Ch. 120, par. 439.109)

09900HB0293ham001 - 464 - LRB099 04265 HLH 51448 a
Sec. 9. Each serviceman required or authorized to collect
the tax herein imposed shall pay to the Department the amount
of such tax at the time when he is required to file his return
for the period during which such tax was collectible, less the
vendor discount amount a discount of 2.1% prior to January 1,
1990, and 1.75% on and after January 1, 1990, or $5 per
calendar year, whichever is greater, which is allowed to
reimburse the serviceman for expenses incurred in collecting
the tax, keeping records, preparing and filing returns,
remitting the tax and supplying data to the Department on
request. On and after January 1, 1990 and prior to January 1,
2017, the vendor discount amount shall be 1.75% or $5 per
calendar year, whichever is greater. On and after January 1,
2017, the vendor discount amount shall be the sum of (i) 1.75%
of the first $1,000 collected during the calendar year and (ii)
1% of the amount of proceeds collected during the calendar year
that exceeds $1,000; however, on and after January 1, 2017, in
no event shall the discount allowed to any vendor be less than
$5 in any calendar year or more than $1,500 in any calendar
year. The Department may disallow the discount for servicemen
whose certificate of registration is revoked at the time the
return is filed, but only if the Department's decision to
revoke the certificate of registration has become final.
Where such tangible personal property is sold under a
conditional sales contract, or under any other form of sale
wherein the payment of the principal sum, or a part thereof, is

09900HB0293ham001 - 465 - LRB099 04265 HLH 51448 a
extended beyond the close of the period for which the return is
filed, the serviceman, in collecting the tax may collect, for
each tax return period, only the tax applicable to the part of
the selling price actually received during such tax return
period.
Except as provided hereinafter in this Section, on or
before the twentieth day of each calendar month, such
serviceman shall file a return for the preceding calendar month
in accordance with reasonable rules and regulations to be
promulgated by the Department of Revenue. Such return shall be
filed on a form prescribed by the Department and shall contain
such information as the Department may reasonably require.
The Department may require returns to be filed on a
quarterly basis. If so required, a return for each calendar
quarter shall be filed on or before the twentieth day of the
calendar month following the end of such calendar quarter. The
taxpayer shall also file a return with the Department for each
of the first two months of each calendar quarter, on or before
the twentieth day of the following calendar month, stating:
1. The name of the seller;
2. The address of the principal place of business from
which he engages in business as a serviceman in this State;
3. The total amount of taxable receipts received by him
during the preceding calendar month, including receipts
from charge and time sales, but less all deductions allowed
by law;

09900HB0293ham001 - 466 - LRB099 04265 HLH 51448 a
4. The amount of credit provided in Section 2d of this
Act;
5. The amount of tax due;
5-5. The signature of the taxpayer; and
6. Such other reasonable information as the Department
may require.
If a taxpayer fails to sign a return within 30 days after
the proper notice and demand for signature by the Department,
the return shall be considered valid and any amount shown to be
due on the return shall be deemed assessed.
Prior to October 1, 2003, and on and after September 1,
2004 a serviceman may accept a Manufacturer's Purchase Credit
certification from a purchaser in satisfaction of Service Use
Tax as provided in Section 3-70 of the Service Use Tax Act if
the purchaser provides the appropriate documentation as
required by Section 3-70 of the Service Use Tax Act. A
Manufacturer's Purchase Credit certification, accepted prior
to October 1, 2003 or on or after September 1, 2004 by a
serviceman as provided in Section 3-70 of the Service Use Tax
Act, may be used by that serviceman to satisfy Service
Occupation Tax liability in the amount claimed in the
certification, not to exceed 6.25% of the receipts subject to
tax from a qualifying purchase. A Manufacturer's Purchase
Credit reported on any original or amended return filed under
this Act after October 20, 2003 for reporting periods prior to
September 1, 2004 shall be disallowed. Manufacturer's Purchase

09900HB0293ham001 - 467 - LRB099 04265 HLH 51448 a
Credit reported on annual returns due on or after January 1,
2005 will be disallowed for periods prior to September 1, 2004.
No Manufacturer's Purchase Credit may be used after September
30, 2003 through August 31, 2004 to satisfy any tax liability
imposed under this Act, including any audit liability.
If the serviceman's average monthly tax liability to the
Department does not exceed $200, the Department may authorize
his returns to be filed on a quarter annual basis, with the
return for January, February and March of a given year being
due by April 20 of such year; with the return for April, May
and June of a given year being due by July 20 of such year; with
the return for July, August and September of a given year being
due by October 20 of such year, and with the return for
October, November and December of a given year being due by
January 20 of the following year.
If the serviceman's average monthly tax liability to the
Department does not exceed $50, the Department may authorize
his returns to be filed on an annual basis, with the return for
a given year being due by January 20 of the following year.
Such quarter annual and annual returns, as to form and
substance, shall be subject to the same requirements as monthly
returns.
Notwithstanding any other provision in this Act concerning
the time within which a serviceman may file his return, in the
case of any serviceman who ceases to engage in a kind of
business which makes him responsible for filing returns under

09900HB0293ham001 - 468 - LRB099 04265 HLH 51448 a
this Act, such serviceman shall file a final return under this
Act with the Department not more than 1 month after
discontinuing such business.
Beginning October 1, 1993, a taxpayer who has an average
monthly tax liability of $150,000 or more shall make all
payments required by rules of the Department by electronic
funds transfer. Beginning October 1, 1994, a taxpayer who has
an average monthly tax liability of $100,000 or more shall make
all payments required by rules of the Department by electronic
funds transfer. Beginning October 1, 1995, a taxpayer who has
an average monthly tax liability of $50,000 or more shall make
all payments required by rules of the Department by electronic
funds transfer. Beginning October 1, 2000, a taxpayer who has
an annual tax liability of $200,000 or more shall make all
payments required by rules of the Department by electronic
funds transfer. The term "annual tax liability" shall be the
sum of the taxpayer's liabilities under this Act, and under all
other State and local occupation and use tax laws administered
by the Department, for the immediately preceding calendar year.
The term "average monthly tax liability" means the sum of the
taxpayer's liabilities under this Act, and under all other
State and local occupation and use tax laws administered by the
Department, for the immediately preceding calendar year
divided by 12. Beginning on October 1, 2002, a taxpayer who has
a tax liability in the amount set forth in subsection (b) of
Section 2505-210 of the Department of Revenue Law shall make

09900HB0293ham001 - 469 - LRB099 04265 HLH 51448 a
all payments required by rules of the Department by electronic
funds transfer.
Before August 1 of each year beginning in 1993, the
Department shall notify all taxpayers required to make payments
by electronic funds transfer. All taxpayers required to make
payments by electronic funds transfer shall make those payments
for a minimum of one year beginning on October 1.
Any taxpayer not required to make payments by electronic
funds transfer may make payments by electronic funds transfer
with the permission of the Department.
All taxpayers required to make payment by electronic funds
transfer and any taxpayers authorized to voluntarily make
payments by electronic funds transfer shall make those payments
in the manner authorized by the Department.
The Department shall adopt such rules as are necessary to
effectuate a program of electronic funds transfer and the
requirements of this Section.
Where a serviceman collects the tax with respect to the
selling price of tangible personal property which he sells and
the purchaser thereafter returns such tangible personal
property and the serviceman refunds the selling price thereof
to the purchaser, such serviceman shall also refund, to the
purchaser, the tax so collected from the purchaser. When filing
his return for the period in which he refunds such tax to the
purchaser, the serviceman may deduct the amount of the tax so
refunded by him to the purchaser from any other Service

09900HB0293ham001 - 470 - LRB099 04265 HLH 51448 a
Occupation Tax, Service Use Tax, Retailers' Occupation Tax or
Use Tax which such serviceman may be required to pay or remit
to the Department, as shown by such return, provided that the
amount of the tax to be deducted shall previously have been
remitted to the Department by such serviceman. If the
serviceman shall not previously have remitted the amount of
such tax to the Department, he shall be entitled to no
deduction hereunder upon refunding such tax to the purchaser.
If experience indicates such action to be practicable, the
Department may prescribe and furnish a combination or joint
return which will enable servicemen, who are required to file
returns hereunder and also under the Retailers' Occupation Tax
Act, the Use Tax Act or the Service Use Tax Act, to furnish all
the return information required by all said Acts on the one
form.
Where the serviceman has more than one business registered
with the Department under separate registrations hereunder,
such serviceman shall file separate returns for each registered
business.
Beginning January 1, 1990, each month the Department shall
pay into the Local Government Tax Fund the revenue realized for
the preceding month from the 1% tax on sales of food for human
consumption which is to be consumed off the premises where it
is sold (other than alcoholic beverages, soft drinks and food
which has been prepared for immediate consumption) and
prescription and nonprescription medicines, drugs, medical

09900HB0293ham001 - 471 - LRB099 04265 HLH 51448 a
appliances, products classified as Class III medical devices by
the United States Food and Drug Administration that are used
for cancer treatment pursuant to a prescription, as well as any
accessories and components related to those devices, and
insulin, urine testing materials, syringes and needles used by
diabetics.
Beginning January 1, 1990, each month the Department shall
pay into the County and Mass Transit District Fund 4% of the
revenue realized for the preceding month from the 6.25% general
rate.
Beginning August 1, 2000, each month the Department shall
pay into the County and Mass Transit District Fund 20% of the
net revenue realized for the preceding month from the 1.25%
rate on the selling price of motor fuel and gasohol.
Beginning January 1, 1990, each month the Department shall
pay into the Local Government Tax Fund 16% of the revenue
realized for the preceding month from the 6.25% general rate on
transfers of tangible personal property.
Beginning August 1, 2000, each month the Department shall
pay into the Local Government Tax Fund 80% of the net revenue
realized for the preceding month from the 1.25% rate on the
selling price of motor fuel and gasohol.
Beginning October 1, 2009, each month the Department shall
pay into the Capital Projects Fund an amount that is equal to
an amount estimated by the Department to represent 80% of the
net revenue realized for the preceding month from the sale of

09900HB0293ham001 - 472 - LRB099 04265 HLH 51448 a
candy, grooming and hygiene products, and soft drinks that had
been taxed at a rate of 1% prior to September 1, 2009 but that
are now taxed at 6.25%.
Beginning July 1, 2013, each month the Department shall pay
into the Underground Storage Tank Fund from the proceeds
collected under this Act, the Use Tax Act, the Service Use Tax
Act, and the Retailers' Occupation Tax Act an amount equal to
the average monthly deficit in the Underground Storage Tank
Fund during the prior year, as certified annually by the
Illinois Environmental Protection Agency, but the total
payment into the Underground Storage Tank Fund under this Act,
the Use Tax Act, the Service Use Tax Act, and the Retailers'
Occupation Tax Act shall not exceed $18,000,000 in any State
fiscal year. As used in this paragraph, the "average monthly
deficit" shall be equal to the difference between the average
monthly claims for payment by the fund and the average monthly
revenues deposited into the fund, excluding payments made
pursuant to this paragraph.
Beginning July 1, 2015, of the remainder of the moneys
received by the Department under the Use Tax Act, the Service
Use Tax Act, this Act, and the Retailers' Occupation Tax Act,
each month the Department shall deposit $500,000 into the State
Crime Laboratory Fund.
Of the remainder of the moneys received by the Department
pursuant to this Act, (a) 1.75% thereof shall be paid into the
Build Illinois Fund and (b) prior to July 1, 1989, 2.2% and on

09900HB0293ham001 - 473 - LRB099 04265 HLH 51448 a
and after July 1, 1989, 3.8% thereof shall be paid into the
Build Illinois Fund; provided, however, that if in any fiscal
year the sum of (1) the aggregate of 2.2% or 3.8%, as the case
may be, of the moneys received by the Department and required
to be paid into the Build Illinois Fund pursuant to Section 3
of the Retailers' Occupation Tax Act, Section 9 of the Use Tax
Act, Section 9 of the Service Use Tax Act, and Section 9 of the
Service Occupation Tax Act, such Acts being hereinafter called
the "Tax Acts" and such aggregate of 2.2% or 3.8%, as the case
may be, of moneys being hereinafter called the "Tax Act
Amount", and (2) the amount transferred to the Build Illinois
Fund from the State and Local Sales Tax Reform Fund shall be
less than the Annual Specified Amount (as defined in Section 3
of the Retailers' Occupation Tax Act), an amount equal to the
difference shall be immediately paid into the Build Illinois
Fund from other moneys received by the Department pursuant to
the Tax Acts; and further provided, that if on the last
business day of any month the sum of (1) the Tax Act Amount
required to be deposited into the Build Illinois Account in the
Build Illinois Fund during such month and (2) the amount
transferred during such month to the Build Illinois Fund from
the State and Local Sales Tax Reform Fund shall have been less
than 1/12 of the Annual Specified Amount, an amount equal to
the difference shall be immediately paid into the Build
Illinois Fund from other moneys received by the Department
pursuant to the Tax Acts; and, further provided, that in no

09900HB0293ham001 - 474 - LRB099 04265 HLH 51448 a
event shall the payments required under the preceding proviso
result in aggregate payments into the Build Illinois Fund
pursuant to this clause (b) for any fiscal year in excess of
the greater of (i) the Tax Act Amount or (ii) the Annual
Specified Amount for such fiscal year; and, further provided,
that the amounts payable into the Build Illinois Fund under
this clause (b) shall be payable only until such time as the
aggregate amount on deposit under each trust indenture securing
Bonds issued and outstanding pursuant to the Build Illinois
Bond Act is sufficient, taking into account any future
investment income, to fully provide, in accordance with such
indenture, for the defeasance of or the payment of the
principal of, premium, if any, and interest on the Bonds
secured by such indenture and on any Bonds expected to be
issued thereafter and all fees and costs payable with respect
thereto, all as certified by the Director of the Bureau of the
Budget (now Governor's Office of Management and Budget). If on
the last business day of any month in which Bonds are
outstanding pursuant to the Build Illinois Bond Act, the
aggregate of the moneys deposited in the Build Illinois Bond
Account in the Build Illinois Fund in such month shall be less
than the amount required to be transferred in such month from
the Build Illinois Bond Account to the Build Illinois Bond
Retirement and Interest Fund pursuant to Section 13 of the
Build Illinois Bond Act, an amount equal to such deficiency
shall be immediately paid from other moneys received by the

09900HB0293ham001 - 475 - LRB099 04265 HLH 51448 a
Department pursuant to the Tax Acts to the Build Illinois Fund;
provided, however, that any amounts paid to the Build Illinois
Fund in any fiscal year pursuant to this sentence shall be
deemed to constitute payments pursuant to clause (b) of the
preceding sentence and shall reduce the amount otherwise
payable for such fiscal year pursuant to clause (b) of the
preceding sentence. The moneys received by the Department
pursuant to this Act and required to be deposited into the
Build Illinois Fund are subject to the pledge, claim and charge
set forth in Section 12 of the Build Illinois Bond Act.
Subject to payment of amounts into the Build Illinois Fund
as provided in the preceding paragraph or in any amendment
thereto hereafter enacted, the following specified monthly
installment of the amount requested in the certificate of the
Chairman of the Metropolitan Pier and Exposition Authority
provided under Section 8.25f of the State Finance Act, but not
in excess of the sums designated as "Total Deposit", shall be
deposited in the aggregate from collections under Section 9 of
the Use Tax Act, Section 9 of the Service Use Tax Act, Section
9 of the Service Occupation Tax Act, and Section 3 of the
Retailers' Occupation Tax Act into the McCormick Place
Expansion Project Fund in the specified fiscal years.
Fiscal Year Total Deposit
1993 $0
1994 53,000,000

09900HB0293ham001 - 476 - LRB099 04265 HLH 51448 a
1995 58,000,000
1996 61,000,000
1997 64,000,000
1998 68,000,000
1999 71,000,000
2000 75,000,000
2001 80,000,000
2002 93,000,000
2003 99,000,000
2004 103,000,000
2005 108,000,000
2006 113,000,000
2007 119,000,000
2008 126,000,000
2009 132,000,000
2010 139,000,000
2011 146,000,000
2012 153,000,000
2013 161,000,000
2014 170,000,000
2015 179,000,000
2016 189,000,000
2017 199,000,000
2018 210,000,000
2019 221,000,000
2020 233,000,000

09900HB0293ham001 - 477 - LRB099 04265 HLH 51448 a
2021 246,000,000
2022 260,000,000
2023 275,000,000
2024 275,000,000
2025 275,000,000
2026 279,000,000
2027 292,000,000
2028 307,000,000
2029 322,000,000
2030 338,000,000
2031 350,000,000
2032 350,000,000
and
each fiscal year
thereafter that bonds
are outstanding under
Section 13.2 of the
Metropolitan Pier and
Exposition Authority Act,
but not after fiscal year 2060.
Beginning July 20, 1993 and in each month of each fiscal
year thereafter, one-eighth of the amount requested in the
certificate of the Chairman of the Metropolitan Pier and
Exposition Authority for that fiscal year, less the amount
deposited into the McCormick Place Expansion Project Fund by
the State Treasurer in the respective month under subsection

09900HB0293ham001 - 478 - LRB099 04265 HLH 51448 a
(g) of Section 13 of the Metropolitan Pier and Exposition
Authority Act, plus cumulative deficiencies in the deposits
required under this Section for previous months and years,
shall be deposited into the McCormick Place Expansion Project
Fund, until the full amount requested for the fiscal year, but
not in excess of the amount specified above as "Total Deposit",
has been deposited.
Subject to payment of amounts into the Build Illinois Fund
and the McCormick Place Expansion Project Fund pursuant to the
preceding paragraphs or in any amendments thereto hereafter
enacted, beginning July 1, 1993 and ending on September 30,
2013, the Department shall each month pay into the Illinois Tax
Increment Fund 0.27% of 80% of the net revenue realized for the
preceding month from the 6.25% general rate on the selling
price of tangible personal property.
Subject to payment of amounts into the Build Illinois Fund
and the McCormick Place Expansion Project Fund pursuant to the
preceding paragraphs or in any amendments thereto hereafter
enacted, beginning with the receipt of the first report of
taxes paid by an eligible business and continuing for a 25-year
period, the Department shall each month pay into the Energy
Infrastructure Fund 80% of the net revenue realized from the
6.25% general rate on the selling price of Illinois-mined coal
that was sold to an eligible business. For purposes of this
paragraph, the term "eligible business" means a new electric
generating facility certified pursuant to Section 605-332 of

09900HB0293ham001 - 479 - LRB099 04265 HLH 51448 a
the Department of Commerce and Economic Opportunity Law of the
Civil Administrative Code of Illinois.
Subject to payment of amounts into the Build Illinois Fund,
the McCormick Place Expansion Project Fund, the Illinois Tax
Increment Fund, and the Energy Infrastructure Fund pursuant to
the preceding paragraphs or in any amendments to this Section
hereafter enacted, beginning on the first day of the first
calendar month to occur on or after the effective date of this
amendatory Act of the 98th General Assembly, each month, from
the collections made under Section 9 of the Use Tax Act,
Section 9 of the Service Use Tax Act, Section 9 of the Service
Occupation Tax Act, and Section 3 of the Retailers' Occupation
Tax Act, the Department shall pay into the Tax Compliance and
Administration Fund, to be used, subject to appropriation, to
fund additional auditors and compliance personnel at the
Department of Revenue, an amount equal to 1/12 of 5% of 80% of
the cash receipts collected during the preceding fiscal year by
the Audit Bureau of the Department under the Use Tax Act, the
Service Use Tax Act, the Service Occupation Tax Act, the
Retailers' Occupation Tax Act, and associated local occupation
and use taxes administered by the Department.
Of the remainder of the moneys received by the Department
pursuant to this Act, 75% shall be paid into the General
Revenue Fund of the State Treasury and 25% shall be reserved in
a special account and used only for the transfer to the Common
School Fund as part of the monthly transfer from the General

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Revenue Fund in accordance with Section 8a of the State Finance
Act.
The Department may, upon separate written notice to a
taxpayer, require the taxpayer to prepare and file with the
Department on a form prescribed by the Department within not
less than 60 days after receipt of the notice an annual
information return for the tax year specified in the notice.
Such annual return to the Department shall include a statement
of gross receipts as shown by the taxpayer's last Federal
income tax return. If the total receipts of the business as
reported in the Federal income tax return do not agree with the
gross receipts reported to the Department of Revenue for the
same period, the taxpayer shall attach to his annual return a
schedule showing a reconciliation of the 2 amounts and the
reasons for the difference. The taxpayer's annual return to the
Department shall also disclose the cost of goods sold by the
taxpayer during the year covered by such return, opening and
closing inventories of such goods for such year, cost of goods
used from stock or taken from stock and given away by the
taxpayer during such year, pay roll information of the
taxpayer's business during such year and any additional
reasonable information which the Department deems would be
helpful in determining the accuracy of the monthly, quarterly
or annual returns filed by such taxpayer as hereinbefore
provided for in this Section.
If the annual information return required by this Section

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is not filed when and as required, the taxpayer shall be liable
as follows:
(i) Until January 1, 1994, the taxpayer shall be liable
for a penalty equal to 1/6 of 1% of the tax due from such
taxpayer under this Act during the period to be covered by
the annual return for each month or fraction of a month
until such return is filed as required, the penalty to be
assessed and collected in the same manner as any other
penalty provided for in this Act.
(ii) On and after January 1, 1994, the taxpayer shall
be liable for a penalty as described in Section 3-4 of the
Uniform Penalty and Interest Act.
The chief executive officer, proprietor, owner or highest
ranking manager shall sign the annual return to certify the
accuracy of the information contained therein. Any person who
willfully signs the annual return containing false or
inaccurate information shall be guilty of perjury and punished
accordingly. The annual return form prescribed by the
Department shall include a warning that the person signing the
return may be liable for perjury.
The foregoing portion of this Section concerning the filing
of an annual information return shall not apply to a serviceman
who is not required to file an income tax return with the
United States Government.
As soon as possible after the first day of each month, upon
certification of the Department of Revenue, the Comptroller

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shall order transferred and the Treasurer shall transfer from
the General Revenue Fund to the Motor Fuel Tax Fund an amount
equal to 1.7% of 80% of the net revenue realized under this Act
for the second preceding month. Beginning April 1, 2000, this
transfer is no longer required and shall not be made.
Net revenue realized for a month shall be the revenue
collected by the State pursuant to this Act, less the amount
paid out during that month as refunds to taxpayers for
overpayment of liability.
For greater simplicity of administration, it shall be
permissible for manufacturers, importers and wholesalers whose
products are sold by numerous servicemen in Illinois, and who
wish to do so, to assume the responsibility for accounting and
paying to the Department all tax accruing under this Act with
respect to such sales, if the servicemen who are affected do
not make written objection to the Department to this
arrangement.
(Source: P.A. 98-24, eff. 6-19-13; 98-109, eff. 7-25-13;
98-298, eff. 8-9-13; 98-496, eff. 1-1-14; 98-756, eff. 7-16-14;
98-1098, eff. 8-26-14; 99-352, eff. 8-12-15; 99-858, eff.
8-19-16.)
Section 35-20. The Retailers' Occupation Tax Act is amended
by changing Section 3 as follows:
(35 ILCS 120/3) (from Ch. 120, par. 442)

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Sec. 3. Except as provided in this Section, on or before
the twentieth day of each calendar month, every person engaged
in the business of selling tangible personal property at retail
in this State during the preceding calendar month shall file a
return with the Department, stating:
1. The name of the seller;
2. His residence address and the address of his
principal place of business and the address of the
principal place of business (if that is a different
address) from which he engages in the business of selling
tangible personal property at retail in this State;
3. Total amount of receipts received by him during the
preceding calendar month or quarter, as the case may be,
from sales of tangible personal property, and from services
furnished, by him during such preceding calendar month or
quarter;
4. Total amount received by him during the preceding
calendar month or quarter on charge and time sales of
tangible personal property, and from services furnished,
by him prior to the month or quarter for which the return
is filed;
5. Deductions allowed by law;
6. Gross receipts which were received by him during the
preceding calendar month or quarter and upon the basis of
which the tax is imposed;
7. The amount of credit provided in Section 2d of this

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Act;
8. The amount of tax due;
9. The signature of the taxpayer; and
10. Such other reasonable information as the
Department may require.
If a taxpayer fails to sign a return within 30 days after
the proper notice and demand for signature by the Department,
the return shall be considered valid and any amount shown to be
due on the return shall be deemed assessed.
Each return shall be accompanied by the statement of
prepaid tax issued pursuant to Section 2e for which credit is
claimed.
Prior to October 1, 2003, and on and after September 1,
2004 a retailer may accept a Manufacturer's Purchase Credit
certification from a purchaser in satisfaction of Use Tax as
provided in Section 3-85 of the Use Tax Act if the purchaser
provides the appropriate documentation as required by Section
3-85 of the Use Tax Act. A Manufacturer's Purchase Credit
certification, accepted by a retailer prior to October 1, 2003
and on and after September 1, 2004 as provided in Section 3-85
of the Use Tax Act, may be used by that retailer to satisfy
Retailers' Occupation Tax liability in the amount claimed in
the certification, not to exceed 6.25% of the receipts subject
to tax from a qualifying purchase. A Manufacturer's Purchase
Credit reported on any original or amended return filed under
this Act after October 20, 2003 for reporting periods prior to

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September 1, 2004 shall be disallowed. Manufacturer's
Purchaser Credit reported on annual returns due on or after
January 1, 2005 will be disallowed for periods prior to
September 1, 2004. No Manufacturer's Purchase Credit may be
used after September 30, 2003 through August 31, 2004 to
satisfy any tax liability imposed under this Act, including any
audit liability.
The Department may require returns to be filed on a
quarterly basis. If so required, a return for each calendar
quarter shall be filed on or before the twentieth day of the
calendar month following the end of such calendar quarter. The
taxpayer shall also file a return with the Department for each
of the first two months of each calendar quarter, on or before
the twentieth day of the following calendar month, stating:
1. The name of the seller;
2. The address of the principal place of business from
which he engages in the business of selling tangible
personal property at retail in this State;
3. The total amount of taxable receipts received by him
during the preceding calendar month from sales of tangible
personal property by him during such preceding calendar
month, including receipts from charge and time sales, but
less all deductions allowed by law;
4. The amount of credit provided in Section 2d of this
Act;
5. The amount of tax due; and

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6. Such other reasonable information as the Department
may require.
Beginning on October 1, 2003, any person who is not a
licensed distributor, importing distributor, or manufacturer,
as defined in the Liquor Control Act of 1934, but is engaged in
the business of selling, at retail, alcoholic liquor shall file
a statement with the Department of Revenue, in a format and at
a time prescribed by the Department, showing the total amount
paid for alcoholic liquor purchased during the preceding month
and such other information as is reasonably required by the
Department. The Department may adopt rules to require that this
statement be filed in an electronic or telephonic format. Such
rules may provide for exceptions from the filing requirements
of this paragraph. For the purposes of this paragraph, the term
"alcoholic liquor" shall have the meaning prescribed in the
Liquor Control Act of 1934.
Beginning on October 1, 2003, every distributor, importing
distributor, and manufacturer of alcoholic liquor as defined in
the Liquor Control Act of 1934, shall file a statement with the
Department of Revenue, no later than the 10th day of the month
for the preceding month during which transactions occurred, by
electronic means, showing the total amount of gross receipts
from the sale of alcoholic liquor sold or distributed during
the preceding month to purchasers; identifying the purchaser to
whom it was sold or distributed; the purchaser's tax
registration number; and such other information reasonably

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required by the Department. A distributor, importing
distributor, or manufacturer of alcoholic liquor must
personally deliver, mail, or provide by electronic means to
each retailer listed on the monthly statement a report
containing a cumulative total of that distributor's, importing
distributor's, or manufacturer's total sales of alcoholic
liquor to that retailer no later than the 10th day of the month
for the preceding month during which the transaction occurred.
The distributor, importing distributor, or manufacturer shall
notify the retailer as to the method by which the distributor,
importing distributor, or manufacturer will provide the sales
information. If the retailer is unable to receive the sales
information by electronic means, the distributor, importing
distributor, or manufacturer shall furnish the sales
information by personal delivery or by mail. For purposes of
this paragraph, the term "electronic means" includes, but is
not limited to, the use of a secure Internet website, e-mail,
or facsimile.
If a total amount of less than $1 is payable, refundable or
creditable, such amount shall be disregarded if it is less than
50 cents and shall be increased to $1 if it is 50 cents or more.
Beginning October 1, 1993, a taxpayer who has an average
monthly tax liability of $150,000 or more shall make all
payments required by rules of the Department by electronic
funds transfer. Beginning October 1, 1994, a taxpayer who has
an average monthly tax liability of $100,000 or more shall make

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all payments required by rules of the Department by electronic
funds transfer. Beginning October 1, 1995, a taxpayer who has
an average monthly tax liability of $50,000 or more shall make
all payments required by rules of the Department by electronic
funds transfer. Beginning October 1, 2000, a taxpayer who has
an annual tax liability of $200,000 or more shall make all
payments required by rules of the Department by electronic
funds transfer. The term "annual tax liability" shall be the
sum of the taxpayer's liabilities under this Act, and under all
other State and local occupation and use tax laws administered
by the Department, for the immediately preceding calendar year.
The term "average monthly tax liability" shall be the sum of
the taxpayer's liabilities under this Act, and under all other
State and local occupation and use tax laws administered by the
Department, for the immediately preceding calendar year
divided by 12. Beginning on October 1, 2002, a taxpayer who has
a tax liability in the amount set forth in subsection (b) of
Section 2505-210 of the Department of Revenue Law shall make
all payments required by rules of the Department by electronic
funds transfer.
Before August 1 of each year beginning in 1993, the
Department shall notify all taxpayers required to make payments
by electronic funds transfer. All taxpayers required to make
payments by electronic funds transfer shall make those payments
for a minimum of one year beginning on October 1.
Any taxpayer not required to make payments by electronic

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funds transfer may make payments by electronic funds transfer
with the permission of the Department.
All taxpayers required to make payment by electronic funds
transfer and any taxpayers authorized to voluntarily make
payments by electronic funds transfer shall make those payments
in the manner authorized by the Department.
The Department shall adopt such rules as are necessary to
effectuate a program of electronic funds transfer and the
requirements of this Section.
Any amount which is required to be shown or reported on any
return or other document under this Act shall, if such amount
is not a whole-dollar amount, be increased to the nearest
whole-dollar amount in any case where the fractional part of a
dollar is 50 cents or more, and decreased to the nearest
whole-dollar amount where the fractional part of a dollar is
less than 50 cents.
If the retailer is otherwise required to file a monthly
return and if the retailer's average monthly tax liability to
the Department does not exceed $200, the Department may
authorize his returns to be filed on a quarter annual basis,
with the return for January, February and March of a given year
being due by April 20 of such year; with the return for April,
May and June of a given year being due by July 20 of such year;
with the return for July, August and September of a given year
being due by October 20 of such year, and with the return for
October, November and December of a given year being due by

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January 20 of the following year.
If the retailer is otherwise required to file a monthly or
quarterly return and if the retailer's average monthly tax
liability with the Department does not exceed $50, the
Department may authorize his returns to be filed on an annual
basis, with the return for a given year being due by January 20
of the following year.
Such quarter annual and annual returns, as to form and
substance, shall be subject to the same requirements as monthly
returns.
Notwithstanding any other provision in this Act concerning
the time within which a retailer may file his return, in the
case of any retailer who ceases to engage in a kind of business
which makes him responsible for filing returns under this Act,
such retailer shall file a final return under this Act with the
Department not more than one month after discontinuing such
business.
Where the same person has more than one business registered
with the Department under separate registrations under this
Act, such person may not file each return that is due as a
single return covering all such registered businesses, but
shall file separate returns for each such registered business.
In addition, with respect to motor vehicles, watercraft,
aircraft, and trailers that are required to be registered with
an agency of this State, every retailer selling this kind of
tangible personal property shall file, with the Department,

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upon a form to be prescribed and supplied by the Department, a
separate return for each such item of tangible personal
property which the retailer sells, except that if, in the same
transaction, (i) a retailer of aircraft, watercraft, motor
vehicles or trailers transfers more than one aircraft,
watercraft, motor vehicle or trailer to another aircraft,
watercraft, motor vehicle retailer or trailer retailer for the
purpose of resale or (ii) a retailer of aircraft, watercraft,
motor vehicles, or trailers transfers more than one aircraft,
watercraft, motor vehicle, or trailer to a purchaser for use as
a qualifying rolling stock as provided in Section 2-5 of this
Act, then that seller may report the transfer of all aircraft,
watercraft, motor vehicles or trailers involved in that
transaction to the Department on the same uniform
invoice-transaction reporting return form. For purposes of
this Section, "watercraft" means a Class 2, Class 3, or Class 4
watercraft as defined in Section 3-2 of the Boat Registration
and Safety Act, a personal watercraft, or any boat equipped
with an inboard motor.
Any retailer who sells only motor vehicles, watercraft,
aircraft, or trailers that are required to be registered with
an agency of this State, so that all retailers' occupation tax
liability is required to be reported, and is reported, on such
transaction reporting returns and who is not otherwise required
to file monthly or quarterly returns, need not file monthly or
quarterly returns. However, those retailers shall be required

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to file returns on an annual basis.
The transaction reporting return, in the case of motor
vehicles or trailers that are required to be registered with an
agency of this State, shall be the same document as the Uniform
Invoice referred to in Section 5-402 of The Illinois Vehicle
Code and must show the name and address of the seller; the name
and address of the purchaser; the amount of the selling price
including the amount allowed by the retailer for traded-in
property, if any; the amount allowed by the retailer for the
traded-in tangible personal property, if any, to the extent to
which Section 1 of this Act allows an exemption for the value
of traded-in property; the balance payable after deducting such
trade-in allowance from the total selling price; the amount of
tax due from the retailer with respect to such transaction; the
amount of tax collected from the purchaser by the retailer on
such transaction (or satisfactory evidence that such tax is not
due in that particular instance, if that is claimed to be the
fact); the place and date of the sale; a sufficient
identification of the property sold; such other information as
is required in Section 5-402 of The Illinois Vehicle Code, and
such other information as the Department may reasonably
require.
The transaction reporting return in the case of watercraft
or aircraft must show the name and address of the seller; the
name and address of the purchaser; the amount of the selling
price including the amount allowed by the retailer for

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traded-in property, if any; the amount allowed by the retailer
for the traded-in tangible personal property, if any, to the
extent to which Section 1 of this Act allows an exemption for
the value of traded-in property; the balance payable after
deducting such trade-in allowance from the total selling price;
the amount of tax due from the retailer with respect to such
transaction; the amount of tax collected from the purchaser by
the retailer on such transaction (or satisfactory evidence that
such tax is not due in that particular instance, if that is
claimed to be the fact); the place and date of the sale, a
sufficient identification of the property sold, and such other
information as the Department may reasonably require.
Such transaction reporting return shall be filed not later
than 20 days after the day of delivery of the item that is
being sold, but may be filed by the retailer at any time sooner
than that if he chooses to do so. The transaction reporting
return and tax remittance or proof of exemption from the
Illinois use tax may be transmitted to the Department by way of
the State agency with which, or State officer with whom the
tangible personal property must be titled or registered (if
titling or registration is required) if the Department and such
agency or State officer determine that this procedure will
expedite the processing of applications for title or
registration.
With each such transaction reporting return, the retailer
shall remit the proper amount of tax due (or shall submit

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satisfactory evidence that the sale is not taxable if that is
the case), to the Department or its agents, whereupon the
Department shall issue, in the purchaser's name, a use tax
receipt (or a certificate of exemption if the Department is
satisfied that the particular sale is tax exempt) which such
purchaser may submit to the agency with which, or State officer
with whom, he must title or register the tangible personal
property that is involved (if titling or registration is
required) in support of such purchaser's application for an
Illinois certificate or other evidence of title or registration
to such tangible personal property.
No retailer's failure or refusal to remit tax under this
Act precludes a user, who has paid the proper tax to the
retailer, from obtaining his certificate of title or other
evidence of title or registration (if titling or registration
is required) upon satisfying the Department that such user has
paid the proper tax (if tax is due) to the retailer. The
Department shall adopt appropriate rules to carry out the
mandate of this paragraph.
If the user who would otherwise pay tax to the retailer
wants the transaction reporting return filed and the payment of
the tax or proof of exemption made to the Department before the
retailer is willing to take these actions and such user has not
paid the tax to the retailer, such user may certify to the fact
of such delay by the retailer and may (upon the Department
being satisfied of the truth of such certification) transmit

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the information required by the transaction reporting return
and the remittance for tax or proof of exemption directly to
the Department and obtain his tax receipt or exemption
determination, in which event the transaction reporting return
and tax remittance (if a tax payment was required) shall be
credited by the Department to the proper retailer's account
with the Department, but without the vendor's 2.1% or 1.75%
discount provided for in this Section being allowed. When the
user pays the tax directly to the Department, he shall pay the
tax in the same amount and in the same form in which it would be
remitted if the tax had been remitted to the Department by the
retailer.
Refunds made by the seller during the preceding return
period to purchasers, on account of tangible personal property
returned to the seller, shall be allowed as a deduction under
subdivision 5 of his monthly or quarterly return, as the case
may be, in case the seller had theretofore included the
receipts from the sale of such tangible personal property in a
return filed by him and had paid the tax imposed by this Act
with respect to such receipts.
Where the seller is a corporation, the return filed on
behalf of such corporation shall be signed by the president,
vice-president, secretary or treasurer or by the properly
accredited agent of such corporation.
Where the seller is a limited liability company, the return
filed on behalf of the limited liability company shall be

09900HB0293ham001 - 496 - LRB099 04265 HLH 51448 a
signed by a manager, member, or properly accredited agent of
the limited liability company.
Except as provided in this Section, the retailer filing the
return under this Section shall, at the time of filing such
return, pay to the Department the amount of tax imposed by this
Act less the vendor discount amount a discount of 2.1% prior to
January 1, 1990 and 1.75% on and after January 1, 1990, or $5
per calendar year, whichever is greater, which is allowed to
reimburse the retailer for the expenses incurred in keeping
records, preparing and filing returns, remitting the tax and
supplying data to the Department on request. On and after
January 1, 1990 and prior to January 1, 2017, the vendor
discount amount shall be 1.75% or $5 per calendar year,
whichever is greater. On and after January 1, 2017, the vendor
discount amount shall be the sum of (i) 1.75% of the first
$1,000 collected during the calendar year and (ii) 1% of the
amount of proceeds collected during the calendar year that
exceeds $1,000; however, on and after January 1, 2017, in no
event shall the discount allowed to any vendor be less than $5
in any calendar year or more than $1,500 in any calendar year.
Any prepayment made pursuant to Section 2d of this Act shall be
included in the amount on which such 2.1% or 1.75% discount is
computed. In the case of retailers who report and pay the tax
on a transaction by transaction basis, as provided in this
Section, such discount shall be taken with each such tax
remittance instead of when such retailer files his periodic

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return. The Department may disallow the discount for retailers
whose certificate of registration is revoked at the time the
return is filed, but only if the Department's decision to
revoke the certificate of registration has become final.
Before October 1, 2000, if the taxpayer's average monthly
tax liability to the Department under this Act, the Use Tax
Act, the Service Occupation Tax Act, and the Service Use Tax
Act, excluding any liability for prepaid sales tax to be
remitted in accordance with Section 2d of this Act, was $10,000
or more during the preceding 4 complete calendar quarters, he
shall file a return with the Department each month by the 20th
day of the month next following the month during which such tax
liability is incurred and shall make payments to the Department
on or before the 7th, 15th, 22nd and last day of the month
during which such liability is incurred. On and after October
1, 2000, if the taxpayer's average monthly tax liability to the
Department under this Act, the Use Tax Act, the Service
Occupation Tax Act, and the Service Use Tax Act, excluding any
liability for prepaid sales tax to be remitted in accordance
with Section 2d of this Act, was $20,000 or more during the
preceding 4 complete calendar quarters, he shall file a return
with the Department each month by the 20th day of the month
next following the month during which such tax liability is
incurred and shall make payment to the Department on or before
the 7th, 15th, 22nd and last day of the month during which such
liability is incurred. If the month during which such tax

09900HB0293ham001 - 498 - LRB099 04265 HLH 51448 a
liability is incurred began prior to January 1, 1985, each
payment shall be in an amount equal to 1/4 of the taxpayer's
actual liability for the month or an amount set by the
Department not to exceed 1/4 of the average monthly liability
of the taxpayer to the Department for the preceding 4 complete
calendar quarters (excluding the month of highest liability and
the month of lowest liability in such 4 quarter period). If the
month during which such tax liability is incurred begins on or
after January 1, 1985 and prior to January 1, 1987, each
payment shall be in an amount equal to 22.5% of the taxpayer's
actual liability for the month or 27.5% of the taxpayer's
liability for the same calendar month of the preceding year. If
the month during which such tax liability is incurred begins on
or after January 1, 1987 and prior to January 1, 1988, each
payment shall be in an amount equal to 22.5% of the taxpayer's
actual liability for the month or 26.25% of the taxpayer's
liability for the same calendar month of the preceding year. If
the month during which such tax liability is incurred begins on
or after January 1, 1988, and prior to January 1, 1989, or
begins on or after January 1, 1996, each payment shall be in an
amount equal to 22.5% of the taxpayer's actual liability for
the month or 25% of the taxpayer's liability for the same
calendar month of the preceding year. If the month during which
such tax liability is incurred begins on or after January 1,
1989, and prior to January 1, 1996, each payment shall be in an
amount equal to 22.5% of the taxpayer's actual liability for

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the month or 25% of the taxpayer's liability for the same
calendar month of the preceding year or 100% of the taxpayer's
actual liability for the quarter monthly reporting period. The
amount of such quarter monthly payments shall be credited
against the final tax liability of the taxpayer's return for
that month. Before October 1, 2000, once applicable, the
requirement of the making of quarter monthly payments to the
Department by taxpayers having an average monthly tax liability
of $10,000 or more as determined in the manner provided above
shall continue until such taxpayer's average monthly liability
to the Department during the preceding 4 complete calendar
quarters (excluding the month of highest liability and the
month of lowest liability) is less than $9,000, or until such
taxpayer's average monthly liability to the Department as
computed for each calendar quarter of the 4 preceding complete
calendar quarter period is less than $10,000. However, if a
taxpayer can show the Department that a substantial change in
the taxpayer's business has occurred which causes the taxpayer
to anticipate that his average monthly tax liability for the
reasonably foreseeable future will fall below the $10,000
threshold stated above, then such taxpayer may petition the
Department for a change in such taxpayer's reporting status. On
and after October 1, 2000, once applicable, the requirement of
the making of quarter monthly payments to the Department by
taxpayers having an average monthly tax liability of $20,000 or
more as determined in the manner provided above shall continue

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until such taxpayer's average monthly liability to the
Department during the preceding 4 complete calendar quarters
(excluding the month of highest liability and the month of
lowest liability) is less than $19,000 or until such taxpayer's
average monthly liability to the Department as computed for
each calendar quarter of the 4 preceding complete calendar
quarter period is less than $20,000. However, if a taxpayer can
show the Department that a substantial change in the taxpayer's
business has occurred which causes the taxpayer to anticipate
that his average monthly tax liability for the reasonably
foreseeable future will fall below the $20,000 threshold stated
above, then such taxpayer may petition the Department for a
change in such taxpayer's reporting status. The Department
shall change such taxpayer's reporting status unless it finds
that such change is seasonal in nature and not likely to be
long term. If any such quarter monthly payment is not paid at
the time or in the amount required by this Section, then the
taxpayer shall be liable for penalties and interest on the
difference between the minimum amount due as a payment and the
amount of such quarter monthly payment actually and timely
paid, except insofar as the taxpayer has previously made
payments for that month to the Department in excess of the
minimum payments previously due as provided in this Section.
The Department shall make reasonable rules and regulations to
govern the quarter monthly payment amount and quarter monthly
payment dates for taxpayers who file on other than a calendar

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monthly basis.
The provisions of this paragraph apply before October 1,
2001. Without regard to whether a taxpayer is required to make
quarter monthly payments as specified above, any taxpayer who
is required by Section 2d of this Act to collect and remit
prepaid taxes and has collected prepaid taxes which average in
excess of $25,000 per month during the preceding 2 complete
calendar quarters, shall file a return with the Department as
required by Section 2f and shall make payments to the
Department on or before the 7th, 15th, 22nd and last day of the
month during which such liability is incurred. If the month
during which such tax liability is incurred began prior to the
effective date of this amendatory Act of 1985, each payment
shall be in an amount not less than 22.5% of the taxpayer's
actual liability under Section 2d. If the month during which
such tax liability is incurred begins on or after January 1,
1986, each payment shall be in an amount equal to 22.5% of the
taxpayer's actual liability for the month or 27.5% of the
taxpayer's liability for the same calendar month of the
preceding calendar year. If the month during which such tax
liability is incurred begins on or after January 1, 1987, each
payment shall be in an amount equal to 22.5% of the taxpayer's
actual liability for the month or 26.25% of the taxpayer's
liability for the same calendar month of the preceding year.
The amount of such quarter monthly payments shall be credited
against the final tax liability of the taxpayer's return for

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that month filed under this Section or Section 2f, as the case
may be. Once applicable, the requirement of the making of
quarter monthly payments to the Department pursuant to this
paragraph shall continue until such taxpayer's average monthly
prepaid tax collections during the preceding 2 complete
calendar quarters is $25,000 or less. If any such quarter
monthly payment is not paid at the time or in the amount
required, the taxpayer shall be liable for penalties and
interest on such difference, except insofar as the taxpayer has
previously made payments for that month in excess of the
minimum payments previously due.
The provisions of this paragraph apply on and after October
1, 2001. Without regard to whether a taxpayer is required to
make quarter monthly payments as specified above, any taxpayer
who is required by Section 2d of this Act to collect and remit
prepaid taxes and has collected prepaid taxes that average in
excess of $20,000 per month during the preceding 4 complete
calendar quarters shall file a return with the Department as
required by Section 2f and shall make payments to the
Department on or before the 7th, 15th, 22nd and last day of the
month during which the liability is incurred. Each payment
shall be in an amount equal to 22.5% of the taxpayer's actual
liability for the month or 25% of the taxpayer's liability for
the same calendar month of the preceding year. The amount of
the quarter monthly payments shall be credited against the
final tax liability of the taxpayer's return for that month

09900HB0293ham001 - 503 - LRB099 04265 HLH 51448 a
filed under this Section or Section 2f, as the case may be.
Once applicable, the requirement of the making of quarter
monthly payments to the Department pursuant to this paragraph
shall continue until the taxpayer's average monthly prepaid tax
collections during the preceding 4 complete calendar quarters
(excluding the month of highest liability and the month of
lowest liability) is less than $19,000 or until such taxpayer's
average monthly liability to the Department as computed for
each calendar quarter of the 4 preceding complete calendar
quarters is less than $20,000. If any such quarter monthly
payment is not paid at the time or in the amount required, the
taxpayer shall be liable for penalties and interest on such
difference, except insofar as the taxpayer has previously made
payments for that month in excess of the minimum payments
previously due.
If any payment provided for in this Section exceeds the
taxpayer's liabilities under this Act, the Use Tax Act, the
Service Occupation Tax Act and the Service Use Tax Act, as
shown on an original monthly return, the Department shall, if
requested by the taxpayer, issue to the taxpayer a credit
memorandum no later than 30 days after the date of payment. The
credit evidenced by such credit memorandum may be assigned by
the taxpayer to a similar taxpayer under this Act, the Use Tax
Act, the Service Occupation Tax Act or the Service Use Tax Act,
in accordance with reasonable rules and regulations to be
prescribed by the Department. If no such request is made, the

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taxpayer may credit such excess payment against tax liability
subsequently to be remitted to the Department under this Act,
the Use Tax Act, the Service Occupation Tax Act or the Service
Use Tax Act, in accordance with reasonable rules and
regulations prescribed by the Department. If the Department
subsequently determined that all or any part of the credit
taken was not actually due to the taxpayer, the taxpayer's 2.1%
and 1.75% vendor's discount shall be reduced by 2.1% or 1.75%
of the difference between the credit taken and that actually
due multiplied by the vendor discount amount, and that taxpayer
shall be liable for penalties and interest on such difference.
If a retailer of motor fuel is entitled to a credit under
Section 2d of this Act which exceeds the taxpayer's liability
to the Department under this Act for the month which the
taxpayer is filing a return, the Department shall issue the
taxpayer a credit memorandum for the excess.
Beginning January 1, 1990, each month the Department shall
pay into the Local Government Tax Fund, a special fund in the
State treasury which is hereby created, the net revenue
realized for the preceding month from the 1% tax on sales of
food for human consumption which is to be consumed off the
premises where it is sold (other than alcoholic beverages, soft
drinks and food which has been prepared for immediate
consumption) and prescription and nonprescription medicines,
drugs, medical appliances, products classified as Class III
medical devices by the United States Food and Drug

09900HB0293ham001 - 505 - LRB099 04265 HLH 51448 a
Administration that are used for cancer treatment pursuant to a
prescription, as well as any accessories and components related
to those devices, and insulin, urine testing materials,
syringes and needles used by diabetics.
Beginning January 1, 1990, each month the Department shall
pay into the County and Mass Transit District Fund, a special
fund in the State treasury which is hereby created, 4% of the
net revenue realized for the preceding month from the 6.25%
general rate.
Beginning August 1, 2000, each month the Department shall
pay into the County and Mass Transit District Fund 20% of the
net revenue realized for the preceding month from the 1.25%
rate on the selling price of motor fuel and gasohol. Beginning
September 1, 2010, each month the Department shall pay into the
County and Mass Transit District Fund 20% of the net revenue
realized for the preceding month from the 1.25% rate on the
selling price of sales tax holiday items.
Beginning January 1, 1990, each month the Department shall
pay into the Local Government Tax Fund 16% of the net revenue
realized for the preceding month from the 6.25% general rate on
the selling price of tangible personal property.
Beginning August 1, 2000, each month the Department shall
pay into the Local Government Tax Fund 80% of the net revenue
realized for the preceding month from the 1.25% rate on the
selling price of motor fuel and gasohol. Beginning September 1,
2010, each month the Department shall pay into the Local

09900HB0293ham001 - 506 - LRB099 04265 HLH 51448 a
Government Tax Fund 80% of the net revenue realized for the
preceding month from the 1.25% rate on the selling price of
sales tax holiday items.
Beginning October 1, 2009, each month the Department shall
pay into the Capital Projects Fund an amount that is equal to
an amount estimated by the Department to represent 80% of the
net revenue realized for the preceding month from the sale of
candy, grooming and hygiene products, and soft drinks that had
been taxed at a rate of 1% prior to September 1, 2009 but that
are now taxed at 6.25%.
Beginning July 1, 2011, each month the Department shall pay
into the Clean Air Act (CAA) Permit Fund 80% of the net revenue
realized for the preceding month from the 6.25% general rate on
the selling price of sorbents used in Illinois in the process
of sorbent injection as used to comply with the Environmental
Protection Act or the federal Clean Air Act, but the total
payment into the Clean Air Act (CAA) Permit Fund under this Act
and the Use Tax Act shall not exceed $2,000,000 in any fiscal
year.
Beginning July 1, 2013, each month the Department shall pay
into the Underground Storage Tank Fund from the proceeds
collected under this Act, the Use Tax Act, the Service Use Tax
Act, and the Service Occupation Tax Act an amount equal to the
average monthly deficit in the Underground Storage Tank Fund
during the prior year, as certified annually by the Illinois
Environmental Protection Agency, but the total payment into the

09900HB0293ham001 - 507 - LRB099 04265 HLH 51448 a
Underground Storage Tank Fund under this Act, the Use Tax Act,
the Service Use Tax Act, and the Service Occupation Tax Act
shall not exceed $18,000,000 in any State fiscal year. As used
in this paragraph, the "average monthly deficit" shall be equal
to the difference between the average monthly claims for
payment by the fund and the average monthly revenues deposited
into the fund, excluding payments made pursuant to this
paragraph.
Beginning July 1, 2015, of the remainder of the moneys
received by the Department under the Use Tax Act, the Service
Use Tax Act, the Service Occupation Tax Act, and this Act, each
month the Department shall deposit $500,000 into the State
Crime Laboratory Fund.
Of the remainder of the moneys received by the Department
pursuant to this Act, (a) 1.75% thereof shall be paid into the
Build Illinois Fund and (b) prior to July 1, 1989, 2.2% and on
and after July 1, 1989, 3.8% thereof shall be paid into the
Build Illinois Fund; provided, however, that if in any fiscal
year the sum of (1) the aggregate of 2.2% or 3.8%, as the case
may be, of the moneys received by the Department and required
to be paid into the Build Illinois Fund pursuant to this Act,
Section 9 of the Use Tax Act, Section 9 of the Service Use Tax
Act, and Section 9 of the Service Occupation Tax Act, such Acts
being hereinafter called the "Tax Acts" and such aggregate of
2.2% or 3.8%, as the case may be, of moneys being hereinafter
called the "Tax Act Amount", and (2) the amount transferred to

09900HB0293ham001 - 508 - LRB099 04265 HLH 51448 a
the Build Illinois Fund from the State and Local Sales Tax
Reform Fund shall be less than the Annual Specified Amount (as
hereinafter defined), an amount equal to the difference shall
be immediately paid into the Build Illinois Fund from other
moneys received by the Department pursuant to the Tax Acts; the
"Annual Specified Amount" means the amounts specified below for
fiscal years 1986 through 1993:
Fiscal Year Annual Specified Amount
1986 $54,800,000
1987 $76,650,000
1988 $80,480,000
1989 $88,510,000
1990 $115,330,000
1991 $145,470,000
1992 $182,730,000
1993 $206,520,000;
and means the Certified Annual Debt Service Requirement (as
defined in Section 13 of the Build Illinois Bond Act) or the
Tax Act Amount, whichever is greater, for fiscal year 1994 and
each fiscal year thereafter; and further provided, that if on
the last business day of any month the sum of (1) the Tax Act
Amount required to be deposited into the Build Illinois Bond
Account in the Build Illinois Fund during such month and (2)
the amount transferred to the Build Illinois Fund from the
State and Local Sales Tax Reform Fund shall have been less than
1/12 of the Annual Specified Amount, an amount equal to the

09900HB0293ham001 - 509 - LRB099 04265 HLH 51448 a
difference shall be immediately paid into the Build Illinois
Fund from other moneys received by the Department pursuant to
the Tax Acts; and, further provided, that in no event shall the
payments required under the preceding proviso result in
aggregate payments into the Build Illinois Fund pursuant to
this clause (b) for any fiscal year in excess of the greater of
(i) the Tax Act Amount or (ii) the Annual Specified Amount for
such fiscal year. The amounts payable into the Build Illinois
Fund under clause (b) of the first sentence in this paragraph
shall be payable only until such time as the aggregate amount
on deposit under each trust indenture securing Bonds issued and
outstanding pursuant to the Build Illinois Bond Act is
sufficient, taking into account any future investment income,
to fully provide, in accordance with such indenture, for the
defeasance of or the payment of the principal of, premium, if
any, and interest on the Bonds secured by such indenture and on
any Bonds expected to be issued thereafter and all fees and
costs payable with respect thereto, all as certified by the
Director of the Bureau of the Budget (now Governor's Office of
Management and Budget). If on the last business day of any
month in which Bonds are outstanding pursuant to the Build
Illinois Bond Act, the aggregate of moneys deposited in the
Build Illinois Bond Account in the Build Illinois Fund in such
month shall be less than the amount required to be transferred
in such month from the Build Illinois Bond Account to the Build
Illinois Bond Retirement and Interest Fund pursuant to Section

09900HB0293ham001 - 510 - LRB099 04265 HLH 51448 a
13 of the Build Illinois Bond Act, an amount equal to such
deficiency shall be immediately paid from other moneys received
by the Department pursuant to the Tax Acts to the Build
Illinois Fund; provided, however, that any amounts paid to the
Build Illinois Fund in any fiscal year pursuant to this
sentence shall be deemed to constitute payments pursuant to
clause (b) of the first sentence of this paragraph and shall
reduce the amount otherwise payable for such fiscal year
pursuant to that clause (b). The moneys received by the
Department pursuant to this Act and required to be deposited
into the Build Illinois Fund are subject to the pledge, claim
and charge set forth in Section 12 of the Build Illinois Bond
Act.
Subject to payment of amounts into the Build Illinois Fund
as provided in the preceding paragraph or in any amendment
thereto hereafter enacted, the following specified monthly
installment of the amount requested in the certificate of the
Chairman of the Metropolitan Pier and Exposition Authority
provided under Section 8.25f of the State Finance Act, but not
in excess of sums designated as "Total Deposit", shall be
deposited in the aggregate from collections under Section 9 of
the Use Tax Act, Section 9 of the Service Use Tax Act, Section
9 of the Service Occupation Tax Act, and Section 3 of the
Retailers' Occupation Tax Act into the McCormick Place
Expansion Project Fund in the specified fiscal years.

09900HB0293ham001 - 511 - LRB099 04265 HLH 51448 a
Fiscal Year Total Deposit
1993 $0
1994 53,000,000
1995 58,000,000
1996 61,000,000
1997 64,000,000
1998 68,000,000
1999 71,000,000
2000 75,000,000
2001 80,000,000
2002 93,000,000
2003 99,000,000
2004 103,000,000
2005 108,000,000
2006 113,000,000
2007 119,000,000
2008 126,000,000
2009 132,000,000
2010 139,000,000
2011 146,000,000
2012 153,000,000
2013 161,000,000
2014 170,000,000
2015 179,000,000
2016 189,000,000

09900HB0293ham001 - 512 - LRB099 04265 HLH 51448 a
2017 199,000,000
2018 210,000,000
2019 221,000,000
2020 233,000,000
2021 246,000,000
2022 260,000,000
2023 275,000,000
2024 275,000,000
2025 275,000,000
2026 279,000,000
2027 292,000,000
2028 307,000,000
2029 322,000,000
2030 338,000,000
2031 350,000,000
2032 350,000,000
and
each fiscal year
thereafter that bonds
are outstanding under
Section 13.2 of the
Metropolitan Pier and
Exposition Authority Act,
but not after fiscal year 2060.
Beginning July 20, 1993 and in each month of each fiscal
year thereafter, one-eighth of the amount requested in the

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certificate of the Chairman of the Metropolitan Pier and
Exposition Authority for that fiscal year, less the amount
deposited into the McCormick Place Expansion Project Fund by
the State Treasurer in the respective month under subsection
(g) of Section 13 of the Metropolitan Pier and Exposition
Authority Act, plus cumulative deficiencies in the deposits
required under this Section for previous months and years,
shall be deposited into the McCormick Place Expansion Project
Fund, until the full amount requested for the fiscal year, but
not in excess of the amount specified above as "Total Deposit",
has been deposited.
Subject to payment of amounts into the Build Illinois Fund
and the McCormick Place Expansion Project Fund pursuant to the
preceding paragraphs or in any amendments thereto hereafter
enacted, beginning July 1, 1993 and ending on September 30,
2013, the Department shall each month pay into the Illinois Tax
Increment Fund 0.27% of 80% of the net revenue realized for the
preceding month from the 6.25% general rate on the selling
price of tangible personal property.
Subject to payment of amounts into the Build Illinois Fund
and the McCormick Place Expansion Project Fund pursuant to the
preceding paragraphs or in any amendments thereto hereafter
enacted, beginning with the receipt of the first report of
taxes paid by an eligible business and continuing for a 25-year
period, the Department shall each month pay into the Energy
Infrastructure Fund 80% of the net revenue realized from the

09900HB0293ham001 - 514 - LRB099 04265 HLH 51448 a
6.25% general rate on the selling price of Illinois-mined coal
that was sold to an eligible business. For purposes of this
paragraph, the term "eligible business" means a new electric
generating facility certified pursuant to Section 605-332 of
the Department of Commerce and Economic Opportunity Law of the
Civil Administrative Code of Illinois.
Subject to payment of amounts into the Build Illinois Fund,
the McCormick Place Expansion Project Fund, the Illinois Tax
Increment Fund, and the Energy Infrastructure Fund pursuant to
the preceding paragraphs or in any amendments to this Section
hereafter enacted, beginning on the first day of the first
calendar month to occur on or after the effective date of this
amendatory Act of the 98th General Assembly, each month, from
the collections made under Section 9 of the Use Tax Act,
Section 9 of the Service Use Tax Act, Section 9 of the Service
Occupation Tax Act, and Section 3 of the Retailers' Occupation
Tax Act, the Department shall pay into the Tax Compliance and
Administration Fund, to be used, subject to appropriation, to
fund additional auditors and compliance personnel at the
Department of Revenue, an amount equal to 1/12 of 5% of 80% of
the cash receipts collected during the preceding fiscal year by
the Audit Bureau of the Department under the Use Tax Act, the
Service Use Tax Act, the Service Occupation Tax Act, the
Retailers' Occupation Tax Act, and associated local occupation
and use taxes administered by the Department.
Of the remainder of the moneys received by the Department

09900HB0293ham001 - 515 - LRB099 04265 HLH 51448 a
pursuant to this Act, 75% thereof shall be paid into the State
Treasury and 25% shall be reserved in a special account and
used only for the transfer to the Common School Fund as part of
the monthly transfer from the General Revenue Fund in
accordance with Section 8a of the State Finance Act.
The Department may, upon separate written notice to a
taxpayer, require the taxpayer to prepare and file with the
Department on a form prescribed by the Department within not
less than 60 days after receipt of the notice an annual
information return for the tax year specified in the notice.
Such annual return to the Department shall include a statement
of gross receipts as shown by the retailer's last Federal
income tax return. If the total receipts of the business as
reported in the Federal income tax return do not agree with the
gross receipts reported to the Department of Revenue for the
same period, the retailer shall attach to his annual return a
schedule showing a reconciliation of the 2 amounts and the
reasons for the difference. The retailer's annual return to the
Department shall also disclose the cost of goods sold by the
retailer during the year covered by such return, opening and
closing inventories of such goods for such year, costs of goods
used from stock or taken from stock and given away by the
retailer during such year, payroll information of the
retailer's business during such year and any additional
reasonable information which the Department deems would be
helpful in determining the accuracy of the monthly, quarterly

09900HB0293ham001 - 516 - LRB099 04265 HLH 51448 a
or annual returns filed by such retailer as provided for in
this Section.
If the annual information return required by this Section
is not filed when and as required, the taxpayer shall be liable
as follows:
(i) Until January 1, 1994, the taxpayer shall be liable
for a penalty equal to 1/6 of 1% of the tax due from such
taxpayer under this Act during the period to be covered by
the annual return for each month or fraction of a month
until such return is filed as required, the penalty to be
assessed and collected in the same manner as any other
penalty provided for in this Act.
(ii) On and after January 1, 1994, the taxpayer shall
be liable for a penalty as described in Section 3-4 of the
Uniform Penalty and Interest Act.
The chief executive officer, proprietor, owner or highest
ranking manager shall sign the annual return to certify the
accuracy of the information contained therein. Any person who
willfully signs the annual return containing false or
inaccurate information shall be guilty of perjury and punished
accordingly. The annual return form prescribed by the
Department shall include a warning that the person signing the
return may be liable for perjury.
The provisions of this Section concerning the filing of an
annual information return do not apply to a retailer who is not
required to file an income tax return with the United States

09900HB0293ham001 - 517 - LRB099 04265 HLH 51448 a
Government.
As soon as possible after the first day of each month, upon
certification of the Department of Revenue, the Comptroller
shall order transferred and the Treasurer shall transfer from
the General Revenue Fund to the Motor Fuel Tax Fund an amount
equal to 1.7% of 80% of the net revenue realized under this Act
for the second preceding month. Beginning April 1, 2000, this
transfer is no longer required and shall not be made.
Net revenue realized for a month shall be the revenue
collected by the State pursuant to this Act, less the amount
paid out during that month as refunds to taxpayers for
overpayment of liability.
For greater simplicity of administration, manufacturers,
importers and wholesalers whose products are sold at retail in
Illinois by numerous retailers, and who wish to do so, may
assume the responsibility for accounting and paying to the
Department all tax accruing under this Act with respect to such
sales, if the retailers who are affected do not make written
objection to the Department to this arrangement.
Any person who promotes, organizes, provides retail
selling space for concessionaires or other types of sellers at
the Illinois State Fair, DuQuoin State Fair, county fairs,
local fairs, art shows, flea markets and similar exhibitions or
events, including any transient merchant as defined by Section
2 of the Transient Merchant Act of 1987, is required to file a
report with the Department providing the name of the merchant's

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business, the name of the person or persons engaged in
merchant's business, the permanent address and Illinois
Retailers Occupation Tax Registration Number of the merchant,
the dates and location of the event and other reasonable
information that the Department may require. The report must be
filed not later than the 20th day of the month next following
the month during which the event with retail sales was held.
Any person who fails to file a report required by this Section
commits a business offense and is subject to a fine not to
exceed $250.
Any person engaged in the business of selling tangible
personal property at retail as a concessionaire or other type
of seller at the Illinois State Fair, county fairs, art shows,
flea markets and similar exhibitions or events, or any
transient merchants, as defined by Section 2 of the Transient
Merchant Act of 1987, may be required to make a daily report of
the amount of such sales to the Department and to make a daily
payment of the full amount of tax due. The Department shall
impose this requirement when it finds that there is a
significant risk of loss of revenue to the State at such an
exhibition or event. Such a finding shall be based on evidence
that a substantial number of concessionaires or other sellers
who are not residents of Illinois will be engaging in the
business of selling tangible personal property at retail at the
exhibition or event, or other evidence of a significant risk of
loss of revenue to the State. The Department shall notify

09900HB0293ham001 - 519 - LRB099 04265 HLH 51448 a
concessionaires and other sellers affected by the imposition of
this requirement. In the absence of notification by the
Department, the concessionaires and other sellers shall file
their returns as otherwise required in this Section.
(Source: P.A. 98-24, eff. 6-19-13; 98-109, eff. 7-25-13;
98-496, eff. 1-1-14; 98-756, eff. 7-16-14; 98-1098, eff.
8-26-14; 99-352, eff. 8-12-15; 99-858, eff. 8-19-16.)
Section 35-25. The Cigarette Tax Act is amended by changing
Section 2 as follows:
(35 ILCS 130/2) (from Ch. 120, par. 453.2)
Sec. 2. Tax imposed; rate; collection, payment, and
distribution; discount.
(a) A tax is imposed upon any person engaged in business as
a retailer of cigarettes in this State at the rate of 5 1/2
mills per cigarette sold, or otherwise disposed of in the
course of such business in this State. In addition to any other
tax imposed by this Act, a tax is imposed upon any person
engaged in business as a retailer of cigarettes in this State
at a rate of 1/2 mill per cigarette sold or otherwise disposed
of in the course of such business in this State on and after
January 1, 1947, and shall be paid into the Metropolitan Fair
and Exposition Authority Reconstruction Fund or as otherwise
provided in Section 29. On and after December 1, 1985, in
addition to any other tax imposed by this Act, a tax is imposed

09900HB0293ham001 - 520 - LRB099 04265 HLH 51448 a
upon any person engaged in business as a retailer of cigarettes
in this State at a rate of 4 mills per cigarette sold or
otherwise disposed of in the course of such business in this
State. Of the additional tax imposed by this amendatory Act of
1985, $9,000,000 of the moneys received by the Department of
Revenue pursuant to this Act shall be paid each month into the
Common School Fund. On and after the effective date of this
amendatory Act of 1989, in addition to any other tax imposed by
this Act, a tax is imposed upon any person engaged in business
as a retailer of cigarettes at the rate of 5 mills per
cigarette sold or otherwise disposed of in the course of such
business in this State. On and after the effective date of this
amendatory Act of 1993, in addition to any other tax imposed by
this Act, a tax is imposed upon any person engaged in business
as a retailer of cigarettes at the rate of 7 mills per
cigarette sold or otherwise disposed of in the course of such
business in this State. On and after December 15, 1997, in
addition to any other tax imposed by this Act, a tax is imposed
upon any person engaged in business as a retailer of cigarettes
at the rate of 7 mills per cigarette sold or otherwise disposed
of in the course of such business of this State. All of the
moneys received by the Department of Revenue pursuant to this
Act and the Cigarette Use Tax Act from the additional taxes
imposed by this amendatory Act of 1997, shall be paid each
month into the Common School Fund. On and after July 1, 2002,
in addition to any other tax imposed by this Act, a tax is

09900HB0293ham001 - 521 - LRB099 04265 HLH 51448 a
imposed upon any person engaged in business as a retailer of
cigarettes at the rate of 20.0 mills per cigarette sold or
otherwise disposed of in the course of such business in this
State. Beginning on June 24, 2012, in addition to any other tax
imposed by this Act, a tax is imposed upon any person engaged
in business as a retailer of cigarettes at the rate of 50 mills
per cigarette sold or otherwise disposed of in the course of
such business in this State. All moneys received by the
Department of Revenue under this Act and the Cigarette Use Tax
Act from the additional taxes imposed by this amendatory Act of
the 97th General Assembly shall be paid each month into the
Healthcare Provider Relief Fund. The payment of such taxes
shall be evidenced by a stamp affixed to each original package
of cigarettes, or an authorized substitute for such stamp
imprinted on each original package of such cigarettes
underneath the sealed transparent outside wrapper of such
original package, as hereinafter provided. However, such taxes
are not imposed upon any activity in such business in
interstate commerce or otherwise, which activity may not under
the Constitution and statutes of the United States be made the
subject of taxation by this State.
Beginning on the effective date of this amendatory Act of
the 92nd General Assembly and through June 30, 2006, all of the
moneys received by the Department of Revenue pursuant to this
Act and the Cigarette Use Tax Act, other than the moneys that
are dedicated to the Common School Fund, shall be distributed

09900HB0293ham001 - 522 - LRB099 04265 HLH 51448 a
each month as follows: first, there shall be paid into the
General Revenue Fund an amount which, when added to the amount
paid into the Common School Fund for that month, equals
$33,300,000, except that in the month of August of 2004, this
amount shall equal $83,300,000; then, from the moneys
remaining, if any amounts required to be paid into the General
Revenue Fund in previous months remain unpaid, those amounts
shall be paid into the General Revenue Fund; then, beginning on
April 1, 2003, from the moneys remaining, $5,000,000 per month
shall be paid into the School Infrastructure Fund; then, if any
amounts required to be paid into the School Infrastructure Fund
in previous months remain unpaid, those amounts shall be paid
into the School Infrastructure Fund; then the moneys remaining,
if any, shall be paid into the Long-Term Care Provider Fund. To
the extent that more than $25,000,000 has been paid into the
General Revenue Fund and Common School Fund per month for the
period of July 1, 1993 through the effective date of this
amendatory Act of 1994 from combined receipts of the Cigarette
Tax Act and the Cigarette Use Tax Act, notwithstanding the
distribution provided in this Section, the Department of
Revenue is hereby directed to adjust the distribution provided
in this Section to increase the next monthly payments to the
Long Term Care Provider Fund by the amount paid to the General
Revenue Fund and Common School Fund in excess of $25,000,000
per month and to decrease the next monthly payments to the
General Revenue Fund and Common School Fund by that same excess

09900HB0293ham001 - 523 - LRB099 04265 HLH 51448 a
amount.
Beginning on July 1, 2006, all of the moneys received by
the Department of Revenue pursuant to this Act and the
Cigarette Use Tax Act, other than the moneys that are dedicated
to the Common School Fund and, beginning on the effective date
of this amendatory Act of the 97th General Assembly, other than
the moneys from the additional taxes imposed by this amendatory
Act of the 97th General Assembly that must be paid each month
into the Healthcare Provider Relief Fund, shall be distributed
each month as follows: first, there shall be paid into the
General Revenue Fund an amount that, when added to the amount
paid into the Common School Fund for that month, equals
$29,200,000; then, from the moneys remaining, if any amounts
required to be paid into the General Revenue Fund in previous
months remain unpaid, those amounts shall be paid into the
General Revenue Fund; then from the moneys remaining,
$5,000,000 per month shall be paid into the School
Infrastructure Fund; then, if any amounts required to be paid
into the School Infrastructure Fund in previous months remain
unpaid, those amounts shall be paid into the School
Infrastructure Fund; then the moneys remaining, if any, shall
be paid into the Long-Term Care Provider Fund.
Moneys collected from the tax imposed on little cigars
under Section 10-10 of the Tobacco Products Tax Act of 1995
shall be included with the moneys collected under the Cigarette
Tax Act and the Cigarette Use Tax Act when making distributions

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to the Common School Fund, the Healthcare Provider Relief Fund,
the General Revenue Fund, the School Infrastructure Fund, and
the Long-Term Care Provider Fund under this Section.
When any tax imposed herein terminates or has terminated,
distributors who have bought stamps while such tax was in
effect and who therefore paid such tax, but who can show, to
the Department's satisfaction, that they sold the cigarettes to
which they affixed such stamps after such tax had terminated
and did not recover the tax or its equivalent from purchasers,
shall be allowed by the Department to take credit for such
absorbed tax against subsequent tax stamp purchases from the
Department by such distributor.
The impact of the tax levied by this Act is imposed upon
the retailer and shall be prepaid or pre-collected by the
distributor for the purpose of convenience and facility only,
and the amount of the tax shall be added to the price of the
cigarettes sold by such distributor. Collection of the tax
shall be evidenced by a stamp or stamps affixed to each
original package of cigarettes, as hereinafter provided.
Each distributor shall collect the tax from the retailer at
or before the time of the sale, shall affix the stamps as
hereinafter required, and shall remit the tax collected from
retailers to the Department, as hereinafter provided. Any
distributor who fails to properly collect and pay the tax
imposed by this Act shall be liable for the tax. Any
distributor having cigarettes to which stamps have been affixed

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in his possession for sale on the effective date of this
amendatory Act of 1989 shall not be required to pay the
additional tax imposed by this amendatory Act of 1989 on such
stamped cigarettes. Any distributor having cigarettes to which
stamps have been affixed in his or her possession for sale at
12:01 a.m. on the effective date of this amendatory Act of
1993, is required to pay the additional tax imposed by this
amendatory Act of 1993 on such stamped cigarettes. This
payment, less the discount provided in subsection (b), shall be
due when the distributor first makes a purchase of cigarette
tax stamps after the effective date of this amendatory Act of
1993, or on the first due date of a return under this Act after
the effective date of this amendatory Act of 1993, whichever
occurs first. Any distributor having cigarettes to which stamps
have been affixed in his possession for sale on December 15,
1997 shall not be required to pay the additional tax imposed by
this amendatory Act of 1997 on such stamped cigarettes.
Any distributor having cigarettes to which stamps have been
affixed in his or her possession for sale on July 1, 2002 shall
not be required to pay the additional tax imposed by this
amendatory Act of the 92nd General Assembly on those stamped
cigarettes.
Any retailer having cigarettes in his or her possession on
June 24, 2012 to which tax stamps have been affixed is not
required to pay the additional tax that begins on June 24, 2012
imposed by this amendatory Act of the 97th General Assembly on

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those stamped cigarettes. Any distributor having cigarettes in
his or her possession on June 24, 2012 to which tax stamps have
been affixed, and any distributor having stamps in his or her
possession on June 24, 2012 that have not been affixed to
packages of cigarettes before June 24, 2012, is required to pay
the additional tax that begins on June 24, 2012 imposed by this
amendatory Act of the 97th General Assembly to the extent the
calendar year 2012 average monthly volume of cigarette stamps
in the distributor's possession exceeds the average monthly
volume of cigarette stamps purchased by the distributor in
calendar year 2011. This payment, less the discount provided in
subsection (b), is due when the distributor first makes a
purchase of cigarette stamps on or after June 24, 2012 or on
the first due date of a return under this Act occurring on or
after June 24, 2012, whichever occurs first. Those distributors
may elect to pay the additional tax on packages of cigarettes
to which stamps have been affixed and on any stamps in the
distributor's possession that have not been affixed to packages
of cigarettes over a period not to exceed 12 months from the
due date of the additional tax by notifying the Department in
writing. The first payment for distributors making such
election is due when the distributor first makes a purchase of
cigarette tax stamps on or after June 24, 2012 or on the first
due date of a return under this Act occurring on or after June
24, 2012, whichever occurs first. Distributors making such an
election are not entitled to take the discount provided in

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subsection (b) on such payments.
Distributors making sales of cigarettes to secondary
distributors shall add the amount of the tax to the price of
the cigarettes sold by the distributors. Secondary
distributors making sales of cigarettes to retailers shall
include the amount of the tax in the price of the cigarettes
sold to retailers. The amount of tax shall not be less than the
amount of taxes imposed by the State and all local
jurisdictions. The amount of local taxes shall be calculated
based on the location of the retailer's place of business shown
on the retailer's certificate of registration or
sub-registration issued to the retailer pursuant to Section 2a
of the Retailers' Occupation Tax Act. The original packages of
cigarettes sold to the retailer shall bear all the required
stamps, or other indicia, for the taxes included in the price
of cigarettes.
The amount of the Cigarette Tax imposed by this Act shall
be separately stated, apart from the price of the goods, by
distributors, manufacturer representatives, secondary
distributors, and retailers, in all bills and sales invoices.
(b) The distributor shall be required to collect the taxes
provided under paragraph (a) hereof, and, to cover the costs of
such collection, shall be allowed a discount during any year
commencing July 1st and ending the following June 30th in
accordance with the schedule set out hereinbelow, which
discount shall be allowed at the time of purchase of the stamps

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when purchase is required by this Act, or at the time when the
tax is remitted to the Department without the purchase of
stamps from the Department when that method of paying the tax
is required or authorized by this Act. Prior to December 1,
1985, a discount equal to 1 2/3% of the amount of the tax up to
and including the first $700,000 paid hereunder by such
distributor to the Department during any such year; 1 1/3% of
the next $700,000 of tax or any part thereof, paid hereunder by
such distributor to the Department during any such year; 1% of
the next $700,000 of tax, or any part thereof, paid hereunder
by such distributor to the Department during any such year, and
2/3 of 1% of the amount of any additional tax paid hereunder by
such distributor to the Department during any such year shall
apply. On and after December 1, 1985, a discount equal to 1.75%
of the amount of the tax payable under this Act up to and
including the first $3,000,000 paid hereunder by such
distributor to the Department during any such year and 1.5% of
the amount of any additional tax paid hereunder by such
distributor to the Department during any such year shall apply.
On and after December 1, 1985 and until January 1, 2017, the
discount amount shall be 1.75% of the amount of the tax payable
under this Act up to and including the first $3,000,000 paid
hereunder by such distributor to the Department during any such
year and 1.5% of the amount of any additional tax paid
hereunder by such distributor to the Department during any the
year. On and after January 1, 2017, the discount amount shall

09900HB0293ham001 - 529 - LRB099 04265 HLH 51448 a
be the sum of (i) 1.75% of the first $1,000 of the tax payable
under this Act during the calendar year and (ii) 1% of the
amount of the tax payable under this Act during the calendar
year that exceeds $1,000; however, on and after January 1,
2017, in no event shall the discount allowed to any distributor
be less than $5 in any calendar year or more than $1,500 in any
calendar year.
Two or more distributors that use a common means of
affixing revenue tax stamps or that are owned or controlled by
the same interests shall be treated as a single distributor for
the purpose of computing the discount.
(c) The taxes herein imposed are in addition to all other
occupation or privilege taxes imposed by the State of Illinois,
or by any political subdivision thereof, or by any municipal
corporation.
(Source: P.A. 97-587, eff. 8-26-11; 97-688, eff. 6-14-12;
98-273, eff. 8-9-13.)
Section 35-30. The Cigarette Use Tax Act is amended by
changing Section 3 as follows:
(35 ILCS 135/3) (from Ch. 120, par. 453.33)
Sec. 3. Stamp payment. The tax hereby imposed shall be
collected by a distributor maintaining a place of business in
this State or a distributor authorized by the Department
pursuant to Section 7 hereof to collect the tax, and the amount

09900HB0293ham001 - 530 - LRB099 04265 HLH 51448 a
of the tax shall be added to the price of the cigarettes sold
by such distributor. Collection of the tax shall be evidenced
by a stamp or stamps affixed to each original package of
cigarettes or by an authorized substitute for such stamp
imprinted on each original package of such cigarettes
underneath the sealed transparent outside wrapper of such
original package, except as hereinafter provided. Each
distributor who is required or authorized to collect the tax
herein imposed, before delivering or causing to be delivered
any original packages of cigarettes in this State to any
purchaser, shall firmly affix a proper stamp or stamps to each
such package, or (in the case of manufacturers of cigarettes in
original packages which are contained inside a sealed
transparent wrapper) shall imprint the required language on the
original package of cigarettes beneath such outside wrapper as
hereinafter provided. Such stamp or stamps need not be affixed
to the original package of any cigarettes with respect to which
the distributor is required to affix a like stamp or stamps by
virtue of the Cigarette Tax Act, however, and no tax imprint
need be placed underneath the sealed transparent wrapper of an
original package of cigarettes with respect to which the
distributor is required or authorized to employ a like tax
imprint by virtue of the Cigarette Tax Act.
No stamp or imprint may be affixed to, or made upon, any
package of cigarettes unless that package complies with all
requirements of the federal Cigarette Labeling and Advertising

09900HB0293ham001 - 531 - LRB099 04265 HLH 51448 a
Act, 15 U.S.C. 1331 and following, for the placement of labels,
warnings, or any other information upon a package of cigarettes
that is sold within the United States. Under the authority of
Section 6, the Department shall revoke the license of any
distributor that is determined to have violated this paragraph.
A person may not affix a stamp on a package of cigarettes,
cigarette papers, wrappers, or tubes if that individual package
has been marked for export outside the United States with a
label or notice in compliance with Section 290.185 of Title 27
of the Code of Federal Regulations. It is not a defense to a
proceeding for violation of this paragraph that the label or
notice has been removed, mutilated, obliterated, or altered in
any manner.
Only distributors licensed under this Act and
transporters, as defined in Section 9c of the Cigarette Tax
Act, may possess unstamped original packages of cigarettes.
Prior to shipment to an Illinois retailer or secondary
distributor, a stamp shall be applied to each original package
of cigarettes sold to the retailer or secondary distributor. A
distributor may apply a tax stamp only to an original package
of cigarettes purchased or obtained directly from an in-state
maker, manufacturer, or fabricator licensed as a distributor
under Section 4 of this Act or an out-of-state maker,
manufacturer, or fabricator holding a permit under Section 7 of
this Act. A licensed distributor may ship or otherwise cause to
be delivered unstamped original packages of cigarettes in,

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into, or from this State. A licensed distributor may transport
unstamped original packages of cigarettes to a facility,
wherever located, owned or controlled by such distributor;
however, a distributor may not transport unstamped original
packages of cigarettes to a facility where retail sales of
cigarettes take place or to a facility where a secondary
distributor makes sales for resale. Any licensed distributor
that ships or otherwise causes to be delivered unstamped
original packages of cigarettes into, within, or from this
State shall ensure that the invoice or equivalent documentation
and the bill of lading or freight bill for the shipment
identifies the true name and address of the consignor or
seller, the true name and address of the consignee or
purchaser, and the quantity by brand style of the cigarettes so
transported, provided that this Section shall not be construed
as to impose any requirement or liability upon any common or
contract carrier.
Distributors making sales of cigarettes to secondary
distributors shall add the amount of the tax to the price of
the cigarettes sold by the distributors. Secondary
distributors making sales of cigarettes to retailers shall
include the amount of the tax in the price of the cigarettes
sold to retailers. The amount of tax shall not be less than the
amount of taxes imposed by the State and all local
jurisdictions. The amount of local taxes shall be calculated
based on the location of the retailer's place of business shown

09900HB0293ham001 - 533 - LRB099 04265 HLH 51448 a
on the retailer's certificate of registration or
sub-registration issued to the retailer pursuant to Section 2a
of the Retailers' Occupation Tax Act. The original packages of
cigarettes sold by the retailer shall bear all the required
stamps, or other indicia, for the taxes included in the price
of cigarettes.
Stamps, when required hereunder, shall be purchased from
the Department, or any person authorized by the Department, by
distributors. On and after July 1, 2003, payment for such
stamps must be made by means of electronic funds transfer. The
Department may refuse to sell stamps to any person who does not
comply with the provisions of this Act. Beginning on June 6,
2002 and through June 30, 2002, persons holding valid licenses
as distributors may purchase cigarette tax stamps up to an
amount equal to 115% of the distributor's average monthly
cigarette tax stamp purchases over the 12 calendar months prior
to June 6, 2002.
Prior to December 1, 1985, the Department shall allow a
distributor 21 days in which to make final payment of the
amount to be paid for such stamps, by allowing the distributor
to make payment for the stamps at the time of purchasing them
with a draft which shall be in such form as the Department
prescribes, and which shall be payable within 21 days
thereafter: Provided that such distributor has filed with the
Department, and has received the Department's approval of, a
bond, which is in addition to the bond required under Section 4

09900HB0293ham001 - 534 - LRB099 04265 HLH 51448 a
of this Act, payable to the Department in an amount equal to
80% of such distributor's average monthly tax liability to the
Department under this Act during the preceding calendar year or
$500,000, whichever is less. The bond shall be joint and
several and shall be in the form of a surety company bond in
such form as the Department prescribes, or it may be in the
form of a bank certificate of deposit or bank letter of credit.
The bond shall be conditioned upon the distributor's payment of
the amount of any 21-day draft which the Department accepts
from that distributor for the delivery of stamps to that
distributor under this Act. The distributor's failure to pay
any such draft, when due, shall also make such distributor
automatically liable to the Department for a penalty equal to
25% of the amount of such draft.
On and after December 1, 1985 and until July 1, 2003, the
Department shall allow a distributor 30 days in which to make
final payment of the amount to be paid for such stamps, by
allowing the distributor to make payment for the stamps at the
time of purchasing them with a draft which shall be in such
form as the Department prescribes, and which shall be payable
within 30 days thereafter, and beginning on January 1, 2003 and
thereafter, the draft shall be payable by means of electronic
funds transfer: Provided that such distributor has filed with
the Department, and has received the Department's approval of,
a bond, which is in addition to the bond required under Section
4 of this Act, payable to the Department in an amount equal to

09900HB0293ham001 - 535 - LRB099 04265 HLH 51448 a
150% of such distributor's average monthly tax liability to the
Department under this Act during the preceding calendar year or
$750,000, whichever is less, except that as to bonds filed on
or after January 1, 1987, such additional bond shall be in an
amount equal to 100% of such distributor's average monthly tax
liability under this Act during the preceding calendar year or
$750,000, whichever is less. The bond shall be joint and
several and shall be in the form of a surety company bond in
such form as the Department prescribes, or it may be in the
form of a bank certificate of deposit or bank letter of credit.
The bond shall be conditioned upon the distributor's payment of
the amount of any 30-day draft which the Department accepts
from that distributor for the delivery of stamps to that
distributor under this Act. The distributor's failure to pay
any such draft, when due, shall also make such distributor
automatically liable to the Department for a penalty equal to
25% of the amount of such draft.
Every prior continuous compliance taxpayer shall be exempt
from all requirements under this Section concerning the
furnishing of such bond, as defined in this Section, as a
condition precedent to his being authorized to engage in the
business licensed under this Act. This exemption shall continue
for each such taxpayer until such time as he may be determined
by the Department to be delinquent in the filing of any
returns, or is determined by the Department (either through the
Department's issuance of a final assessment which has become

09900HB0293ham001 - 536 - LRB099 04265 HLH 51448 a
final under the Act, or by the taxpayer's filing of a return
which admits tax to be due that is not paid) to be delinquent
or deficient in the paying of any tax under this Act, at which
time that taxpayer shall become subject to the bond
requirements of this Section and, as a condition of being
allowed to continue to engage in the business licensed under
this Act, shall be required to furnish bond to the Department
in such form as provided in this Section. Such taxpayer shall
furnish such bond for a period of 2 years, after which, if the
taxpayer has not been delinquent in the filing of any returns,
or delinquent or deficient in the paying of any tax under this
Act, the Department may reinstate such person as a prior
continuance compliance taxpayer. Any taxpayer who fails to pay
an admitted or established liability under this Act may also be
required to post bond or other acceptable security with the
Department guaranteeing the payment of such admitted or
established liability.
Except as otherwise provided in this Section, any person
aggrieved by any decision of the Department under this Section
may, within the time allowed by law, protest and request a
hearing before the Department, whereupon the Department shall
give notice and shall hold a hearing in conformity with the
provisions of this Act and then issue its final administrative
decision in the matter to such person. Effective July 1, 2013,
protests concerning matters that are subject to the
jurisdiction of the Illinois Independent Tax Tribunal shall be

09900HB0293ham001 - 537 - LRB099 04265 HLH 51448 a
filed in accordance with the Illinois Independent Tax Tribunal
Act of 2012, and hearings concerning those matters shall be
held before the Tribunal in accordance with that Act. With
respect to protests filed with the Department prior to July 1,
2013 that would otherwise be subject to the jurisdiction of the
Illinois Independent Tax Tribunal, the person filing the
protest may elect to be subject to the provisions of the
Illinois Independent Tax Tribunal Act of 2012 at any time on or
after July 1, 2013, but not later than 30 days after the date
on which the protest was filed. If made, the election shall be
irrevocable. In the absence of such a protest filed within the
time allowed by law, the Department's decision shall become
final without any further determination being made or notice
given.
The Department shall discharge any surety and shall release
and return any bond or security deposited, assigned, pledged,
or otherwise provided to it by a taxpayer under this Section
within 30 days after:
(1) such Taxpayer becomes a prior continuous
compliance taxpayer; or
(2) such taxpayer has ceased to collect receipts on
which he is required to remit tax to the Department, has
filed a final tax return, and has paid to the Department an
amount sufficient to discharge his remaining tax liability
as determined by the Department under this Act. The
Department shall make a final determination of the

09900HB0293ham001 - 538 - LRB099 04265 HLH 51448 a
taxpayer's outstanding tax liability as expeditiously as
possible after his final tax return has been filed. If the
Department cannot make such final determination within 45
days after receiving the final tax return, within such
period it shall so notify the taxpayer, stating its reasons
therefor.
At the time of purchasing such stamps from the Department
when purchase is required by this Act, or at the time when the
tax which he has collected is remitted by a distributor to the
Department without the purchase of stamps from the Department
when that method of remitting the tax that has been collected
is required or authorized by this Act, the distributor shall be
allowed a discount during any year commencing July 1 and ending
the following June 30 in accordance with the schedule set out
hereinbelow, from the amount to be paid by him to the
Department for such stamps, or to be paid by him to the
Department on the basis of monthly remittances (as the case may
be), to cover the cost, to such distributor, of collecting the
tax herein imposed by affixing such stamps to the original
packages of cigarettes sold by such distributor or by placing
tax imprints underneath the sealed transparent wrapper of
original packages of cigarettes sold by such distributor (as
the case may be). : (1) Prior to December 1, 1985, a discount
equal to 1-2/3% of the amount of the tax up to and including
the first $700,000 paid hereunder by such distributor to the
Department during any such year; 1-1/3% of the next $700,000 of

09900HB0293ham001 - 539 - LRB099 04265 HLH 51448 a
tax or any part thereof, paid hereunder by such distributor to
the Department during any such year; 1% of the next $700,000 of
tax, or any part thereof, paid hereunder by such distributor to
the Department during any such year; and 2/3 of 1% of the
amount of any additional tax paid hereunder by such distributor
to the Department during any such year or (2) On and after
December 1, 1985 and until January 1, 2017, the a discount
shall be equal to 1.75% of the amount of the tax payable under
this Act up to and including the first $3,000,000 paid
hereunder by such distributor to the Department during any such
year and 1.5% of the amount of any additional tax paid
hereunder by such distributor to the Department during any such
year. On and after January 1, 2017, the discount shall be equal
to the sum of (i) 1.75% of the first $1,000 of the tax payable
under this Act during the calendar year and (ii) 1% of the
amount of the tax payable under this Act during the calendar
year that exceeds $1,000; however, on and after January 1,
2017, in no event shall the discount allowed to any distributor
be less than $5 in any calendar year or more than $1,500 in any
calendar year.
Two or more distributors that use a common means of
affixing revenue tax stamps or that are owned or controlled by
the same interests shall be treated as a single distributor for
the purpose of computing the discount.
Cigarette manufacturers who are distributors under Section
7(a) of this Act, and who place their cigarettes in original

09900HB0293ham001 - 540 - LRB099 04265 HLH 51448 a
packages which are contained inside a sealed transparent
wrapper, shall be required to remit the tax which they are
required to collect under this Act to the Department by
remitting the amount thereof to the Department by the 5th day
of each month, covering cigarettes shipped or otherwise
delivered to points in Illinois to purchasers during the
preceding calendar month, but a distributor need not remit to
the Department the tax so collected by him from purchasers
under this Act to the extent to which such distributor is
required to remit the tax imposed by the Cigarette Tax Act to
the Department with respect to the same cigarettes. All taxes
upon cigarettes under this Act are a direct tax upon the retail
consumer and shall conclusively be presumed to be precollected
for the purpose of convenience and facility only. Cigarette
manufacturers that are distributors licensed under Section
7(a) of this Act and who place their cigarettes in original
packages which are contained inside a sealed transparent
wrapper, before delivering such cigarettes or causing such
cigarettes to be delivered in this State to purchasers, shall
evidence their obligation to collect and remit the tax due with
respect to such cigarettes by imprinting language to be
prescribed by the Department on each original package of such
cigarettes underneath the sealed transparent outside wrapper
of such original package, in such place thereon and in such
manner as the Department may prescribe; provided (as stated
hereinbefore) that this requirement does not apply when such

09900HB0293ham001 - 541 - LRB099 04265 HLH 51448 a
distributor is required or authorized by the Cigarette Tax Act
to place the tax imprint provided for in the last paragraph of
Section 3 of that Act underneath the sealed transparent wrapper
of such original package of cigarettes. Such imprinted language
shall acknowledge the manufacturer's collection and payment of
or liability for the tax imposed by this Act with respect to
such cigarettes.
The Department shall adopt the design or designs of the tax
stamps and shall procure the printing of such stamps in such
amounts and denominations as it deems necessary to provide for
the affixation of the proper amount of tax stamps to each
original package of cigarettes.
Where tax stamps are required, the Department may authorize
distributors to affix revenue tax stamps by imprinting tax
meter stamps upon original packages of cigarettes. The
Department shall adopt rules and regulations relating to the
imprinting of such tax meter stamps as will result in payment
of the proper taxes as herein imposed. No distributor may affix
revenue tax stamps to original packages of cigarettes by
imprinting meter stamps thereon unless such distributor has
first obtained permission from the Department to employ this
method of affixation. The Department shall regulate the use of
tax meters and may, to assure the proper collection of the
taxes imposed by this Act, revoke or suspend the privilege,
theretofore granted by the Department to any distributor, to
imprint tax meter stamps upon original packages of cigarettes.

09900HB0293ham001 - 542 - LRB099 04265 HLH 51448 a
The tax hereby imposed and not paid pursuant to this
Section shall be paid to the Department directly by any person
using such cigarettes within this State, pursuant to Section 12
hereof.
A distributor shall not affix, or cause to be affixed, any
stamp or imprint to a package of cigarettes, as provided for in
this Section, if the tobacco product manufacturer, as defined
in Section 10 of the Tobacco Product Manufacturers' Escrow Act,
that made or sold the cigarettes has failed to become a
participating manufacturer, as defined in subdivision (a)(1)
of Section 15 of the Tobacco Product Manufacturers' Escrow Act,
or has failed to create a qualified escrow fund for any
cigarettes manufactured by the tobacco product manufacturer
and sold in this State or otherwise failed to bring itself into
compliance with subdivision (a)(2) of Section 15 of the Tobacco
Product Manufacturers' Escrow Act.
(Source: P.A. 96-782, eff. 1-1-10; 96-1027, eff. 7-12-10;
97-1129, eff. 8-28-12.)
Section 35-35. The Hotel Operators' Occupation Tax Act is
amended by changing Section 6 as follows:
(35 ILCS 145/6) (from Ch. 120, par. 481b.36)
Sec. 6. Except as provided hereinafter in this Section, on
or before the last day of each calendar month, every person
engaged in the business of renting, leasing or letting rooms in

09900HB0293ham001 - 543 - LRB099 04265 HLH 51448 a
a hotel in this State during the preceding calendar month shall
file a return with the Department, stating:
1. The name of the operator;
2. His residence address and the address of his
principal place of business and the address of the
principal place of business (if that is a different
address) from which he engages in the business of renting,
leasing or letting rooms in a hotel in this State;
3. Total amount of rental receipts received by him
during the preceding calendar month from renting, leasing
or letting rooms during such preceding calendar month;
4. Total amount of rental receipts received by him
during the preceding calendar month from renting, leasing
or letting rooms to permanent residents during such
preceding calendar month;
5. Total amount of other exclusions from gross rental
receipts allowed by this Act;
6. Gross rental receipts which were received by him
during the preceding calendar month and upon the basis of
which the tax is imposed;
7. The amount of tax due;
8. Such other reasonable information as the Department
may require.
If the operator's average monthly tax liability to the
Department does not exceed $200, the Department may authorize
his returns to be filed on a quarter annual basis, with the

09900HB0293ham001 - 544 - LRB099 04265 HLH 51448 a
return for January, February and March of a given year being
due by April 30 of such year; with the return for April, May
and June of a given year being due by July 31 of such year; with
the return for July, August and September of a given year being
due by October 31 of such year, and with the return for
October, November and December of a given year being due by
January 31 of the following year.
If the operator's average monthly tax liability to the
Department does not exceed $50, the Department may authorize
his returns to be filed on an annual basis, with the return for
a given year being due by January 31 of the following year.
Such quarter annual and annual returns, as to form and
substance, shall be subject to the same requirements as monthly
returns.
Notwithstanding any other provision in this Act concerning
the time within which an operator may file his return, in the
case of any operator who ceases to engage in a kind of business
which makes him responsible for filing returns under this Act,
such operator shall file a final return under this Act with the
Department not more than 1 month after discontinuing such
business.
Where the same person has more than 1 business registered
with the Department under separate registrations under this
Act, such person shall not file each return that is due as a
single return covering all such registered businesses, but
shall file separate returns for each such registered business.

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In his return, the operator shall determine the value of
any consideration other than money received by him in
connection with the renting, leasing or letting of rooms in the
course of his business and he shall include such value in his
return. Such determination shall be subject to review and
revision by the Department in the manner hereinafter provided
for the correction of returns.
Where the operator is a corporation, the return filed on
behalf of such corporation shall be signed by the president,
vice-president, secretary or treasurer or by the properly
accredited agent of such corporation.
The person filing the return herein provided for shall, at
the time of filing such return, pay to the Department the
amount of tax herein imposed. The operator filing the return
under this Section shall, at the time of filing such return,
pay to the Department the amount of tax imposed by this Act
less the vendor discount amount a discount of 2.1% or $25 per
calendar year, whichever is greater, which is allowed to
reimburse the operator for the expenses incurred in keeping
records, preparing and filing returns, remitting the tax and
supplying data to the Department on request. Prior to January
1, 2017, the vendor discount amount shall be 2.1% or $25 per
calendar year, whichever is greater. On and after January 1,
2017, the vendor discount amount shall be the sum of (i) 1.75%
of the first $1,000 collected during the calendar year and (ii)
1% of the amount of proceeds collected during the calendar year

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that exceeds $1,000; however, on and after January 1, 2017, in
no event shall the discount allowed to any person be less than
$25 in any calendar year or more than $1,500 in any calendar
year.
There shall be deposited in the Build Illinois Fund in the
State Treasury for each State fiscal year 40% of the amount of
total net proceeds from the tax imposed by subsection (a) of
Section 3. Of the remaining 60%, $5,000,000 shall be deposited
in the Illinois Sports Facilities Fund and credited to the
Subsidy Account each fiscal year by making monthly deposits in
the amount of 1/8 of $5,000,000 plus cumulative deficiencies in
such deposits for prior months, and an additional $8,000,000
shall be deposited in the Illinois Sports Facilities Fund and
credited to the Advance Account each fiscal year by making
monthly deposits in the amount of 1/8 of $8,000,000 plus any
cumulative deficiencies in such deposits for prior months;
provided, that for fiscal years ending after June 30, 2001, the
amount to be so deposited into the Illinois Sports Facilities
Fund and credited to the Advance Account each fiscal year shall
be increased from $8,000,000 to the then applicable Advance
Amount and the required monthly deposits beginning with July
2001 shall be in the amount of 1/8 of the then applicable
Advance Amount plus any cumulative deficiencies in those
deposits for prior months. (The deposits of the additional
$8,000,000 or the then applicable Advance Amount, as
applicable, during each fiscal year shall be treated as

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advances of funds to the Illinois Sports Facilities Authority
for its corporate purposes to the extent paid to the Authority
or its trustee and shall be repaid into the General Revenue
Fund in the State Treasury by the State Treasurer on behalf of
the Authority pursuant to Section 19 of the Illinois Sports
Facilities Authority Act, as amended. If in any fiscal year the
full amount of the then applicable Advance Amount is not repaid
into the General Revenue Fund, then the deficiency shall be
paid from the amount in the Local Government Distributive Fund
that would otherwise be allocated to the City of Chicago under
the State Revenue Sharing Act.)
For purposes of the foregoing paragraph, the term "Advance
Amount" means, for fiscal year 2002, $22,179,000, and for
subsequent fiscal years through fiscal year 2032, 105.615% of
the Advance Amount for the immediately preceding fiscal year,
rounded up to the nearest $1,000.
Of the remaining 60% of the amount of total net proceeds
prior to August 1, 2011 from the tax imposed by subsection (a)
of Section 3 after all required deposits in the Illinois Sports
Facilities Fund, the amount equal to 8% of the net revenue
realized from this Act plus an amount equal to 8% of the net
revenue realized from any tax imposed under Section 4.05 of the
Chicago World's Fair-1992 Authority Act during the preceding
month shall be deposited in the Local Tourism Fund each month
for purposes authorized by Section 605-705 of the Department of
Commerce and Economic Opportunity Law (20 ILCS 605/605-705). Of

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the remaining 60% of the amount of total net proceeds beginning
on August 1, 2011 from the tax imposed by subsection (a) of
Section 3 after all required deposits in the Illinois Sports
Facilities Fund, an amount equal to 8% of the net revenue
realized from this Act plus an amount equal to 8% of the net
revenue realized from any tax imposed under Section 4.05 of the
Chicago World's Fair-1992 Authority Act during the preceding
month shall be deposited as follows: 18% of such amount shall
be deposited into the Chicago Travel Industry Promotion Fund
for the purposes described in subsection (n) of Section 5 of
the Metropolitan Pier and Exposition Authority Act and the
remaining 82% of such amount shall be deposited into the Local
Tourism Fund each month for purposes authorized by Section
605-705 of the Department of Commerce and Economic Opportunity
Law. Beginning on August 1, 1999 and ending on July 31, 2011,
an amount equal to 4.5% of the net revenue realized from the
Hotel Operators' Occupation Tax Act during the preceding month
shall be deposited into the International Tourism Fund for the
purposes authorized in Section 605-707 of the Department of
Commerce and Economic Opportunity Law. Beginning on August 1,
2011, an amount equal to 4.5% of the net revenue realized from
this Act during the preceding month shall be deposited as
follows: 55% of such amount shall be deposited into the Chicago
Travel Industry Promotion Fund for the purposes described in
subsection (n) of Section 5 of the Metropolitan Pier and
Exposition Authority Act and the remaining 45% of such amount

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deposited into the International Tourism Fund for the purposes
authorized in Section 605-707 of the Department of Commerce and
Economic Opportunity Law. "Net revenue realized for a month"
means the revenue collected by the State under that Act during
the previous month less the amount paid out during that same
month as refunds to taxpayers for overpayment of liability
under that Act.
After making all these deposits, all other proceeds of the
tax imposed under subsection (a) of Section 3 shall be
deposited in the General Revenue Fund in the State Treasury.
All moneys received by the Department from the additional tax
imposed under subsection (b) of Section 3 shall be deposited
into the Build Illinois Fund in the State Treasury.
The Department may, upon separate written notice to a
taxpayer, require the taxpayer to prepare and file with the
Department on a form prescribed by the Department within not
less than 60 days after receipt of the notice an annual
information return for the tax year specified in the notice.
Such annual return to the Department shall include a statement
of gross receipts as shown by the operator's last State income
tax return. If the total receipts of the business as reported
in the State income tax return do not agree with the gross
receipts reported to the Department for the same period, the
operator shall attach to his annual information return a
schedule showing a reconciliation of the 2 amounts and the
reasons for the difference. The operator's annual information

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return to the Department shall also disclose pay roll
information of the operator's business during the year covered
by such return and any additional reasonable information which
the Department deems would be helpful in determining the
accuracy of the monthly, quarterly or annual tax returns by
such operator as hereinbefore provided for in this Section.
If the annual information return required by this Section
is not filed when and as required the taxpayer shall be liable
for a penalty in an amount determined in accordance with
Section 3-4 of the Uniform Penalty and Interest Act until such
return is filed as required, the penalty to be assessed and
collected in the same manner as any other penalty provided for
in this Act.
The chief executive officer, proprietor, owner or highest
ranking manager shall sign the annual return to certify the
accuracy of the information contained therein. Any person who
willfully signs the annual return containing false or
inaccurate information shall be guilty of perjury and punished
accordingly. The annual return form prescribed by the
Department shall include a warning that the person signing the
return may be liable for perjury.
The foregoing portion of this Section concerning the filing
of an annual information return shall not apply to an operator
who is not required to file an income tax return with the
United States Government.
(Source: P.A. 97-617, eff. 10-26-11.)

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Section 35-40. The Motor Fuel Tax Law is amended by
changing Sections 2b, 6, and 6a as follows:
(35 ILCS 505/2b) (from Ch. 120, par. 418b)
Sec. 2b. In addition to the tax collection and reporting
responsibilities imposed elsewhere in this Act, a person who is
required to pay the tax imposed by Section 2a of this Act shall
pay the tax to the Department by return showing all fuel
purchased, acquired or received and sold, distributed or used
during the preceding calendar month including losses of fuel as
the result of evaporation or shrinkage due to temperature
variations, and such other reasonable information as the
Department may require. Losses of fuel as the result of
evaporation or shrinkage due to temperature variations may not
exceed 1% of the total gallons in storage at the beginning of
the month, plus the receipts of gallonage during the month,
minus the gallonage remaining in storage at the end of the
month. Any loss reported that is in excess of this amount shall
be subject to the tax imposed by Section 2a of this Law. On and
after July 1, 2001, for each 6-month period January through
June, net losses of fuel (for each category of fuel that is
required to be reported on a return) as the result of
evaporation or shrinkage due to temperature variations may not
exceed 1% of the total gallons in storage at the beginning of
each January, plus the receipts of gallonage each January

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through June, minus the gallonage remaining in storage at the
end of each June. On and after July 1, 2001, for each 6-month
period July through December, net losses of fuel (for each
category of fuel that is required to be reported on a return)
as the result of evaporation or shrinkage due to temperature
variations may not exceed 1% of the total gallons in storage at
the beginning of each July, plus the receipts of gallonage each
July through December, minus the gallonage remaining in storage
at the end of each December. Any net loss reported that is in
excess of this amount shall be subject to the tax imposed by
Section 2a of this Law. For purposes of this Section, "net
loss" means the number of gallons gained through temperature
variations minus the number of gallons lost through temperature
variations or evaporation for each of the respective 6-month
periods.
The return shall be prescribed by the Department and shall
be filed between the 1st and 20th days of each calendar month.
The Department may, in its discretion, combine the returns
filed under this Section, Section 5, and Section 5a of this
Act. The return must be accompanied by appropriate
computer-generated magnetic media supporting schedule data in
the format required by the Department, unless, as provided by
rule, the Department grants an exception upon petition of a
taxpayer. If the return is filed timely, the seller shall take
a discount of 2% through June 30, 2003 and 1.75% thereafter
which is allowed to reimburse the seller for the expenses

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incurred in keeping records, preparing and filing returns,
collecting and remitting the tax and supplying data to the
Department on request. The discount, however, shall be
applicable only to the amount of payment which accompanies a
return that is filed timely in accordance with this Section.
Prior to January 1, 2017, the vendor discount amount shall be
1.75%. On and after January 1, 2017, the vendor discount amount
shall be the sum of (i) 1.75% of the first $1,000 collected
during the calendar year and (ii) 1% of the amount of proceeds
collected during the calendar year that exceeds $1,000;
however, on and after January 1, 2017, in no event shall the
discount allowed to any person be more than $1,500 in any
calendar year.
(Source: P.A. 92-30, eff. 7-1-01; 93-32, eff. 6-20-03.)
(35 ILCS 505/6) (from Ch. 120, par. 422)
Sec. 6. Collection of tax; distributors. A distributor who
sells or distributes any motor fuel, which he is required by
Section 5 to report to the Department when filing a return,
shall (except as hereinafter provided) collect at the time of
such sale and distribution, the amount of tax imposed under
this Act on all such motor fuel sold and distributed, and at
the time of making a return, the distributor shall pay to the
Department the amount so collected less a discount of 2%
through June 30, 2003 and 1.75% thereafter which is allowed to
reimburse the distributor for the expenses incurred in keeping

09900HB0293ham001 - 554 - LRB099 04265 HLH 51448 a
records, preparing and filing returns, collecting and
remitting the tax and supplying data to the Department on
request, and shall also pay to the Department an amount equal
to the amount that would be collectible as a tax in the event
of a sale thereof on all such motor fuel used by said
distributor during the period covered by the return. Prior to
July 1, 2003, the discount amount shall be 2%. From July 1,
2003 through December 31, 2016, the discount amount shall be
1.75%. On and after January 1, 2017, the discount amount shall
be the sum of (i) 1.75% of the first $1,000 collected during
the calendar year and (ii) 1% of the amount of proceeds
collected during the calendar year that exceeds $1,000;
however, on and after January 1, 2017, in no event shall the
discount allowed to any distributor be more than $1,500 in any
calendar year. However, no payment shall be made based upon
dyed diesel fuel used by the distributor for non-highway
purposes. The discount shall only be applicable to the amount
of tax payment which accompanies a return which is filed timely
in accordance with Section 5 of this Act. In each subsequent
sale of motor fuel on which the amount of tax imposed under
this Act has been collected as provided in this Section, the
amount so collected shall be added to the selling price, so
that the amount of tax is paid ultimately by the user of the
motor fuel. However, no collection or payment shall be made in
the case of the sale or use of any motor fuel to the extent to
which such sale or use of motor fuel may not, under the

09900HB0293ham001 - 555 - LRB099 04265 HLH 51448 a
constitution and statutes of the United States, be made the
subject of taxation by this State. A person whose license to
act as a distributor of fuel has been revoked shall, at the
time of making a return, also pay to the Department an amount
equal to the amount that would be collectible as a tax in the
event of a sale thereof on all motor fuel, which he is required
by the second paragraph of Section 5 to report to the
Department in making a return, and which he had on hand on the
date on which the license was revoked, and with respect to
which no tax had been previously paid under this Act.
A distributor may make tax free sales of motor fuel, with
respect to which he is otherwise required to collect the tax,
only as specified in the following items 1 through 7.
1. When the sale is made to a person holding a valid
unrevoked license as a distributor, by making a specific
notation thereof on invoices or sales slip covering each
sale.
2. When the sale is made with delivery to a purchaser
outside of this State.
3. When the sale is made to the Federal Government or
its instrumentalities.
4. When the sale is made to a municipal corporation
owning and operating a local transportation system for
public service in this State when an official certificate
of exemption is obtained in lieu of the tax.
5. When the sale is made to a privately owned public

09900HB0293ham001 - 556 - LRB099 04265 HLH 51448 a
utility owning and operating 2 axle vehicles designed and
used for transporting more than 7 passengers, which
vehicles are used as common carriers in general
transportation of passengers, are not devoted to any
specialized purpose and are operated entirely within the
territorial limits of a single municipality or of any group
of contiguous municipalities, or in a close radius thereof,
and the operations of which are subject to the regulations
of the Illinois Commerce Commission, when an official
certificate of exemption is obtained in lieu of the tax.
6. When a sale of special fuel is made to a person
holding a valid, unrevoked license as a supplier, by making
a specific notation thereof on the invoice or sales slip
covering each such sale.
7. When a sale of dyed diesel fuel is made to someone
other than a licensed distributor or a licensed supplier
for non-highway purposes and the fuel is (i) delivered from
a vehicle designed for the specific purpose of such sales
and delivered directly into a stationary bulk storage tank
that displays the notice required by Section 4f of this
Act, (ii) delivered from a vehicle designed for the
specific purpose of such sales and delivered directly into
the fuel supply tanks of non-highway vehicles that are not
required to be registered for highway use, or (iii)
dispensed from a dyed diesel fuel dispensing facility that
has withdrawal facilities that are not readily accessible

09900HB0293ham001 - 557 - LRB099 04265 HLH 51448 a
to and are not capable of dispensing dyed diesel fuel into
the fuel supply tank of a motor vehicle.
A specific notation is required on the invoice or sales
slip covering such sales, and any supporting documentation
that may be required by the Department must be obtained by
the distributor. The distributor shall obtain and keep the
supporting documentation in such form as the Department may
require by rule.
For purposes of this item 7, a dyed diesel fuel
dispensing facility is considered to have withdrawal
facilities that are "not readily accessible to and not
capable of dispensing dyed diesel fuel into the fuel supply
tank of a motor vehicle" only if the dyed diesel fuel is
delivered from: (i) a dispenser hose that is short enough
so that it will not reach the fuel supply tank of a motor
vehicle or (ii) a dispenser that is enclosed by a fence or
other physical barrier so that a vehicle cannot pull
alongside the dispenser to permit fueling.
8. (Blank).
All special fuel sold or used for non-highway purposes must
have a dye added in accordance with Section 4d of this Law.
All suits or other proceedings brought for the purpose of
recovering any taxes, interest or penalties due the State of
Illinois under this Act may be maintained in the name of the
Department.
(Source: P.A. 96-1384, eff. 7-29-10.)

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(35 ILCS 505/6a) (from Ch. 120, par. 422a)
Sec. 6a. Collection of tax; suppliers. A supplier, other
than a licensed distributor, who sells or distributes any
special fuel, which he is required by Section 5a to report to
the Department when filing a return, shall (except as
hereinafter provided) collect at the time of such sale and
distribution, the amount of tax imposed under this Act on all
such special fuel sold and distributed, and at the time of
making a return, the supplier shall pay to the Department the
amount so collected less a discount of 2% through June 30, 2003
and 1.75% thereafter which is allowed to reimburse the supplier
for the expenses incurred in keeping records, preparing and
filing returns, collecting and remitting the tax and supplying
data to the Department on request, and shall also pay to the
Department an amount equal to the amount that would be
collectible as a tax in the event of a sale thereof on all such
special fuel used by said supplier during the period covered by
the return. Prior to July 1, 2003, the discount amount shall be
2%. From July 1, 2003 through December 31, 2016, the discount
amount shall be 1.75%. On and after January 1, 2017, the
discount amount shall be the sum of (i) 1.75% of the first
$1,000 collected during the calendar year and (ii) 1% of the
amount of proceeds collected during the calendar year that
exceeds $1,000; however, on and after January 1, 2017, in no
event shall the discount allowed to any distributor be more

09900HB0293ham001 - 559 - LRB099 04265 HLH 51448 a
than $1,500 in any calendar year. However, no payment shall be
made based upon dyed diesel fuel used by said supplier for
non-highway purposes. The discount shall only be applicable to
the amount of tax payment which accompanies a return which is
filed timely in accordance with Section 5(a) of this Act. In
each subsequent sale of special fuel on which the amount of tax
imposed under this Act has been collected as provided in this
Section, the amount so collected shall be added to the selling
price, so that the amount of tax is paid ultimately by the user
of the special fuel. However, no collection or payment shall be
made in the case of the sale or use of any special fuel to the
extent to which such sale or use of motor fuel may not, under
the Constitution and statutes of the United States, be made the
subject of taxation by this State.
A person whose license to act as supplier of special fuel
has been revoked shall, at the time of making a return, also
pay to the Department an amount equal to the amount that would
be collectible as a tax in the event of a sale thereof on all
special fuel, which he is required by the 1st paragraph of
Section 5a to report to the Department in making a return.
A supplier may make tax-free sales of special fuel, with
respect to which he is otherwise required to collect the tax,
only as specified in the following items 1 through 7.
1. When the sale is made to the federal government or
its instrumentalities.
2. When the sale is made to a municipal corporation

09900HB0293ham001 - 560 - LRB099 04265 HLH 51448 a
owning and operating a local transportation system for
public service in this State when an official certificate
of exemption is obtained in lieu of the tax.
3. When the sale is made to a privately owned public
utility owning and operating 2 axle vehicles designed and
used for transporting more than 7 passengers, which
vehicles are used as common carriers in general
transportation of passengers, are not devoted to any
specialized purpose and are operated entirely within the
territorial limits of a single municipality or of any group
of contiguous municipalities, or in a close radius thereof,
and the operations of which are subject to the regulations
of the Illinois Commerce Commission, when an official
certificate of exemption is obtained in lieu of the tax.
4. When a sale is made to a person holding a valid
unrevoked license as a supplier or a distributor by making
a specific notation thereof on invoice or sales slip
covering each such sale.
5. When a sale of dyed diesel fuel is made to someone
other than a licensed distributor or licensed supplier for
non-highway purposes and the fuel is (i) delivered from a
vehicle designed for the specific purpose of such sales and
delivered directly into a stationary bulk storage tank that
displays the notice required by Section 4f of this Act,
(ii) delivered from a vehicle designed for the specific
purpose of such sales and delivered directly into the fuel

09900HB0293ham001 - 561 - LRB099 04265 HLH 51448 a
supply tanks of non-highway vehicles that are not required
to be registered for highway use, or (iii) dispensed from a
dyed diesel fuel dispensing facility that has withdrawal
facilities that are not readily accessible to and are not
capable of dispensing dyed diesel fuel into the fuel supply
tank of a motor vehicle.
A specific notation is required on the invoice or sales
slip covering such sales, and any supporting documentation
that may be required by the Department must be obtained by
the supplier. The supplier shall obtain and keep the
supporting documentation in such form as the Department may
require by rule.
For purposes of this item 5, a dyed diesel fuel
dispensing facility is considered to have withdrawal
facilities that are "not readily accessible to and not
capable of dispensing dyed diesel fuel into the fuel supply
tank of a motor vehicle" only if the dyed diesel fuel is
delivered from: (i) a dispenser hose that is short enough
so that it will not reach the fuel supply tank of a motor
vehicle or (ii) a dispenser that is enclosed by a fence or
other physical barrier so that a vehicle cannot pull
alongside the dispenser to permit fueling.
6. (Blank).
7. When a sale of special fuel is made to a person
where delivery is made outside of this State.
All special fuel sold or used for non-highway purposes must

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have a dye added in accordance with Section 4d of this Law.
All suits or other proceedings brought for the purpose of
recovering any taxes, interest or penalties due the State of
Illinois under this Act may be maintained in the name of the
Department.
(Source: P.A. 96-1384, eff. 7-29-10.)
Section 35-45. The Telecommunications Excise Tax Act is
amended by changing Section 6 as follows:
(35 ILCS 630/6) (from Ch. 120, par. 2006)
Sec. 6. Except as provided hereinafter in this Section, on
or before the last day of each month, each retailer maintaining
a place of business in this State shall make a return to the
Department for the preceding calendar month, stating:
1. His name;
2. The address of his principal place of business, or
the address of the principal place of business (if that is
a different address) from which he engages in the business
of transmitting telecommunications;
3. Total amount of gross charges billed by him during
the preceding calendar month for providing
telecommunications during such calendar month;
4. Total amount received by him during the preceding
calendar month on credit extended;
5. Deductions allowed by law;

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6. Gross charges which were billed by him during the
preceding calendar month and upon the basis of which the
tax is imposed;
7. Amount of tax (computed upon Item 6);
8. Such other reasonable information as the Department
may require.
Any taxpayer required to make payments under this Section
may make the payments by electronic funds transfer. The
Department shall adopt rules necessary to effectuate a program
of electronic funds transfer. Any taxpayer who has average
monthly tax billings due to the Department under this Act and
the Simplified Municipal Telecommunications Tax Act that
exceed $1,000 shall make all payments by electronic funds
transfer as required by rules of the Department and shall file
the return required by this Section by electronic means as
required by rules of the Department.
If the retailer's average monthly tax billings due to the
Department under this Act and the Simplified Municipal
Telecommunications Tax Act do not exceed $1,000, the Department
may authorize his returns to be filed on a quarter annual
basis, with the return for January, February and March of a
given year being due by April 30 of such year; with the return
for April, May and June of a given year being due by July 31st
of such year; with the return for July, August and September of
a given year being due by October 31st of such year; and with
the return of October, November and December of a given year

09900HB0293ham001 - 564 - LRB099 04265 HLH 51448 a
being due by January 31st of the following year.
If the retailer is otherwise required to file a monthly or
quarterly return and if the retailer's average monthly tax
billings due to the Department under this Act and the
Simplified Municipal Telecommunications Tax Act do not exceed
$400, the Department may authorize his or her return to be
filed on an annual basis, with the return for a given year
being due by January 31st of the following year.
Notwithstanding any other provision of this Article
containing the time within which a retailer may file his
return, in the case of any retailer who ceases to engage in a
kind of business which makes him responsible for filing returns
under this Article, such retailer shall file a final return
under this Article with the Department not more than one month
after discontinuing such business.
In making such return, the retailer shall determine the
value of any consideration other than money received by him and
he shall include such value in his return. Such determination
shall be subject to review and revision by the Department in
the manner hereinafter provided for the correction of returns.
Each retailer whose average monthly liability to the
Department under this Article and the Simplified Municipal
Telecommunications Tax Act was $25,000 or more during the
preceding calendar year, excluding the month of highest
liability and the month of lowest liability in such calendar
year, and who is not operated by a unit of local government,

09900HB0293ham001 - 565 - LRB099 04265 HLH 51448 a
shall make estimated payments to the Department on or before
the 7th, 15th, 22nd and last day of the month during which tax
collection liability to the Department is incurred in an amount
not less than the lower of either 22.5% of the retailer's
actual tax collections for the month or 25% of the retailer's
actual tax collections for the same calendar month of the
preceding year. The amount of such quarter monthly payments
shall be credited against the final liability of the retailer's
return for that month. Any outstanding credit, approved by the
Department, arising from the retailer's overpayment of its
final liability for any month may be applied to reduce the
amount of any subsequent quarter monthly payment or credited
against the final liability of the retailer's return for any
subsequent month. If any quarter monthly payment is not paid at
the time or in the amount required by this Section, the
retailer shall be liable for penalty and interest on the
difference between the minimum amount due as a payment and the
amount of such payment actually and timely paid, except insofar
as the retailer has previously made payments for that month to
the Department in excess of the minimum payments previously
due.
The retailer making the return herein provided for shall,
at the time of making such return, pay to the Department the
amount of tax herein imposed, less a discount of 1% which is
allowed to reimburse the retailer for the expenses incurred in
keeping records, billing the customer, preparing and filing

09900HB0293ham001 - 566 - LRB099 04265 HLH 51448 a
returns, remitting the tax, and supplying data to the
Department upon request. No discount may be claimed by a
retailer on returns not timely filed and for taxes not timely
remitted. On and after January 1, 2017, in no event shall the
discount allowed to any retailer be more than $1,500 in any
calendar year.
On and after the effective date of this Article of 1985, of
the moneys received by the Department of Revenue pursuant to
this Article, other than moneys received pursuant to the
additional taxes imposed by Public Act 90-548:
(1) $1,000,000 shall be paid each month into the Common
School Fund;
(2) beginning on the first day of the first calendar
month to occur on or after the effective date of this
amendatory Act of the 98th General Assembly, an amount
equal to 1/12 of 5% of the cash receipts collected during
the preceding fiscal year by the Audit Bureau of the
Department from the tax under this Act and the Simplified
Municipal Telecommunications Tax Act shall be paid each
month into the Tax Compliance and Administration Fund;
those moneys shall be used, subject to appropriation, to
fund additional auditors and compliance personnel at the
Department of Revenue; and
(3) the remainder shall be deposited into the General
Revenue Fund.
On and after February 1, 1998, however, of the moneys

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received by the Department of Revenue pursuant to the
additional taxes imposed by Public Act 90-548, one-half shall
be deposited into the School Infrastructure Fund and one-half
shall be deposited into the Common School Fund. On and after
the effective date of this amendatory Act of the 91st General
Assembly, if in any fiscal year the total of the moneys
deposited into the School Infrastructure Fund under this Act is
less than the total of the moneys deposited into that Fund from
the additional taxes imposed by Public Act 90-548 during fiscal
year 1999, then, as soon as possible after the close of the
fiscal year, the Comptroller shall order transferred and the
Treasurer shall transfer from the General Revenue Fund to the
School Infrastructure Fund an amount equal to the difference
between the fiscal year total deposits and the total amount
deposited into the Fund in fiscal year 1999.
(Source: P.A. 98-1098, eff. 8-26-14.)
Section 35-50. The Liquor Control Act of 1934 is amended by
changing Section 8-2 as follows:
(235 ILCS 5/8-2) (from Ch. 43, par. 159)
Sec. 8-2. It is the duty of each manufacturer with respect
to alcoholic liquor produced or imported by such manufacturer,
or purchased tax-free by such manufacturer from another
manufacturer or importing distributor, and of each importing
distributor as to alcoholic liquor purchased by such importing

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distributor from foreign importers or from anyone from any
point in the United States outside of this State or purchased
tax-free from another manufacturer or importing distributor,
to pay the tax imposed by Section 8-1 to the Department of
Revenue on or before the 15th day of the calendar month
following the calendar month in which such alcoholic liquor is
sold or used by such manufacturer or by such importing
distributor other than in an authorized tax-free manner or to
pay that tax electronically as provided in this Section.
Each manufacturer and each importing distributor shall
make payment under one of the following methods: (1) on or
before the 15th day of each calendar month, file in person or
by United States first-class mail, postage pre-paid, with the
Department of Revenue, on forms prescribed and furnished by the
Department, a report in writing in such form as may be required
by the Department in order to compute, and assure the accuracy
of, the tax due on all taxable sales and uses of alcoholic
liquor occurring during the preceding month. Payment of the tax
in the amount disclosed by the report shall accompany the
report or, (2) on or before the 15th day of each calendar
month, electronically file with the Department of Revenue, on
forms prescribed and furnished by the Department, an electronic
report in such form as may be required by the Department in
order to compute, and assure the accuracy of, the tax due on
all taxable sales and uses of alcoholic liquor occurring during
the preceding month. An electronic payment of the tax in the

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amount disclosed by the report shall accompany the report. A
manufacturer or distributor who files an electronic report and
electronically pays the tax imposed pursuant to Section 8-1 to
the Department of Revenue on or before the 15th day of the
calendar month following the calendar month in which such
alcoholic liquor is sold or used by that manufacturer or
importing distributor other than in an authorized tax-free
manner shall pay to the Department the amount of the tax
imposed pursuant to Section 8-1, less a discount which is
allowed to reimburse the manufacturer or importing distributor
for the expenses incurred in keeping and maintaining records,
preparing and filing the electronic returns, remitting the tax,
and supplying data to the Department upon request.
The discount shall be in an amount as follows:
(1) For original returns due on or after January 1,
2003 through September 30, 2003, the discount shall be
1.75% or $1,250 per return, whichever is less;
(2) For original returns due on or after October 1,
2003 through September 30, 2004, the discount shall be 2%
or $3,000 per return, whichever is less; and
(3) For original returns due on or after October 1,
2004 through December 31, 2016, the discount shall be 2% or
$2,000 per return, whichever is less; and .
(4) For original returns due on and after January 1,
2017, the sum of (i) 1.75% of the first $1,000 collected
during the calendar year and (ii) 1% of the amount of

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proceeds collected during the calendar year that exceeds
$1,000; however, on and after January 1, 2017, in no event
shall the discount allowed to any manufacturer or
distributor be more than $1,500 in any calendar year.
The Department may, if it deems it necessary in order to
insure the payment of the tax imposed by this Article, require
returns to be made more frequently than and covering periods of
less than a month. Such return shall contain such further
information as the Department may reasonably require.
It shall be presumed that all alcoholic liquors acquired or
made by any importing distributor or manufacturer have been
sold or used by him in this State and are the basis for the tax
imposed by this Article unless proven, to the satisfaction of
the Department, that such alcoholic liquors are (1) still in
the possession of such importing distributor or manufacturer,
or (2) prior to the termination of possession have been lost by
theft or through unintentional destruction, or (3) that such
alcoholic liquors are otherwise exempt from taxation under this
Act.
The Department may require any foreign importer to file
monthly information returns, by the 15th day of the month
following the month which any such return covers, if the
Department determines this to be necessary to the proper
performance of the Department's functions and duties under this
Act. Such return shall contain such information as the
Department may reasonably require.

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Every manufacturer and importing distributor shall also
file, with the Department, a bond in an amount not less than
$1,000 and not to exceed $100,000 on a form to be approved by,
and with a surety or sureties satisfactory to, the Department.
Such bond shall be conditioned upon the manufacturer or
importing distributor paying to the Department all monies
becoming due from such manufacturer or importing distributor
under this Article. The Department shall fix the penalty of
such bond in each case, taking into consideration the amount of
alcoholic liquor expected to be sold and used by such
manufacturer or importing distributor, and the penalty fixed by
the Department shall be sufficient, in the Department's
opinion, to protect the State of Illinois against failure to
pay any amount due under this Article, but the amount of the
penalty fixed by the Department shall not exceed twice the
amount of tax liability of a monthly return, nor shall the
amount of such penalty be less than $1,000. The Department
shall notify the Commission of the Department's approval or
disapproval of any such manufacturer's or importing
distributor's bond, or of the termination or cancellation of
any such bond, or of the Department's direction to a
manufacturer or importing distributor that he must file
additional bond in order to comply with this Section. The
Commission shall not issue a license to any applicant for a
manufacturer's or importing distributor's license unless the
Commission has received a notification from the Department

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showing that such applicant has filed a satisfactory bond with
the Department hereunder and that such bond has been approved
by the Department. Failure by any licensed manufacturer or
importing distributor to keep a satisfactory bond in effect
with the Department or to furnish additional bond to the
Department, when required hereunder by the Department to do so,
shall be grounds for the revocation or suspension of such
manufacturer's or importing distributor's license by the
Commission. If a manufacturer or importing distributor fails to
pay any amount due under this Article, his bond with the
Department shall be deemed forfeited, and the Department may
institute a suit in its own name on such bond.
After notice and opportunity for a hearing the State
Commission may revoke or suspend the license of any
manufacturer or importing distributor who fails to comply with
the provisions of this Section. Notice of such hearing and the
time and place thereof shall be in writing and shall contain a
statement of the charges against the licensee. Such notice may
be given by United States registered or certified mail with
return receipt requested, addressed to the person concerned at
his last known address and shall be given not less than 7 days
prior to the date fixed for the hearing. An order revoking or
suspending a license under the provisions of this Section may
be reviewed in the manner provided in Section 7-10 of this Act.
No new license shall be granted to a person whose license has
been revoked for a violation of this Section or, in case of

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suspension, shall such suspension be terminated until he has
paid to the Department all taxes and penalties which he owes
the State under the provisions of this Act.
Every manufacturer or importing distributor who has, as
verified by the Department, continuously complied with the
conditions of the bond under this Act for a period of 2 years
shall be considered to be a prior continuous compliance
taxpayer. In determining the consecutive period of time for
qualification as a prior continuous compliance taxpayer, any
consecutive period of time of qualifying compliance
immediately prior to the effective date of this amendatory Act
of 1987 shall be credited to any manufacturer or importing
distributor.
A manufacturer or importing distributor that is a prior
continuous compliance taxpayer under this Section and becomes a
successor as the result of an acquisition, merger, or
consolidation of a manufacturer or importing distributor shall
be deemed to be a prior continuous compliance taxpayer with
respect to the acquired, merged, or consolidated entity.
Every prior continuous compliance taxpayer shall be exempt
from the bond requirements of this Act until the Department has
determined the taxpayer to be delinquent in the filing of any
return or deficient in the payment of any tax under this Act.
Any taxpayer who fails to pay an admitted or established
liability under this Act may also be required to post bond or
other acceptable security with the Department guaranteeing the

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payment of such admitted or established liability.
The Department shall discharge any surety and shall release
and return any bond or security deposit assigned, pledged or
otherwise provided to it by a taxpayer under this Section
within 30 days after: (1) such taxpayer becomes a prior
continuous compliance taxpayer; or (2) such taxpayer has ceased
to collect receipts on which he is required to remit tax to the
Department, has filed a final tax return, and has paid to the
Department an amount sufficient to discharge his remaining tax
liability as determined by the Department under this Act.
(Source: P.A. 95-769, eff. 7-29-08.)
ARTICLE 40. FILM PRODUCTION SERVICES TAX CREDIT ACT
Section 40-5. The Film Production Services Tax Credit Act
of 2008 is amended by changing Section 40 as follows:
(35 ILCS 16/40)
Sec. 40. Amount and duration of the credit. The amount of
the credit awarded under this Act is based on the amount of the
Illinois labor expenditure and Illinois production spending
approved by the Department for the production as set forth
under Section 10. The duration of the credit may not exceed one
taxable year. Beginning on July 1, 2017, the maximum aggregate
amount of credits that may be awarded under this Act for all
taxpayers in any State fiscal year may not exceed $20,000,000.

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(Source: P.A. 95-720, eff. 5-27-08.)
ARTICLE 45. HOTEL OPERATORS' OCCUPATION TAX ACT
Section 45-5. The Hotel Operators' Occupation Tax Act is
amended by changing Section 2 as follows:
(35 ILCS 145/2) (from Ch. 120, par. 481b.32)
Sec. 2. As used in this Act, unless the context otherwise
requires:
(1) "Hotel" means any building or buildings in which
the public may, for a consideration, obtain living
quarters, sleeping or housekeeping accommodations. The
term includes inns, motels, tourist homes or courts,
lodging houses, rooming houses and apartment houses.
(2) "Operator" means any person operating a hotel,
including, but not limited to, an online travel company
that sells hotel rooms to the general public.
(3) "Occupancy" means the use or possession, or the
right to the use or possession, of any room or rooms in a
hotel for any purpose, or the right to the use or
possession of the furnishings or to the services and
accommodations accompanying the use and possession of the
room or rooms.
"Online travel company" means a retailer that
purchases hotel rooms in the State at a wholesale price and

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resells those rooms to the general public via an Internet
website.
(4) "Room" or "rooms" means any living quarters,
sleeping or housekeeping accommodations.
(5) "Permanent resident" means any person who occupied
or has the right to occupy any room or rooms, regardless of
whether or not it is the same room or rooms, in a hotel for
at least 30 consecutive days.
(6) "Rent" or "rental" means the consideration
received for occupancy, valued in money, whether received
in money or otherwise, including all receipts, cash,
credits and property or services of any kind or nature.
(7) "Department" means the Department of Revenue.
(8) "Person" means any natural individual, firm,
partnership, association, joint stock company, joint
adventure, public or private corporation, limited
liability company, or a receiver, executor, trustee,
guardian or other representative appointed by order of any
court.
(Source: P.A. 87-951; 88-480.)
ARTICLE 50. ESTATE TAX
Section 50-5. The Illinois Estate and Generation-Skipping
Transfer Tax Act is amended by changing Section 2 as follows:

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(35 ILCS 405/2) (from Ch. 120, par. 405A-2)
Sec. 2. Definitions.
"Federal estate tax" means the tax due to the United States
with respect to a taxable transfer under Chapter 11 of the
Internal Revenue Code.
"Federal generation-skipping transfer tax" means the tax
due to the United States with respect to a taxable transfer
under Chapter 13 of the Internal Revenue Code.
"Federal return" means the federal estate tax return with
respect to the federal estate tax and means the federal
generation-skipping transfer tax return with respect to the
federal generation-skipping transfer tax.
"Federal transfer tax" means the federal estate tax or the
federal generation-skipping transfer tax.
"Illinois estate tax" means the tax due to this State with
respect to a taxable transfer.
"Illinois generation-skipping transfer tax" means the tax
due to this State with respect to a taxable transfer that gives
rise to a federal generation-skipping transfer tax.
"Illinois transfer tax" means the Illinois estate tax or
the Illinois generation-skipping transfer tax.
"Internal Revenue Code" means, unless otherwise provided,
the Internal Revenue Code of 1986, as amended from time to
time.
"Non-resident trust" means a trust that is not a resident
of this State for purposes of the Illinois Income Tax Act, as

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amended from time to time.
"Person" means and includes any individual, trust, estate,
partnership, association, company or corporation.
"Qualified heir" means a qualified heir as defined in
Section 2032A(e)(1) of the Internal Revenue Code.
"Resident trust" means a trust that is a resident of this
State for purposes of the Illinois Income Tax Act, as amended
from time to time.
"State" means any state, territory or possession of the
United States and the District of Columbia.
"State tax credit" means:
(a) For persons dying on or after January 1, 2003 and
through December 31, 2005, an amount equal to the full credit
calculable under Section 2011 or Section 2604 of the Internal
Revenue Code as the credit would have been computed and allowed
under the Internal Revenue Code as in effect on December 31,
2001, without the reduction in the State Death Tax Credit as
provided in Section 2011(b)(2) or the termination of the State
Death Tax Credit as provided in Section 2011(f) as enacted by
the Economic Growth and Tax Relief Reconciliation Act of 2001,
but recognizing the increased applicable exclusion amount
through December 31, 2005.
(b) For persons dying after December 31, 2005 and on or
before December 31, 2009, and for persons dying after December
31, 2010, an amount equal to the full credit calculable under
Section 2011 or 2604 of the Internal Revenue Code as the credit

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would have been computed and allowed under the Internal Revenue
Code as in effect on December 31, 2001, without the reduction
in the State Death Tax Credit as provided in Section 2011(b)(2)
or the termination of the State Death Tax Credit as provided in
Section 2011(f) as enacted by the Economic Growth and Tax
Relief Reconciliation Act of 2001, but recognizing the
exclusion amount of only (i) $2,000,000 for persons dying prior
to January 1, 2012 or on and after January 1, 2017, (ii)
$3,500,000 for persons dying on or after January 1, 2012 and
prior to January 1, 2013, and (iii) $4,000,000 for persons
dying on or after January 1, 2013 and prior to January 1, 2017,
and with reduction to the adjusted taxable estate for any
qualified terminable interest property election as defined in
subsection (b-1) of this Section.
(b-1) The person required to file the Illinois return may
elect on a timely filed Illinois return a marital deduction for
qualified terminable interest property under Section
2056(b)(7) of the Internal Revenue Code for purposes of the
Illinois estate tax that is separate and independent of any
qualified terminable interest property election for federal
estate tax purposes. For purposes of the Illinois estate tax,
the inclusion of property in the gross estate of a surviving
spouse is the same as under Section 2044 of the Internal
Revenue Code.
In the case of any trust for which a State or federal
qualified terminable interest property election is made, the

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trustee may not retain non-income producing assets for more
than a reasonable amount of time without the consent of the
surviving spouse.
"Taxable transfer" means an event that gives rise to a
state tax credit, including any credit as a result of the
imposition of an additional tax under Section 2032A(c) of the
Internal Revenue Code.
"Transferee" means a transferee within the meaning of
Section 2603(a)(1) and Section 6901(h) of the Internal Revenue
Code.
"Transferred property" means:
(1) With respect to a taxable transfer occurring at the
death of an individual, the deceased individual's gross
estate as defined in Section 2031 of the Internal Revenue
Code.
(2) With respect to a taxable transfer occurring as a
result of a taxable termination as defined in Section
2612(a) of the Internal Revenue Code, the taxable amount
determined under Section 2622(a) of the Internal Revenue
Code.
(3) With respect to a taxable transfer occurring as a
result of a taxable distribution as defined in Section
2612(b) of the Internal Revenue Code, the taxable amount
determined under Section 2621(a) of the Internal Revenue
Code.
(4) With respect to an event which causes the

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imposition of an additional estate tax under Section
2032A(c) of the Internal Revenue Code, the qualified real
property that was disposed of or which ceased to be used
for the qualified use, within the meaning of Section
2032A(c)(1) of the Internal Revenue Code.
"Trust" includes a trust as defined in Section 2652(b)(1)
of the Internal Revenue Code.
(Source: P.A. 96-789, eff. 9-8-09; 96-1496, eff. 1-13-11;
97-636, eff. 6-1-12.)
ARTICLE 99. EFFECTIVE DATE
Section 99-99. Effective date. This Act takes effect upon
becoming law.".