Bill Text: IL HB3111 | 2023-2024 | 103rd General Assembly | Introduced

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Bill Title: Amends the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, and the Retailers' Occupation Tax Act. Provides that motor carriers that sell items of tangible personal property to purchasers for use or consumption in addition to rendering service as a motor carrier are engaged in a profession or service occupation as a motor carrier and are not engaged in the business of selling tangible personal property to purchasers for use or consumption within the meaning of the Acts. Effective immediately.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced) 2024-04-05 - Rule 19(a) / Re-referred to Rules Committee [HB3111 Detail]

Download: Illinois-2023-HB3111-Introduced.html

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103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB3111 Introduced , by Rep. Norine K. Hammond SYNOPSIS AS INTRODUCED:
35 ILCS 105/2 from Ch. 120, par. 439.2
35 ILCS 110/2 from Ch. 120, par. 439.32
35 ILCS 115/2 from Ch. 120, par. 439.102
35 ILCS 120/1 from Ch. 120, par. 440
35 ILCS 120/2-55 from Ch. 120, par. 441-55
Amends the Use Tax Act, the Service Use Tax Act, the Service Occupation Tax Act, and the Retailers' Occupation Tax Act. Provides that motor carriers that sell items of tangible personal property to purchasers for use or consumption in addition to rendering service as a motor carrier are engaged in a profession or service occupation as a motor carrier and are not engaged in the business of selling tangible personal property to purchasers for use or consumption within the meaning of this Act. Effective immediately.
LRB103 29603 HLH 55998 b
A BILL FOR
HB3111 LRB103 29603 HLH 55998 b
AN ACT concerning revenue.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Use Tax Act is amended by changing Section 2
as follows:
(35 ILCS 105/2) (from Ch. 120, par. 439.2)
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, except that it does not include
the sale of such property in any form as tangible personal
property in the regular course of business to the extent that
such property is not first subjected to a use for which it was
purchased, and does not include the use of such property by its
owner for demonstration purposes: Provided that the property
purchased is deemed to be purchased for the purpose of resale,
despite first being used, to the extent to which it is resold
as an ingredient of an intentionally produced product or
by-product of manufacturing. "Use" does not mean the
demonstration use or interim use of tangible personal property
by a retailer before he sells that tangible personal property.
For watercraft or aircraft, if the period of demonstration use
or interim use by the retailer exceeds 18 months, the retailer

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shall pay on the retailers' original cost price the tax
imposed by this Act, and no credit for that tax is permitted if
the watercraft or aircraft is subsequently sold by the
retailer. "Use" does not mean the physical incorporation of
tangible personal property, to the extent not first subjected
to a use for which it was purchased, 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: Provided that the property purchased is
deemed to be purchased for the purpose of resale, despite
first being used, to the extent to which it is resold as an
ingredient of an intentionally produced product or by-product
of manufacturing.
"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.
"Purchase at retail" means the acquisition of the
ownership of or title to tangible personal property through a
sale at retail.
"Purchaser" means anyone who, through a sale at retail,
acquires the ownership of tangible personal property for a
valuable consideration.

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"Sale at retail" means any transfer of the ownership of or
title to tangible personal property to a purchaser, for the
purpose of use, and not for the purpose of resale in any form
as tangible personal property to the extent not first
subjected to a use for which it was purchased, for a valuable
consideration: Provided that the property purchased is deemed
to be purchased for the purpose of resale, despite first being
used, to the extent to which it is resold as an ingredient of
an intentionally produced product or by-product of
manufacturing. For this purpose, slag produced as an incident
to manufacturing pig iron or steel and sold is considered to be
an intentionally produced by-product of manufacturing. "Sale
at retail" includes any such transfer made for resale unless
made in compliance with Section 2c of the Retailers'
Occupation Tax Act, as incorporated by reference into Section
12 of this Act. Transactions whereby the possession of the
property is transferred but the seller retains the title as
security for payment of the selling price are sales.
"Sale at retail" shall also be construed to include any
Illinois florist's sales transaction in which the purchase
order is received in Illinois by a florist and the sale is for
use or consumption, but the Illinois florist has a florist in
another state deliver the property to the purchaser or the
purchaser's donee in such other state.
Nonreusable tangible personal property that is used by
persons engaged in the business of operating a restaurant,

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cafeteria, or drive-in is a sale for resale when it is
transferred to customers in the ordinary course of business as
part of the sale of food or beverages and is used to deliver,
package, or consume food or beverages, regardless of where
consumption of the food or beverages occurs. Examples of those
items include, but are not limited to nonreusable, paper and
plastic cups, plates, baskets, boxes, sleeves, buckets or
other containers, utensils, straws, placemats, napkins, doggie
bags, and wrapping or packaging materials that are transferred
to customers as part of the sale of food or beverages in the
ordinary course of business.
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 tangible personal property.
"Selling price" means the consideration for a sale valued
in money whether received in money or otherwise, including
cash, credits, property other than as hereinafter provided,
and services, but, prior to January 1, 2020 and beginning
again on January 1, 2022, not including the value of or credit
given for traded-in tangible personal property where the item
that is traded-in is of like kind and character as that which
is being sold; beginning January 1, 2020 and until January 1,
2022, "selling price" includes the portion of the value of or
credit given for traded-in motor vehicles of the First
Division as defined in Section 1-146 of the Illinois Vehicle

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Code of like kind and character as that which is being sold
that exceeds $10,000. "Selling price" shall be determined
without any deduction on account of the 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 tax liability under the
Retailers' Occupation Tax Act, or on account of the seller's
duty to collect, from the purchaser, the tax that is imposed by
this Act, or, except as otherwise provided with respect to any
cigarette tax imposed by a home rule unit, on account of the
seller's tax liability under any local occupation tax
administered by the Department, or, except as otherwise
provided with respect to any cigarette tax imposed by a home
rule unit on account of the seller's duty to collect, from the
purchasers, the tax that is imposed under any local use tax
administered by the Department. Effective December 1, 1985,
"selling price" shall include charges that are added to prices
by sellers on account of the seller's tax liability under the
Cigarette Tax Act, on account of the seller's duty to collect,
from the purchaser, the tax imposed under the Cigarette Use
Tax Act, and on account of the seller's duty to collect, from
the purchaser, any cigarette tax imposed by a home rule unit.
Notwithstanding any law to the contrary, for any motor
vehicle, as defined in Section 1-146 of the Vehicle Code, that

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is sold on or after January 1, 2015 for the purpose of leasing
the vehicle for a defined period that is longer than one year
and (1) is a motor vehicle of the second division that: (A) is
a self-contained motor vehicle designed or permanently
converted to provide living quarters for recreational,
camping, or travel use, with direct walk through access to the
living quarters from the driver's seat; (B) is of the van
configuration designed for the transportation of not less than
7 nor more than 16 passengers; or (C) has a gross vehicle
weight rating of 8,000 pounds or less or (2) is a motor vehicle
of the first division, "selling price" or "amount of sale"
means the consideration received by the lessor pursuant to the
lease contract, including amounts due at lease signing and all
monthly or other regular payments charged over the term of the
lease. Also included in the selling price is any amount
received by the lessor from the lessee for the leased vehicle
that is not calculated at the time the lease is executed,
including, but not limited to, excess mileage charges and
charges for excess wear and tear. For sales that occur in
Illinois, with respect to any amount received by the lessor
from the lessee for the leased vehicle that is not calculated
at the time the lease is executed, the lessor who purchased the
motor vehicle does not incur the tax imposed by the Use Tax Act
on those amounts, and the retailer who makes the retail sale of
the motor vehicle to the lessor is not required to collect the
tax imposed by this Act or to pay the tax imposed by the

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Retailers' Occupation Tax Act on those amounts. However, the
lessor who purchased the motor vehicle assumes the liability
for reporting and paying the tax on those amounts directly to
the Department in the same form (Illinois Retailers'
Occupation Tax, and local retailers' occupation taxes, if
applicable) in which the retailer would have reported and paid
such tax if the retailer had accounted for the tax to the
Department. For amounts received by the lessor from the lessee
that are not calculated at the time the lease is executed, the
lessor must file the return and pay the tax to the Department
by the due date otherwise required by this Act for returns
other than transaction returns. If the retailer is entitled
under this Act to a discount for collecting and remitting the
tax imposed under this Act to the Department with respect to
the sale of the motor vehicle to the lessor, then the right to
the discount provided in this Act shall be transferred to the
lessor with respect to the tax paid by the lessor for any
amount received by the lessor from the lessee for the leased
vehicle that is not calculated at the time the lease is
executed; provided that the discount is only allowed if the
return is timely filed and for amounts timely paid. The
"selling price" of a motor vehicle that is sold on or after
January 1, 2015 for the purpose of leasing for a defined period
of longer than one year shall not be reduced by the value of or
credit given for traded-in tangible personal property owned by
the lessor, nor shall it be reduced by the value of or credit

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given for traded-in tangible personal property owned by the
lessee, regardless of whether the trade-in value thereof is
assigned by the lessee to the lessor. In the case of a motor
vehicle that is sold for the purpose of leasing for a defined
period of longer than one year, the sale occurs at the time of
the delivery of the vehicle, regardless of the due date of any
lease payments. A lessor who incurs a Retailers' Occupation
Tax liability on the sale of a motor vehicle coming off lease
may not take a credit against that liability for the Use Tax
the lessor paid upon the purchase of the motor vehicle (or for
any tax the lessor paid with respect to any amount received by
the lessor from the lessee for the leased vehicle that was not
calculated at the time the lease was executed) if the selling
price of the motor vehicle at the time of purchase was
calculated using the definition of "selling price" as defined
in this paragraph. Notwithstanding any other provision of this
Act to the contrary, lessors shall file all returns and make
all payments required under this paragraph to the Department
by electronic means in the manner and form as required by the
Department. This paragraph does not apply to leases of motor
vehicles for which, at the time the lease is entered into, the
term of the lease is not a defined period, including leases
with a defined initial period with the option to continue the
lease on a month-to-month or other basis beyond the initial
defined period.
The phrase "like kind and character" shall be liberally

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construed (including but not limited to any form of motor
vehicle for any form of motor vehicle, or any kind of farm or
agricultural implement for any other kind of farm or
agricultural implement), while not including a kind of item
which, if sold at retail by that retailer, would be exempt from
retailers' occupation tax and use tax as an isolated or
occasional sale.
"Department" means the Department of Revenue.
"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.
"Retailer" means and includes every person engaged in the
business of making sales at retail as defined in this Section.
A person who holds himself or herself out as being engaged
(or who habitually engages) in selling tangible personal
property at retail is a retailer hereunder with respect to
such sales (and not primarily in a service occupation)
notwithstanding the fact that such person designs and produces
such tangible personal property on special order for the
purchaser and in such a way as to render the property of value
only to such purchaser, if such tangible personal property so
produced on special order serves substantially the same
function as stock or standard items of tangible personal
property that are sold at retail.

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A person whose activities are organized and conducted
primarily as a not-for-profit service enterprise, and who
engages in selling tangible personal property at retail
(whether to the public or merely to members and their guests)
is a retailer with respect to such transactions, excepting
only a person organized and operated exclusively for
charitable, religious or educational purposes either (1), to
the extent of sales by such person to its members, students,
patients or inmates of tangible personal property to be used
primarily for the purposes of such person, or (2), to the
extent of sales by such person of tangible personal property
which is not sold or offered for sale by persons organized for
profit. The selling of school books and school supplies by
schools at retail to students is not "primarily for the
purposes of" the school which does such selling. This
paragraph does not apply to nor subject to taxation occasional
dinners, social or similar activities of a person organized
and operated exclusively for charitable, religious or
educational purposes, whether or not such activities are open
to the public.
A person who is the recipient of a grant or contract under
Title VII of the Older Americans Act of 1965 (P.L. 92-258) and
serves meals to participants in the federal Nutrition Program
for the Elderly in return for contributions established in
amount by the individual participant pursuant to a schedule of
suggested fees as provided for in the federal Act is not a

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retailer under this Act with respect to such transactions.
Persons who engage in the business of transferring
tangible personal property upon the redemption of trading
stamps are retailers hereunder when engaged in such business.
The isolated or occasional sale of tangible personal
property at retail by a person who does not hold himself out as
being engaged (or who does not habitually engage) in selling
such tangible personal property at retail or a sale through a
bulk vending machine does not make such person a retailer
hereunder. However, any person who is engaged in a business
which is not subject to the tax imposed by the Retailers'
Occupation Tax Act because of involving the sale of or a
contract to sell real estate or a construction contract to
improve real estate, but who, in the course of conducting such
business, transfers tangible personal property to users or
consumers in the finished form in which it was purchased, and
which does not become real estate, under any provision of a
construction contract or real estate sale or real estate sales
agreement entered into with some other person arising out of
or because of such nontaxable business, is a retailer to the
extent of the value of the tangible personal property so
transferred. If, in such transaction, a separate charge is
made for the tangible personal property so transferred, the
value of such property, for the purposes of this Act, is the
amount so separately charged, but not less than the cost of
such property to the transferor; if no separate charge is

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made, the value of such property, for the purposes of this Act,
is the cost to the transferor of such tangible personal
property.
"Retailer maintaining a place of business in this State",
or any like term, means and includes any of the following
retailers:
(1) A retailer 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
retailer or its subsidiary, irrespective of whether such
place of business or agent or other representative is
located here permanently or temporarily, or whether such
retailer or subsidiary is licensed to do business in this
State. However, the ownership of property that is located
at the premises of a printer with which the retailer has
contracted for printing and that consists of the final
printed product, property that becomes a part of the final
printed product, or copy from which the printed product is
produced shall not result in the retailer being deemed to
have or maintain an office, distribution house, sales
house, warehouse, or other place of business within this
State.
(1.1) A retailer having a contract with a person
located in this State under which the person, for a

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commission or other consideration based upon the sale of
tangible personal property by the retailer, directly or
indirectly refers potential customers to the retailer by
providing to the potential customers a promotional code or
other mechanism that allows the retailer to track
purchases referred by such persons. Examples of mechanisms
that allow the retailer 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 tangible personal property by
the retailer to customers who are referred to the retailer
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
retailer 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, a retailer having a

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contract with a person located in this State under which:
(A) the retailer sells the same or substantially
similar line of products 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 retailer provides a commission or other
consideration to the person located in this State
based upon the sale of tangible personal property by
the retailer.
The provisions of this paragraph (1.2) shall apply
only if the cumulative gross receipts from sales of
tangible personal property by the retailer 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) (Blank).
(3) (Blank).
(4) (Blank).
(5) (Blank).
(6) (Blank).
(7) (Blank).
(8) (Blank).
(9) Beginning October 1, 2018, a retailer making sales
of tangible personal property to purchasers in Illinois
from outside of Illinois if:

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(A) the cumulative gross receipts from sales of
tangible personal property to purchasers in Illinois
are $100,000 or more; or
(B) the retailer enters into 200 or more separate
transactions for the sale of tangible personal
property to purchasers in Illinois.
The retailer shall determine on a quarterly basis,
ending on the last day of March, June, September, and
December, whether he or she meets the criteria of either
subparagraph (A) or (B) of this paragraph (9) for the
preceding 12-month period. If the retailer meets the
threshold of either subparagraph (A) or (B) for a 12-month
period, he or she is considered a retailer maintaining a
place of business in this State and is required to collect
and remit the tax imposed under this Act and file returns
for one year. At the end of that one-year period, the
retailer shall determine whether he or she met the
threshold of either subparagraph (A) or (B) during the
preceding 12-month period. If the retailer met the
criteria in either subparagraph (A) or (B) for the
preceding 12-month period, he or she is considered a
retailer maintaining a place of business in this State and
is required to collect and remit the tax imposed under
this Act and file returns for the subsequent year. If at
the end of a one-year period a retailer that was required
to collect and remit the tax imposed under this Act

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determines that he or she did not meet the threshold in
either subparagraph (A) or (B) during the preceding
12-month period, the retailer shall subsequently determine
on a quarterly basis, ending on the last day of March,
June, September, and December, whether he or she meets the
threshold of either subparagraph (A) or (B) for the
preceding 12-month period.
Beginning January 1, 2020, neither the gross receipts
from nor the number of separate transactions for sales of
tangible personal property to purchasers in Illinois that
a retailer makes through a marketplace facilitator and for
which the retailer has received a certification from the
marketplace facilitator pursuant to Section 2d of this Act
shall be included for purposes of determining whether he
or she has met the thresholds of this paragraph (9).
(10) Beginning January 1, 2020, a marketplace
facilitator that meets a threshold set forth in subsection
(b) of Section 2d of this Act.
Motor carriers, as defined in Section 18c-1104 of the
Vehicle Code, that sell items of tangible personal property to
purchasers for use or consumption in addition to rendering
service as a motor carrier are engaged in a profession or
service occupation as a motor carrier and are not engaged in
the business of selling tangible personal property to
purchasers for use or consumption within the meaning of this
Act. Those motor carriers are not required to remit retailers'

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occupation taxes measured by their receipts from engaging in
such profession or service occupation, including receipts from
both services and tangible personal property.
"Bulk vending machine" means a vending machine, containing
unsorted confections, nuts, toys, or other items designed
primarily to be used or played with by children which, when a
coin or coins of a denomination not larger than $0.50 are
inserted, are dispensed in equal portions, at random and
without selection by the customer.
(Source: P.A. 101-9, eff. 6-5-19; 101-31, eff. 1-1-20;
101-604, eff. 1-1-20; 102-353, eff. 1-1-22.)
Section 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. In this Act:
"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

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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.
"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

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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
for or by any corporation, society, association,
foundation or institution organized and operated
exclusively for charitable, religious or educational

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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) (blank).
(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.
(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,

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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) 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'

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Occupation Tax. The exemption provided by this paragraph
(5) includes production related tangible personal
property, as defined in Section 3-50 of the Use Tax Act,
purchased on or after July 1, 2019. 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 Public Act 98-583
are declaratory of existing law as to the meaning and
scope of this exemption. The exemption under this
paragraph (5) is exempt from the provisions of Section
3-75.
(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
standard uniform bill of lading showing the person who
repaired, reconditioned or remodeled the property to a

HB3111 - 23 - LRB103 29603 HLH 55998 b
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
year sales of service in which the aggregate annual cost

HB3111 - 24 - LRB103 29603 HLH 55998 b
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. On and after July 1, 2017, exemption (5) also
includes graphic arts machinery and equipment, as defined in
paragraph (5) of Section 3-5. The machinery and equipment

HB3111 - 25 - LRB103 29603 HLH 55998 b
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 Public Act 98-583 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),

HB3111 - 26 - LRB103 29603 HLH 55998 b
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 change upon a product being
manufactured or assembled for wholesale or retail sale or
lease. The purchaser of such machinery and equipment who has

HB3111 - 27 - LRB103 29603 HLH 55998 b
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 prepare a certificate of exemption
stating facts establishing the exemption, 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

HB3111 - 28 - LRB103 29603 HLH 55998 b
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.
Motor carriers, as defined in Section 18c-1104 of the
Vehicle Code, that sell items of tangible personal property to
purchasers for use or consumption in addition to rendering
service as a motor carrier are engaged in a profession or
service occupation as a motor carrier and are not engaged in
the business of selling tangible personal property to
purchasers for use or consumption within the meaning of this
Act. Those motor carriers are not required to remit retailers'
occupation taxes measured by their receipts from engaging in
such profession or service occupation, including receipts from
both services and tangible personal property.
"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

HB3111 - 29 - LRB103 29603 HLH 55998 b
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
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

HB3111 - 30 - LRB103 29603 HLH 55998 b
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
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

HB3111 - 31 - LRB103 29603 HLH 55998 b
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 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;

HB3111 - 32 - LRB103 29603 HLH 55998 b
(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; or
(9) beginning October 1, 2018, making sales of service
to purchasers in Illinois from outside of Illinois if:
(A) the cumulative gross receipts from sales of
service to purchasers in Illinois are $100,000 or
more; or
(B) the serviceman enters into 200 or more
separate transactions for sales of service to
purchasers in Illinois.
The serviceman shall determine on a quarterly basis,
ending on the last day of March, June, September, and
December, whether he or she meets the criteria of either
subparagraph (A) or (B) of this paragraph (9) for the
preceding 12-month period. If the serviceman meets the
criteria of either subparagraph (A) or (B) for a 12-month
period, he or she is considered a serviceman maintaining a
place of business in this State and is required to collect
and remit the tax imposed under this Act and file returns
for one year. At the end of that one-year period, the
serviceman shall determine whether the serviceman met the
criteria of either subparagraph (A) or (B) during the
preceding 12-month period. If the serviceman met the
criteria in either subparagraph (A) or (B) for the

HB3111 - 33 - LRB103 29603 HLH 55998 b
preceding 12-month period, he or she is considered a
serviceman maintaining a place of business in this State
and is required to collect and remit the tax imposed under
this Act and file returns for the subsequent year. If at
the end of a one-year period a serviceman that was
required to collect and remit the tax imposed under this
Act determines that he or she did not meet the criteria in
either subparagraph (A) or (B) during the preceding
12-month period, the serviceman subsequently shall
determine on a quarterly basis, ending on the last day of
March, June, September, and December, whether he or she
meets the criteria of either subparagraph (A) or (B) for
the preceding 12-month period.
Beginning January 1, 2020, neither the gross receipts
from nor the number of separate transactions for sales of
service to purchasers in Illinois that a serviceman makes
through a marketplace facilitator and for which the
serviceman has received a certification from the
marketplace facilitator pursuant to Section 2d of this Act
shall be included for purposes of determining whether he
or she has met the thresholds of this paragraph (9).
(10) Beginning January 1, 2020, a marketplace
facilitator, as defined in Section 2d of this Act.
(Source: P.A. 100-22, eff. 7-6-17; 100-321, eff. 8-24-17;
100-587, eff. 6-4-18; 100-863, eff. 8-14-18; 101-9, Article
10, Section 10-15, eff. 6-5-19; 101-9, Article 25, Section

HB3111 - 34 - LRB103 29603 HLH 55998 b
25-10, eff. 6-5-19; 101-604, eff. 12-13-19.)
Section 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. In this Act:
"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

HB3111 - 35 - LRB103 29603 HLH 55998 b
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) (Blank).
(d-1) A sale or transfer of tangible personal property as
an incident to the rendering of service for owners, lessors or

HB3111 - 36 - LRB103 29603 HLH 55998 b
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

HB3111 - 37 - LRB103 29603 HLH 55998 b
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

HB3111 - 38 - LRB103 29603 HLH 55998 b
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 exemption provided
by this paragraph (e) includes production related tangible
personal property, as defined in Section 3-50 of the Use Tax
Act, purchased on or after July 1, 2019. 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

HB3111 - 39 - LRB103 29603 HLH 55998 b
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. The
exemption under this subsection (e) is exempt from the
provisions of Section 3-75.
(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

HB3111 - 40 - LRB103 29603 HLH 55998 b
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. On and after July 1, 2017, exemption (e) also
includes graphic arts machinery and equipment, as defined in
paragraph (5) of Section 3-5. 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 Public Act 98-583 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

HB3111 - 41 - LRB103 29603 HLH 55998 b
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 machines or major components of
such machines contributing to a manufacturing or assembling

HB3111 - 42 - LRB103 29603 HLH 55998 b
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 stating facts establishing the exemption, 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

HB3111 - 43 - LRB103 29603 HLH 55998 b
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.
Motor carriers, as defined in Section 18c-1104 of the
Vehicle Code, that sell items of tangible personal property to
purchasers for use or consumption in addition to rendering
service as a motor carrier are engaged in a profession or
service occupation as a motor carrier and are not engaged in

HB3111 - 44 - LRB103 29603 HLH 55998 b
the business of selling tangible personal property to
purchasers for use or consumption within the meaning of this
Act. Those motor carriers are not required to remit retailers'
occupation taxes measured by their receipts from engaging in
such profession or service occupation, including receipts from
both services and tangible personal property.
"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. 100-22, eff. 7-6-17; 100-321, eff. 8-24-17;
100-863, eff. 8-14-18; 101-9, eff. 6-5-19; 101-604, eff.
12-13-19.)
Section 20. The Retailers' Occupation Tax Act is amended
by changing Sections 1 and 2-55 as follows:
(35 ILCS 120/1) (from Ch. 120, par. 440)
Sec. 1. Definitions. "Sale at retail" means any transfer
of the ownership of or title to tangible personal property to a
purchaser, for the purpose of use or consumption, and not for
the purpose of resale in any form as tangible personal
property to the extent not first subjected to a use for which
it was purchased, for a valuable consideration: Provided that
the property purchased is deemed to be purchased for the

HB3111 - 45 - LRB103 29603 HLH 55998 b
purpose of resale, despite first being used, to the extent to
which it is resold as an ingredient of an intentionally
produced product or byproduct of manufacturing. For this
purpose, slag produced as an incident to manufacturing pig
iron or steel and sold is considered to be an intentionally
produced byproduct of manufacturing. Transactions whereby the
possession of the property is transferred but the seller
retains the title as security for payment of the selling price
shall be deemed to be sales.
"Sale at retail" shall be construed to include any
transfer of the ownership of or title to tangible personal
property to a purchaser, for use or consumption by any other
person to whom such purchaser may transfer the tangible
personal property without a valuable consideration, and to
include any transfer, whether made for or without a valuable
consideration, for resale in any form as tangible personal
property unless made in compliance with Section 2c of this
Act.
Sales of tangible personal property, which property, to
the extent not first subjected to a use for which it was
purchased, as an ingredient or constituent, goes into and
forms a part of tangible personal property subsequently the
subject of a "Sale at retail", are not sales at retail as
defined in this Act: Provided that the property purchased is
deemed to be purchased for the purpose of resale, despite
first being used, to the extent to which it is resold as an

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ingredient of an intentionally produced product or byproduct
of manufacturing.
"Sale at retail" shall be construed to include any
Illinois florist's sales transaction in which the purchase
order is received in Illinois by a florist and the sale is for
use or consumption, but the Illinois florist has a florist in
another state deliver the property to the purchaser or the
purchaser's donee in such other state.
Nonreusable tangible personal property that is used by
persons engaged in the business of operating a restaurant,
cafeteria, or drive-in is a sale for resale when it is
transferred to customers in the ordinary course of business as
part of the sale of food or beverages and is used to deliver,
package, or consume food or beverages, regardless of where
consumption of the food or beverages occurs. Examples of those
items include, but are not limited to nonreusable, paper and
plastic cups, plates, baskets, boxes, sleeves, buckets or
other containers, utensils, straws, placemats, napkins, doggie
bags, and wrapping or packaging materials that are transferred
to customers as part of the sale of food or beverages in the
ordinary course of business.
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 tangible personal property.
A person whose activities are organized and conducted

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primarily as a not-for-profit service enterprise, and who
engages in selling tangible personal property at retail
(whether to the public or merely to members and their guests)
is engaged in the business of selling tangible personal
property at retail with respect to such transactions,
excepting only a person organized and operated exclusively for
charitable, religious or educational purposes either (1), to
the extent of sales by such person to its members, students,
patients or inmates of tangible personal property to be used
primarily for the purposes of such person, or (2), to the
extent of sales by such person of tangible personal property
which is not sold or offered for sale by persons organized for
profit. The selling of school books and school supplies by
schools at retail to students is not "primarily for the
purposes of" the school which does such selling. The
provisions of this paragraph shall not apply to nor subject to
taxation occasional dinners, socials or similar activities of
a person organized and operated exclusively for charitable,
religious or educational purposes, whether or not such
activities are open to the public.
A person who is the recipient of a grant or contract under
Title VII of the Older Americans Act of 1965 (P.L. 92-258) and
serves meals to participants in the federal Nutrition Program
for the Elderly in return for contributions established in
amount by the individual participant pursuant to a schedule of
suggested fees as provided for in the federal Act is not

HB3111 - 48 - LRB103 29603 HLH 55998 b
engaged in the business of selling tangible personal property
at retail with respect to such transactions.
"Purchaser" means anyone who, through a sale at retail,
acquires the ownership of or title to tangible personal
property for a valuable consideration.
"Reseller of motor fuel" means any person engaged in the
business of selling or delivering or transferring title of
motor fuel to another person other than for use or
consumption. No person shall act as a reseller of motor fuel
within this State without first being registered as a reseller
pursuant to Section 2c or a retailer pursuant to Section 2a.
"Selling price" or the "amount of sale" means the
consideration for a sale valued in money whether received in
money or otherwise, including cash, credits, property, other
than as hereinafter provided, and services, but, prior to
January 1, 2020 and beginning again on January 1, 2022, not
including the value of or credit given for traded-in tangible
personal property where the item that is traded-in is of like
kind and character as that which is being sold; beginning
January 1, 2020 and until January 1, 2022, "selling price"
includes the portion of the value of or credit given for
traded-in motor vehicles of the First Division as defined in
Section 1-146 of the Illinois Vehicle Code of like kind and
character as that which is being sold that exceeds $10,000.
"Selling price" shall be determined without any deduction on
account of the cost of the property sold, the cost of materials

HB3111 - 49 - LRB103 29603 HLH 55998 b
used, labor or service cost or any other expense whatsoever,
but does not include charges that are added to prices by
sellers on account of the seller's tax liability under this
Act, or on account of the seller's duty to collect, from the
purchaser, the tax that is imposed by the Use Tax Act, or,
except as otherwise provided with respect to any cigarette tax
imposed by a home rule unit, on account of the seller's tax
liability under any local occupation tax administered by the
Department, or, except as otherwise provided with respect to
any cigarette tax imposed by a home rule unit on account of the
seller's duty to collect, from the purchasers, the tax that is
imposed under any local use tax administered by the
Department. Effective December 1, 1985, "selling price" shall
include charges that are added to prices by sellers on account
of the seller's tax liability under the Cigarette Tax Act, on
account of the sellers' duty to collect, from the purchaser,
the tax imposed under the Cigarette Use Tax Act, and on account
of the seller's duty to collect, from the purchaser, any
cigarette tax imposed by a home rule unit.
Notwithstanding any law to the contrary, for any motor
vehicle, as defined in Section 1-146 of the Vehicle Code, that
is sold on or after January 1, 2015 for the purpose of leasing
the vehicle for a defined period that is longer than one year
and (1) is a motor vehicle of the second division that: (A) is
a self-contained motor vehicle designed or permanently
converted to provide living quarters for recreational,

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camping, or travel use, with direct walk through access to the
living quarters from the driver's seat; (B) is of the van
configuration designed for the transportation of not less than
7 nor more than 16 passengers; or (C) has a gross vehicle
weight rating of 8,000 pounds or less or (2) is a motor vehicle
of the first division, "selling price" or "amount of sale"
means the consideration received by the lessor pursuant to the
lease contract, including amounts due at lease signing and all
monthly or other regular payments charged over the term of the
lease. Also included in the selling price is any amount
received by the lessor from the lessee for the leased vehicle
that is not calculated at the time the lease is executed,
including, but not limited to, excess mileage charges and
charges for excess wear and tear. For sales that occur in
Illinois, with respect to any amount received by the lessor
from the lessee for the leased vehicle that is not calculated
at the time the lease is executed, the lessor who purchased the
motor vehicle does not incur the tax imposed by the Use Tax Act
on those amounts, and the retailer who makes the retail sale of
the motor vehicle to the lessor is not required to collect the
tax imposed by the Use Tax Act or to pay the tax imposed by
this Act on those amounts. However, the lessor who purchased
the motor vehicle assumes the liability for reporting and
paying the tax on those amounts directly to the Department in
the same form (Illinois Retailers' Occupation Tax, and local
retailers' occupation taxes, if applicable) in which the

HB3111 - 51 - LRB103 29603 HLH 55998 b
retailer would have reported and paid such tax if the retailer
had accounted for the tax to the Department. For amounts
received by the lessor from the lessee that are not calculated
at the time the lease is executed, the lessor must file the
return and pay the tax to the Department by the due date
otherwise required by this Act for returns other than
transaction returns. If the retailer is entitled under this
Act to a discount for collecting and remitting the tax imposed
under this Act to the Department with respect to the sale of
the motor vehicle to the lessor, then the right to the discount
provided in this Act shall be transferred to the lessor with
respect to the tax paid by the lessor for any amount received
by the lessor from the lessee for the leased vehicle that is
not calculated at the time the lease is executed; provided
that the discount is only allowed if the return is timely filed
and for amounts timely paid. The "selling price" of a motor
vehicle that is sold on or after January 1, 2015 for the
purpose of leasing for a defined period of longer than one year
shall not be reduced by the value of or credit given for
traded-in tangible personal property owned by the lessor, nor
shall it be reduced by the value of or credit given for
traded-in tangible personal property owned by the lessee,
regardless of whether the trade-in value thereof is assigned
by the lessee to the lessor. In the case of a motor vehicle
that is sold for the purpose of leasing for a defined period of
longer than one year, the sale occurs at the time of the

HB3111 - 52 - LRB103 29603 HLH 55998 b
delivery of the vehicle, regardless of the due date of any
lease payments. A lessor who incurs a Retailers' Occupation
Tax liability on the sale of a motor vehicle coming off lease
may not take a credit against that liability for the Use Tax
the lessor paid upon the purchase of the motor vehicle (or for
any tax the lessor paid with respect to any amount received by
the lessor from the lessee for the leased vehicle that was not
calculated at the time the lease was executed) if the selling
price of the motor vehicle at the time of purchase was
calculated using the definition of "selling price" as defined
in this paragraph. Notwithstanding any other provision of this
Act to the contrary, lessors shall file all returns and make
all payments required under this paragraph to the Department
by electronic means in the manner and form as required by the
Department. This paragraph does not apply to leases of motor
vehicles for which, at the time the lease is entered into, the
term of the lease is not a defined period, including leases
with a defined initial period with the option to continue the
lease on a month-to-month or other basis beyond the initial
defined period.
The phrase "like kind and character" shall be liberally
construed (including but not limited to any form of motor
vehicle for any form of motor vehicle, or any kind of farm or
agricultural implement for any other kind of farm or
agricultural implement), while not including a kind of item
which, if sold at retail by that retailer, would be exempt from

HB3111 - 53 - LRB103 29603 HLH 55998 b
retailers' occupation tax and use tax as an isolated or
occasional sale.
"Gross receipts" from the sales of tangible personal
property at retail means the total selling price or the amount
of such sales, as hereinbefore defined. In the case of charge
and time sales, the amount thereof shall be included only as
and when payments are received by the seller. Receipts or
other consideration derived by a seller from the sale,
transfer or assignment of accounts receivable to a wholly
owned subsidiary will not be deemed payments prior to the time
the purchaser makes payment on such accounts.
"Department" means the Department of Revenue.
"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.
The isolated or occasional sale of tangible personal
property at retail by a person who does not hold himself out as
being engaged (or who does not habitually engage) in selling
such tangible personal property at retail, or a sale through a
bulk vending machine, does not constitute engaging in a
business of selling such tangible personal property at retail
within the meaning of this Act; provided that any person who is
engaged in a business which is not subject to the tax imposed
by this Act because of involving the sale of or a contract to

HB3111 - 54 - LRB103 29603 HLH 55998 b
sell real estate or a construction contract to improve real
estate or a construction contract to engineer, install, and
maintain an integrated system of products, but who, in the
course of conducting such business, transfers tangible
personal property to users or consumers in the finished form
in which it was purchased, and which does not become real
estate or was not engineered and installed, under any
provision of a construction contract or real estate sale or
real estate sales agreement entered into with some other
person arising out of or because of such nontaxable business,
is engaged in the business of selling tangible personal
property at retail to the extent of the value of the tangible
personal property so transferred. If, in such a transaction, a
separate charge is made for the tangible personal property so
transferred, the value of such property, for the purpose of
this Act, shall be the amount so separately charged, but not
less than the cost of such property to the transferor; if no
separate charge is made, the value of such property, for the
purposes of this Act, is the cost to the transferor of such
tangible personal property. Construction contracts for the
improvement of real estate consisting of engineering,
installation, and maintenance of voice, data, video, security,
and all telecommunication systems do not constitute engaging
in a business of selling tangible personal property at retail
within the meaning of this Act if they are sold at one
specified contract price.

HB3111 - 55 - LRB103 29603 HLH 55998 b
A person who holds himself or herself out as being engaged
(or who habitually engages) in selling tangible personal
property at retail is a person engaged in the business of
selling tangible personal property at retail hereunder with
respect to such sales (and not primarily in a service
occupation) notwithstanding the fact that such person designs
and produces such tangible personal property on special order
for the purchaser and in such a way as to render the property
of value only to such purchaser, if such tangible personal
property so produced on special order serves substantially the
same function as stock or standard items of tangible personal
property that are sold at retail.
Persons who engage in the business of transferring
tangible personal property upon the redemption of trading
stamps are engaged in the business of selling such property at
retail and shall be liable for and shall pay the tax imposed by
this Act on the basis of the retail value of the property
transferred upon redemption of such stamps.
Motor carriers, as defined in Section 18c-1104 of the
Vehicle Code, that sell items of tangible personal property to
purchasers for use or consumption in addition to rendering
service as a motor carrier are engaged in a profession or
service occupation as a motor carrier and are not engaged in
the business of selling tangible personal property to
purchasers for use or consumption within the meaning of this
Act. Those motor carriers are not required to remit retailers'

HB3111 - 56 - LRB103 29603 HLH 55998 b
occupation taxes measured by their receipts from engaging in
such profession or service occupation, including receipts from
both services and tangible personal property.
"Bulk vending machine" means a vending machine, containing
unsorted confections, nuts, toys, or other items designed
primarily to be used or played with by children which, when a
coin or coins of a denomination not larger than $0.50 are
inserted, are dispensed in equal portions, at random and
without selection by the customer.
"Remote retailer" means a retailer that does not maintain
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 retailer or its
subsidiary, irrespective of whether such place of business or
agent is located here permanently or temporarily or whether
such retailer or subsidiary is licensed to do business in this
State.
"Marketplace" means a physical or electronic place, forum,
platform, application, or other method by which a marketplace
seller sells or offers to sell items.
"Marketplace facilitator" means a person who, pursuant to
an agreement with an unrelated third-party marketplace seller,
directly or indirectly through one or more affiliates
facilitates a retail sale by an unrelated third party
marketplace seller by:

HB3111 - 57 - LRB103 29603 HLH 55998 b
(1) listing or advertising for sale by the marketplace
seller in a marketplace, tangible personal property that
is subject to tax under this Act; and
(2) either directly or indirectly, through agreements
or arrangements with third parties, collecting payment
from the customer and transmitting that payment to the
marketplace seller regardless of whether the marketplace
facilitator receives compensation or other consideration
in exchange for its services.
A person who provides advertising services, including
listing products for sale, is not considered a marketplace
facilitator, so long as the advertising service platform or
forum does not engage, directly or indirectly through one or
more affiliated persons, in the activities described in
paragraph (2) of this definition of "marketplace facilitator".
"Marketplace facilitator" does not include any person
licensed under the Auction License Act. This exemption does
not apply to any person who is an Internet auction listing
service, as defined by the Auction License Act.
"Marketplace seller" means a person that makes sales
through a marketplace operated by an unrelated third party
marketplace facilitator.
(Source: P.A. 101-31, eff. 6-28-19; 101-604, eff. 1-1-20;
102-353, eff. 1-1-22; 102-634, eff. 8-27-21; 102-813, eff.
5-13-22.)

HB3111 - 58 - LRB103 29603 HLH 55998 b
(35 ILCS 120/2-55) (from Ch. 120, par. 441-55)
Sec. 2-55. Serviceman transfer. Tangible personal property
purchased by a serviceman, as defined in Section 2 of the
Service Occupation Tax Act, is subject to the tax imposed by
this Act when purchased for transfer by the serviceman
incidental to completion of a maintenance agreement.
Motor carriers, as defined in Section 18c-1104 of the
Vehicle Code, that sell items of tangible personal property to
purchasers for use or consumption in addition to rendering
service as a motor carrier are engaged in a profession or
service occupation as a motor carrier and are not engaged in
the business of selling tangible personal property to
purchasers for use or consumption within the meaning of this
Act. Those motor carriers are not required to remit retailers'
occupation taxes measured by their receipts from engaging in
such profession or service occupation, including receipts from
both services and tangible personal property.
(Source: P.A. 91-51, eff. 6-30-99.)
Section 99. Effective date. This Act takes effect upon
becoming law.