Bill Text: IL SB2079 | 2011-2012 | 97th General Assembly | Introduced

---

Bill Title: Amends the Gas Revenue Tax Act, the Telecommunications Excise Tax Act, and the Electricity Excise Tax Act. Provides that businesses that are primarily engaged in manufacturing are exempt from taxation under the Acts. Provides that the Acts' automatic sunset provisions do not apply to the exemption.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Failed) 2013-01-08 - Session Sine Die [SB2079 Detail]

Download: Illinois-2011-SB2079-Introduced.html

---

97TH GENERAL ASSEMBLY State of Illinois 2011 and 2012 SB2079 Introduced 2/10/2011, by Sen. Kirk W. Dillard SYNOPSIS AS INTRODUCED:
35 ILCS 615/1 from Ch. 120, par. 467.16
35 ILCS 630/2 from Ch. 120, par. 2002
35 ILCS 640/2-4
Amends the Gas Revenue Tax Act, the Telecommunications Excise Tax Act, and the Electricity Excise Tax Act. Provides that businesses that are primarily engaged in manufacturing are exempt from taxation under the Acts. Provides that the Acts' automatic sunset provisions do not apply to the exemption.
LRB097 10318 HLH 50526 b
FISCAL NOTE ACT MAY APPLY
A BILL FOR
SB2079 LRB097 10318 HLH 50526 b
AN ACT concerning revenue.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Gas Revenue Tax Act is amended by changing
Section 1 as follows:
(35 ILCS 615/1) (from Ch. 120, par. 467.16)
Sec. 1. For the purposes of this Act: "Gross receipts"
means the consideration received for gas distributed,
supplied, furnished or sold to persons for use or consumption
and not for resale, and for all services (including the
transportation or storage of gas for an end-user) rendered in
connection therewith, and shall include cash, services and
property of every kind or nature, and shall be determined
without any deduction on account of the cost of the service,
product or commodity supplied, the cost of materials used,
labor or service costs, or any other expense whatsoever.
However, "gross receipts" shall not include receipts from:
(i) any minimum or other charge for gas or gas service
where the customer has taken no therms of gas;
(ii) any charge for a dishonored check;
(iii) any finance or credit charge, penalty or charge
for delayed payment, or discount for prompt payment;
(iv) any charge for reconnection of service or for

SB2079 - 2 - LRB097 10318 HLH 50526 b
replacement or relocation of facilities;
(v) any advance or contribution in aid of construction;
(vi) repair, inspection or servicing of equipment
located on customer premises;
(vii) leasing or rental of equipment, the leasing or
rental of which is not necessary to distributing,
furnishing, supplying, selling, transporting or storing
gas;
(viii) any sale to a customer if the taxpayer is
prohibited by federal or State constitution, treaty,
convention, statute or court decision from recovering the
related tax liability from such customer;
(ix) any charges added to customers' bills pursuant to
the provisions of Section 9-221 or Section 9-222 of the
Public Utilities Act, as amended, or any charges added to
customers' bills by taxpayers who are not subject to rate
regulation by the Illinois Commerce Commission for the
purpose of recovering any of the tax liabilities or other
amounts specified in such provisions of such Act; and
(x) prior to October 1, 2003, any charge for gas or gas
services to a customer who acquired contractual rights for
the direct purchase of gas or gas services originating from
an out-of-state supplier or source on or before March 1,
1995, except for those charges solely related to the local
distribution of gas by a public utility. This exemption
includes any charge for gas or gas service, except for

SB2079 - 3 - LRB097 10318 HLH 50526 b
those charges solely related to the local distribution of
gas by a public utility, to a customer who maintained an
account with a public utility (as defined in Section 3-105
of the Public Utilities Act) for the transportation of
customer-owned gas on or before March 1, 1995. The
provisions of this amendatory Act of 1997 are intended to
clarify, rather than change, existing law as to the meaning
and scope of this exemption. This exemption (x) expires on
September 30, 2003.
In case credit is extended, the amount thereof shall be
included only as and when payments are received.
"Gross receipts" shall not include consideration received
from business enterprises certified under Section 9-222.1 of
the Public Utilities Act, as amended, to the extent of such
exemption and during the period of time specified by the
Department of Commerce and Economic Opportunity.
"Gross receipts" shall not include consideration received
from businesses that are primarily engaged in manufacturing.
This paragraph is exempt from the provisions of Section 2a.3 of
this Act.
"Department" means the Department of Revenue of the State
of Illinois.
"Director" means the Director of Revenue for the Department
of Revenue of the State of Illinois.
"Taxpayer" means a person engaged in the business of
distributing, supplying, furnishing or selling gas for use or

SB2079 - 4 - LRB097 10318 HLH 50526 b
consumption and not for resale.
"Person" means any natural individual, firm, trust,
estate, partnership, association, joint stock company, joint
adventure, corporation, limited liability company, or a
receiver, trustee, guardian or other representative appointed
by order of any court, or any city, town, county or other
political subdivision of this State.
"Invested capital" means that amount equal to (i) the
average of the balances at the beginning and end of each
taxable period of the taxpayer's total stockholder's equity and
total long-term debt, less investments in and advances to all
corporations, as set forth on the balance sheets included in
the taxpayer's annual report to the Illinois Commerce
Commission for the taxable period; (ii) multiplied by a
fraction determined under Sections 301 and 304(a) of the
"Illinois Income Tax Act" and reported on the Illinois income
tax return for the taxable period ending in or with the taxable
period in question. However, notwithstanding the income tax
return reporting requirement stated above, beginning July 1,
1979, no taxpayer's denominators used to compute the sales,
property or payroll factors under subsection (a) of Section 304
of the Illinois Income Tax Act shall include payroll, property
or sales of any corporate entity other than the taxpayer for
the purposes of determining an allocation for the invested
capital tax. This amendatory Act of 1982, Public Act 82-1024,
is not intended to and does not make any change in the meaning

SB2079 - 5 - LRB097 10318 HLH 50526 b
of any provision of this Act, it having been the intent of the
General Assembly in initially enacting the definition of
"invested capital" to provide for apportionment of the invested
capital of each company, based solely upon the sales, property
and payroll of that company.
"Taxable period" means each period which ends after the
effective date of this Act and which is covered by an annual
report filed by the taxpayer with the Illinois Commerce
Commission.
(Source: P.A. 93-31, eff. 10-1-03; 94-793, eff. 5-19-06.)
Section 10. The Telecommunications Excise Tax Act is
amended by changing Section 2 as follows:
(35 ILCS 630/2) (from Ch. 120, par. 2002)
Sec. 2. As used in this Article, unless the context clearly
requires otherwise:
(a) "Gross charge" means the amount paid for the act or
privilege of originating or receiving telecommunications in
this State and for all services and equipment provided in
connection therewith by a retailer, valued in money whether
paid in money or otherwise, including cash, credits, services
and property of every kind or nature, and shall be determined
without any deduction on account of the cost of such
telecommunications, the cost of materials used, labor or
service costs or any other expense whatsoever. In case credit

SB2079 - 6 - LRB097 10318 HLH 50526 b
is extended, the amount thereof shall be included only as and
when paid. "Gross charges" for private line service shall
include charges imposed at each channel termination point
within this State, charges for the channel mileage between each
channel termination point within this State, and charges for
that portion of the interstate inter-office channel provided
within Illinois. Charges for that portion of the interstate
inter-office channel provided in Illinois shall be determined
by the retailer as follows: (i) for interstate inter-office
channels having 2 channel termination points, only one of which
is in Illinois, 50% of the total charge imposed; or (ii) for
interstate inter-office channels having more than 2 channel
termination points, one or more of which are in Illinois, an
amount equal to the total charge multiplied by a fraction, the
numerator of which is the number of channel termination points
within Illinois and the denominator of which is the total
number of channel termination points. Prior to January 1, 2004,
any method consistent with this paragraph or other method that
reasonably apportions the total charges for interstate
inter-office channels among the states in which channel
terminations points are located shall be accepted as a
reasonable method to determine the charges for that portion of
the interstate inter-office channel provided within Illinois
for that period. However, "gross charges" shall not include any
of the following:
(1) Any amounts added to a purchaser's bill because of

SB2079 - 7 - LRB097 10318 HLH 50526 b
a charge made pursuant to (i) the tax imposed by this
Article; (ii) charges added to customers' bills pursuant to
the provisions of Sections 9-221 or 9-222 of the Public
Utilities Act, as amended, or any similar charges added to
customers' bills by retailers who are not subject to rate
regulation by the Illinois Commerce Commission for the
purpose of recovering any of the tax liabilities or other
amounts specified in such provisions of such Act; (iii) the
tax imposed by Section 4251 of the Internal Revenue Code;
(iv) 911 surcharges; or (v) the tax imposed by the
Simplified Municipal Telecommunications Tax Act.
(2) Charges for a sent collect telecommunication
received outside of the State.
(3) Charges for leased time on equipment or charges for
the storage of data or information for subsequent retrieval
or the processing of data or information intended to change
its form or content. Such equipment includes, but is not
limited to, the use of calculators, computers, data
processing equipment, tabulating equipment or accounting
equipment and also includes the usage of computers under a
time-sharing agreement.
(4) Charges for customer equipment, including such
equipment that is leased or rented by the customer from any
source, wherein such charges are disaggregated and
separately identified from other charges.
(5) Charges to business enterprises certified under

SB2079 - 8 - LRB097 10318 HLH 50526 b
Section 9-222.1 of the Public Utilities Act, as amended, to
the extent of such exemption and during the period of time
specified by the Department of Commerce and Economic
Opportunity.
(5-5) Charges to businesses that are primarily engaged
in manufacturing. This item (5-5) is exempt from the
provisions of Section 4.5.
(6) Charges for telecommunications and all services
and equipment provided in connection therewith between a
parent corporation and its wholly owned subsidiaries or
between wholly owned subsidiaries when the tax imposed
under this Article has already been paid to a retailer and
only to the extent that the charges between the parent
corporation and wholly owned subsidiaries or between
wholly owned subsidiaries represent expense allocation
between the corporations and not the generation of profit
for the corporation rendering such service.
(7) Bad debts. Bad debt means any portion of a debt
that is related to a sale at retail for which gross charges
are not otherwise deductible or excludable that has become
worthless or uncollectable, as determined under applicable
federal income tax standards. If the portion of the debt
deemed to be bad is subsequently paid, the retailer shall
report and pay the tax on that portion during the reporting
period in which the payment is made.
(8) Charges paid by inserting coins in coin-operated

SB2079 - 9 - LRB097 10318 HLH 50526 b
telecommunication devices.
(9) Amounts paid by telecommunications retailers under
the Telecommunications Municipal Infrastructure
Maintenance Fee Act.
(10) Charges for nontaxable services or
telecommunications if (i) those charges are aggregated
with other charges for telecommunications that are
taxable, (ii) those charges are not separately stated on
the customer bill or invoice, and (iii) the retailer can
reasonably identify the nontaxable charges on the
retailer's books and records kept in the regular course of
business. If the nontaxable charges cannot reasonably be
identified, the gross charge from the sale of both taxable
and nontaxable services or telecommunications billed on a
combined basis shall be attributed to the taxable services
or telecommunications. The burden of proving nontaxable
charges shall be on the retailer of the telecommunications.
(b) "Amount paid" means the amount charged to the
taxpayer's service address in this State regardless of where
such amount is billed or paid.
(c) "Telecommunications", in addition to the meaning
ordinarily and popularly ascribed to it, includes, without
limitation, messages or information transmitted through use of
local, toll and wide area telephone service; private line
services; channel services; telegraph services;
teletypewriter; computer exchange services; cellular mobile

SB2079 - 10 - LRB097 10318 HLH 50526 b
telecommunications service; specialized mobile radio;
stationary two way radio; paging service; or any other form of
mobile and portable one-way or two-way communications; or any
other transmission of messages or information by electronic or
similar means, between or among points by wire, cable,
fiber-optics, laser, microwave, radio, satellite or similar
facilities. As used in this Act, "private line" means a
dedicated non-traffic sensitive service for a single customer,
that entitles the customer to exclusive or priority use of a
communications channel or group of channels, from one or more
specified locations to one or more other specified locations.
The definition of "telecommunications" shall not include value
added services in which computer processing applications are
used to act on the form, content, code and protocol of the
information for purposes other than transmission.
"Telecommunications" shall not include purchases of
telecommunications by a telecommunications service provider
for use as a component part of the service provided by him to
the ultimate retail consumer who originates or terminates the
taxable end-to-end communications. Carrier access charges,
right of access charges, charges for use of inter-company
facilities, and all telecommunications resold in the
subsequent provision of, used as a component of, or integrated
into end-to-end telecommunications service shall be
non-taxable as sales for resale.
(d) "Interstate telecommunications" means all

SB2079 - 11 - LRB097 10318 HLH 50526 b
telecommunications that either originate or terminate outside
this State.
(e) "Intrastate telecommunications" means all
telecommunications that originate and terminate within this
State.
(f) "Department" means the Department of Revenue of the
State of Illinois.
(g) "Director" means the Director of Revenue for the
Department of Revenue of the State of Illinois.
(h) "Taxpayer" means a person who individually or through
his agents, employees or permittees engages in the act or
privilege of originating or receiving telecommunications in
this State and who incurs a tax liability under this Article.
(i) "Person" means any natural individual, firm, trust,
estate, partnership, association, joint stock company, joint
venture, corporation, limited liability company, or a
receiver, trustee, guardian or other representative appointed
by order of any court, the Federal and State governments,
including State universities created by statute or any city,
town, county or other political subdivision of this State.
(j) "Purchase at retail" means the acquisition,
consumption or use of telecommunication through a sale at
retail.
(k) "Sale at retail" means the transmitting, supplying or
furnishing of telecommunications and all services and
equipment provided in connection therewith for a consideration

SB2079 - 12 - LRB097 10318 HLH 50526 b
to persons other than the Federal and State governments, and
State universities created by statute and other than between a
parent corporation and its wholly owned subsidiaries or between
wholly owned subsidiaries for their use or consumption and not
for resale.
(l) "Retailer" means and includes every person engaged in
the business of making sales at retail as defined in this
Article. The Department may, in its discretion, upon
application, authorize the collection of the tax hereby imposed
by any retailer not maintaining a place of business within this
State, who, to the satisfaction of the Department, furnishes
adequate security to insure collection and payment of the tax.
Such retailer shall be issued, without charge, a permit to
collect such tax. When so authorized, it shall be the duty of
such retailer to collect the tax upon all of the gross charges
for telecommunications in this State in the same manner and
subject to the same requirements as a retailer maintaining a
place of business within this State. The permit may be revoked
by the Department at its discretion.
(m) "Retailer maintaining a place of business in this
State", or any like term, means and includes any retailer
having or maintaining within this State, directly or by a
subsidiary, an office, distribution facilities, transmission
facilities, sales office, 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,

SB2079 - 13 - LRB097 10318 HLH 50526 b
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.
(n) "Service address" means the location of
telecommunications equipment from which the telecommunications
services are originated or at which telecommunications
services are received by a taxpayer. In the event this may not
be a defined location, as in the case of mobile phones, paging
systems, maritime systems, service address means the
customer's place of primary use as defined in the Mobile
Telecommunications Sourcing Conformity Act. For air-to-ground
systems and the like, service address shall mean the location
of a taxpayer's primary use of the telecommunications equipment
as defined by telephone number, authorization code, or location
in Illinois where bills are sent.
(o) "Prepaid telephone calling arrangements" mean the
right to exclusively purchase telephone or telecommunications
services that must be paid for in advance and enable the
origination of one or more intrastate, interstate, or
international telephone calls or other telecommunications
using an access number, an authorization code, or both, whether
manually or electronically dialed, for which payment to a
retailer must be made in advance, provided that, unless
recharged, no further service is provided once that prepaid
amount of service has been consumed. Prepaid telephone calling

SB2079 - 14 - LRB097 10318 HLH 50526 b
arrangements include the recharge of a prepaid calling
arrangement. For purposes of this subsection, "recharge" means
the purchase of additional prepaid telephone or
telecommunications services whether or not the purchaser
acquires a different access number or authorization code.
"Prepaid telephone calling arrangement" does not include an
arrangement whereby a customer purchases a payment card and
pursuant to which the service provider reflects the amount of
such purchase as a credit on an invoice issued to that customer
under an existing subscription plan.
(Source: P.A. 93-286, 1-1-04; 94-793, eff. 5-19-06.)
Section 15. The Electricity Excise Tax Law is amended by
changing Section 2-4 as follows:
(35 ILCS 640/2-4)
Sec. 2-4. Tax imposed.
(a) Except as provided in subsection (b), a tax is imposed
on the privilege of using in this State electricity purchased
for use or consumption and not for resale, other than by
municipal corporations owning and operating a local
transportation system for public service, at the following
rates per kilowatt-hour delivered to the purchaser:
(i) For the first 2000 kilowatt-hours used or consumed
in a month: 0.330 cents per kilowatt-hour;
(ii) For the next 48,000 kilowatt-hours used or

SB2079 - 15 - LRB097 10318 HLH 50526 b
consumed in a month: 0.319 cents per kilowatt-hour;
(iii) For the next 50,000 kilowatt-hours used or
consumed in a month: 0.303 cents per kilowatt-hour;
(iv) For the next 400,000 kilowatt-hours used or
consumed in a month: 0.297 cents per kilowatt-hour;
(v) For the next 500,000 kilowatt-hours used or
consumed in a month: 0.286 cents per kilowatt-hour;
(vi) For the next 2,000,000 kilowatt-hours used or
consumed in a month: 0.270 cents per kilowatt-hour;
(vii) For the next 2,000,000 kilowatt-hours used or
consumed in a month: 0.254 cents per kilowatt-hour;
(viii) For the next 5,000,000 kilowatt-hours used or
consumed in a month: 0.233 cents per kilowatt-hour;
(ix) For the next 10,000,000 kilowatt-hours used or
consumed in a month: 0.207 cents per kilowatt-hour;
(x) For all electricity in excess of 20,000,000
kilowatt-hours used or consumed in a month: 0.202 cents per
kilowatt-hour.
Provided, that in lieu of the foregoing rates, the tax is
imposed on a self-assessing purchaser at the rate of 5.1% of
the self-assessing purchaser's purchase price for all
electricity distributed, supplied, furnished, sold,
transmitted and delivered to the self-assessing purchaser in a
month.
(b) A tax is imposed on the privilege of using in this
State electricity purchased from a municipal system or electric

SB2079 - 16 - LRB097 10318 HLH 50526 b
cooperative, as defined in Article XVII of the Public Utilities
Act, which has not made an election as permitted by either
Section 17-200 or Section 17-300 of such Act, at the lesser of
0.32 cents per kilowatt hour of all electricity distributed,
supplied, furnished, sold, transmitted, and delivered by such
municipal system or electric cooperative to the purchaser or 5%
of each such purchaser's purchase price for all electricity
distributed, supplied, furnished, sold, transmitted, and
delivered by such municipal system or electric cooperative to
the purchaser, whichever is the lower rate as applied to each
purchaser in each billing period.
(c) The tax imposed by this Section 2-4 is not imposed with
respect to any use of electricity by business enterprises
certified under Section 9-222.1 or 9-222.1A of the Public
Utilities Act, as amended, to the extent of such exemption and
during the time specified by the Department of Commerce and
Economic Opportunity; or with respect to any transaction in
interstate commerce, or otherwise, to the extent to which such
transaction may not, under the Constitution and statutes of the
United States, be made the subject of taxation by this State.
(d) The tax imposed by this Section 2-4 is not imposed with
respect to any use of electricity by businesses that are
primarily engaged in manufacturing. This subsection (d) is
exempt from the provisions of Section 2-6.
(Source: P.A. 94-793, eff. 5-19-06.)