USE/OCC TX-SELLING PRICE-PAINT

Illinois General Assembly ILGA.GOV HB5252 - 104th General Assembly 104TH GENERAL ASSEMBLY State of Illinois 2025 and 2026 HB5252 Introduced 2/10/2026, by Rep. Dan Ugaste 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 120/1 Amends the Use Tax Act, the Service Use Tax Act, and the Retailers' Occupation Tax Act. Provides that the term "selling price" does not include any assessment imposed under the Paint Stewardship Act. LRB104 17667 HLH 33933 b A BILL FOR HB5252 LRB104 17667 HLH 33933 b 1 AN ACT concerning revenue. 2 Be it enacted by the People of the State of Illinois, 3 represented in the General Assembly: 4 Section 5. The Use Tax Act is amended by changing Section 2 5 as follows: 6 (35 ILCS 105/2) (from Ch. 120, par. 439.2) 7 Sec. 2. Definitions. As used in this Act: 8 "Use" means the exercise by any person of any right or 9 power over tangible personal property incident to the 10 ownership of that property, or, on and after January 1, 2025, 11 incident to the possession or control of, the right to possess 12 or control, or a license to use that property through a lease, 13 except that it does not include the sale of such property in 14 any form as tangible personal property in the regular course 15 of business to the extent that such property is not first 16 subjected to a use for which it was purchased, and does not 17 include the use of such property by its owner for 18 demonstration purposes: Provided that the property purchased 19 is deemed to be purchased for the purpose of resale, despite 20 first being used, to the extent to which it is resold as an 21 ingredient of an intentionally produced product or by-product 22 of manufacturing. "Use" does not mean the demonstration use or 23 interim use of tangible personal property by a retailer before HB5252 - 2 - LRB104 17667 HLH 33933 b 1 he sells that tangible personal property. On and after January 2 1, 2025, the lease of tangible personal property to a lessee by 3 a retailer who is subject to tax on lease receipts under Public 4 Act 103-592 does not qualify as demonstration use or interim 5 use of that property. For watercraft or aircraft, if the 6 period of demonstration use or interim use by the retailer 7 exceeds 18 months, the retailer shall pay on the retailers' 8 original cost price the tax imposed by this Act, and no credit 9 for that tax is permitted if the watercraft or aircraft is 10 subsequently sold by the retailer. "Use" does not mean the 11 physical incorporation of tangible personal property, to the 12 extent not first subjected to a use for which it was purchased, 13 as an ingredient or constituent, into other tangible personal 14 property (a) which is sold in the regular course of business or 15 (b) which the person incorporating such ingredient or 16 constituent therein has undertaken at the time of such 17 purchase to cause to be transported in interstate commerce to 18 destinations outside the State of Illinois: Provided that the 19 property purchased is deemed to be purchased for the purpose 20 of resale, despite first being used, to the extent to which it 21 is resold as an ingredient of an intentionally produced 22 product or by-product of manufacturing. 23 "Lease" means a transfer of the possession or control of, 24 the right to possess or control, or a license to use, but not 25 title to, tangible personal property for a fixed or 26 indeterminate term for consideration, regardless of the name HB5252 - 3 - LRB104 17667 HLH 33933 b 1 by which the transaction is called. "Lease" does not include a 2 lease entered into merely as a security agreement that does 3 not involve a transfer of possession or control from the 4 lessor to the lessee. 5 On and after January 1, 2025, the term "sale", when used in 6 this Act, includes a lease. 7 "Watercraft" means a Class 2, Class 3, or Class 4 8 watercraft as defined in Section 3-2 of the Boat Registration 9 and Safety Act, a personal watercraft, or any boat equipped 10 with an inboard motor. 11 "Purchase at retail" means the acquisition of the 12 ownership of, the title to, the possession or control of, the 13 right to possess or control, or a license to use, tangible 14 personal property through a sale at retail. 15 "Purchaser" means anyone who, through a sale at retail, 16 acquires the ownership of, the title to, the possession or 17 control of, the right to possess or control, or a license to 18 use, tangible personal property for a valuable consideration. 19 "Sale at retail" means any transfer of the ownership of or 20 title to tangible personal property to a purchaser, for the 21 purpose of use, and not for the purpose of resale in any form 22 as tangible personal property to the extent not first 23 subjected to a use for which it was purchased, for a valuable 24 consideration: Provided that the property purchased is deemed 25 to be purchased for the purpose of resale, despite first being 26 used, to the extent to which it is resold as an ingredient of HB5252 - 4 - LRB104 17667 HLH 33933 b 1 an intentionally produced product or by-product of 2 manufacturing. For this purpose, slag produced as an incident 3 to manufacturing pig iron or steel and sold is considered to be 4 an intentionally produced by-product of manufacturing. "Sale 5 at retail" includes any such transfer made for resale unless 6 made in compliance with Section 2c of the Retailers' 7 Occupation Tax Act, as incorporated by reference into Section 8 12 of this Act. Transactions whereby the possession of the 9 property is transferred but the seller retains the title as 10 security for payment of the selling price are sales. 11 "Sale at retail" shall also be construed to include any 12 Illinois florist's sales transaction in which the purchase 13 order is received in Illinois by a florist and the sale is for 14 use or consumption, but the Illinois florist has a florist in 15 another state deliver the property to the purchaser or the 16 purchaser's donee in such other state. 17 Nonreusable tangible personal property that is used by 18 persons engaged in the business of operating a restaurant, 19 cafeteria, or drive-in is a sale for resale when it is 20 transferred to customers in the ordinary course of business as 21 part of the sale of food or beverages and is used to deliver, 22 package, or consume food or beverages, regardless of where 23 consumption of the food or beverages occurs. Examples of those 24 items include, but are not limited to nonreusable, paper and 25 plastic cups, plates, baskets, boxes, sleeves, buckets or 26 other containers, utensils, straws, placemats, napkins, doggie HB5252 - 5 - LRB104 17667 HLH 33933 b 1 bags, and wrapping or packaging materials that are transferred 2 to customers as part of the sale of food or beverages in the 3 ordinary course of business. 4 The purchase, employment, and transfer of such tangible 5 personal property as newsprint and ink for the primary purpose 6 of conveying news (with or without other information) is not a 7 purchase, use, or sale of tangible personal property. 8 "Selling price" means the consideration for a sale valued 9 in money whether received in money or otherwise, including 10 cash, credits, property other than as hereinafter provided, 11 and services, but, prior to January 1, 2020 and beginning 12 again on January 1, 2022, not including the value of or credit 13 given for traded-in tangible personal property where the item 14 that is traded-in is of like kind and character as that which 15 is being sold; beginning January 1, 2020 and until January 1, 16 2022, "selling price" includes the portion of the value of or 17 credit given for traded-in motor vehicles of the First 18 Division as defined in Section 1-146 of the Illinois Vehicle 19 Code of like kind and character as that which is being sold 20 that exceeds $10,000. "Selling price" shall be determined 21 without any deduction on account of the cost of the property 22 sold, the cost of materials used, labor or service cost, or any 23 other expense whatsoever, but does not include interest or 24 finance charges which appear as separate items on the bill of 25 sale or sales contract nor charges that are added to prices by 26 sellers on account of the seller's tax liability under the HB5252 - 6 - LRB104 17667 HLH 33933 b 1 Retailers' Occupation Tax Act, or on account of the seller's 2 duty to collect, from the purchaser, the tax that is imposed by 3 this Act, or, except as otherwise provided with respect to any 4 cigarette tax imposed by a home rule unit, on account of the 5 seller's tax liability under any local occupation tax 6 administered by the Department, or, except as otherwise 7 provided with respect to any cigarette tax imposed by a home 8 rule unit on account of the seller's duty to collect, from the 9 purchasers, the tax that is imposed under any local use tax 10 administered by the Department. Effective December 1, 1985, 11 "selling price" shall include charges that are added to prices 12 by sellers on account of the seller's tax liability under the 13 Cigarette Tax Act, on account of the seller's duty to collect, 14 from the purchaser, the tax imposed under the Cigarette Use 15 Tax Act, and on account of the seller's duty to collect, from 16 the purchaser, any cigarette tax imposed by a home rule unit. 17 On and after the effective date of this amendatory Act of the 18 104th General Assembly, "selling price" does not include any 19 assessment imposed under the Paint Stewardship Act. 20 The provisions of this paragraph, which provides only for 21 an alternative meaning of "selling price" with respect to the 22 sale of certain motor vehicles incident to the contemporaneous 23 lease of those motor vehicles, continue in effect and are not 24 changed by the tax on leases implemented by Public Act 25 103-592. Notwithstanding any law to the contrary, for any 26 motor vehicle, as defined in Section 1-146 of the Vehicle HB5252 - 7 - LRB104 17667 HLH 33933 b 1 Code, that is sold on or after January 1, 2015 for the purpose 2 of leasing the vehicle for a defined period that is longer than 3 one year and (1) is a motor vehicle of the second division 4 that: (A) is a self-contained motor vehicle designed or 5 permanently converted to provide living quarters for 6 recreational, camping, or travel use, with direct walk through 7 access to the living quarters from the driver's seat; (B) is of 8 the van configuration designed for the transportation of not 9 less than 7 nor more than 16 passengers; or (C) has a gross 10 vehicle weight rating of 8,000 pounds or less or (2) is a motor 11 vehicle of the first division, "selling price" or "amount of 12 sale" means the consideration received by the lessor pursuant 13 to the lease contract, including amounts due at lease signing 14 and all monthly or other regular payments charged over the 15 term of the lease. Also included in the selling price is any 16 amount received by the lessor from the lessee for the leased 17 vehicle that is not calculated at the time the lease is 18 executed, including, but not limited to, excess mileage 19 charges and charges for excess wear and tear. For sales that 20 occur in Illinois, with respect to any amount received by the 21 lessor from the lessee for the leased vehicle that is not 22 calculated at the time the lease is executed, the lessor who 23 purchased the motor vehicle does not incur the tax imposed by 24 the Use Tax Act on those amounts, and the retailer who makes 25 the retail sale of the motor vehicle to the lessor is not 26 required to collect the tax imposed by this Act or to pay the HB5252 - 8 - LRB104 17667 HLH 33933 b 1 tax imposed by the Retailers' Occupation Tax Act on those 2 amounts. However, the lessor who purchased the motor vehicle 3 assumes the liability for reporting and paying the tax on 4 those amounts directly to the Department in the same form 5 (Illinois Retailers' Occupation Tax, and local retailers' 6 occupation taxes, if applicable) in which the retailer would 7 have reported and paid such tax if the retailer had accounted 8 for the tax to the Department. For amounts received by the 9 lessor from the lessee that are not calculated at the time the 10 lease is executed, the lessor must file the return and pay the 11 tax to the Department by the due date otherwise required by 12 this Act for returns other than transaction returns. If the 13 retailer is entitled under this Act to a discount for 14 collecting and remitting the tax imposed under this Act to the 15 Department with respect to the sale of the motor vehicle to the 16 lessor, then the right to the discount provided in this Act 17 shall be transferred to the lessor with respect to the tax paid 18 by the lessor for any amount received by the lessor from the 19 lessee for the leased vehicle that is not calculated at the 20 time the lease is executed; provided that the discount is only 21 allowed if the return is timely filed and for amounts timely 22 paid. The "selling price" of a motor vehicle that is sold on or 23 after January 1, 2015 for the purpose of leasing for a defined 24 period of longer than one year shall not be reduced by the 25 value of or credit given for traded-in tangible personal 26 property owned by the lessor, nor shall it be reduced by the HB5252 - 9 - LRB104 17667 HLH 33933 b 1 value of or credit given for traded-in tangible personal 2 property owned by the lessee, regardless of whether the 3 trade-in value thereof is assigned by the lessee to the 4 lessor. In the case of a motor vehicle that is sold for the 5 purpose of leasing for a defined period of longer than one 6 year, the sale occurs at the time of the delivery of the 7 vehicle, regardless of the due date of any lease payments. A 8 lessor who incurs a Retailers' Occupation Tax liability on the 9 sale of a motor vehicle coming off lease may not take a credit 10 against that liability for the Use Tax the lessor paid upon the 11 purchase of the motor vehicle (or for any tax the lessor paid 12 with respect to any amount received by the lessor from the 13 lessee for the leased vehicle that was not calculated at the 14 time the lease was executed) if the selling price of the motor 15 vehicle at the time of purchase was calculated using the 16 definition of "selling price" as defined in this paragraph. 17 Notwithstanding any other provision of this Act to the 18 contrary, lessors shall file all returns and make all payments 19 required under this paragraph to the Department by electronic 20 means in the manner and form as required by the Department. 21 This paragraph does not apply to leases of motor vehicles for 22 which, at the time the lease is entered into, the term of the 23 lease is not a defined period, including leases with a defined 24 initial period with the option to continue the lease on a 25 month-to-month or other basis beyond the initial defined 26 period. HB5252 - 10 - LRB104 17667 HLH 33933 b 1 The phrase "like kind and character" shall be liberally 2 construed (including, but not limited to, any form of motor 3 vehicle for any form of motor vehicle, or any kind of farm or 4 agricultural implement for any other kind of farm or 5 agricultural implement), while not including a kind of item 6 which, if sold at retail by that retailer, would be exempt from 7 retailers' occupation tax and use tax as an isolated or 8 occasional sale. 9 "Department" means the Department of Revenue. 10 "Person" means any natural individual, firm, partnership, 11 association, joint stock company, joint adventure, public or 12 private corporation, limited liability company, or a receiver, 13 executor, trustee, guardian, or other representative appointed 14 by order of any court. 15 "Retailer" means and includes every person engaged in the 16 business of making sales, including, on and after January 1, 17 2025, leases, at retail as defined in this Section. With 18 respect to leases, a "retailer" also means a "lessor", except 19 as otherwise provided in this Act. 20 A person who holds himself or herself out as being engaged 21 (or who habitually engages) in selling tangible personal 22 property at retail is a retailer hereunder with respect to 23 such sales (and not primarily in a service occupation) 24 notwithstanding the fact that such person designs and produces 25 such tangible personal property on special order for the 26 purchaser and in such a way as to render the property of value HB5252 - 11 - LRB104 17667 HLH 33933 b 1 only to such purchaser, if such tangible personal property so 2 produced on special order serves substantially the same 3 function as stock or standard items of tangible personal 4 property that are sold at retail. 5 A person whose activities are organized and conducted 6 primarily as a not-for-profit service enterprise, and who 7 engages in selling tangible personal property at retail 8 (whether to the public or merely to members and their guests) 9 is a retailer with respect to such transactions, excepting 10 only a person organized and operated exclusively for 11 charitable, religious or educational purposes either (1) to 12 the extent of sales by such person to its members, students, 13 patients, or inmates of tangible personal property to be used 14 primarily for the purposes of such person, or (2) to the extent 15 of sales by such person of tangible personal property which is 16 not sold or offered for sale by persons organized for profit. 17 The selling of school books and school supplies by schools at 18 retail to students is not "primarily for the purposes of" the 19 school which does such selling. This paragraph does not apply 20 to nor subject to taxation occasional dinners, social, or 21 similar activities of a person organized and operated 22 exclusively for charitable, religious, or educational 23 purposes, whether or not such activities are open to the 24 public. 25 A person who is the recipient of a grant or contract under 26 Title VII of the Older Americans Act of 1965 (P.L. 92-258) and HB5252 - 12 - LRB104 17667 HLH 33933 b 1 serves meals to participants in the federal Nutrition Program 2 for the Elderly in return for contributions established in 3 amount by the individual participant pursuant to a schedule of 4 suggested fees as provided for in the federal Act is not a 5 retailer under this Act with respect to such transactions. 6 Persons who engage in the business of transferring 7 tangible personal property upon the redemption of trading 8 stamps are retailers hereunder when engaged in such business. 9 The isolated or occasional sale of tangible personal 10 property at retail by a person who does not hold himself out as 11 being engaged (or who does not habitually engage) in selling 12 such tangible personal property at retail or a sale through a 13 bulk vending machine does not make such person a retailer 14 hereunder. However, any person who is engaged in a business 15 which is not subject to the tax imposed by the Retailers' 16 Occupation Tax Act because of involving the sale of or a 17 contract to sell real estate or a construction contract to 18 improve real estate, but who, in the course of conducting such 19 business, transfers tangible personal property to users or 20 consumers in the finished form in which it was purchased, and 21 which does not become real estate, under any provision of a 22 construction contract or real estate sale or real estate sales 23 agreement entered into with some other person arising out of 24 or because of such nontaxable business, is a retailer to the 25 extent of the value of the tangible personal property so 26 transferred. If, in such transaction, a separate charge is HB5252 - 13 - LRB104 17667 HLH 33933 b 1 made for the tangible personal property so transferred, the 2 value of such property, for the purposes of this Act, is the 3 amount so separately charged, but not less than the cost of 4 such property to the transferor; if no separate charge is 5 made, the value of such property, for the purposes of this Act, 6 is the cost to the transferor of such tangible personal 7 property. 8 "Retailer maintaining a place of business in this State", 9 or any like term, means and includes any of the following 10 retailers: 11 (1) A retailer having or maintaining within this 12 State, directly or by a subsidiary, an office, 13 distribution house, sales house, warehouse, or other place 14 of business, or any agent or other representative 15 operating within this State under the authority of the 16 retailer or its subsidiary, irrespective of whether such 17 place of business or agent or other representative is 18 located here permanently or temporarily, or whether such 19 retailer or subsidiary is licensed to do business in this 20 State. However, the ownership of property that is located 21 at the premises of a printer with which the retailer has 22 contracted for printing and that consists of the final 23 printed product, property that becomes a part of the final 24 printed product, or copy from which the printed product is 25 produced shall not result in the retailer being deemed to 26 have or maintain an office, distribution house, sales HB5252 - 14 - LRB104 17667 HLH 33933 b 1 house, warehouse, or other place of business within this 2 State. 3 (1.1) A retailer having a contract with a person 4 located in this State under which the person, for a 5 commission or other consideration based upon the sale of 6 tangible personal property by the retailer, directly or 7 indirectly refers potential customers to the retailer by 8 providing to the potential customers a promotional code or 9 other mechanism that allows the retailer to track 10 purchases referred by such persons. Examples of mechanisms 11 that allow the retailer to track purchases referred by 12 such persons include, but are not limited to, the use of a 13 link on the person's Internet website, promotional codes 14 distributed through the person's hand-delivered or mailed 15 material, and promotional codes distributed by the person 16 through radio or other broadcast media. The provisions of 17 this paragraph (1.1) shall apply only if the cumulative 18 gross receipts from sales of tangible personal property by 19 the retailer to customers who are referred to the retailer 20 by all persons in this State under such contracts exceed 21 $10,000 during the preceding 4 quarterly periods ending on 22 the last day of March, June, September, and December. A 23 retailer meeting the requirements of this paragraph (1.1) 24 shall be presumed to be maintaining a place of business in 25 this State but may rebut this presumption by submitting 26 proof that the referrals or other activities pursued HB5252 - 15 - LRB104 17667 HLH 33933 b 1 within this State by such persons were not sufficient to 2 meet the nexus standards of the United States Constitution 3 during the preceding 4 quarterly periods. 4 (1.2) Beginning July 1, 2011, a retailer having a 5 contract with a person located in this State under which: 6 (A) the retailer sells the same or substantially 7 similar line of products as the person located in this 8 State and does so using an identical or substantially 9 similar name, trade name, or trademark as the person 10 located in this State; and 11 (B) the retailer provides a commission or other 12 consideration to the person located in this State 13 based upon the sale of tangible personal property by 14 the retailer. 15 The provisions of this paragraph (1.2) shall apply 16 only if the cumulative gross receipts from sales of 17 tangible personal property by the retailer to customers in 18 this State under all such contracts exceed $10,000 during 19 the preceding 4 quarterly periods ending on the last day 20 of March, June, September, and December. 21 (2) (Blank). 22 (3) (Blank). 23 (4) (Blank). 24 (5) (Blank). 25 (6) (Blank). 26 (7) (Blank). HB5252 - 16 - LRB104 17667 HLH 33933 b 1 (8) (Blank). 2 (9) Beginning October 1, 2018 and through December 31, 3 2025, a retailer making sales of tangible personal 4 property to purchasers in Illinois from outside of 5 Illinois if: 6 (A) the cumulative gross receipts from sales of 7 tangible personal property to purchasers in Illinois 8 are $100,000 or more; or 9 (B) the retailer enters into 200 or more separate 10 transactions for the sale of tangible personal 11 property to purchasers in Illinois. 12 The retailer shall determine on a quarterly basis, 13 ending on the last day of March, June, September, and 14 December, whether the retailer meets the threshold of 15 either subparagraph (A) or (B) of this paragraph (9) for 16 the preceding 12-month period. If the retailer meets the 17 threshold of either subparagraph (A) or (B) for a 12-month 18 period, the retailer is considered a retailer maintaining 19 a place of business in this State and is required to 20 collect and remit the tax imposed under this Act and file 21 returns for one year. At the end of that one-year period, 22 the retailer shall determine whether it has met the 23 threshold of either subparagraph (A) or (B) during the 24 preceding 12-month period. If the retailer met the 25 threshold in either subparagraph (A) or (B) for the 26 preceding 12-month period, the retailer is considered a HB5252 - 17 - LRB104 17667 HLH 33933 b 1 retailer maintaining a place of business in this State and 2 is required to collect and remit the tax imposed under 3 this Act and file returns for the subsequent year. If at 4 the end of a one-year period a retailer that was required 5 to collect and remit the tax imposed under this Act 6 determines that it did not meet the threshold in either 7 subparagraph (A) or (B) during the preceding 12-month 8 period, the retailer shall subsequently determine on a 9 quarterly basis, ending on the last day of March, June, 10 September, and December, whether the retailer meets the 11 threshold of either subparagraph (A) or (B) for the 12 preceding 12-month period. 13 (9.1) Beginning January 1, 2026, a retailer making 14 sales of tangible personal property to purchasers in 15 Illinois from outside of Illinois if the cumulative gross 16 receipts from sales of tangible personal property to 17 purchasers in Illinois are $100,000 or more. 18 The retailer shall determine on a quarterly basis, 19 ending on the last day of March, June, September, and 20 December, whether the retailer meets the threshold in this 21 paragraph (9.1) for the preceding 12-month period. If the 22 retailer meets the threshold for a 12-month period, the 23 retailer is considered a retailer maintaining a place of 24 business in this State and is required to collect and 25 remit the tax imposed under this Act and file returns for 26 one year. At the end of the one-year period, the retailer HB5252 - 18 - LRB104 17667 HLH 33933 b 1 shall determine whether the retailer met the threshold 2 during the preceding 12-month period. If the retailer met 3 the threshold for the preceding 12-month period, the 4 retailer is considered a retailer maintaining a place of 5 business in this State and is required to collect and 6 remit the tax imposed under this Act and file returns for 7 the subsequent year. If at the end of a one-year period a 8 retailer that was required to collect and remit the tax 9 imposed under this Act determines that the retailer did 10 not meet the threshold during the preceding 12-month 11 period, the retailer shall subsequently determine on a 12 quarterly basis, ending on the last day of March, June, 13 September, and December, whether the retailer meets the 14 threshold for the preceding 12-month period. 15 Beginning January 1, 2020, neither the gross receipts 16 from nor the number of separate transactions for sales of 17 tangible personal property to purchasers in Illinois that 18 a retailer makes through a marketplace facilitator and for 19 which the retailer has received a certification from the 20 marketplace facilitator pursuant to Section 2d of this Act 21 shall be included for purposes of determining whether the 22 retailer has met the thresholds of paragraphs (9) or 23 (9.1). 24 (10) Beginning January 1, 2020, a marketplace 25 facilitator that meets a threshold set forth in subsection 26 (b) or (b-5) of Section 2d of this Act. HB5252 - 19 - LRB104 17667 HLH 33933 b 1 "Bulk vending machine" means a vending machine, containing 2 unsorted confections, nuts, toys, or other items designed 3 primarily to be used or played with by children which, when a 4 coin or coins of a denomination not larger than $0.50 are 5 inserted, are dispensed in equal portions, at random and 6 without selection by the customer. 7 (Source: P.A. 103-592, eff. 1-1-25; 104-6, eff. 6-16-25; 8 104-417, eff. 8-15-25.) 9 Section 10. The Service Use Tax Act is amended by changing 10 Section 2 as follows: 11 (35 ILCS 110/2) (from Ch. 120, par. 439.32) 12 Sec. 2. Definitions. In this Act: 13 "Use" means the exercise by any person of any right or 14 power over tangible personal property incident to the 15 ownership of that property, or, on and after January 1, 2025, 16 incident to the possession or control of, the right to possess 17 or control, or a license to use that property through a lease, 18 but does not include the sale or use for demonstration by him 19 of that property in any form as tangible personal property in 20 the regular course of business. "Use" does not mean the 21 interim use of tangible personal property. On and after 22 January 1, 2025, the lease of tangible personal property to a 23 lessee by a serviceman who is subject to tax on lease receipts 24 under this amendatory Act of the 103rd General Assembly does HB5252 - 20 - LRB104 17667 HLH 33933 b 1 not qualify as demonstration use or interim use of that 2 property. "Use" does not mean the physical incorporation of 3 tangible personal property, as an ingredient or constituent, 4 into other tangible personal property, (a) which is sold in 5 the regular course of business or (b) which the person 6 incorporating such ingredient or constituent therein has 7 undertaken at the time of such purchase to cause to be 8 transported in interstate commerce to destinations outside the 9 State of Illinois. 10 "Lease" means a transfer of the possession or control of, 11 the right to possess or control, or a license to use, but not 12 title to, tangible personal property for a fixed or 13 indeterminate term for consideration, regardless of the name 14 by which the transaction is called. "Lease" does not include a 15 lease entered into merely as a security agreement that does 16 not involve a transfer of possession from the lessor to the 17 lessee. 18 On and after January 1, 2025, the term "sale", when used in 19 this Act with respect to tangible personal property, includes 20 a lease. 21 "Purchased from a serviceman" means the acquisition of the 22 ownership of, the title to, the possession or control of, the 23 right to possess or control, or a license to use, tangible 24 personal property through a sale of service. 25 "Purchaser" means any person who, through a sale of 26 service, acquires the ownership of, the title to, the HB5252 - 21 - LRB104 17667 HLH 33933 b 1 possession or control of, the right to possess or control, or a 2 license to use, any tangible personal property. 3 "Cost price" means the consideration paid by the 4 serviceman for a purchase, including, on and after January 1, 5 2025, a lease, valued in money, whether paid in money or 6 otherwise, including cash, credits and services, and shall be 7 determined without any deduction on account of the supplier's 8 cost of the property sold or on account of any other expense 9 incurred by the supplier. When a serviceman contracts out part 10 or all of the services required in his sale of service, it 11 shall be presumed that the cost price to the serviceman of the 12 property transferred to him or her by his or her subcontractor 13 is equal to 50% of the subcontractor's charges to the 14 serviceman in the absence of proof of the consideration paid 15 by the subcontractor for the purchase of such property. 16 "Selling price" means the consideration for a sale, 17 including, on and after January 1, 2025, a lease, valued in 18 money whether received in money or otherwise, including cash, 19 credits and service, and shall be determined without any 20 deduction on account of the serviceman's cost of the property 21 sold, the cost of materials used, labor or service cost or any 22 other expense whatsoever, but does not include interest or 23 finance charges which appear as separate items on the bill of 24 sale or sales contract nor charges that are added to prices by 25 sellers on account of the seller's duty to collect, from the 26 purchaser, the tax that is imposed by this Act. On and after HB5252 - 22 - LRB104 17667 HLH 33933 b 1 the effective date of this amendatory Act of the 104th General 2 Assembly, "selling price" does not include any assessment 3 imposed under the Paint Stewardship Act. 4 "Department" means the Department of Revenue. 5 "Person" means any natural individual, firm, partnership, 6 association, joint stock company, joint venture, public or 7 private corporation, limited liability company, and any 8 receiver, executor, trustee, guardian or other representative 9 appointed by order of any court. 10 "Sale of service" means any transaction except: 11 (1) a retail sale of tangible personal property 12 taxable under the Retailers' Occupation Tax Act or under 13 the Use Tax Act. 14 (2) a sale of tangible personal property for the 15 purpose of resale made in compliance with Section 2c of 16 the Retailers' Occupation Tax Act. 17 (3) except as hereinafter provided, a sale or transfer 18 of tangible personal property as an incident to the 19 rendering of service for or by any governmental body, or 20 for or by any corporation, society, association, 21 foundation or institution organized and operated 22 exclusively for charitable, religious or educational 23 purposes or any not-for-profit corporation, society, 24 association, foundation, institution or organization which 25 has no compensated officers or employees and which is 26 organized and operated primarily for the recreation of HB5252 - 23 - LRB104 17667 HLH 33933 b 1 persons 55 years of age or older. A limited liability 2 company may qualify for the exemption under this paragraph 3 only if the limited liability company is organized and 4 operated exclusively for educational purposes. 5 (4) (blank). 6 (4a) a sale or transfer of tangible personal property 7 as an incident to the rendering of service for owners or 8 lessors, lessees, or shippers of tangible personal 9 property which is utilized by interstate carriers for hire 10 for use as rolling stock moving in interstate commerce so 11 long as so used by interstate carriers for hire, and 12 equipment operated by a telecommunications provider, 13 licensed as a common carrier by the Federal Communications 14 Commission, which is permanently installed in or affixed 15 to aircraft moving in interstate commerce. 16 (4a-5) on and after July 1, 2003 and through June 30, 17 2004, a sale or transfer of a motor vehicle of the second 18 division with a gross vehicle weight in excess of 8,000 19 pounds as an incident to the rendering of service if that 20 motor vehicle is subject to the commercial distribution 21 fee imposed under Section 3-815.1 of the Illinois Vehicle 22 Code. Beginning on July 1, 2004 and through June 30, 2005, 23 the use in this State of motor vehicles of the second 24 division: (i) with a gross vehicle weight rating in excess 25 of 8,000 pounds; (ii) that are subject to the commercial 26 distribution fee imposed under Section 3-815.1 of the HB5252 - 24 - LRB104 17667 HLH 33933 b 1 Illinois Vehicle Code; and (iii) that are primarily used 2 for commercial purposes. Through June 30, 2005, this 3 exemption applies to repair and replacement parts added 4 after the initial purchase of such a motor vehicle if that 5 motor vehicle is used in a manner that would qualify for 6 the rolling stock exemption otherwise provided for in this 7 Act. For purposes of this paragraph, "used for commercial 8 purposes" means the transportation of persons or property 9 in furtherance of any commercial or industrial enterprise 10 whether for-hire or not. 11 (5) a sale or transfer of machinery and equipment used 12 primarily in the process of the manufacturing or 13 assembling, either in an existing, an expanded or a new 14 manufacturing facility, of tangible personal property for 15 wholesale or retail sale or lease, whether such sale or 16 lease is made directly by the manufacturer or by some 17 other person, whether the materials used in the process 18 are owned by the manufacturer or some other person, or 19 whether such sale or lease is made apart from or as an 20 incident to the seller's engaging in a service occupation 21 and the applicable tax is a Service Use Tax or Service 22 Occupation Tax, rather than Use Tax or Retailers' 23 Occupation Tax. The exemption provided by this paragraph 24 (5) includes production related tangible personal 25 property, as defined in Section 3-50 of the Use Tax Act, 26 purchased on or after July 1, 2019. The exemption provided HB5252 - 25 - LRB104 17667 HLH 33933 b 1 by this paragraph (5) does not include machinery and 2 equipment used in (i) the generation of electricity for 3 wholesale or retail sale; (ii) the generation or treatment 4 of natural or artificial gas for wholesale or retail sale 5 that is delivered to customers through pipes, pipelines, 6 or mains; or (iii) the treatment of water for wholesale or 7 retail sale that is delivered to customers through pipes, 8 pipelines, or mains. The provisions of Public Act 98-583 9 are declaratory of existing law as to the meaning and 10 scope of this exemption. The exemption under this 11 paragraph (5) is exempt from the provisions of Section 12 3-75. 13 (5a) the repairing, reconditioning or remodeling, for 14 a common carrier by rail, of tangible personal property 15 which belongs to such carrier for hire, and as to which 16 such carrier receives the physical possession of the 17 repaired, reconditioned or remodeled item of tangible 18 personal property in Illinois, and which such carrier 19 transports, or shares with another common carrier in the 20 transportation of such property, out of Illinois on a 21 standard uniform bill of lading showing the person who 22 repaired, reconditioned or remodeled the property to a 23 destination outside Illinois, for use outside Illinois. 24 (5b) a sale or transfer of tangible personal property 25 which is produced by the seller thereof on special order 26 in such a way as to have made the applicable tax the HB5252 - 26 - LRB104 17667 HLH 33933 b 1 Service Occupation Tax or the Service Use Tax, rather than 2 the Retailers' Occupation Tax or the Use Tax, for an 3 interstate carrier by rail which receives the physical 4 possession of such property in Illinois, and which 5 transports such property, or shares with another common 6 carrier in the transportation of such property, out of 7 Illinois on a standard uniform bill of lading showing the 8 seller of the property as the shipper or consignor of such 9 property to a destination outside Illinois, for use 10 outside Illinois. 11 (6) until July 1, 2003, a sale or transfer of 12 distillation machinery and equipment, sold as a unit or 13 kit and assembled or installed by the retailer, which 14 machinery and equipment is certified by the user to be 15 used only for the production of ethyl alcohol that will be 16 used for consumption as motor fuel or as a component of 17 motor fuel for the personal use of such user and not 18 subject to sale or resale. 19 (7) at the election for each fiscal year of any 20 serviceman not required to be otherwise registered as a 21 retailer under Section 2a of the Retailers' Occupation Tax 22 Act or, beginning January 1, 2026, any serviceman 23 maintaining a place of business in this State who does not 24 make any retail sales of tangible personal property to 25 purchasers in Illinois, sales of service in which the 26 aggregate annual cost price of tangible personal property HB5252 - 27 - LRB104 17667 HLH 33933 b 1 transferred as an incident to the sales of service is less 2 than 35%, or 75% in the case of servicemen transferring 3 prescription drugs or servicemen engaged in graphic arts 4 production, of the aggregate annual total gross receipts 5 from all sales of service. The purchase of such tangible 6 personal property by the serviceman shall be subject to 7 tax under the Retailers' Occupation Tax Act and the Use 8 Tax Act. However, if a primary serviceman who has made the 9 election described in this paragraph subcontracts service 10 work to a secondary serviceman who has also made the 11 election described in this paragraph, the primary 12 serviceman does not incur a Use Tax liability if the 13 secondary serviceman (i) has paid or will pay Use Tax on 14 his or her cost price of any tangible personal property 15 transferred to the primary serviceman and (ii) certifies 16 that fact in writing to the primary serviceman. Beginning 17 January 1, 2026, this election shall not apply to any sale 18 of service through a marketplace that has met the 19 threshold in subsection (b-5) of Section 2d of this Act. 20 All transactions over such a marketplace shall be subject 21 to the tax imposed under Section 3-10 of this Act. 22 Tangible personal property transferred incident to the 23 completion of a maintenance agreement is exempt from the tax 24 imposed pursuant to this Act. 25 Exemption (5) also includes machinery and equipment used 26 in the general maintenance or repair of such exempt machinery HB5252 - 28 - LRB104 17667 HLH 33933 b 1 and equipment or for in-house manufacture of exempt machinery 2 and equipment. On and after July 1, 2017, exemption (5) also 3 includes graphic arts machinery and equipment, as defined in 4 paragraph (5) of Section 3-5. The machinery and equipment 5 exemption does not include machinery and equipment used in (i) 6 the generation of electricity for wholesale or retail sale; 7 (ii) the generation or treatment of natural or artificial gas 8 for wholesale or retail sale that is delivered to customers 9 through pipes, pipelines, or mains; or (iii) the treatment of 10 water for wholesale or retail sale that is delivered to 11 customers through pipes, pipelines, or mains. The provisions 12 of Public Act 98-583 are declaratory of existing law as to the 13 meaning and scope of this exemption. For the purposes of 14 exemption (5), each of these terms shall have the following 15 meanings: (1) "manufacturing process" shall mean the 16 production of any article of tangible personal property, 17 whether such article is a finished product or an article for 18 use in the process of manufacturing or assembling a different 19 article of tangible personal property, by procedures commonly 20 regarded as manufacturing, processing, fabricating, or 21 refining which changes some existing material or materials 22 into a material with a different form, use or name. In relation 23 to a recognized integrated business composed of a series of 24 operations which collectively constitute manufacturing, or 25 individually constitute manufacturing operations, the 26 manufacturing process shall be deemed to commence with the HB5252 - 29 - LRB104 17667 HLH 33933 b 1 first operation or stage of production in the series, and 2 shall not be deemed to end until the completion of the final 3 product in the last operation or stage of production in the 4 series; and further, for purposes of exemption (5), 5 photoprocessing is deemed to be a manufacturing process of 6 tangible personal property for wholesale or retail sale; (2) 7 "assembling process" shall mean the production of any article 8 of tangible personal property, whether such article is a 9 finished product or an article for use in the process of 10 manufacturing or assembling a different article of tangible 11 personal property, by the combination of existing materials in 12 a manner commonly regarded as assembling which results in a 13 material of a different form, use or name; (3) "machinery" 14 shall mean major mechanical machines or major components of 15 such machines contributing to a manufacturing or assembling 16 process; and (4) "equipment" shall include any independent 17 device or tool separate from any machinery but essential to an 18 integrated manufacturing or assembly process; including 19 computers used primarily in a manufacturer's computer assisted 20 design, computer assisted manufacturing (CAD/CAM) system; or 21 any subunit or assembly comprising a component of any 22 machinery or auxiliary, adjunct or attachment parts of 23 machinery, such as tools, dies, jigs, fixtures, patterns and 24 molds; or any parts which require periodic replacement in the 25 course of normal operation; but shall not include hand tools. 26 Equipment includes chemicals or chemicals acting as catalysts HB5252 - 30 - LRB104 17667 HLH 33933 b 1 but only if the chemicals or chemicals acting as catalysts 2 effect a direct and immediate change upon a product being 3 manufactured or assembled for wholesale or retail sale or 4 lease. The purchaser of such machinery and equipment who has 5 an active resale registration number shall furnish such number 6 to the seller at the time of purchase. The purchaser of such 7 machinery and equipment and tools without an active resale 8 registration number shall prepare a certificate of exemption 9 stating facts establishing the exemption, which certificate 10 shall be available to the Department for inspection or audit. 11 The Department shall prescribe the form of the certificate. 12 Any informal rulings, opinions or letters issued by the 13 Department in response to an inquiry or request for any 14 opinion from any person regarding the coverage and 15 applicability of exemption (5) to specific devices shall be 16 published, maintained as a public record, and made available 17 for public inspection and copying. If the informal ruling, 18 opinion or letter contains trade secrets or other confidential 19 information, where possible the Department shall delete such 20 information prior to publication. Whenever such informal 21 rulings, opinions, or letters contain any policy of general 22 applicability, the Department shall formulate and adopt such 23 policy as a rule in accordance with the provisions of the 24 Illinois Administrative Procedure Act. 25 On and after July 1, 1987, no entity otherwise eligible 26 under exemption (3) of this Section shall make tax-free HB5252 - 31 - LRB104 17667 HLH 33933 b 1 purchases unless it has an active exemption identification 2 number issued by the Department. 3 The purchase, employment and transfer of such tangible 4 personal property as newsprint and ink for the primary purpose 5 of conveying news (with or without other information) is not a 6 purchase, use or sale of service or of tangible personal 7 property within the meaning of this Act. 8 "Serviceman" means any person who is engaged in the 9 occupation of making sales of service. 10 "Sale at retail" means "sale at retail" as defined in the 11 Retailers' Occupation Tax Act, which, on and after January 1, 12 2025, is defined to include leases. 13 "Supplier" means any person who makes sales of tangible 14 personal property to servicemen for the purpose of resale as 15 an incident to a sale of service. 16 "Serviceman maintaining a place of business in this 17 State", or any like term, means and includes any serviceman: 18 (1) Having or maintaining within this State, directly 19 or by a subsidiary, an office, distribution house, sales 20 house, warehouse or other place of business, or any agent 21 or other representative operating within this State under 22 the authority of the serviceman or its subsidiary, 23 irrespective of whether such place of business or agent or 24 other representative is located here permanently or 25 temporarily, or whether such serviceman or subsidiary is 26 licensed to do business in this State; HB5252 - 32 - LRB104 17667 HLH 33933 b 1 (1.1) Having a contract with a person located in this 2 State under which the person, for a commission or other 3 consideration based on the sale of service by the 4 serviceman, directly or indirectly refers potential 5 customers to the serviceman by providing to the potential 6 customers a promotional code or other mechanism that 7 allows the serviceman to track purchases referred by such 8 persons. Examples of mechanisms that allow the serviceman 9 to track purchases referred by such persons include but 10 are not limited to the use of a link on the person's 11 Internet website, promotional codes distributed through 12 the person's hand-delivered or mailed material, and 13 promotional codes distributed by the person through radio 14 or other broadcast media. The provisions of this paragraph 15 (1.1) shall apply only if the cumulative gross receipts 16 from sales of service by the serviceman to customers who 17 are referred to the serviceman by all persons in this 18 State under such contracts exceed $10,000 during the 19 preceding 4 quarterly periods ending on the last day of 20 March, June, September, and December; a serviceman meeting 21 the requirements of this paragraph (1.1) shall be presumed 22 to be maintaining a place of business in this State but may 23 rebut this presumption by submitting proof that the 24 referrals or other activities pursued within this State by 25 such persons were not sufficient to meet the nexus 26 standards of the United States Constitution during the HB5252 - 33 - LRB104 17667 HLH 33933 b 1 preceding 4 quarterly periods; 2 (1.2) Beginning July 1, 2011, having a contract with a 3 person located in this State under which: 4 (A) the serviceman sells the same or substantially 5 similar line of services as the person located in this 6 State and does so using an identical or substantially 7 similar name, trade name, or trademark as the person 8 located in this State; and 9 (B) the serviceman provides a commission or other 10 consideration to the person located in this State 11 based upon the sale of services by the serviceman. 12 The provisions of this paragraph (1.2) shall apply only if 13 the cumulative gross receipts from sales of service by the 14 serviceman to customers in this State under all such 15 contracts exceed $10,000 during the preceding 4 quarterly 16 periods ending on the last day of March, June, September, 17 and December; 18 (2) (Blank). 19 (3) (Blank). 20 (4) (Blank). 21 (5) (Blank). 22 (6) (Blank). 23 (7) (Blank). 24 (8) (Blank). 25 (9) Beginning October 1, 2018 and through December 31, 26 2025, making sales of service to purchasers in Illinois HB5252 - 34 - LRB104 17667 HLH 33933 b 1 from outside of Illinois if: 2 (A) the cumulative gross receipts from sales of 3 service to purchasers in Illinois are $100,000 or 4 more; or 5 (B) the serviceman enters into 200 or more 6 separate transactions for sales of service to 7 purchasers in Illinois. 8 The serviceman shall determine on a quarterly basis, 9 ending on the last day of March, June, September, and 10 December, whether he or she meets the threshold of either 11 subparagraph (A) or (B) of this paragraph (9) for the 12 preceding 12-month period. If the serviceman meets the 13 threshold of either subparagraph (A) or (B) for a 12-month 14 period, he or she is considered a serviceman maintaining a 15 place of business in this State and is required to collect 16 and remit the tax imposed under this Act and file returns 17 for one year. At the end of that one-year period, the 18 serviceman shall determine whether the serviceman met the 19 threshold of either subparagraph (A) or (B) during the 20 preceding 12-month period. If the serviceman met the 21 threshold in either subparagraph (A) or (B) for the 22 preceding 12-month period, he or she is considered a 23 serviceman maintaining a place of business in this State 24 and is required to collect and remit the tax imposed under 25 this Act and file returns for the subsequent year. If at 26 the end of a one-year period a serviceman that was HB5252 - 35 - LRB104 17667 HLH 33933 b 1 required to collect and remit the tax imposed under this 2 Act determines that he or she did not meet the threshold in 3 either subparagraph (A) or (B) during the preceding 4 12-month period, the serviceman subsequently shall 5 determine on a quarterly basis, ending on the last day of 6 March, June, September, and December, whether he or she 7 meets the threshold of either subparagraph (A) or (B) for 8 the preceding 12-month period. 9 (9.1) Beginning January 1, 2026, making sales of 10 service to purchasers in Illinois from outside of Illinois 11 if the cumulative gross receipts from sales of service to 12 purchasers in Illinois are $100,000 or more. 13 The serviceman shall determine on a quarterly basis, 14 ending on the last day of March, June, September, and 15 December, whether the serviceman meets the threshold in 16 this paragraph (9.1) for the preceding 12-month period. If 17 the serviceman meets the threshold for a 12-month period, 18 the serviceman is considered a serviceman maintaining a 19 place of business in this State and is required to collect 20 and remit the tax imposed under this Act and file returns 21 for one year. At the end of the one-year period, the 22 serviceman shall determine whether the serviceman met the 23 threshold during the preceding 12-month period. If the 24 serviceman met the threshold for the preceding 12-month 25 period, the serviceman is considered a serviceman 26 maintaining a place of business in this State and is HB5252 - 36 - LRB104 17667 HLH 33933 b 1 required to collect and remit the tax imposed under this 2 Act and file returns for the subsequent year. If at the end 3 of a one-year period a serviceman that was required to 4 collect and remit the tax imposed under this Act 5 determines that the serviceman did not meet the threshold 6 during the preceding 12-month period, the serviceman shall 7 subsequently determine on a quarterly basis, ending on the 8 last day of March, June, September, and December, whether 9 the serviceman meets the threshold for the preceding 10 12-month period. 11 Beginning January 1, 2020, neither the gross receipts 12 from nor the number of separate transactions for sales of 13 service to purchasers in Illinois that a serviceman makes 14 through a marketplace facilitator and for which the 15 serviceman has received a certification from the 16 marketplace facilitator pursuant to Section 2d of this Act 17 shall be included for purposes of determining whether he 18 or she has met a threshold of paragraph (9) or this 19 paragraph (9.1). 20 (10) Beginning January 1, 2020, a marketplace 21 facilitator that meets a threshold set forth in either 22 subsection (b) or (b-5) of Section 2d of this Act. 23 (Source: P.A. 103-592, eff. 1-1-25; 104-6, eff. 6-16-25.) 24 Section 15. The Retailers' Occupation Tax Act is amended 25 by changing Section 1 as follows: HB5252 - 37 - LRB104 17667 HLH 33933 b 1 (35 ILCS 120/1) 2 Sec. 1. Definitions. As used in this Act: 3 "Sale at retail" means any transfer of the ownership of, 4 the title to, the possession or control of, the right to 5 possess or control, or a license to use tangible personal 6 property to a purchaser, for the purpose of use or 7 consumption, and not for the purpose of resale in any form as 8 tangible personal property to the extent not first subjected 9 to a use for which it was purchased, for a valuable 10 consideration: Provided that the property purchased is deemed 11 to be purchased for the purpose of resale, despite first being 12 used, to the extent to which it is resold as an ingredient of 13 an intentionally produced product or byproduct of 14 manufacturing. For this purpose, slag produced as an incident 15 to manufacturing pig iron or steel and sold is considered to be 16 an intentionally produced byproduct of manufacturing. 17 Transactions whereby the possession of the property is 18 transferred but the seller retains the title as security for 19 payment of the selling price shall be deemed to be sales. 20 "Sale at retail" shall be construed to include any 21 transfer of the ownership of, the title to, the possession or 22 control of, the right to possess or control, or a license to 23 use tangible personal property to a purchaser, for use or 24 consumption by any other person to whom such purchaser may 25 transfer the tangible personal property without a valuable HB5252 - 38 - LRB104 17667 HLH 33933 b 1 consideration, and to include any transfer, whether made for 2 or without a valuable consideration, for resale in any form as 3 tangible personal property unless made in compliance with 4 Section 2c of this Act. 5 Sales of tangible personal property, which property, to 6 the extent not first subjected to a use for which it was 7 purchased, as an ingredient or constituent, goes into and 8 forms a part of tangible personal property subsequently the 9 subject of a "Sale at retail", are not sales at retail as 10 defined in this Act: Provided that the property purchased is 11 deemed to be purchased for the purpose of resale, despite 12 first being used, to the extent to which it is resold as an 13 ingredient of an intentionally produced product or byproduct 14 of manufacturing. 15 "Sale at retail" shall be construed to include any 16 Illinois florist's sales transaction in which the purchase 17 order is received in Illinois by a florist and the sale is for 18 use or consumption, but the Illinois florist has a florist in 19 another state deliver the property to the purchaser or the 20 purchaser's donee in such other state. 21 Nonreusable tangible personal property that is used by 22 persons engaged in the business of operating a restaurant, 23 cafeteria, or drive-in is a sale for resale when it is 24 transferred to customers in the ordinary course of business as 25 part of the sale of food or beverages and is used to deliver, 26 package, or consume food or beverages, regardless of where HB5252 - 39 - LRB104 17667 HLH 33933 b 1 consumption of the food or beverages occurs. Examples of those 2 items include, but are not limited to nonreusable, paper and 3 plastic cups, plates, baskets, boxes, sleeves, buckets or 4 other containers, utensils, straws, placemats, napkins, doggie 5 bags, and wrapping or packaging materials that are transferred 6 to customers as part of the sale of food or beverages in the 7 ordinary course of business. 8 The purchase, employment and transfer of such tangible 9 personal property as newsprint and ink for the primary purpose 10 of conveying news (with or without other information) is not a 11 purchase, use or sale of tangible personal property. 12 A person whose activities are organized and conducted 13 primarily as a not-for-profit service enterprise, and who 14 engages in selling tangible personal property at retail 15 (whether to the public or merely to members and their guests) 16 is engaged in the business of selling tangible personal 17 property at retail with respect to such transactions, 18 excepting only a person organized and operated exclusively for 19 charitable, religious or educational purposes either (1), to 20 the extent of sales by such person to its members, students, 21 patients or inmates of tangible personal property to be used 22 primarily for the purposes of such person, or (2), to the 23 extent of sales by such person of tangible personal property 24 which is not sold or offered for sale by persons organized for 25 profit. The selling of school books and school supplies by 26 schools at retail to students is not "primarily for the HB5252 - 40 - LRB104 17667 HLH 33933 b 1 purposes of" the school which does such selling. The 2 provisions of this paragraph shall not apply to nor subject to 3 taxation occasional dinners, socials or similar activities of 4 a person organized and operated exclusively for charitable, 5 religious or educational purposes, whether or not such 6 activities are open to the public. 7 A person who is the recipient of a grant or contract under 8 Title VII of the Older Americans Act of 1965 (P.L. 92-258) and 9 serves meals to participants in the federal Nutrition Program 10 for the Elderly in return for contributions established in 11 amount by the individual participant pursuant to a schedule of 12 suggested fees as provided for in the federal Act is not 13 engaged in the business of selling tangible personal property 14 at retail with respect to such transactions. 15 "Lease" means a transfer of the possession or control of, 16 the right to possess or control, or a license to use, but not 17 title to, tangible personal property for a fixed or 18 indeterminate term for consideration, regardless of the name 19 by which the transaction is called. "Lease" does not include a 20 lease entered into merely as a security agreement that does 21 not involve a transfer of possession or control from the 22 lessor to the lessee. 23 On and after January 1, 2025, the term "sale", when used in 24 this Act, includes a lease. 25 "Purchaser" means anyone who, through a sale at retail, 26 acquires the ownership of, the title to, the possession or HB5252 - 41 - LRB104 17667 HLH 33933 b 1 control of, the right to possess or control, or a license to 2 use tangible personal property for a valuable consideration. 3 "Reseller of motor fuel" means any person engaged in the 4 business of selling or delivering or transferring title of 5 motor fuel to another person other than for use or 6 consumption. No person shall act as a reseller of motor fuel 7 within this State without first being registered as a reseller 8 pursuant to Section 2c or a retailer pursuant to Section 2a. 9 "Selling price" or the "amount of sale" means the 10 consideration for a sale valued in money whether received in 11 money or otherwise, including cash, credits, property, other 12 than as hereinafter provided, and services, but, prior to 13 January 1, 2020 and beginning again on January 1, 2022, not 14 including the value of or credit given for traded-in tangible 15 personal property where the item that is traded-in is of like 16 kind and character as that which is being sold; beginning 17 January 1, 2020 and until January 1, 2022, "selling price" 18 includes the portion of the value of or credit given for 19 traded-in motor vehicles of the First Division as defined in 20 Section 1-146 of the Illinois Vehicle Code of like kind and 21 character as that which is being sold that exceeds $10,000. 22 "Selling price" shall be determined without any deduction on 23 account of the cost of the property sold, the cost of materials 24 used, labor or service cost or any other expense whatsoever, 25 but does not include charges that are added to prices by 26 sellers on account of the seller's tax liability under this HB5252 - 42 - LRB104 17667 HLH 33933 b 1 Act, or on account of the seller's duty to collect, from the 2 purchaser, the tax that is imposed by the Use Tax Act, or, 3 except as otherwise provided with respect to any cigarette tax 4 imposed by a home rule unit, on account of the seller's tax 5 liability under any local occupation tax administered by the 6 Department, or, except as otherwise provided with respect to 7 any cigarette tax imposed by a home rule unit on account of the 8 seller's duty to collect, from the purchasers, the tax that is 9 imposed under any local use tax administered by the 10 Department. Effective December 1, 1985, "selling price" shall 11 include charges that are added to prices by sellers on account 12 of the seller's tax liability under the Cigarette Tax Act, on 13 account of the sellers' duty to collect, from the purchaser, 14 the tax imposed under the Cigarette Use Tax Act, and on account 15 of the seller's duty to collect, from the purchaser, any 16 cigarette tax imposed by a home rule unit. On and after the 17 effective date of this amendatory Act of the 104th General 18 Assembly, "selling price" does not include any assessment 19 imposed under the Paint Stewardship Act. 20 The provisions of this paragraph, which provides only for 21 an alternative meaning of "selling price" with respect to the 22 sale of certain motor vehicles incident to the contemporaneous 23 lease of those motor vehicles, continue in effect and are not 24 changed by the tax on leases implemented by Public Act 25 103-592. Notwithstanding any law to the contrary, for any 26 motor vehicle, as defined in Section 1-146 of the Illinois HB5252 - 43 - LRB104 17667 HLH 33933 b 1 Vehicle Code, that is sold on or after January 1, 2015 for the 2 purpose of leasing the vehicle for a defined period that is 3 longer than one year and (1) is a motor vehicle of the second 4 division that: (A) is a self-contained motor vehicle designed 5 or permanently converted to provide living quarters for 6 recreational, camping, or travel use, with direct walk through 7 access to the living quarters from the driver's seat; (B) is of 8 the van configuration designed for the transportation of not 9 less than 7 nor more than 16 passengers; or (C) has a gross 10 vehicle weight rating of 8,000 pounds or less or (2) is a motor 11 vehicle of the first division, "selling price" or "amount of 12 sale" means the consideration received by the lessor pursuant 13 to the lease contract, including amounts due at lease signing 14 and all monthly or other regular payments charged over the 15 term of the lease. Also included in the selling price is any 16 amount received by the lessor from the lessee for the leased 17 vehicle that is not calculated at the time the lease is 18 executed, including, but not limited to, excess mileage 19 charges and charges for excess wear and tear. For sales that 20 occur in Illinois, with respect to any amount received by the 21 lessor from the lessee for the leased vehicle that is not 22 calculated at the time the lease is executed, the lessor who 23 purchased the motor vehicle does not incur the tax imposed by 24 the Use Tax Act on those amounts, and the retailer who makes 25 the retail sale of the motor vehicle to the lessor is not 26 required to collect the tax imposed by the Use Tax Act or to HB5252 - 44 - LRB104 17667 HLH 33933 b 1 pay the tax imposed by this Act on those amounts. However, the 2 lessor who purchased the motor vehicle assumes the liability 3 for reporting and paying the tax on those amounts directly to 4 the Department in the same form (Illinois Retailers' 5 Occupation Tax, and local retailers' occupation taxes, if 6 applicable) in which the retailer would have reported and paid 7 such tax if the retailer had accounted for the tax to the 8 Department. For amounts received by the lessor from the lessee 9 that are not calculated at the time the lease is executed, the 10 lessor must file the return and pay the tax to the Department 11 by the due date otherwise required by this Act for returns 12 other than transaction returns. If the retailer is entitled 13 under this Act to a discount for collecting and remitting the 14 tax imposed under this Act to the Department with respect to 15 the sale of the motor vehicle to the lessor, then the right to 16 the discount provided in this Act shall be transferred to the 17 lessor with respect to the tax paid by the lessor for any 18 amount received by the lessor from the lessee for the leased 19 vehicle that is not calculated at the time the lease is 20 executed; provided that the discount is only allowed if the 21 return is timely filed and for amounts timely paid. The 22 "selling price" of a motor vehicle that is sold on or after 23 January 1, 2015 for the purpose of leasing for a defined period 24 of longer than one year shall not be reduced by the value of or 25 credit given for traded-in tangible personal property owned by 26 the lessor, nor shall it be reduced by the value of or credit HB5252 - 45 - LRB104 17667 HLH 33933 b 1 given for traded-in tangible personal property owned by the 2 lessee, regardless of whether the trade-in value thereof is 3 assigned by the lessee to the lessor. In the case of a motor 4 vehicle that is sold for the purpose of leasing for a defined 5 period of longer than one year, the sale occurs at the time of 6 the delivery of the vehicle, regardless of the due date of any 7 lease payments. A lessor who incurs a Retailers' Occupation 8 Tax liability on the sale of a motor vehicle coming off lease 9 may not take a credit against that liability for the Use Tax 10 the lessor paid upon the purchase of the motor vehicle (or for 11 any tax the lessor paid with respect to any amount received by 12 the lessor from the lessee for the leased vehicle that was not 13 calculated at the time the lease was executed) if the selling 14 price of the motor vehicle at the time of purchase was 15 calculated using the definition of "selling price" as defined 16 in this paragraph. Notwithstanding any other provision of this 17 Act to the contrary, lessors shall file all returns and make 18 all payments required under this paragraph to the Department 19 by electronic means in the manner and form as required by the 20 Department. This paragraph does not apply to leases of motor 21 vehicles for which, at the time the lease is entered into, the 22 term of the lease is not a defined period, including leases 23 with a defined initial period with the option to continue the 24 lease on a month-to-month or other basis beyond the initial 25 defined period. 26 The phrase "like kind and character" shall be liberally HB5252 - 46 - LRB104 17667 HLH 33933 b 1 construed (including but not limited to any form of motor 2 vehicle for any form of motor vehicle, or any kind of farm or 3 agricultural implement for any other kind of farm or 4 agricultural implement), while not including a kind of item 5 which, if sold at retail by that retailer, would be exempt from 6 retailers' occupation tax and use tax as an isolated or 7 occasional sale. 8 "Gross receipts" from the sales of tangible personal 9 property at retail means the total selling price or the amount 10 of such sales, as hereinbefore defined. In the case of charge 11 and time sales, the amount thereof shall be included only as 12 and when payments are received by the seller. In the case of 13 leases, except as otherwise provided in this Act, the amount 14 thereof shall be included only as and when gross receipts are 15 received by the lessor. Receipts or other consideration 16 derived by a seller from the sale, transfer or assignment of 17 accounts receivable to a wholly owned subsidiary will not be 18 deemed payments prior to the time the purchaser makes payment 19 on such accounts. 20 "Department" means the Department of Revenue. 21 "Person" means any natural individual, firm, partnership, 22 association, joint stock company, joint adventure, public or 23 private corporation, limited liability company, or a receiver, 24 executor, trustee, guardian or other representative appointed 25 by order of any court. 26 The isolated or occasional sale of tangible personal HB5252 - 47 - LRB104 17667 HLH 33933 b 1 property at retail by a person who does not hold himself out as 2 being engaged (or who does not habitually engage) in selling 3 such tangible personal property at retail, or a sale through a 4 bulk vending machine, does not constitute engaging in a 5 business of selling such tangible personal property at retail 6 within the meaning of this Act; provided that any person who is 7 engaged in a business which is not subject to the tax imposed 8 by this Act because of involving the sale of or a contract to 9 sell real estate or a construction contract to improve real 10 estate or a construction contract to engineer, install, and 11 maintain an integrated system of products, but who, in the 12 course of conducting such business, transfers tangible 13 personal property to users or consumers in the finished form 14 in which it was purchased, and which does not become real 15 estate or was not engineered and installed, under any 16 provision of a construction contract or real estate sale or 17 real estate sales agreement entered into with some other 18 person arising out of or because of such nontaxable business, 19 is engaged in the business of selling tangible personal 20 property at retail to the extent of the value of the tangible 21 personal property so transferred. If, in such a transaction, a 22 separate charge is made for the tangible personal property so 23 transferred, the value of such property, for the purpose of 24 this Act, shall be the amount so separately charged, but not 25 less than the cost of such property to the transferor; if no 26 separate charge is made, the value of such property, for the HB5252 - 48 - LRB104 17667 HLH 33933 b 1 purposes of this Act, is the cost to the transferor of such 2 tangible personal property. Construction contracts for the 3 improvement of real estate consisting of engineering, 4 installation, and maintenance of voice, data, video, security, 5 and all telecommunication systems do not constitute engaging 6 in a business of selling tangible personal property at retail 7 within the meaning of this Act if they are sold at one 8 specified contract price. 9 A person who holds himself or herself out as being engaged 10 (or who habitually engages) in selling tangible personal 11 property at retail is a person engaged in the business of 12 selling tangible personal property at retail hereunder with 13 respect to such sales (and not primarily in a service 14 occupation) notwithstanding the fact that such person designs 15 and produces such tangible personal property on special order 16 for the purchaser and in such a way as to render the property 17 of value only to such purchaser, if such tangible personal 18 property so produced on special order serves substantially the 19 same function as stock or standard items of tangible personal 20 property that are sold at retail. 21 Persons who engage in the business of transferring 22 tangible personal property upon the redemption of trading 23 stamps are engaged in the business of selling such property at 24 retail and shall be liable for and shall pay the tax imposed by 25 this Act on the basis of the retail value of the property 26 transferred upon redemption of such stamps. HB5252 - 49 - LRB104 17667 HLH 33933 b 1 "Bulk vending machine" means a vending machine, containing 2 unsorted confections, nuts, toys, or other items designed 3 primarily to be used or played with by children which, when a 4 coin or coins of a denomination not larger than $0.50 are 5 inserted, are dispensed in equal portions, at random and 6 without selection by the customer. 7 "Remote retailer" means a retailer that does not maintain 8 within this State, directly or by a subsidiary, an office, 9 distribution house, sales house, warehouse or other place of 10 business, or any agent or other representative operating 11 within this State under the authority of the retailer or its 12 subsidiary, irrespective of whether such place of business or 13 agent is located here permanently or temporarily or whether 14 such retailer or subsidiary is licensed to do business in this 15 State. 16 "Retailer maintaining a place of business in this State" 17 has the meaning given to that term in Section 2 of the Use Tax 18 Act. 19 "Marketplace" means a physical or electronic place, forum, 20 platform, application, or other method by which a marketplace 21 seller sells or offers to sell items. 22 "Marketplace facilitator" means a person who, pursuant to 23 an agreement with an unrelated third-party marketplace seller, 24 directly or indirectly through one or more affiliates 25 facilitates a retail sale by an unrelated third-party 26 marketplace seller by: HB5252 - 50 - LRB104 17667 HLH 33933 b 1 (1) listing or advertising for sale by the marketplace 2 seller in a marketplace, tangible personal property that 3 is subject to tax under this Act; and 4 (2) either directly or indirectly, through agreements 5 or arrangements with third parties, collecting payment 6 from the customer and transmitting that payment to the 7 marketplace seller regardless of whether the marketplace 8 facilitator receives compensation or other consideration 9 in exchange for its services. 10 A person who provides advertising services, including 11 listing products for sale, is not considered a marketplace 12 facilitator, so long as the advertising service platform or 13 forum does not engage, directly or indirectly through one or 14 more affiliated persons, in the activities described in 15 paragraph (2) of this definition of "marketplace facilitator". 16 "Marketplace facilitator" does not include any person 17 licensed under the Auction License Act. This exemption does 18 not apply to any person who is an Internet auction listing 19 service, as defined by the Auction License Act. 20 "Marketplace seller" means a person who makes sales 21 through a marketplace operated by an unrelated third-party 22 marketplace facilitator. 23 (Source: P.A. 103-592, eff. 1-1-25; 103-983, eff. 1-1-25; 24 104-417, eff. 8-15-25.)