USE/OCC TX-SELLING PRICE-PAINT

Illinois General Assembly - Full Text of HB5252

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HB5252 - 104th General Assembly

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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

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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

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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

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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

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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

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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

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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

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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
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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
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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

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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

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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

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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

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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

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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
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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

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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

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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.

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"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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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;

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(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

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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

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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

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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

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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:

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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.

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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:

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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.)

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