35 ILCS 120/5k

Current through Public Act 103-1052

Section 35 ILCS 120/5k - Building materials exemption; enterprise zone

(a) Each retailer who makes a qualified sale of building materials to be incorporated into real estate in an enterprise zone established by a county or municipality under the Illinois Enterprise Zone Act by remodeling, rehabilitation or new construction, may deduct receipts from such sales when calculating the tax imposed by this Act. For purposes of this Section, before July 1, 2013, "qualified sale" means a sale of building materials that will be incorporated into real estate as part of a building project for which a Certificate of Eligibility for Sales Tax Exemption has been issued by the administrator of the enterprise zone in which the building project is located, and on and after July 1, 2013, "qualified sale" means a sale of building materials that will be incorporated into real estate as part of a building project for which an Enterprise Zone Building Materials Exemption Certificate has been issued to the purchaser by the Department. A construction contractor or other entity shall not make tax-free purchases unless it has an active Exemption Certificate issued by the Department at the time of the purchase.

(b) Before July 1, 2013, to document the exemption allowed under this Section, the retailer must obtain from the purchaser a copy of the Certificate of Eligibility for Sales Tax Exemption issued by the administrator of the enterprise zone into which the building materials will be incorporated. On and after July 1, 2013, to document the exemption allowed under this Section, the retailer must obtain from the purchaser the certification required under subsection (c), which must contain the Enterprise Zone Building Materials Exemption Certificate number issued to the purchaser by the Department. Upon request from the enterprise zone administrator, the Department shall issue an Enterprise Zone Building Materials Exemption Certificate for each construction contractor or other entity identified by the enterprise zone administrator.

The Department shall make the Exemption Certificates available directly to each enterprise zone administrator, construction contractor, or other entity. The request for Enterprise Zone Building Materials Exemption Certificates from the enterprise zone administrator to the Department must include the following information:

(1) the name and address of the construction contractor or other entity;

(2) the name and number of the enterprise zone;

(3) the name and location or address of the building project in the enterprise zone;

(4) the estimated amount of the exemption for each construction contractor or other entity for which a request for Exemption Certificate is made, based on a stated estimated average tax rate and the percentage of the contract that consists of materials;

(5) the period of time over which supplies for the project are expected to be purchased; and

(6) other reasonable information as the Department may require, including, but not limited to FEIN numbers, to determine if the contractor or other entity, or any partner, or a corporate officer, and in the case of a limited liability company, any manager or member, of the construction contractor or other entity, is or has been the owner, a partner, a corporate officer, and in the case of a limited liability company, a manager or member, of a person that is in default for moneys due to the Department under this Act or any other tax or fee Act administered by the Department.

The Department shall issue the Enterprise Zone Building Materials Exemption Certificates within 3 business days after receipt of request from the zone administrator. This requirement does not apply in circumstances where the Department, for reasonable cause, is unable to issue the Exemption Certificate within 3 business days. The Department may refuse to issue an Exemption Certificate if the owner, any partner, or a corporate officer, and in the case of a limited liability company, any manager or member, of the construction contractor or other entity is or has been the owner, a partner, a corporate officer, and in the case of a limited liability company, a manager or member, of a person that is in default for moneys due to the Department under this Act or any other tax or fee Act administered by the Department. The Enterprise Zone Building Materials Exemption Certificate shall contain language stating that if the construction contractor or other entity who is issued the Exemption Certificate makes a tax-exempt purchase, as described in this Section, that is not eligible for exemption under this Section or allows another person to make a tax-exempt purchase, as described in this Section, that is not eligible for exemption under this Section, then, in addition to any tax or other penalty imposed, the construction contractor or other entity is subject to a penalty equal to the tax that would have been paid by the retailer under this Act as well as any applicable local retailers' occupation tax on the purchase that is not eligible for the exemption.

The Department, in its discretion, may require that the request for Enterprise Zone Building Materials Exemption Certificates be submitted electronically. The Department may, in its discretion, issue the Exemption Certificates electronically. The Enterprise Zone Building Materials Exemption Certificate number shall be designed in such a way that the Department can identify from the unique number on the Exemption Certificate issued to a given construction contractor or other entity, the name of the Enterprise Zone, the project for which the Exemption Certificate is issued, and the construction contractor or other entity to whom the Exemption Certificate is issued. The Exemption Certificate shall contain an expiration date, which shall be no more than 2 years after the date of issuance. At the request of the zone administrator, the Department may renew an Exemption Certificate. After the Department issues Exemption Certificates for a given enterprise zone project, the enterprise zone administrator may notify the Department of additional construction contractors or other entities eligible for an Enterprise Zone Building Materials Exemption Certificate. Upon notification by the enterprise zone administrator and subject to the other provisions of this subsection (b), the Department shall issue an Enterprise Zone Building Materials Exemption Certificate to each additional construction contractor or other entity identified by the enterprise zone administrator. An enterprise zone administrator may notify the Department to rescind an Enterprise Zone Building Materials Exemption Certificate previously issued by the Department but that has not yet expired. Upon notification by the enterprise zone administrator and subject to the other provisions of this subsection (b), the Department shall issue the rescission of the Enterprise Zone Building Materials Exemption Certificate to the construction contractor or other entity identified by the enterprise zone administrator and provide a copy to the enterprise zone administrator.

If the Department of Revenue determines that a construction contractor or other entity that was issued an Exemption Certificate under this subsection (b) made a tax-exempt purchase, as described in this Section, that was not eligible for exemption under this Section or allowed another person to make a tax-exempt purchase, as described in this Section, that was not eligible for exemption under this Section, then, in addition to any tax or other penalty imposed, the construction contractor or other entity is subject to a penalty equal to the tax that would have been paid by the retailer under this Act as well as any applicable local retailers' occupation tax on the purchase that was not eligible for the exemption.

(c) In addition, the retailer must obtain certification from the purchaser that contains:

(1) a statement that the building materials are being purchased for incorporation into real estate located in an Illinois enterprise zone;

(2) the location or address of the real estate into which the building materials will be incorporated;

(3) the name of the enterprise zone in which that real estate is located;

(4) a description of the building materials being purchased;

(5) on and after July 1, 2013, the purchaser's Enterprise Zone Building Materials Exemption Certificate number issued by the Department; and

(6) the purchaser's signature and date of purchase.

(d) The deduction allowed by this Section for the sale of building materials may be limited, to the extent authorized by ordinance, adopted after the effective date of this amendatory Act of 1992, by the municipality or county that created the enterprise zone into which the building materials will be incorporated. The ordinance, however, may neither require nor prohibit the purchase of building materials from any retailer or class of retailers in order to qualify for the exemption allowed under this Section. The provisions of this Section are exempt from Section 2-70.

(e) Notwithstanding anything to the contrary in this Section, for enterprise zone projects already in existence and for which construction contracts are already in place on July 1, 2013, the request for Enterprise Zone Building Materials Exemption Certificates from the enterprise zone administrator to the Department for these pre-existing construction contractors and other entities must include the information required under subsection (b), but not including the information listed in items (4) and (5). For any new construction contract entered into on or after July 1, 2013, however, all of the information in subsection (b) must be provided.

35 ILCS 120/5k

Amended by P.A. 098-0109,§ 5-40, eff. 7/25/2013.

Amended by P.A. 097-0905,§ 15, eff. 8/7/2012.

P.A. 91-51, eff. 6-30-99; 91-954, eff. 1-1-02; 92-484, eff. 8-23-01; 92-779, eff. 8-6-02.