Illinois Tax Budget Bill Reinstates Corporate Credits and Exemptions

Both houses of the Illinois General Assembly passed Senate Bills 841, 842, and 1733 on May 31, 2003, and Governor Rod Blagojevich is expected to sign the bills as early as this week. In an attempt to raise revenues to fill the deficit gap, these bills eliminate the Manufacturers' Purchase Credit, the Graphic Arts Machinery and Equipment Exemption, the Out-of-State Natural Gas Use Tax Exemption, the Oil Field and Coal Exploration Equipment Exemption, and the Rolling Stock Exemption for motor vehicles.

One of the most significant changes is to eliminate the Manufacturers' Purchase Credit for purchases after June 30, 2003. A qualified purchaser desiring to use the Manufacturers' Purchase Credit must certify to their sellers prior to October 1, 2003 that the purchaser is satisfying their tax liability through utilization of the credit. A Manufacturers' Purchase Credit reported on any original or amended return after October 20, 2003 shall be disallowed. It is critical that purchasers certify and report all qualifying purchases in a timely manner in order to maximize the amount of Manufacturers' Purchase Credit prior to its elimination.

Other sales and use tax exemptions to be eliminated within the next 30 days include: 

• The Graphic Arts Machinery and Equipment Exemption will be eliminated for qualified purchases after July 1, 2003.
• The Out-of-State Natural Gas Use Tax Exemption for direct purchases of gas from out-of-state suppliers with respect to contracts executed prior to March 1, 1995 is eliminated for purchases after September 30, 2003.
• The Equipment Exemptions with respect to Oil Field and Coal Exploration will be eliminated for purchases after July 1, 2003.
• In addition, effective July 1, 2003, motor vehicles do not qualify for the Rolling Stock Exemption.