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The Illinois Department of Revenue issued a private letter ruling concluding that a computer and printer system for printing digital images qualifies for exemption from state’s sales and use tax as graphic arts machinery and equipment used primarily for graphic arts production. The particular system in question was a picture maker thermal print station (TPS). Images are transmitted into the TPS from a variety of sources and then digitally uploaded to the TPS internal computer, and later transferred to special paper for printing. Since the state’s definition of graphic arts production includes quick printing and digital printing, the TPS system is considered exempt. (Illinois Department of Revenue, Private Letter Ruling, ST 06-0008, June 14, 2006)


According to a General Information Letter from the Illinois Department of Revenue, spoiled or damaged ingredients do not qualify for the state’s manufacturing exemption. Raw materials which are spoiled or damaged in production are taxed on their cost price. Materials damaged after refinement or other manufacturing steps are taxed at the lower of their fair market value or cost price. (ST 05-0097-GIL)


Even if exempt in another state, an out-of-state entity cannot make tax-free purchases in Illinois without presenting its vendor with an exemption identification number issued by the Illinois Department of Revenue. An exemption certificate offered by another state would not meet this requirement. No other validation is acceptable. (ST 05-0107-GIL; 86 Ill. Adm. Code 130.2007)


The Department of Revenue established an amnesty program entitled the “City of Chicago Tax and Indebtedness Amnesty Ordinance of 2005”. The amnesty period runs from October 24, 2005 to December 16, 2005, but may be extended for a period of up to 60 days provided an application for extension is submitted to the Chicago Director of Revenue by December 16, 2005. The amnesty is available to taxpayers, who as of October 24, 2005 and not at any time prior to September 14, 2005, were not registered to collect and/or remit taxes for which they are seeking this amnesty relief. When an eligible taxpayer pays all taxes owed for taxable periods ending after July 1, 2003, the Department will not assess interest or penalties on the taxes paid. In addition, the Department will not seek to collect tax, interest, or penalties for taxable periods ending before July 1, 2003 or civil or criminal prosecution for any taxes owed by the eligible unregistered taxpayer prior to the amnesty period. Amnesty shall be granted only if all amnesty conditions are met by the taxpayer, tax collector or other debtor. Any taxpayer or tax collector who fails to take advantage of the amnesty program, and is liable for any taxes due is liable for a penalty of 20% of such taxes, in addition to the taxes, interest or penalty due thereon. (City of Chicago, Department of Revenue, September 14, 2005)


Under the Federal Enterprise Zone Act, certain new gasification facilities now qualify as a "high impact business." As a result of this change, these facilities would qualified to receive Illinois corporate and personal income, sales and use, and utility tax credits and exemptions. While certain pilot projects are excepted, a "new gasification facility" is a newly-constructed coal gasification facility that generates chemical feed stocks or transportation fuels derived from coal, that supports the creation or retention of Illinois coal-mining jobs, and qualifies for state financial assistance before December 31, 2006. (SB 1814, effective June 21, 2005)



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