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An amendment added by the House would change the state's definition of 'use' and the state's definition of 'tangible personal property.' If passed, sales and leases of prewritten and custom software would be taxable. Illinois does not tax leases of tangible personal property and since a true license of prewritten software is like a lease and does not result in a transfer of title, licenses of prewritten software are excluded from the definition of sale. Currently, the development of custom software is deemed a service and is not taxable. The proposed change would define computer software to include a set of statements, data or instructions to be used directly or indirectly in a computer in order to bring about a certain result and would include software that is adapted to specific individualize requirements. (Illinois Senate Bill 2205, Laws 2004.)


Effective immediately, when registering a business with the state of Illinois, Form NUC-1 is no longer accepted. Completing Form REG-1 is the initial step in the registration process for most fees and taxes, including sales and use, administered by the Illinois Department of Revenue. The only tax not currently included on Reg-1 is the Motor Fuel Use Tax, which can be applied for using a separate form, Form MFUT-12. New businesses can also register online at (What's New with Illinois Business Registration, Informational Bulletin, FY 2004-22, January 2004)


Several changes were made to the Uniform Penalty and Interest Act. These changes are outlined in IL DOR Information Bulletin FY 2004-17 and include:
• New calculations for the late payment penalty are effective for tax returns due on or after January 1, 2004.
• An underreporting penalty will replace the current additional liability late-payment of nonpayment penalty on returns due on or after January 1, 2004
• If you do not pay the total amount shown due on a bill within 30 days of the notice being issued, an additional cost of collection fee will be imposed. Effective for returns due on or after July 1, 2003.
• New interest rate calculations are effective for interest accruing on or after January 1, 2004.
Additional information can be found at the Illinois Department of Revenue website, (Illinois Department of Revenue, Uniform Penalty and Interest Changes Informational Bulletin FY 2004-17)


Beginning October 2003, Line A has been added to Illinois Form ST-1, Sales and Use Tax Return, and Form ST-1-T, Illinois Sales and Use Tax Telefile Worksheet on which liquor retailers are required to report total liquor purchases. This value is equivalent to the total value of all alcoholic liquor invoiced and delivered to the retailer during the liability period, even if payment is remitted to the distributor during a different period. Purchases from more than one distributor should be added together and then recorded on the line. (Illinois Department of Revenue, Information Bulletin FY 2004-13, September 2003)


An Illinois utility company operating two coal fired power plants was denied an Illinois use tax pollution control facility exemption. The exemption was denied because the primary use of the coal was to produce electricity, not to control the company's pollution system and did not meet the "primary purpose" test. (Central Illinois Light Co. v. Illinois Department of Revenue, III AppCt, Third District, No. 3-01-0860, February 7, 2003)



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