Illinois Enacts Exemptions for Electricity, Gas and Water

Illinois has enacted legislationeffective June 1, 2014 that amends the sales and use tax treatment of electricity, natural or artificial gas and water. Per the legislation, transactions involving the following are exempt from retailers’ occupation tax, use tax, service occupation tax (SOT), and service use tax (SUT): electricity delivered to customers by wire; natural or artificial gas that is delivered to customers through pipes, pipelines, or mains; and water that is delivered to customers through pipes, pipelines, or mains. The sales and use tax machinery and equipment exemption does not apply to machinery and equipment, repair and replacement parts, or in-house manufactured machinery and equipment used in: the generation of electricity for wholesale or retail sale; the generation or treatment of natural or artificial gas for wholesale or retail sale that is delivered to customers through pipes, pipelines, or mains; or the treatment of water for wholesale or retail sale that is delivered to customers through pipes, pipelines, or mains. Per the legislation, for purposes of the retailers’ occupation tax, use tax, SOT, and SUT, the term “computer software” includes software used to operate machinery and equipment used in: the generation of electricity for wholesale or retail sale; the generation or treatment of natural or artificial gas for wholesale or retail sale that is delivered to customers through pipes, pipelines, or mains; or the treatment of water for wholesale or retail sale that is delivered to customers through pipes, pipelines, or mains. (P.A. 98-583 (S.B. 2243), Laws 2013, effective June 1, 2014)

Posted on April 11, 2014