Illinois Expands Manufacturing Machinery and Equipment Exemption

Illinois has expanded the state’s manufacturing sales and use tax exemption to include production related tangible personal property, effective July 1, 2019. “Production related tangible personal property” is considered all tangible personal property that is used or consumed by a purchaser in a manufacturing facility. The state also expanded the definition of production related tangible personal property to include supplies and consumables used in a manufacturing facility including fuels, coolants, solvents, oils, lubricants, and adhesives, hand tools, protective apparel, and fire and safety equipment used or consumed within a manufacturing facility. This broadens the exemption to include items previously qualifying for the tax credit under the Manufacturer’s Purchase Credit (MPC) and brings Illinois’ exemption more in line with surrounding states.

The Illinois Department of Revenue will adopt rules to implement and administer the exemption for production related tangible personal property. (S.B. 689, Laws 2019, effective July 1, 2019)

Update: On December 13, 2019, Illinois Gov. J.B. Pritzker signed legislation (effective on that date) removing the requirement that an exemption certificate is required for each transaction that qualifies for the state’s manufacturing sales and use tax exemption. Per the legislation, a purchaser of manufacturing machinery, equipment or tools without an active resale registration number must complete an exemption certificate stating the facts establishing the exemption, and the certificate must be available to the Illinois Department of Revenue for inspection or audit. Purchasers qualifying for the manufacturing exemption should keep a properly completed exemption certificate on file at all times. Exemption certificates can be downloaded on the Illinois Department of Revenue website. (P.A. 101-0604 (S.B. 119), Laws 2019, effective December 13, 2019)

Posted on July 17, 2019