The Illinois Department of Revenue has issued a general information letter regarding whether commercial printing is considered “manufacturing” and if the state’s manufacturing exemption applies to electricity consumed to run printing machinery. In Illinois, the manufacturing machinery and equipment exemption is available for machinery and equipment used primarily (more than 50% of the time) in the manufacturing or assembling of tangible personal property (TPP) for wholesale or retail sale or lease. The state’s manufacturing exemption does not include hand tools, supplies, coal, fuel oil, electricity, natural gas, artificial gas, steam, refrigerants or water. Utilities such as gas and electricity are not taxed under the Retailer’s Occupation or Use Taxes but rather under separate excise taxes. Therefore, any exemptions under the sales and use tax provisions are not applicable to alternative excise taxes.
Effective July 1, 2017, the exemption does include machinery and equipment used primarily in graphic arts production. The regulation pertaining to the manufacturing exemption is in the process of being amended to reflect this change. “Graphic arts production” means the production of TPP for wholesale or retail sale or lease by means of printing, including ink jet printing, by one or more of the processes described in Groups 323110 through 323122 of Subsector 323, Groups 511110 through 511199 of Subsector 511, and Group 512230 of Subsector 512 of the North American Industry Classification System (NAICS). Graphic arts production does not include the transfer of images onto paper or other TPP by means of photocopying or final printed products in electronic or audio form, including the production of software or audiobooks. Persons engaged primarily in the business of printing or publishing newspapers or magazines that qualify as newsprint and ink, by one or more of the processes described in Groups 511110 through 511199 of subsector 511 of the NAICS are deemed to be engaged in graphic arts production. (General Information Letter ST 18-0009-GIL, Illinois Department of Revenue, March 30, 2018)