Illinois Manufacturer’s Purchase Credit (MPC) reinstated as of September 1, 2004.

Purchases of machinery and equipment made on or after that date will earn a credit equal to 50% of the 6.25%, or 3.125%, of the state sales tax rate. Printers and newspaper companies will also be allowed to apply the amount of taxes not paid due to the graphic arts exemption to future machinery and equipment purchases not exempt under the graphics arts or other exemptions. The MPC also applied to machinery and equipment purchased between January 1, 1995 and June 30, 2003. In order for the MPC to be valid it must be dated and include the name, address, registration number (if registered), credit being applied, and purchasers must indicate that the manufacturer’s or graphic arts producer’s purchase credit applies. The certification may be incorporated into the producer’s purchase order. The MPC is nontransferable and the manufacturer or graphic arts producer must report all information required by the annual Report of Manufacturer’s Purchase Credit Used within six months of the end of the calendar year in which a MPC is earned. The report will include the total purchase price of all exempt purchases for which credit was earned, the total State Use Tax or Service Use Tax which would have been due, amount of credit earned, and the percentage used to calculate the amount of credit earned. Failure to file the report will forfeit MPC for that year, unless a reasonable cause for not filing the report can be proven, and MPC on purchases made during the period not reported. Although not yet codified, the new MPC is expected to follow the same requirements as the MPC which ended July 1, 2003. Credits expire on December 31 of the second calendar year after the credits were accrued. For a copy of the Public Act, visit (SB 2207, 2205, July 2004)

Posted on August 18, 2004