Beginning on July 1, 2007 and ending on June 30, 2008, the purchase of eligible production-related tangible personal property is eligible for a manufacturing and assembling machinery and equipment exemption in Illinois. Eligible purchases made within the stated period are entitled to a credit memorandum equal to 5% of the purchase price, with an aggregate maximum award to all taxpayers of $10,000,000.
To qualify, the tangible personal property must be used or consumed in a production- related process by a manufacturer in a manufacturing facility. Eligible purchases include property that is purchased for incorporation into real estate within a manufacturing facility or used in activities such as research and development, preproduction, material handling, receiving, quality or inventory control, storage, staging, or packaging for shipping and transportation. Tangible personal property that transferred to a customer, registered or titled with a government agency, or used in sales, purchasing, accounting, fiscal management, marketing, personnel recruitment or selection, or landscaping does not qualify. Purchases otherwise eligible for the manufacturing and assembling machinery and equipment exemption are not eligible for a credit memorandum, nor can purchases earn a Manufacturer’s Purchase Credit if a credit memorandum is received.
A Production Related Tangible Personal Property Exemption Report must be filed no later than September 1, 2008. The Report must state the total purchase price of all production-related tangible personal property purchased within the period and the amount of the exemption claimed. In addition, purchasers must maintain records identifying the vendor or supplier, date of purchase, purchase price, and description of the property. If the Department does not approve the full amount claimed, it will notify the taxpayer and explain the basis for its decision. The taxpayer has 30 days after the date of the notice to submit a corrected Exemption Report or provide evidence that the original Report is correct. If the taxpayer does not respond to the notice, or if the Department does not agree with the revised amount, the Exemption Report will be approved only for the amount the Department initially determined eligible. If the aggregate amount of claims exceeds $10,000,000, the Department shall reduce the amount of each taxpayer’s credit on a pro rata basis. If this occurs, the Department will notify each purchaser within 30 days of its final decision that the Report was approved and the pro rata amount of the exemption claimed was allowed. (Title 86, Part 150, Section 150.340, Illinois Department of Revenue)