Current through Register Vol. 48, No. 12, March 22, 2024
a) General. The exemption provided in this
Section terminated on June 30, 2003, pursuant to P.A. 93-24. P.A. 98-456,
effective August 16, 2013, reinstated the coal exemption retroactive to July 1,
2003. The Department, however, will not approve any claims or refunds on or
after August 16, 2013, for taxes due or paid during the period beginning July
1, 2003 through August 16, 2013. The exemption for coal exploration, mining,
off highway hauling, processing, maintenance and reclamation equipment will
terminate by operation of the sunset provisions of Section 2-70 of the
Retailers' Occupation Tax Act on August 16, 2018. Pursuant to P.A. 100-0594,
effective June 29, 2018, the exemption provided in this Section is extended
until July 1, 2023. Pursuant to P.A. 102-0700, effective April 19, 2022, the
exemption provided in this Section is extended until July 1, 2028. The
exemption does not apply to motor vehicles required to be registered pursuant
to the Illinois Vehicle Code [625 ILCS 5 ]. This exemption
applies only to equipment used primarily in coal exploration, mining, off
highway hauling, processing, maintenance and reclamation. Equipment used 50% or
less in exploration, mining, off highway hauling, processing, maintenance and
reclamation will not qualify for this exemption. Excluded from this exemption
are motor vehicles required to be registered pursuant to the Illinois Vehicle
Code. Special mobile equipment other than motor vehicles may qualify for the
exemption if it is used primarily in coal exploration, mining, off highway
hauling, processing, maintenance and reclamation. This exemption does not
include supplies (such as chemicals, rust inhibitors and adhesives), coolants,
lubricants, inert limestone, magnetite and other materials added to the coal
washing medium, reclamation materials (such as seed, plants and limestone),
items of personal apparel (such as gloves, shoes, hats, helmets, coveralls,
masks, mask air filters, belts, harnesses or holsters) or fuel of any
type.
b) Definitions
1) "Coal" means a mineral deposit or finished
product comprised of combustible, carbon based plant fossil matter used as
fuel.
2) "Coal Exploration" means
the search for coal. Exploration includes, but is not limited to, geophysical
exploration, excavating and drilling to locate coal deposits.
3) "Kits" means commercially-packaged sets of
parts that are ordered from a manufacturer, inventoried and sold by a retailer
as a single item. An example would be a "tire assembly" comprised of the rim,
tire, foam filling and valve stem.
4) "Maintenance" means keeping coal
exploration, mining, off highway hauling, processing, maintenance and
reclamation equipment in a state of repair and efficiency.
5) "Mining" means the extraction of coal from
the earth by underground and surface mining and includes the extraction of coal
by the mine owner or operator.
6)
"Off Highway Hauling" means carrying or transporting and would include
transport of overburden, waste material, including gob from the processing
facility for disposal, and coal from the coal seam to the processing facility
by conveyors or unlicensed vehicles, and conveying coal from the beginning of
the processing cycle through the last stage of coal production, which ends at
the time the coal is stored.
7)
"Processing" means preparation activities performed directly on the coal which
are necessary for converting coal into a finished product so that it is ready
for sale or the reprocessing of coal mine waste to extract and recycle coal
from the waste by the mine owner, operator or a third party contractor or
successor. Processing includes, but is not limited to, sizing, crushing, drying
and washing.
8) "Reclamation" means
conditioning areas affected by mining operations. Examples of reclamation
activities include, but are not limited to, backfilling, grading, seeding and
planting.
9) "Replacement Parts"
means parts that are used to replace parts of qualifying equipment and that
require periodic replacement. To be considered a replacement part, the part
must be purchased for the purpose of being installed and must, in fact, become
a physical component part of coal exploration, mining, off highway hauling,
processing, maintenance or reclamation equipment.
10) "Used primarily" means equipment that is
used more than 50% of the time in coal exploration, mining, off highway
hauling, processing, maintenance and reclamation.
c) Exempt Activities
By way of illustration and not limitation, the following
activities will be considered to constitute coal exploration, mining, off
highway hauling, processing, maintenance and reclamation:
1) Coal is produced in a surface mining
operation that begins with locating the coal deposit to be mined, clearing of
surface obstacles and overburden from the land above the coal deposit to be
mined, continues with the removal of waste material and with the extraction of
the coal, continues with the transportation from the coal seam to the
processing facility, continues further with the refilling and grading of the
mined area with overburden and waste material from a subsequently mined area,
continues further with the processing of the coal, and ends with the
stockpiling of the coal to allow moisture to drain and evaporate from the
washed coal. By way of illustration and not limitation, the following equipment
is exempt:
A) Geophysical surveying,
excavating, dredging and drilling machinery and equipment used primarily to
locate surface mine coal deposits (e.g., data logger transducer;
photoionization detector; optical televiewer; acoustic televiewer; petrographic
survey equipment; and inclinometer survey equipment).
B) Equipment used primarily to drill and load
holes for blasting material to dislodge the overburden, blasting agents (such
as ammonium nitrate and fuel oil or ANFO); equipment used primarily to ignite
blasting agents, including, but not limited to, high explosives, detonators,
lead-in lines and blasting machines; and equipment used primarily to transport
the blasting material.
C) Equipment
used primarily to remove overburden and other waste materials from the pit to
be mined.
D) Equipment used
primarily to modify the energy purchased for the surface mining process if the
equipment is used to modify the energy for use on exempt equipment (e.g.,
transformers, capacitors and other equipment used to reduce, increase,
stabilize or otherwise control the amperage, voltage or frequency of the
electric current and transmit the electrical current to coal mining and
processing equipment).
E) Pumps and
hoses used primarily to remove water or to divert water from the active pit
area.
F) Equipment used primarily
to load the overburden, waste material or coal to be transported to the
processing facility into off highway haulage trucks or onto a conveyor
system.
G) Equipment used primarily
to extract coal from the earth.
H)
Unlicensed off highway haulage trucks or a conveyor system to transport
overburden, waste material or coal to the processing facility.
I) Equipment used primarily to backfill,
grade, seed, plant or otherwise reclaim previously mined land.
J) Equipment used primarily in a coal wash
plant to clean the coal prior to sale to customers. Equipment used primarily in
the cleaning, sizing or grading of coal in a coal preparation plant may qualify
as manufacturing machinery and equipment (see Section
130.330).
K) Equipment used primarily to blend
different grades of coal together so that the final product meets customer
specifications regarding quality and sulfur content.
L) Electrical cable that is part of an
electrical distribution system supplying electricity to exempt equipment in the
field (e.g., draglines and shovels that move and load overburden and shovels
that load coal in the pit).
M)
Computers and electrical control panels integral to and used primarily to
operate exempt equipment used in coal exploration, mining, off highway hauling,
processing, maintenance and reclamation.
N) Remote audio visual equipment integral to
and used primarily in connection with coal exploration, mining, off highway
hauling, processing, maintenance and reclamation.
O) Electric generators used primarily to
power exempt coal exploration, mining, off highway hauling, processing,
maintenance and reclamation equipment.
P) Communication equipment integral to and
used primarily in production and operation activities in connection with coal
exploration, mining, off highway hauling, processing, maintenance and
reclamation equipment.
2) Coal is produced in an underground mining
operation that begins with locating the coal deposit to be mined, continues
with the boring of a shaft from the surface to the coal deposit to be mined,
continues with the removal of waste material and the extraction of coal,
continues further with the transportation from the coal seam to the processing
facility, continues further with the installation of roof supports and the
coating of walls with rock dust to prevent mine explosions and collapse,
continues further with the processing of coal and disposal of waste material
from the mine and processing facility, and ends with the stockpiling of coal to
allow moisture to drain and evaporate from the washed coal. By way of
illustration and not limitation, the following equipment is exempt:
A) Geophysical surveying, excavating and
drilling machinery and equipment used primarily to locate underground mine coal
deposits (e.g., data logger transducer; photoionization detector; optical
televiewer; acoustic televiewer; petrographic survey equipment; and
inclinometer survey equipment).
B)
Equipment used primarily to create access to the coal deposit (e.g., a rotary
drill or a track drill), equipment used primarily to sever coal from the
deposit (e.g., continuous miners and long wall mining equipment), and equipment
used primarily to load coal onto conveyor belts, into trucks or other
conveyances used to transport coal from the deposit to the processing operation
(e.g., shuttle cars and battery powered haulers).
C) Shuttle cars used primarily to transport
the coal from the point of severance to the feeder-breaker at the end of a
conveyor belt or other transportation system.
D) The feeder-breaker which breaks the large
lumps of coal and feeds the coal onto the conveyor belt which carries the coal
outside the mine where it is temporarily stockpiled or transported to the
processing facility.
E) Equipment
used primarily to modify the energy purchased for the underground mining
process if the equipment is used to modify the energy for use on exempt
equipment, e.g., transformers, capacitors and other equipment used to reduce,
increase, stabilize or otherwise control the amperage, voltage or frequency of
the electrical current and transmit the electrical current to mining and
processing equipment.
F) Pumps and
hoses, piping and discharge apparatus used primarily in the movement or removal
of water or to divert water from the underground mine area.
G) Equipment used primarily to install roof
bolts, roof bolt supports and side rib bolt supports and in scaling (e.g., the
removal of loose rock and slabs of rock) prior to roof bolting to prevent mine
collapse.
H) Roof bolts and plates,
side rib bolts and plates, and epoxy resin cartridges used primarily to secure
roof bolts and side rib bolts installed to prevent mine collapse.
I) Equipment used primarily to coat mine
walls with inert limestone as the coal is removed to prevent explosions caused
by the escape of volatile materials.
J) Equipment installed as improvements to
real estate in underground mining such as elevators, rail, ventilating and
illuminating systems, including the foundations for that equipment as long as
those foundations are located within the underground mine.
K) Equipment used primarily in the
construction, reconstruction, alteration, remodeling, servicing, repairing,
maintenance or improvement of underground mine structures. Materials, such as
lumber, steel, concrete, rock and other building materials, qualify for the
exemption only when used in underground mine structures, including use as roof
support to prevent mine collapse.
L) Additions to exempt underground rail
conveyors, ventilating and illumination systems due to the progression of
mining.
M) Longwall equipment
consisting of shields, shearers, face conveyors and equipment used primarily
for recovery, handling and transportation of longwall equipment.
N) Machinery and equipment used primarily to
transport coal to aboveground facilities.
O) Machinery and equipment used primarily to
convey coal from the beginning of the processing cycle through the last stage
of coal production.
P) Equipment
used primarily in a coal wash plant to clean the coal prior to sale to
customers. Equipment used primarily in the cleaning, sizing, or grading of coal
in a coal preparation plant may qualify as manufacturing machinery and
equipment (see Section 130.330).
Q)
Equipment used primarily to blend different grades of coal together so that the
final product meets customer specifications regarding quality and sulfur
content.
R) Equipment, other than
motor vehicles required to be registered pursuant to the Illinois Vehicle Code,
used primarily to transport miners into and out of an underground mine (e.g.,
mantrips, utility vehicles, mobile equipment and scoops).
S) Electrical cable that is part of an
electrical distribution system supplying electricity to exempt equipment at the
mine site (e.g., draglines and shovels that move and load overburden and
shovels that load coal in the pit).
T) Computers and electrical control panels
integral to and used primarily to operate exempt equipment used in coal
exploration, mining, off highway hauling, processing, maintenance and
reclamation.
U) Remote audio visual
equipment integral to and used primarily in connection with exempt coal
exploration, mining, off highway hauling, processing, maintenance and
reclamation equipment.
V)
Electrical generators used primarily to power exempt coal exploration, mining,
off highway hauling, processing, maintenance and reclamation
equipment.
W) Communication
equipment integral to and used primarily in production and operation activities
in connection with exempt coal exploration, mining, off highway hauling,
processing, maintenance and reclamation equipment.
3) By way of illustration and not limitation,
the following maintenance equipment is exempt:
A) Unlicensed maintenance and welding trucks
used primarily for field repair of exempt equipment.
B) Lathes, drill presses, air compressors and
welders used primarily to build, modify or rework exempt repair parts or
equipment.
C) Mobile and overhead
cranes and manlifts used primarily in connection with exempt coal exploration,
mining, off highway hauling, processing, maintenance and reclamation.
4) By way of illustration and not
limitation, the following coal exploration equipment is exempt unless
registered pursuant to the Illinois Vehicle Code:
A) Drill rigs used primarily to drill
exploration core holes.
B) Water
trucks used primarily in the drilling process.
C) Winch and casing trucks used primarily in
the drilling process.
D) Field
maintenance trucks used primarily to make repairs on exempt field
equipment.
E) Air compressors used
in connection with exempt coal exploration, mining, off highway hauling,
processing, maintenance and reclamation.
d) Nonexempt Activities
By way of illustration and not limitation, the following
activities will not be considered to constitute coal exploration, mining, off
highway hauling, processing, maintenance and reclamation:
1) The use of equipment in the construction,
reconstruction, alteration, remodeling, servicing, repairing, maintenance or
improvement of real estate except for underground mine structures. Material,
such as lumber, steel, concrete, rock and other building materials, will not
qualify for the exemption except when used in underground mine structures, such
as roof support to prevent mine collapse;
2) the use of equipment in research and
development for new uses of coal;
3) the use of equipment, trailers, sheds or
structures in management, sales or other nonproduction, nonoperational
activities including production or extraction scheduling, purchasing,
receiving, accounting, fiscal management, communications equipment (e.g.,
radios and phones), security, marketing, product exhibition and promotion,
personnel recruitment, selection or training;
4) the use of equipment to prevent or fight
fires or other mining hazards, protective supplies such as face masks, gas
masks, helmets, gloves, coveralls, goggles, or first aid equipment and
supplies, rescue chambers, self-rescuers, protective mine shelters or tracking
devices (e.g., Global Positioning Systems or similar devices) even though such
equipment and supplies may be required by law;
5) the use of equipment for general
ventilation, heating, cooling, climate control or general illumination not
specifically required for the exploration, mining, off highway hauling,
processing, maintenance and reclamation operation;
6) the use of facilities for storing coal
after extraction and processing;
7)
the use of front-end loaders, cranes, equipment used to load coal onto trucks,
railcars or barges for delivery to customers;
8) the use of concrete foundations and
support structures for ventilation equipment used aboveground.
e) Sales to Lessors of Coal
Exploration, Mining, Off Highway Hauling, Processing, Maintenance and
Reclamation Equipment
1) For the exemption to
apply, the purchaser need not, himself, employ the equipment in coal
exploration, mining, off highway hauling, processing, maintenance and
reclamation. If the purchaser leases the equipment to a lessee who uses it
primarily in a qualified manner, the sale to the purchaser-lessor will be
eligible for the exemption. A supplier may exclude these sales from taxable
gross receipts if the purchaser-lessor provides the supplier with a properly
completed certificate and the information contained in the certificate would
support an exemption if the sale were made directly to the lessee.
2) Should a purchaser-lessor subsequently
lease the equipment to a lessee who does not use it primarily in a way that
would qualify for the exemption, the purchaser-lessor will become liable for
the tax he or she previously did not pay.
f) Purchaser Certification
Certificates must be executed by the purchaser. The
certificate must include the seller's name and address, the purchaser's name
and address and a statement that the property purchased will be used primarily
for coal exploration, mining, off highway hauling, processing, maintenance and
reclamation. If a purchaser can claim either the exemption under this Section
or the Manufacturing Machinery and Equipment exemption, the purchaser must
specify on the certificate which exemption the purchaser is claiming. Sellers
may accept blanket certificates, but have the responsibility to obtain and keep
all certificates as part of their books and records. If a retailer accepts the
certificate and the purchaser does not, in fact, use the equipment in a
qualifying manner, the purchaser will be liable to the Department for the tax.
Equipment that is initially used primarily in a qualifying manner and, having
been so used for less than one-half of its useful life, is converted to
nonqualified uses, will become subject to tax at the time of conversion.
Replacement parts purchased initially for use in a qualifying manner and used
in a nonqualifying use will become subject to tax at the time of
use.