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 aggregate 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
aggregate 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. Notwithstanding the fact that the sales may be at retail, the
Retailers' Occupation Tax Act does not apply to sales of aggregate exploration,
mining, off highway hauling, processing, maintenance and reclamation equipment
used primarily for the exploration and mining of mineral deposits and for the
manufacture of resultant aggregate products. The exemption also applies to
individual replacement parts for exempt aggregate exploration, mining, off
highway hauling, processing, maintenance and reclamation equipment. The
exemption also applies to equipment and replacement parts purchased for lease
if those items are used primarily in the activities noted in this subsection.
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 aggregate
exploration, mining, off highway hauling, processing, maintenance and
reclamation. Use of the equipment in any other 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 aggregate exploration, mining, off highway hauling, processing, maintenance
and reclamation. This exemption does not include supplies (such as chemicals,
rust inhibitors, and adhesives), coolants, lubricants, 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) "Aggregate" means any mineral deposit or
finished product, including but not limited to sand, gravel, stone, clay,
industrial minerals, composites or other mineral solids, except coal.
2) "Aggregate Exploration" means the search
for aggregate. Exploration includes, but is not limited to, geophysical
exploration, excavating, dredging, and drilling to locate aggregate
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 aggregate exploration, mining, off highway hauling, processing,
maintenance and reclamation equipment in a state of repair and
efficiency.
5) "Mining" means the
extraction of aggregate from the earth by underground and surface mining and
includes the extraction of aggregate by the mine owner or operator.
6) "Off Highway Hauling" means carrying or
transporting and would include transport of overburden or waste material,
including byproduct materials from the processing facility for disposal,
transporting aggregates from the aggregate deposit to the processing facility
by conveyors or unlicensed vehicles, and conveying aggregates from the
beginning of the processing cycle through the last stage of aggregate
production, which ends at the time the aggregate is ready for sale.
7) "Processing" means preparation activities
performed directly on the aggregate that are necessary for converting aggregate
into a finished product so that it is ready for sale or the reprocessing of
aggregate fines to extract and recycle construction aggregates by the mine
owner, operator, or 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 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 aggregate exploration, mining, off highway hauling,
processing, maintenance and reclamation equipment.
10) "Used primarily" means that the equipment
and replacement parts must be used more than 50% of the time in aggregate
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 aggregate exploration, mining, off highway
hauling, processing, maintenance and reclamation:
1) Aggregate is produced in a surface mining
operation that begins with locating the aggregate deposit to be mined, clearing
of surface obstacles and overburden from the land above the aggregate deposit
to be mined, continues with the removal of waste material and with the
extraction of the aggregate, continues with the transportation from the
aggregate deposit to the processing facility, continues further with the
refilling and grading of the mined area with overburden and waste material,
continues further with the processing of the aggregate, and ends with the
stockpiling of the aggregate. 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 aggregate deposits (e.g., data logger
transducer; photoionization detector; optical televiewer; acoustic televiewer;
petrographic survey equipment; and inclinometer survey equipment).
B) Equipment used primarily to remove
overburden and other waste materials from the deposit to be mined.
C) Equipment used primarily to drill and load
holes for blasting material used to fracture aggregate for extraction; blasting
agents used primarily for surface aggregate mine blasting, including, but not
limited to, 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.
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 aggregate surface mining and processing
equipment).
E) Pumps, hoses, piping
and discharge apparatus, used primarily in the movement or removal of water or
to divert water from the active mine area.
F) Equipment used primarily to load the
overburden, waste material or aggregate to be transported to the processing
facility into off highway haulage trucks or onto a conveyor system.
G) Equipment used primarily to extract
aggregate from the earth.
H)
Unlicensed off highway haulage trucks or a conveyor system used primarily to
transport overburden, waste material or aggregate to the processing
facility.
I) Equipment used
primarily to backfill, grade, seed, plant or otherwise reclaim previously mined
land.
J) Crushing, screening and
other equipment used primarily to beneficiate and size aggregate
products.
K) Equipment used
primarily in an aggregate wash plant to clean the aggregate prior to sale to
customers.
L) Equipment used
primarily to blend different grades of aggregate together so that the final
product meets customer specifications.
M) 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 aggregate in the pit).
N)
Computers and electrical control panels integral to and used primarily to
operate exempt equipment used primarily in aggregate exploration, mining, off
highway hauling, processing, maintenance and reclamation.
O) Remote audio visual equipment integral to
and used primarily in connection with exempt aggregate exploration, mining, off
highway hauling, processing, maintenance and reclamation.
P) Electrical generators used primarily to
power exempt aggregate exploration, mining, off highway hauling, processing,
maintenance and reclamation equipment.
Q) Communication equipment integral to and
used primarily in production and operation activities in connection with exempt
aggregate exploration, mining, off highway hauling, processing, maintenance and
reclamation equipment.
2) Aggregate is produced in an underground
mining operation that begins with locating the aggregate deposit to be mined,
creating access from the surface to the aggregate deposit to be mined,
continues further with the installation of roof supports, continues with the
removal of waste material and the extraction of aggregate, continues further
with the transportation from the aggregate deposit to the processing facility,
continues further with the processing of aggregate and disposal of waste
material from the mine and processing facility, and ends with the stockpiling
of aggregate. 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 aggregate 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 aggregate deposit (e.g., drills, equipment to deliver blasting agents,
excavators, loaders and tunnel boring equipment) and equipment used primarily
to load aggregate on to conveyor belts, trucks or other conveyances used
primarily to transport aggregate from the deposit to the processing operation
(e.g., loaders).
C) Equipment used
primarily to drill and load holes for blasting material used to fracture
aggregate for extraction; blasting agents (such as ammonium nitrate and fuel
oil or ANFO) used for underground aggregate mine blasting; 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.
D) 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).
E) Conveyor belts, trucks or other
conveyances primarily used to transport aggregate from the deposit to the
processing operation.
F) The feeder
and crusher used primarily to break large pieces of aggregate.
G) 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 electric current and transmit the
electrical current to aggregate underground mining and processing
equipment).
H) Pumps, hoses, piping
and discharge apparatus, used primarily in the movement or removal of water or
to divert water from the underground mine area.
I) Equipment used primarily to install roof
bolts, roof bolt supports and side rib bolt supports, and scaling prior to roof
bolting, to prevent mine collapse.
J) 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.
K) Equipment used primarily to coat mine
walls with inert material for loose rock safety.
L) Equipment installed as improvements to
real estate for mining, such as elevators and rail, ventilating and
illuminating systems, including the foundations for that equipment as long as
those foundations are located within the underground mine.
M) Additions to exempt underground rail
conveyors and ventilating and illumination systems due to the progression of
mining.
N) Crushing, screening and
other equipment used primarily to beneficiate and size aggregate
products.
O) Machinery and
equipment used primarily to convey aggregates from the beginning of the
processing cycle through the last stage of aggregate production, which ends at
the time the aggregate is ready for sale.
P) Equipment used primarily in an aggregate
wash plant to clean the aggregate prior to sale to customers.
Q) Equipment used primarily to blend
different grades of aggregate together so that the final product meets customer
specifications.
R) 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 move and load aggregate in the pit).
S) Computers and electrical control panels
integral to and used primarily to operate exempt equipment used in aggregate
exploration, mining, off highway hauling, processing, maintenance and
reclamation.
T) Remote audiovisual
equipment integral to and used primarily in connection with exempt aggregate
exploration, mining, off highway hauling, processing, maintenance and
reclamation.
U) Electrical
generators used primarily to power exempt aggregate exploration, mining, off
highway hauling, processing, maintenance and reclamation equipment.
V) Communication equipment integral to and
used primarily in production and operation activities in connection with exempt
aggregate 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 aggregate
exploration, mining, off highway hauling, processing, maintenance and
reclamation.
D) Equipment used
primarily for dust suppression.
E)
Equipment and machinery used primarily to clean areas around off-highway
conveying and processing machinery and equipment.
4) By way of illustration and not limitation,
the following aggregate 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 primarily in
connection with exempt aggregate 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 aggregate 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 supports to prevent mine collapse;
2) the use of equipment in research and
development for new uses of aggregate;
3) the use of equipment, trailers, sheds or
structures in management, sales or other nonproduction, nonoperational
activities including production of extraction scheduling, purchasing,
receiving, accounting, fiscal management, communications equipment (e.g.,
radios and phones), security, marketing, product exhibition and promotion, and
personnel recruitment, selection or training;
4) the use of equipment to prevent or fight
fires or other mining hazards and 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
aggregate after extraction and processing;
7) the use of front-end loaders, cranes,
conveyors and equipment used primarily to load aggregate 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 Aggregate
Exploration, Mining, Off Highway Hauling, Processing, Maintenance and
Reclamation Equipment
1) For the exemption to
apply, the purchaser need not, himself or herself, employ the equipment in
aggregate 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 those 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 that he or she previously did not pay. The tax will be assessed upon
the fair market value of the equipment at the time of conversion.
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 aggregate 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.
Manufacturer's Purchase Credit can only be earned on purchases of qualifying
Manufacturing Machinery and Equipment (see 86 Ill. Adm. Code
130.330 and
130.331). Purchasers claiming
the exemption under this Section cannot earn Manufacturer's Purchase Credit.
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.