a) Authority to
Impose Tax
1) Pursuant to the Non-Home Rule
Municipal Service Occupation Tax Act [65 ILCS 5/8-11-1.4], the
corporate authorities of a non-home rule municipality may impose, by ordinance
or resolution adopted in the manner described in Section 8-11-1.1, a tax upon
all persons engaged in the municipality in the business of making sales of
service. If imposed, the tax shall be imposed on the selling price of all
tangible personal property transferred by such servicemen, either in the form
of tangible personal property or in the form of real estate, as an incident to
a sale of service. The proceeds of the tax may be used for public
infrastructure or for property tax relief or both, as defined in Section
8-11-1.2.
2)
The
tax imposed may not be more than 1% and may be imposed only in ¼%
increments.
3)
If
the tax is approved by referendum on or after July 14, 2010, and before August
5, 2024, the corporate authorities of the non-home rule municipality may, until
January 1, 2031, use the proceeds of the tax for expenditure on municipal
operations, in addition to or in lieu of any expenditure on public
infrastructure or for property tax relief. If the tax is approved by ordinance
or resolution adopted on or after August 5, 2024, the corporate authorities of
the non-home rule municipality, may until January 1, 2031, use the proceeds of
the tax for expenditure on municipal operations, in addition to or in lieu of
any expenditure on public infrastructure or for property tax relief.
[65 ILCS 5/8-11-1.3]
4)
The
tax may not be imposed on tangible personal property taxed at the 1% rate under
the Service Occupation Tax Act [35 ILCS 115]
. [65
ILCS 5/8-11-1.4] For guidance on the types of tangible personal property taxed
at the 1% rate, see 86 Ill. Adm. Code
130.310 and
130.311.
5)
Beginning December 1, 2019, this
tax is not imposed on sales of aviation fuel unless the tax revenue is expended
for airport-related purposes. If a municipality does not have an
airport-related purpose to which it dedicates aviation fuel tax revenue, then
aviation fuel is excluded from the tax. Each municipality must comply with the
certification requirements for airport-related purposes under Section 2-22 of
the Retailers' Occupation Tax Act. [65 ILCS 5/8-11-1.4]
"Aviation fuel" means jet fuel and aviation gasoline.
[
35 ILCS
115/9 ]
"Airport-related purposes" has the
meaning ascribed in Section 6z-20.2 of the State Finance Act [30 ILCS
105]
. This exclusion for aviation fuel only applies for so long the
revenue use requirements of 49 U.S.C.
47107(b) and
49 U.S.C.
47133 are binding on the
municipality.
6)
The tax imposed by a municipality pursuant to this Section
and all civil penalties that may be assessed as an incident thereof
shall be collected and enforced by the Department of Revenue. [65 ILCS
5/8-11-1.4]
b) Passing on
the Tax
The legal incidence of the Non-Home Rule Municipal Service
Occupation Tax is on the serviceman. Nevertheless, the General Assembly has
authorized persons subject to this tax to reimburse
themselves for their serviceman's tax liability by separately stating such tax
as an additional charge, which charge may be stated in combination, in a single
amount, with State tax which servicemen are authorized to collect under the
Service Use Tax Act [35 ILCS 110], pursuant to such bracket
schedules the Department has prescribed. [65 ILCS
5/8-11-1.4] (See 86 Ill. Adm. Code 150.Table A).
c) Exclusion from "Selling Price"
Any amount added by a serviceman to the selling price of
tangible personal property as an incident to service because of a Non-Home Rule
Municipal Service Occupation Tax, the Service Occupation Tax, the Service Use
Tax, or any other local occupation tax administered by the Department, shall
not be regarded as a part of the selling price that is subject to such Non-Home
Rule Municipal Service Occupation Tax.
