ILLINOIS ENTERPRISE ZONE PROGRAM
TAX QUESTIONS AND
ANSWERS
EZ MACHINERY AND EQUIPMENT SALES TAX EXEMPTION
What is the EZ Manufacturing -Machinery and Equipment (M. M & E)
Sales Tax Exemption? - The Revenue Act 35 ILCS 120/ld-lf, as amended allows
a business enterprise that is certified by DCCA, as making a $5 million
investment that either: creates a minimum of 200 full-time equivalent jobs in
Illinois; or retains a minimum of 2,000 full-time jobs in Illinois; or which
retains 90% of the existing jobs, a 6.25 percent state sales tax exemption on
all tangible personal property which is used or consumed within an enterprise
zone in the process of manufacturing or assembly of tangible personal property
for wholesale or retail sale or lease. This exemption includes repair and
replacement parts for machinery and equipment used primarily in the process of
manufacturing or assembling tangible personal property for wholesale or retail
sale or lease, and equipment, manufacturing fuels, material and supplies for the
maintenance, repair or operation of manufacturing, or assembling machinery or
equipment.
How does a business become eligible for the M, M & E Sales Tax
Exemption? - To be eligible for this incentive, DCCA must certify that the
business has made an investment of at least $5 million in an enterprise zone and
has created a minimum of 200 full-time equivalent jobs in Illinois or has made
an investment of at least $40 million in an enterprise zone and has retained a
minimum of 2,000 full-time jobs in Illinois or has made an investment of $40
million in an enterprise zone and retained 90 percent of the jobs in place on
date of certification. A business must submit an application to DCCA
documenting the eligible investment and that the job creation or job retention
criteria will be met.
What is an eligible investment? - For purposes of this incentive,
eligible investment may be either: 1) investments in qualified property as
defined in the Enterprise Zone Investment Tax Credit (described on Page 2 of
this publication); or, 2) non-capital and non-routine investments and associated
service costs made for the basic construction, renovation or improvement of
qualified property including productive capacity, efficiency, product quality or
competitive position. Regular maintenance and routine expenditures are not
included.
Are eligible sales limited to the units of government sponsoring the
zone? - No. Items eligible for the 6.25 percent state sales tax exemption
may be purchased anywhere in Illinois.
What tangible personal property is eligible for the M, M & E sales
tax exemption? - To be eligible for this exemption the tangible personal
property must be directly used or consumed in the process of manufacturing or
assembling tangible personal property for wholesale or retail sale or lease.
Examples of this include: repair and replacement parts; hand tools; materials
and supplies such as abrasives, acids or lubricants; protective clothing and
safety equipment; and, any fuel used for machinery and equipment.
NOTE: The above examples are only exempt to the extent they are used
with machinery and equipment that qualifies for the statewide Manufacturing
Machinery and Equipment Sales Tax Exemption.
Back to EZ Tax Q & A Index
Back
to the Coles Together Home Page
