86 Ill. Adm. Code 160.116 — Persons Who Lease Tangible Personal Property to Exempt Hospitals

# Persons Who Lease Tangible Personal Property to Exempt Hospitals

TITLE 86: REVENUE CHAPTER I: DEPARTMENT OF REVENUE PART 160 SERVICE USE TAX SECTION 160.116 PERSONS WHO LEASE TANGIBLE PERSONAL PROPERTY TO EXEMPT HOSPITALS

Section 160.116 Persons Who Lease Tangible Personal Property to Exempt Hospitals a) Effective January 1, 1996, through December 31, 2000, and on and after August 2, 2001, computers and communications equipment utilized for any hospital purpose and equipment used in the diagnosis, analysis, or treatment of hospital patients that are transferred incident to the sale of service to persons who lease those items to exempt hospitals are not subject to Service Use Tax providing: 1) the computers and communications equipment described above must be leased to a tax-exempt hospital under a lease that has been executed or is in effect at the time of purchase; 2) the lease must be for a period of one year or longer; and 3) the lease must be to a hospital that has an active tax exemption identification number issued by the Department under Section 1g of the Retailers' Occupation Tax Act (see 86 Ill. Adm. Code 130.2007).

b) The service customer must provide the serviceman a certification that contains the following information:

1) the serviceman's name and address;

2) the service customer's name and address;

3) a description of the tangible personal property;

4) the service customer's signature and date of signing;

5) the name and address of the hospital and its tax exemption identification number issued by the Department;

6) the date the lease was executed and the lease period; and 7) a statement that the computer or other communications equipment or equipment used in the diagnosis, analysis, or treatment of hospital patients is for lease to a tax-exempt hospital under a lease for a period of one year or longer executed or in effect at the time of the purchase.

c) For purposes of this Section, "hospital patients" means persons who seek any form of medical care including, but not limited to, medical treatment, testing, diagnosis, or therapy at a hospital or at another location under the control and supervision of a hospital. For example, persons who are sent by doctors for X-rays or other tests at qualifying hospitals, even though those persons are not admitted to those hospitals, are considered hospital patients.

d) If the equipment is leased in a manner that does not qualify for this exemption or is used in any other nonexempt manner, the lessor shall be liable for the tax imposed under the Act or the Use Tax Act, as the case may be, based on the fair market value of the property at the time the nonqualifying use occurs.

e) No lessor shall collect or attempt to collect an amount (however designated) that purports to reimburse that lessor for the tax imposed by the Act or the Use Tax Act, as the case may be, if the tax has not been paid by the lessor. If a lessor improperly collects any such amount from the lessee, the lessee shall have a legal right to claim a refund of that amount from the lessor. If, however, that amount is not refunded to the lessee for any reason, the lessor is liable to pay that amount to the Department. [35 ILCS 110/3-5(15) and 3-5(24)] (Source: Amended at 48 Ill. Reg. 10710, effective July 2, 2024)

Section 160.116 Persons Who Lease Tangible Personal Property to Exempt Hospitals

a) Effective January 1, 1996, through December 31, 2000, and on and after August 2, 2001, computers and communications equipment utilized for any hospital purpose and equipment used in the diagnosis, analysis, or treatment of hospital patients that are transferred incident to the sale of service to persons who lease those items to exempt hospitals are not subject to Service Use Tax providing:

1) the computers and communications equipment described above must be leased to a tax-exempt hospital under a lease that has been executed or is in effect at the time of purchase;

2) the lease must be for a period of one year or longer; and

3) the lease must be to a hospital that has an active tax exemption identification number issued by the Department under Section 1g of the Retailers' Occupation Tax Act (see 86 Ill. Adm. Code 130.2007).

b) The service customer must provide the serviceman a certification that contains the following information:

1) the serviceman's name and address;

2) the service customer's name and address;

3) a description of the tangible personal property;

4) the service customer's signature and date of signing;

5) the name and address of the hospital and its tax exemption identification number issued by the Department;

6) the date the lease was executed and the lease period; and

7) a statement that the computer or other communications equipment or equipment used in the diagnosis, analysis, or treatment of hospital patients is for lease to a tax-exempt hospital under a lease for a period of one year or longer executed or in effect at the time of the purchase.

c) For purposes of this Section, "hospital patients" means persons who seek any form of medical care including, but not limited to, medical treatment, testing, diagnosis, or therapy at a hospital or at another location under the control and supervision of a hospital. For example, persons who are sent by doctors for X-rays or other tests at qualifying hospitals, even though those persons are not admitted to those hospitals, are considered hospital patients.

d) If the equipment is leased in a manner that does not qualify for this exemption or is used in any other nonexempt manner, the lessor shall be liable for the tax imposed under the Act or the Use Tax Act, as the case may be, based on the fair market value of the property at the time the nonqualifying use occurs.

e) No lessor shall collect or attempt to collect an amount (however designated) that purports to reimburse that lessor for the tax imposed by the Act or the Use Tax Act, as the case may be, if the tax has not been paid by the lessor. If a lessor improperly collects any such amount from the lessee, the lessee shall have a legal right to claim a refund of that amount from the lessor. If, however, that amount is not refunded to the lessee for any reason, the lessor is liable to pay that amount to the Department. [35 ILCS 110/3-5(15) and 3-5(24)]

(Source: Amended at 48 Ill. Reg. 10710, effective July 2, 2024)