Tax

Deadline Approaching to Claim Illinois Manufacturer’s Purchase Credit

June 2015

Certain Illinois businesses still have an opportunity to claim the state Manufacturer’s Purchase Credit (MPC), but the filing deadline is rapidly approaching.

The Illinois MPC ceased on August 30, 2014. Purchasers of manufacturing machinery and equipment, as well as purchasers of graphic arts equipment, are not eligible to earn this credit for equipment purchased after August 30. However, credits earned before August 31 still are available for the purchase of qualifying production-related tangible personal property. In the case of graphic arts companies, production-related tangible personal property includes presses and related equipment that gave rise to the credit. To preserve any credits earned in 2014 (before August 31), businesses must file Form ST-16 no later than June 30, 2015; no extensions are allowed.

The MPC allows manufacturers to earn sales tax credits based on purchases of exempt manufacturing machinery and equipment, repair parts and chemical catalysts; it’s also available to graphic arts companies that purchase graphic arts equipment and repair parts. The credit is 50 percent of the state portion of the Illinois sales tax that would have been due on these purchases—currently 3.125 percent. These credits can be used to offset Illinois sales tax due on taxable purchases of production-related supplies and nonexempt equipment.

Credits must be used within two years of the year in which they were earned; credits earned in 2012 and 2013 will expire December 31, 2014, and December 31, 2015, respectively, if unused. Credits earned January 1, 2014, to August 30, 2014, will expire December 31, 2016.

Form ST-16 must be filed to claim the MPC for eligible calendar year 2014 purchases by June 30, 2015; Form ST-17, which reports the MPC used during calendar year 2014, also must be filed by that date. Taxpayers may amend previously filed Forms ST-16 within two years of their original due dates to claim additional credits for prior years. Original Forms ST-16 cannot be filed after the June 30 date for the year of a purchase.

Businesses should review their qualifying purchases during 2014 and, if applicable, file the requisite forms no later than June 30.

For more information on how this credit program could affect your organization, contact your BKD advisor.

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