State & Local Tax Blog

Certain Illinois Taxpayers May Lose Millions of Dollars on July 1, 2010

Illinois Taxpayers May Lose Millions of Dollars on July 1, 2010

The State of Illinois Manufacturer’s Purchase Credit (“MPC”) is unique among state incentives. Many Illinois taxpayers might qualify for this credit. If they do qualify, they must file the appropriate forms by June 30, 2010, or the money is lost forever.

What is the MPC Credit?
The MPC is earned when a manufacturer or graphic artist purchases manufacturing or graphic arts machinery and that equipment qualifies for the existing sales/use tax exemptions. The credit is equal to half of 6.25% state sales tax that would have been owed if the purchase was not otherwise exempt.
The MPC Credit may be used to pay state sales tax or use tax on future purchases of qualifying production-related tangible personal property. All unused MPC earned expires the last day of the second calendar year following the year in which the original tax exempt purchase was made. MPC may not be transferred to another party.
What Must You Do?
File an Illinois ST-16 Annual Report of MPC earned with the Illinois Department of Revenue by June 30,2010 for all qualified purchases made in 2009. In addition, the Illinois ST-17 Annual Report of MPC used should also be filed.
We Can Help
Facing a time crunch? Not sure if you qualify or which purchases you make meet the tests? We can help you. We will review the prior year’s capital purchases and Accounts Payable files to identify qualifying purchases. We will then prepare the ST-16 Report of MPC earned along with a ST-17 Report of MPC used on your behalf.
PJCo will also review the credit earned to ensure maximum usage of the credit. By reviewing your AP files we can identify transactions where MPC can be applied. If we discover tax was paid to a vendor or State we will prepare a refund to recover the taxes paid.
How Soon Can You Actually Get This Money in Your Pocket?
It’s one thing to qualify for a credit and file all the right forms — it’s quite another to actually get the cash in your hands. The state of Illinois doesn’t just send you a check. The credit has to be applied against other taxes owed. If it isn’t applied to some other tax in a timely fashion, it’s lost and all that work was wasted. This is where our experience and services become valuable in assisting your company in using the credit before they expire. We know exactly where to look to apply the credit on future or past purchases. Eligible purchases of the credit can be applied to many areas to include production related tangible personal property that is:
  • Incorporated into real estate within a manufacturing or graphic arts facility.
  • Used or consumed in activities such as pre-production, material handling, receiving, quality control, inventory control, storage and staging, and packaging for shipping purposes.
  • Used or consumed Tangible Personal Property for Research and Development.
What Should You Do Now?
Contact us today to arrange a review of all purchases made in 2009. Remember there is no extension available to file for this credit and the return must be filed by June 30, 2010. There is still time for us to marshal our resources and complete this critical filing on your behalf.

Leave a Reply

Your email address will not be published.

What You Should Do Next

Have a state or local tax issue or question? Need help? Want peace of mind? We can help! Sign up for a free "What's Next" call and let us get to work for you.