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The Manufacturer’s Purchase Credit
is Back
 Effective
September 1, 2004, a manufacturer may once again earn a credit when
purchasing exempt manufacturing machinery and equipment. Also, a
graphic arts producer may earn a credit when purchasing exempt graphic
arts machinery and equipment. The credit is known as the
Manufacturer’s Purchase Credit or MPC. The amount is limited to 50% of
the 6.25% state tax rate that would have been incurred on the
purchase.
If, on or after September 1, 2004, you make tax-exempt purchases of
manufacturing or graphic arts machinery or equipment, you are eligible
to receive a credit. The credit can be applied toward state sales tax
or use tax on future purchases of production-related tangible
property, including items related to research and development. Items
must be used in the manufacturing process or graphic arts production.
Property used for selling, purchasing, accounting, marketing, hiring,
or landscaping is not eligible for this credit.
To report and earn your MPC, you must complete and file Form ST-16,
Annual Report of Manufacturer’s Purchase Credit Earned, no later than
June 30 of the year after purchase. If you do not file within this
period of time, you forfeit the credit. The MPC may not be transferred
to another party.
In order to use your credit, you must certify to your supplier that
you have MPC available when you purchase any production-related
property. Then, you and your supplier complete Form ST-16-C,
Manufacturer’s Purchase Credit Certificate, or an equivalent
certification specifying your name and address, the purchase date,
your IBT number, the MPC you are applying for, and a statement that
you are satisfying all or part of the state sales or use tax
liability. Afterwards, you must file Form ST-17, Annual Report of
Manufacturer’s Purchase Credit Used, no later than June 30 of the year
following the year the credit was used.
If you intend to use your credit towards purchases from suppliers not
registered in Illinois, you must also report the total amount of MPC
you are using on your Sales and Use Tax Return in order to reduce the
amount of use tax you owe when you report the purchase.
If you have any questions, please contact our office at 847-850-5270.
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