this morning is case number four seventeen zero four three four erdman gehring versus the illinois department revenue for the palace we have mr reed and for the apple good morning coun the facts are also part of the record but i would like to delineate certain exhibits in me record which i think are especially relevant to today's hearing and these again these exhibits are marked and are in the case file the first want to see twenty five in a second c twenty six and these documents  practical matter i mean these are not talking bags these are these these bags range in size all the way up to twenty  criteria and i think it's relevant to whether that its engine is reasonable or not i've also referenced the one fifteen c one sixty four and c one sixty six and these are part of the all reference to same transaction a notice of tax liability for joy twenty eight two thousand and twelve another is the details of the transaction showing the purchase of terms two pipes significant to bag range again is and i misquoted eight foot five hundred fifty or fourteen feet by five hundred feet and that's on exhibit two seventy six also the your brief discussing the fact that this is used in production yet do you agree that not only do you have to establish that but that you also have to establish that it's equipment yes ma'am the code i reference it primarily for women but the occult clearly says equipment or apparatus i understand happen i want to make sure that we're looking at what was looked at below so that's why i asked the question was other continuing the other exhibit i wanted to reference a c one fifty five which shows the farming equipment searching certificate sent to the department of to use it quicker and but i believe seventy days is tops and that actually you know to to address a related matter be the process mower if we don't have the gas it can't use the mower either right well i think that i'm not sure about i mean to me gas would be a consumable supply but i think that the you know i think the bags the size of the silent tubes the fact that they're they have a limited warranty for two years they are plastic but they're heavy purpose of that silent is the feed the light people livestock on the farm which is good for production agriculture so i think there's some difference it's not directly on point but i think it's certainly related i think it knocks out the argument that you know one time you're done it's supply i would also say that the  is incorrect to state that a director is decision may reach and be reversed only for clear air we think this this is wrong because in our case there is no historical fact he admitted or stablished to invoke the apple like ability of the provident covenant case rather the parties disagree as to the interpretation of the administrative code whether the silent banks are equipment or supplies the financial firing there are other there are very operations all around central and perhaps all through why is this a case of i don't know judge her justice i think that's a good question i think one thing that this permanent forgive me i'm stubborn but it just doesn't make sense to kind of a hybrid in the sense that you've distinguished the bourbon barrels or talk about them but it is consumed yes or is this morning may please the court richard davidson on behalf of the illinois department of revenue instructor your honour's the director here properly denied ermine's theories use tax exemption because disposable plastic bags are not machinery or equipment but instead supplies which are specifically excluded from the exemption and in reviewing the situation we asked that the court be guided by the well recognized maxim that taxation is the rule and exemption is the exception to the extent of tax payers entitle men to an exemption is debatable the illinois supreme court has instructed that all debatable questions are to research resolved in favor of taxation guided by this principle we ask the court is undisputed that to qualify for the farm machinery and equipment exemption the taxpayer must make a threshold showing that the property is farm machinery or quit meds here because the director determined earthman fail to make this first showing she properly denied the exemption specifically equipment on of the regulation is defined as any independent device or apparatus separate from any machinery but essential so if we are to take that definition of apparatus which is a dictionary definition and say that apparatus means any material needed in the process that would be prodding the x exemption so as i stated it's well recognized illinois that we're not going and the definition that your honor cites that i'm not familiar with them indicates that it's any material needed for the process and if that were to be the definition we would submit that the farm machinery equipment which is an independent showing would be removed from the consideration and the exemption would simply look to whether or not this item were needed several items are needed in a process and clude ing supplies so if we look to the regulation that's important so we're simply looking at is this or is this not a piece of equipment we're also looking at the fact that the regulations specifically excludes supplies and that's part of the director's determination as well so they looked at these facts they looked at the fact that there  and i really am having a hard time grasping we are comparing it to that because if you look at the definition of supply is under dictionary definitions you see that it's defined as provisions or stores and provisions turn is defined as an item that's in need of constant replacement here too like laws like bailing wire the silence bags are repeatedly needed or they're in constant need o but he doesn't get that seem inconsistent group i understand that perspective however i think the question is what does it seem inconsistent was my question just yes i don't believe so i believe you know we bow to the item under issue and here under issue is whether or not these bags are  i think we look to the director's determination and we decide was it clearly erroneous for the director to decide that these bags rather than being a piece of equipment which if you want to dictionary definitions is defined as a fixed i'm not familiar but i would say that in that they are similar to a disposable item as here that that would speakin and it's not clearly erroneous on a director's part to find that those are more akin to a supply as opposed to a piece of equipment and also we cite some private letter rulings in our brief and those are not binding on this court but we cite them to show that this decision is in line with prior department determinations and is not clearly erroneous and when you look to those  letter rulings they also involved there was cellulose casing for sausage was one example and another was bags used in metal plating processes both of those items were found to be again be consumable supplies and not equipment and importantly they were found to be necessary to the process that they were you know interpol part of creating these items but nevertheless the department found that that is not alo transform an item that is otherwise a supply into a piece of equipment and also growers we can look to that case as well in that case the taxpayer was referring to a greenhouse and was attempting to argue that a greenhouse was a machine and part of their argument similar to the arguments that earn and dairy is making is that this was integral to the process and therefore it was a piece of machinery the court there recognise that despite the fact that it was needed that does not change the commonly understood term machinery to suddenly mean a greenhouse and so to here we would ask that again that we don't read an exemption broadly that we narrowly construe it and see that ermine's expert on testified that these bags are used within seventy days so there replenish on a yearly if not monthly basis so in that way it was not clearly erroneous for the two years i think that would play into the analysis you are under the hypothetical but that it would be if it were something that were a fixture a fixed asset again with only a fixture if it lasts two years but it's not a fixture for the last three months or six months i think in this case because it was a you know found only last a few months that that military  supply rather than equipment but the fact that we're having this exchange and debating whether or not it's a supply or an equipment that goes to whether this is a debatable question and again under illinois supreme court precedent we see time and again that if you're at the stage of debating you should err to the side of taxation rather than exemption so the carts that justice turner refer to those are not consumed by the process is that correct correct  we've heard the answer referred to as tubes and when you talk about to get a different image yes you are mine versus when you talk about bags yes your honor and i that tubing phrase is not one made by the director i'm not exactly sure where the two phrase is coming from but i would distinguish this from a two particularly in the coal regulation that was handed to me this morning where there's use of the word tubing and hoses there's some indication that there's water that flows through these tubes and that way it's horrible something akin to a piece of equipment as opposed to here which is a thin terrible piece of plastic which  even animals can poke holes through that is used within i'm one hundred seventy days and i also want to talk about american distillers that case involving whiskey barrels that case only address the incorporation doctrine in other words when an item becomes part of the final product the tax statute recognizes that that will not be subject to use tax american distillers in no way addresses what is before this court which is whether or equipment whether that was clearly erroneous here you know you have made some some excellent points but at the same time without conceding anything in your argument in terms of just understanding i think i was kind of intrigued by by what counsel said about the change in economics and anecdotally i'm wondering if fewer and fewer dairy farmers are using real estate  for one because it's got a physical structure to the gloves and the boots on the last what ones are used and how expensive they are this kind of matter personal choice there might be people that would keep track of those in need but would you concede that maybe some of this will be changing as the economy change the rules on agriculture change i can't speak to that your honor perhaps it might but we are looking at the statute in the right wants you know you're standing i'm i'm asking a hypothetical i'm asking you to think out loud without losing your case or winning here i believe that we look people that are writing the administrative code or assisting in the administrative code so that benefit those private letter ruling come out on the side of the department of revenue i don't think that's a prize  i would also say that the cited private letter rulings are nineteen eighty nine thousand nine hundred ninety one and things to have probably change since since that time  part of the legislature with input from the department of revenue will have to raise revise that code i've also like to add that i think at the end of the day that this interpretation but i think at the end of the day there's case law that says is this is this reasonable or not and i think that that the court should find its unreasonable for several reasons one the interpretation defeats the intent of the statute to aid production agriculture through the silent process to the interpretation of inconsistent with the scheme of the statute and administrative code if you have or promoted for this process and again i'd be happy to address i add one more thing real quickly this working at accounting terms tax terms fixed assets you know it so i think again the department is argue that that's a reason that supplies instead of the women but that's really not that's really between the taxpayer and his his or her account so we think there's but it's problematic to raise that is an issue along and along with its history as one time it's made of plastic except for we think if you leave if you look at the code an interpretation of the code would show that these should be ex