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RTA sues three more towns in sales-tax war

Thursday, March 20, 2014
Crain's Chicago Business
by Greg Hinz

The Regional Transportation Authority has gone back to court in its still-expanding war against alleged sales-tax havens that operate on the periphery of the agency's area.

In an action filed late yesterday in Cook County Circuit Court, the RTA names far-suburban Genoa, Savanna and Morris and three fuel-oil companies that it says have agreed to work together to avoid paying the agency's regional sales taxes by locating "sham sales offices" in the towns and the rebating a portion of what is paid back to the companies.

The suit does not name a damage figure, but a RTA spokesman said the amount of revenue lost from PetroLiance, Palatine Oil Co. and Bell Fuels Inc. collectively is in the millions of dollars in recent years.

Officials at the communities and the companies were not immediately available for comment last evening. The RTA in 2011 filed suits naming Kankakee, Channahon and other towns that similarly house such “sales-acceptance” offices, and only last week sued American Airlines for a taxing scheme that it contends has cost local governments at least $22 million.

Officials from all of those companies and towns have denied any impropriety, saying they acted within state law. All of the cases still are being litigated. Last year, the Illinois Supreme Court last year ordered the state to redraft its sales-tax rules to prevent abuses in a case involving petroleum products provider Hartney Fuel Oil Co.

New rules have been proposed by the Illinois Department of Revenue that the RTA likes, but business groups say the rules still leave too much uncertainty about who needs to pay what and where.

Driving the cases is that fact that sales taxes in the six-county RTA area can be as much as 3 percentage points higher than in adjoining counties.



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