Don’t like tax law? You could try passing your own like Rosemont did, but you could face county suit
Wednesday, June 29, 2005
by Rob Olmstead
Wouldn’t it be great if you could pass your own law that said you didn’t have to be bothered with taxes?
Cook County says the village is breaking state law and owes $13 million — and counting.
A Cook County judge is preparing to decide which side is right.
The dispute originated when the county passed a 3 percent amusement tax on Nov. 22, 1996. It was intended to require venues like the Allstate Arena, which is owned by the village, to tax shows.
Rosemont followed up with its own ordinance on July 2, 1997, that said no Rosemont public employee could collect a tax on behalf of the county.
“(T)his ordinance is intended to create a conflict with the Cook County Amusement Tax Ordinance insofar as the Cook County Amusement Tax Ordinance would otherwise require the village of Rosemont to collect and remit the Cook County Amusement Tax,” Rosemont’s ordinance read in part.
The county filed suit and demanded that Rosemont pay up, just as private owners at Wrigley Field and U.S. Cellular Field do.
Rosemont officials say it’s nothing nefarious; they just don’t want to spend villagers’ tax dollars to give the county its money. Moreover, they contend, state law supports them and says the county can’t tell a municipality how to run itself.
Hogwash, says the county.
Rosemont can claim all the municipal rights it wants, but it’s simply not obeying the law, the county’s lawsuit says.
In fact, the suit alleges, Rosemont is using the tax refusal as an edge to draw acts to its Allstate Arena and Rosemont Theater in the highly competitive world of concerts and sporting events.
As proof, the county cites memos from the Clear Channel event promotion company boasting about the tax break to try to entice rock stars to perform at Rosemont.
“By playing for Clear Channel at Allstate Arena, John Mellencamp will earn more money due to exclusive savings that only Clear Channel can bring to the table: No county tax … $11,900 (in savings to Mellencamp),” said a Dec. 17, 2001, letter from the company’s Scott Gelman to Indiana’s favorite rocker.
Moody Blues, Incubus, Linkin Park, No Doubt, Jerry Seinfeld and George Carlin were similarly wooed, according to the suit.
And, the suit points out, Rosemont already collects its own amusement tax. Adding one more wouldn’t be that difficult.
As far as having to spend village taxes to collect the tax, the suit points out the county ordinance allows the organizer to take 1/6th of the amusement tax collected — or one-half of 1 percent out of the 3 percent — to cover its expenses.
That number was pulled out of a hat and wouldn’t come close to covering the village’s costs, said Rosemont attorney Peter Rosenthal.
“In order for the village to be able to comply … the village would have to be able to establish a box office (at the Donald E. Stephens convention center),” Rosenthal said. With unionized workers and overhead, that’s a huge cost.
Rosemont’s amusement tax is structured differently than the county’s, and Rosemont doesn’t tax the convention center. The county can go ahead and collect its tax, but it shouldn’t make Rosemont taxpayers pay to do it, Rosenthal said.
As proof, he points out that some performers in Rosemont already are collecting and remitting the tax: The Chicago Wolves, Ringling Brothers and Barnum & Bailey Circus, Jam Productions and others. The county just isn’t making an effort to make the private business pay, he said.
So far, the courts are seeing things the county’s way.
A preliminary ruling by an earlier judge in the case, Thomas P. Quinn, cited an earlier case decided by the Illinois Supreme Court involving Evanston.
“In light of the Supreme Court’s strong endorsement of the county’s authority to tax in spite of a municipal attempt at pre-emption, it is difficult to imagine that this authority would succumb simply because the municipality has the audacity to forbid collection,” he wrote.
At one point, the Illinois Appellate Court declared Rosemont’s ordinance unconstitutional, but for reasons not central to the tax dispute. Rosemont re-wrote the ordinance and passed it again and continued to ignore the county.
Enough is enough, said the county. It has asked Cook County Law Judge Alexander White to order the repayment as well as $1.5 million in fines. It also wants White to declare the village’s ordinance unconstitutional — no ifs, ands or buts about it.
White was scheduled to take up the issue Tuesday, but just as he was scheduled to rule, the case was pushed back to Tuesday, July 12.