Tuesday, June 04, 2013
Challenge to Cook County's Non-Titled Personal Property Use
Memo to Clients and Friends
Horwood Marcus & Berk is
pleased to announce that its challenge to Cook County Non-Titled
Personal Property Use Tax is set for a hearing on July 24, 2013 on
our motion for a preliminary injunction. This will be the first
time that the viability of the Non-Titled Personal Property Use Tax
is addressed by a court. If successful, the injunctive relief will
benefit all businesses potentially subject to the tax.
The Cook County Non-Titled Personal
Property Use Tax is imposed at 1.25% of the "value" of property
when it is first brought into Cook County after being purchased
elsewhere. In order to comply with the new tax ordinance beginning
April 1, 2013, every person in Cook County who acquires non-titled
personal property from locations outside of Cook County must
register with the Cook County Department of Revenue, prepare a Cook
County Non-Titled Personal Property Use Tax Return and pay tax on a
monthly basis. HMB brought this lawsuit on May 14, 2013 seeking
declaratory and injunctive relief based on its allegations that the
Cook County imposition of a Non-Titled Personal Property Use Tax is
unlawful as a matter of Illinois statutory and constitutional law.
In its complaint, HMB contends that the defendants cannot impose a
non-titled personal property use tax based on three interrelated
First, the Illinois County Code
only permits a home rule county to impose a use tax on an item of
personal property which is titled or registered. The code further
provides that no home rule county may impose a use tax based upon
the gross receipts or purchase price of tangible personal
Second, even if the new tax is not
a prohibited use tax as the term is used in the Illinois County
Code, the tax is still in violation of the Illinois Constitution
which prohibits a personal property tax. Illinois Constitution
Article IX Section 5(a) provides that a personal property tax is
one which is measured by the value of the personal property.
Because the tax is based on the value of the property brought into
Cook County, the tax violates the Illinois Constitution.
Finally, the Cook County Non-Titled
Personal Property Use Tax violates the Commerce Clause of the
United States Constitution because it imposes a higher tax on
property bought outside of Illinois than it imposes on property
bought inside Cook County. Cook County currently imposes a sales
tax of .75% on sales of tangible property. The Non-Titled Personal
Property Use Tax, however, is imposed at a rate of 1.25%.
HMB brought this suit in its own
name as it is directly affected by the Cook County Non-Titled
Personal Property Use Tax. More importantly, HMB knows this tax is
a burden on all businesses, both large and small, that have a
presence in Cook County.
While the suit filed by HMB is
focused on our own use tax liability, we recommend that all
businesses, large and small, affected by the Cook County Non-Titled
Personal Property Use Tax register and account for taxes due and
report such taxes due on the monthly returns. HMB is also advising
our clients that each return filed with Cook County contain the
"Tax shown on the face of this
return is being paid under protest. Tax is not authorized by state
statute, and the imposition of the tax violates both the Illinois
Constitution and the U.S. Constitution."
Questions regarding the challenge
to or payment of Cook County Non-Titled Personal Property Use Tax
should be directed to an HMB SALT attorney.