Wednesday, August 06, 2014
HMB's Jordan Goodman and Chris Lutz Quoted in Tax
Analysts Use Tax Article
"Illinois Appellate Court Invalidates County Use Tax on
By Maria Koklanaris and
Excerpt from Tax Notes/State Tax Today,
Tuesday, August 5, 2014
The Appellate Court of
Illinois, First Judicial District, on August 4 struck
down Cook County's use tax on non-titled personal
property brought into the county, upholding the circuit
court's finding that the tax violates the Cook County Code as an
improper use tax on the purchase price of personal property.
The appeal was a victory for both Reed Smith LLP and Horwood Marcus &
Berk, who brought suit against the Cook County
Department of Revenue on three grounds.
In October 2013 the firms prevailed in the Circuit Court of Cook
County, which granted a motion for summary
judgment permanently enjoining the imposition of the tax.
In that decision, the court found for the plaintiffs on all three
counts, determining that the tax violated the Illinois
Counties Code by imposing tax on gross receipts from the
sale of tangible personal property, the Illinois Constitution's
prohibition on personal property ad valorem taxes, and the commerce
clause of the U.S. Constitution.
Lutz of Horwood Marcus & Berk said that if the
county was unhappy about the prohibition on concurrent use taxes
between counties and municipalities, the county should have gone to
the General Assembly.
"There was an easy fix to this. Cook County could have gone to the
legislature and said, 'Hey change the Illinois counties code,'"
Lutz said. "They didn't do that; instead they tried to create this
cute little way of getting around the prohibition that the General
Assembly had created."
Lutz added that the tax was burdensome, especially for large
companies that often bring in substantial amounts of property. "I
can imagine a company that's bringing in tangible property all the
time. The practical effect [of the decision] is that now all those
companies . . . don't have to worry about it, and will either be
getting a refund or will not be subject to tax and penalties," he
Lutz said companies also had to deal with an entirely new
regulatory structure when paying the Cook County tax, as it is
calculated differently from Illinois and Chicago taxes.
Goodman of Horwood Marcus & Berk said that
although the law firms brought suit on behalf of themselves, they
were also mindful of its effect on many clients. "A number of our
clients have expressed support because they were dramatically
affected but did not want to be seen as fighting a governmental
entity on this basis, so they have been able to remain anonymous
and reap the benefits of this litigation," he said.
Goodman said he thought it would be a challenge for the county to
prevail in a higher court, given the history of the case. "The
circuit court ruled on the three separate grounds that we had
brought forth and they agreed with us on all three. We thought it
would be challenging for the appellate court to reverse on all
three," he said.
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Tax Analysts website.
Copyright 2014 Tax Analysts.
Reprinted with permission.