Knowledge Center

Tuesday, August 05, 2014

HMB's Jordan Goodman and Chris Lutz Quoted in Chicago Daily Law Bulletin Article

"Cook Co. Use Tax Violates State Law"

By  Marc Karlinsky

Excerpt from Chicago Daily Law Bulletin, Tuesday, August 5, 2014

A state appeals court ruled Monday that a Cook County tax violated state law, a second strike against a fee the county hoped would produce about $14 million in revenue this year.

In a consolidated case against the county, Reed, Smith LLP and Horwood Marcus & Berk Chtd. contended that the Illinois County Code prohibited use taxes based on the sales price of property and claimed the tax ordinance violated provisions of the state and federal constitutions.

Circuit Judge Robert Lopez Cepero issued a preliminary injunction against the tax in August 2013 and granted summary judgment for the plaintiffs in October.

On appeal, the county contended the ordinance did not violate state law because it did not impose a use tax on the sales price of property, but rather its value.

In a 13-page unpublished order written by Justice Mathias W. Delort, the panel found that the term "value" was ambiguous. It looked to the county's legislative intent for guidance.

The panel rejected the county's argument that there were four acceptable ways to determine value of items subject to the tax, of which two are based on sales price, then reduced for depreciation.

Because the panel found the county ordinance to be prohibited on statutory grounds, it declined to address questions of constitutionality.

The ruling affirms the circuit court's judgment enjoining the county from collecting the tax.

Justices Maureen E. Connors and Joy V. Cunningham concurred in the unpublished order.

The county was represented by Daniel F. Gallagher, chief of the Cook County state's attorney's office's civil actions bureau, and Assistant State's Attorneys Paul A. Castiglione, Kent S. Ray and Sarah W. Cunningham. Gallagher could not be reached for comment.

Horwood Marcus & Berk was represented by partners Jordan M. Goodman, David S. Ruskin and Christopher T. Lutz.

Goodman said he is pleased with the ruling and is confident it will survive a rehearing if the county requests one.

"In our eyes, it's over unless the Supreme Court takes the case," he said.

Lutz said the decision is good for the firm and its clients not simply because they won't owe the tax, but because the online filing requirements it imposed were troublesome.

"The burden of complying with the tax - it was a completely separate framework," Lutz said. "We filed our return over here, and it was a pain."

To read more, please visit the Chicago Daily Law Bulletin website.

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