Chicago Tribune Co. v. Cook County Assessor’s Office, 2018 IL App (1st) 170455 (1st Dist. June 29, 2018). The Chicago Tribune sent a Freedom of Information Act (FOIA) request to the Cook County Assessor’s Office requesting the Assessor’s Office to produce records regarding its valuation of properties in Cook County. The Assessor’s Office denied the request, citing the “deliberative process exemption” (also referred to as the “preliminary records exemption”) found at 5 ILCS 140/7(1)(f). The Chicago Tribune challenged the denial in court. On cross-motions for summary judgment, the Circuit Court ruled in favor of the Chicago Tribune and the Appellate Court affirmed. The Appellate Court agreed with the Circuit Court that the deliberative process exemption did not apply because (1) the requested records are “final” determinations, not “preliminary”; and (2) the requested records are not ones in which opinions are expressed or in which policies or actions are formulated, but are factual in nature. The Appellate Court also noted that “the public has a strong right to know about how they are being taxed by their government as opposed to the government’s fairly meek interest in secrecy.”
Republic Bancorp Co. v. Beard, Director of Rev., et al., 2018 IL App (2d) 170350 (2d Dist. June 8, 2018). S corporations are subject to Illinois Personal Property Tax Replacement Income Tax (replacement tax) on their income, but are allowed a deduction for income passed through to shareholders that are also subject to the replacement tax to avoid double taxation. Republic, an S corporation, claimed a deduction from its taxable income for income passed through to its shareholders (all of which were grantor trusts), based on the argument that each of the grantor trusts was subject to the replacement tax.
The Department disallowed the deduction and assessed Republic with additional replacement tax. Republic paid the tax under protest pursuant to the state’s “Protest Monies Act” (30 ILCS 230/2a). On cross-motions for summary judgment, the trial court ruled in favor of the Department and the Appellate Court affirmed. The Appellate Court agreed with the Department and trial court that grantor trusts are expressly excluded from being subject to replacement (and income) tax and, therefore, Republic was not entitled to its claimed deduction.
Labell et al. v. City of Chicago et al., 2015-CH- 13399 (Cir. Ct. Cook County, May 24, 2018). The Cook County Circuit Court granted the City of Chicago’s motion for summary judgment to uphold the City of Chicago Comptroller’s imposition of the city amusement tax on streaming services delivered electronically (e.g., Netflix, Amazon Prime, Xbox Gold). The amusement tax is imposed on those streaming service customers with a residential street address or primary business address in Chicago, as reflected by the customer’s credit card billing address or zip code.
Based on the finding that live performances (receiving preferential Chicago amusement tax rates) and automatic amusement machines are sufficiently different from the streaming services, the court ruled that the amusement tax on streaming services did not violate (i) the Internet Tax Freedom Act (prohibiting discriminatory taxes on electronic commerce), or (ii) the uniformity clause of the Illinois Constitution. The court also found that the amusement tax on streaming services satisfied the U.S. Constitution commerce clause under the four-part test set forth in Complete Auto Transit v. Brady, 430 U.S. 274, 279 (1977). Finally, the court found that using the customer’s Chicago billing address to impose the amusement tax on streaming services was a proper exercise within the city’s home rule authority.
State of Illinois ex rel. Lindblom v. Sears Brands, LLC, et al., 2018 IL App (1st) 171468 (1st Dist. Apr. 17, 2018). The plaintiffs brought a qui tam action under the Illinois False Claims Act alleging that certain big-box appliance retailers engaged in a “scheme” to avoid charging Illinois sales tax on the sale of appliances, such as dishwashers and over-the-range microwaves, by treating the sale and installation of the appliances as construction contracts. (Property acquired to be permanently affixed to real property in Illinois is
generally subject to use tax at the time of purchase by the construction contractor, and not when the contractor installs and sells the property.)
One of the defendant retailers was added to the case, even though the defendant was already before the Department’s Informal Conference Board with an appeal involving the same issue. The retailer moved to dismiss plaintiff’s amended complaint adding it as a defendant, on the grounds that the Illinois False Claims Act’s “government action bar” prohibits a qui tam claim if the named defendant is already subject to an administrative civil money penalty proceeding (740 ILCS 175/4(e)(3)). The trial court granted the defendant retailer’s motion to dismiss, and the Appellate Court reversed.
The Appellate Court held that the proposed liability and the defendant’s appeal of the proposed liability to the Informal Conference Board did not qualify as an administrative civil money penalty proceeding because the audit and the Board’s review were investigatory in nature and were steps in an administrative process, rather than an administrative proceeding.
