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RTA wants Sycamore-United fuel deal to end

Published: Thursday, Dec. 5, 2013 5:30 a.m. CST
Caption
(Shaw Media File Photo)
The door to United Aviation Fuels Corp, as well as other businesses, are seen Jan. 14 at 1101 DeKalb Avenue in Sycamore.

SYCAMORE – Regional Transportation Authority officials are asking Sycamore and United Airlines to stop a sales-tax agreement embroiled in litigation after the Illinois Supreme Court ruled on a similar situation last month.

“We’re not seeking to bankrupt any municipality,” said Jordan Matyas, RTA chief of staff. “We just want the practice to end and end immediately.” 

The lawsuit RTA filed Jan. 14 against United Aviation Fuels Corp., the city and the airline is next due in Cook County Circuit Court on Tuesday. Sycamore leaders said they still are reviewing the Supreme Court decision, while an United Airlines spokeswoman declined comment.

Both United and American airlines have used offices in Sycamore for years to make jet fuel purchases that allow them to avoid the 9.5 percent sales tax in Cook County. United Airlines benefits from the lower 8 percent sales tax rate and a generous rebate. Last year, the city reimbursed United Airlines about $17.9 million of its $18.3 million share of sales-tax proceeds. The city received about $400,000.

RTA officials have contended both United and American airlines are running sham offices in Sycamore to avoid paying higher sale tax rates from actual locations in Cook County. They have said the companies have deprived taxpayers and public transportation agencies of almost $300 million in the past seven years.  

RTA did not pursue a lawsuit against American Airlines because it is in bankruptcy. 

Matyas said a recent court decision would be relevant in the lawsuit involving Sycamore, while a DeKalb County official said the situations involved are different.

On Nov. 21, the Illinois Supreme Court found Cook County-based Hartney Fuel Oil Co., a fuel oil retailer, could no longer use a contractor in Putnam County to take advantage of lower sales-tax rates there for sales made in Cook County. Because the majority of the company’s selling activity was in Cook County, the court found it should be subjected to the tax rates there. 

“The court clearly said going forward the law applies, and the law is very clear you have to pay taxes in the places you’re selling property,” Maytas said. 

Sycamore’s sales-tax agreement also benefits DeKalb County, which has no tax rebate agreement with the airline and receives about $2 million a year in sales-tax proceeds from the fuel sales. 

“We are certainly watching that [Illinois Supreme Court] case and the [Illinois] Department of Revenue if they do any changes to the rules based on the case,” DeKalb County Administrator Gary Hanson said.

Hanson said he noted with the Illinois Supreme Court case, Hartney Fuel Oil Co. didn’t have a dedicated office or employee at the location in Putnam County, unlike with the offices in Sycamore, which have employees. 

After the court made its decision Nov. 21, Sycamore City Manager Brian Gregory said city officials would need to analyze the decision before commenting. Gregory said Wednesday it still is being reviewed by the city’s legal team. 

“We’re still in the same position,” he said. “We’re still reviewing it.” 

Gino DiVito, an attorney for RTA, said documents relevant to the lawsuits’ allegations are being gathered. He said the court’s decision will certainly have an effect on the case. 

“How the effect is going to be played out or what that effect is has yet to be determined,” he said.  

In the RTA’s lawsuit, one sales office for United Fuels was stated to be at 1101 DeKalb Ave. in Sycamore. Gregory said American Airlines still is renting space at the Sycamore Center, 308 W. State St. 

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