The Regional Transportation Authority filed another lawsuit Friday aimed at preventing sales tax arrangements similar to those the City of Sycamore has with two major airlines.
The RTA, the umbrella organization that oversees the Chicago Transit Authority, the region's Metra commuter line and the Pace suburban bus service, is asking a Cook County judge to stop the Illinois Department of Revenue from enforcing its new point of sales rules, which RTA leaders believe exceed the department's regulatory authority.
Overall, the RTA's goal is to stop companies from creating small satellite offices outside its boundaries in order to purchase materials at a lower sales tax rate. The sales tax rates are lower in Sycamore – 8 percent compared with 9.5 percent in Cook County – in part because it does not include the sales taxes that support the RTA.
In the past four years, the RTA has spent about $1.8 million in legal fees fighting the issue, which leaders believe is costing them tens of millions of dollars a year in sales tax revenue, said Jordan Matyas, the RTA's chief of staff.
"If that keeps happening, that just means that that burden gets passed on to the riders, whether that be cuts in service, increases in fares," Matyas said. "It just depends on how big this practice gets and how long it keeps going."
Matyas believes the lawsuit filed Friday is a matter of interpreting the law and can be resolved quickly, while a spokesman for the state Department of Revenue said the department stands by the new rules.
“The state spent five months seeking comments from everyone involved," spokesman Carson Krislov-Quinn said in a prepared statement. "The rules balance the interests of Illinois’ businesses with the needs of the local and regional governments to collect revenue. We are confident the rules reflect good policy and are consistent with the governing law.”
Meanwhile, other RTA lawsuits remain pending. In March, the RTA sued American Airlines and Sycamore for operating what it calls a sham office in Sycamore to avoid paying tens of millions of dollars in taxes a year in Chicago. About a year before, the RTA filed a similar lawsuit against United Airlines and Sycamore.
Under Sycamore's agreement with United Airlines, the city rebates a gradually decreasing portion of the sales tax back to the company. For example, in 2012 Sycamore reimbursed United Airlines roughly $17.9 million of the $18.3 million collected in sales tax, netting the city roughly $400,000.
DeKalb County has no rebate agreement with the companies and collects about $2 million annually in sales taxes from United Airlines' subsidiary.
In April, the RTA sued Genoa and oil distribution company PetroLiance over an office at 114 N. Washington St., which was opened after Genoa agreed to rebate half the taxes from the company's sales. When it was signed, Genoa officials expected the agreement would net $75,000 for the city, increasing its annual sales tax revenue of $290,000 by 26 percent. From December 2012 to November 2013, the agreement generated $133,728 for the city.
"We have reached out to United and American regarding settlement, but that hasn't proceeded," Matyas said. "We are talking with Genoa in regard to a settlement, and we're hopeful."