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Illinois RTA Wants Fair Share of Sales Tax Revenue

  • Apr 9, 2013 | Gail Cole

 Channahon, Illinois, and RTA in court over sales tax.

Last week, the Illinois Regional Transportation Authority (RTA) issued a press release entitled, “RTA Demands Channahon Pay Fair Share of Taxes to DuPage County and RTA.” In it, it accused the Village of Channahon of “accepting sales tax revenue generated from Communication Supply Corporation (“CSC”) sales that [it] was not entitled to.”

The RTA bases this assertion on documents that reveal that “the Village of Channahon entered into an ‘economic incentive agreement’ that allowed Carol Stream-based CSC to avoid paying Carol Stream, DuPage County and RTA sales taxes and instead claim their sales were conducted in Channahon.” Under the incentive agreement, “Channahon kicked back to CSC and its tax consultant 85% of the municipal taxes as an incentive for CSC to claim they operated in Channahon.” The documents were obtained through a Freedom of Information Request.

This is not the first time the Regional Transit Authority has accused a business and city of being in cahoots to reduce a business’ sales tax liability. RTA is suing American and United Airlines over a similar sales tax issue, and it has “been in court since 2011 with Channahon, Kankakee and Sycamore” over these types of deals. RTA alleges that “CSC is among dozens of companies in Illinois that have entered into agreements with towns like Channahon, Kankakee and Sycamore in an attempt to avoid paying the appropriate tax….”

The Herald-News reports that the RTA “wants Channahon to release names of retailers, airlines and other companies” that have set up “sham” offices to avoid sales taxes, and cost the RTA “hundreds of millions of dollars.” Those identities are currently protected by court order; CSC is one of the first to have its identity revealed.

RTA Executive Director Costello reminds that “CTA, Metra and Pace riders rely on funding from sales taxes, and without this revenue our budget problems worsen.” RTA Chief of Staff Jordan Matyas says simply, “[W]e just what this to stop.”

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Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.