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Medline to Receive Sales Tax Rebate from Mundelein, Illinois


 St. Mary of the Lake, in Mundelein, Illinois.

Mundelein, Illinois, is a village of approximately 31,000 located some 35 miles northwest of Chicago. It is home to the St. Mary of the Lake Seminary and the headquarters of Medline, a large health care manufacturer and distributor.

Medline is by far the largest employer in the area; to keep it happy, Mundelein town officials recently approved tax incentives for the company. According to a local newspaper, “Mundelein Trustees agreed to rebate half of the two percent sales tax the village now collects on Medline’s $35 million in annual sales.” Two percent translates to $700,000--$350,000 in kickbacks per year for Medline.

The decision to grant the rebate was not unanimous. Mundelein Trustee Terri Voss thinks every penny of that $700,000 should go to Mundelein. “All I see is us giving them money. They should have paid this to us the entire time.”

Voss was referring to the fact that for years, Medline has avoided paying sales tax revenue to the village of Mundelein. Instead, its sales tax revenue went to the village of Kankakee, where it has a satellite office.

The back story

In the November 2013 decision of Hartney Fuel Oil Company v. Hamer, the Illinois Supreme Court “resolved a longstanding controversy over the meaning of Illinois’ local Retailers’ Occupation Tax Acts. The Court concluded that a seller incurs retailers’ occupation taxes in the local jurisdiction where its predominant selling activities occur, even if it also engages in very limited activities in other places.”

As explained by the Illinois Department of Revenue, which created emergency sales tax sourcing regulations and rules in response to the Hartney case:

“Before the decision in Hartney…, a number of retailers with selling activities in multiple jurisdictions sought to collect and pay local retailers’ occupation taxes only in the low tax rate jurisdictions where they arranged for final acceptance of purchase orders, even when their predominant selling activities occurred in the other places."

In the Regional Transportation Authority’s (RTA) 2011 suit against Kankakee over the use of sham offices, it named Medline as a company with a sales tax rebate agreement with Kankakee.

According to Medline spokesman John Marks, the company is now “sourcing its Illinois sales through its Mundelein headquarters location” in order to comply with the Illinois Supreme Court decision and the new sourcing regulations. And Mundelein is giving Medline a 2% sales tax rebate.

As good as it gets

Why offer a sales tax rebate to a profitable manufacturer? To keep it around, of course. Mundelein Mayor Steve Lentz expressed concerns that Medline would move to neighboring Vernon Hills or Libertyville if it didn’t receive the sales tax rebate. And Trustee Ed Sullivan is pleased that Mundelein will now be getting any sales tax revenue from Medline, “We didn’t get a penny before now,” he said. “This deal is as good as we can get.”

The sales tax rebate agreement between Mundelein and Medline is a 40-year deal.

photo credit: mobile_gnome via photopin cc


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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.