Cook County Use Tax Update – Reed Smith wins Summary Judgment – Tax Ordinance Invalid on its Face

by Reed Smith
Contact

Today, Cook County was finally (pending a possible appeal) stopped from trying to impose its Non-Titled Personal Property Use Tax (the "Use Tax"). Following Judge Lopez Cepero’s granting of Reed Smith’s Motion for Preliminary Injunction in the matter of Reed Smith LLP and the Chicagoland Chamber of Commerce v. Zahra Ali on July 24,1 Reed Smith and the Chicagoland Chamber filed a Motion for Summary Judgment on the merits of the case. Cook County responded to Reed Smith’s Motion for Summary Judgment with its own Motion for Summary Judgment. Today, oral arguments were held on the cross Motions for Summary Judgment, and Judge Lopez Cepero ruled from the bench in favor of Reed Smith, the Chicagoland Chamber, and the taxpayers of Cook County.

Today’s ruling, which will be issued in written form on Friday, effectively dissolves the Appellate Court Order of October 4, 2013, which had previously stayed the preliminary injuction. However, the Appellate Court’s Order stated that Cook County (i) must "segregate but not process all payments received pursuant to the ordinance" and (ii) "may not enforce the penalty provisions as to registration, seek to penalize taxpayers who do not register, or submit returns, or send out returns during the pendency of the permanent injunction proceedings." Thus, while the Appellate Court’s Order technically required taxpayers to file Use Tax returns and submit payments for the September reporting period (due October 20, 2013), it did not provide Cook County with any authority to process the Use Tax payments made by taxpayers, or impose penalties on those taxpayers who failed to file returns or pay the tax. There is now, in effect, a permanent injunction due to Judge Lopez Cepero’s ruling, as the Stay was only in effect pending the outcome of the trial court proceedings.

Had Cook County succeeded with its Motion for Summary Judgment, taxpayers would have faced the decision of whether to begin paying the Use Tax with the October 20 filing, or risk possible penalties and interest for non-payment if the Use Tax is not ultimately declared to be an illegal tax (see our prior Alert for a discussion of taxpayer options with regard to the Use Tax). Once Cook County appeals the Circuit Court’s Order, as is expected, it could ask the Circuit Court or the Illinois Appellate Court, once again, to stay the Order and allow it to continue collecting taxes during the appeal.

Cook County’s budget for 2014 must be finalized before the end of November, so today’s decision will likely have an impact on the county’s budget deliberations. Even if the Appellate Court were to grant the county a stay, the county’s budget would remain fiscally suspect if it continues to rely on the Use Tax, until a final ruling by the Illinois Appellate Court on the merits of whether the Use Tax violates: (i) the Illinois Counties Code disallowing a home-rule unit from imposing a use tax on the selling or purchase price; (ii) the Illinois Constitution’s prohibition against imposition of an ad valorem tax on personal property; and (iii) the Commerce Clause of the United States Constitution.

As discussed in another previous Alert, Reed Smith has filed an additional challenge to the County Refund Ordinance, on behalf of the Chicagoland Chamber of Commerce, requesting the court to clarify that taxpayers can obtain refunds if the Use Tax is ultimately declared illegal. This additional challenge was not a subject of today’s hearing, and will be addressed by the Circuit Court after all appeal rights with respect to today’s Circuit Court decision have been exhausted or allowed to lapse.

  1. Reed Smith, LLP and Chicagoland Chamber of Commerce v. Zahra Ali and the Cook County Department of Revenue, Cook County Circuit Court, Docket No. 2013 L 050454. While Judge Lopez Cepero entered an oral Order from the bench at the July 24 hearing, a written Order was entered August 1, 2013.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Reed Smith | Attorney Advertising

Written by:

Reed Smith
Contact
more
less

Reed Smith on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.