Cook County Use Tax Update – Reed Smith Wins Appeal – Ordinance Invalid

by Reed Smith

On August 4, 2014, the First District Illinois Appellate Court affirmed a lower court decision invalidating Cook County’s Non-Titled Personal Property Use Tax (the “Use Tax”). The Appellate Court dismissed as moot the County’s interlocutory appeal of the lower court’s preliminary injunction against enforcement of the Use Tax Ordinance, which was extinguished upon entry of the permanent injunctions in favor of Reed Smith and its client, the Chicagoland Chamber of Commerce, as discussed in our previous alert. Of procedural note, the Appellate Court rejected the County’s argument that Reed Smith lacked standing to challenge the Use Tax Ordinance because it failed to register for or pay the Use Tax. The court found that Reed Smith would have suffered a direct injury from enforcement of the Use Tax and therefore had standing to challenge the Use Tax Ordinance.

Reed Smith tailored its appeal to leave before the trial court its claim on behalf of the Chicagoland Chamber of Commerce that the County must accept the invalidity of the Ordinance as a “mistake of law” which, under its refund ordinance, is a prerequisite for the County to approve a refund claim. That remaining claim is now ripe for decision upon return to the trial court.

Standing The court addressed Cook County’s contention that Reed Smith lacked standing to challenge the Use Tax because it failed to register or pay any tax due. The court found that (i) the Use Tax Ordinance provides that the mere failure to register is a violation, (ii) Reed Smith would have been subject to penalties and interest for failing to register and pay the Use Tax, had the tax been valid, and (iii) these assessments would constitute a lien on Reed Smith’s real and personal property, all of which would make the injury “hardly theoretical.” The court distinguished Reed Smith’s case from the case upon which the County based its claim, Wexler v. Wirtz,1 noting that the plaintiff in Wexler lacked standing primarily because it was not legally obligated to collect and remit tax. The court also shot down the County’s argument that the voluntary payment doctrine would bar Reed Smith’s claim, stating that it was indisputable that Reed Smith didn’t pay the Use Tax; making the voluntary payment doctrine inapplicable.

Imposition of A Prohibited Sales Tax The Appellate Court affirmed the trial court’s decision to grant Reed Smith’s motions for summary judgment, based on the Use Tax violating Section 5-1009 of the Illinois Counties Code by imposing a use tax on the sales price of nontitled personal property. Section 5-1009 provides that “no home rule county has the authority to impose, pursuant to its home rule authority a . . . use tax based on . . . the selling or purchase price of said tangible personal property.”2 The court found that mere residency in the County established the date of “first use” of property under the Use Tax Ordinance, which effectively eliminated any meaningful difference between the purchase date and the first use of the property. In addition, the court found that although the Use Tax Ordinance provided four acceptable methods of determining the value of property subject to the Use Tax, it still constituted an improper use tax on the selling or purchase price of personal property because the methods provided in the Ordinance did not allow for anything more than a trivial deviation from the purchase price or would require either an unjust and inconvenient necessity of an appraisal or a blind estimate of the “fair market value” of the property. Based on the foregoing, the Appellate Court held that the trial court did not err in granting Reed Smith’s motions for summary judgment and denying Cook County’s motion.

Constitutional Claims Reed Smith had also argued, and the lower court agreed, that the Use Tax Ordinance imposed an ad valorem tax on personal property prohibited by Section 5 of Article IX of the Illinois Constitution of 1970, and that the Ordinance facially discriminated against interstate commerce in violation of the Commerce Clause of the United States Constitution, because it did not impose the use tax on in-county purchases between private parties while targeting such purchases from private parties outside the County and State. The Appellate Court declined to rule on these constitutional issues, stating that the court addresses constitutional issues only as a last resort.

Further Proceedings Had the Ordinance been declared unconstitutional on either ground, a direct appeal to the Supreme Court would be a matter of right for the County. However, as these constitutional issues were not the basis for the invalidity of the Ordinance, Cook County does not have a right to appeal directly to the Supreme Court.3

The lower court may now be asked to determine whether the invalidity of the Use Tax Ordinance constitutes a “mistake of law,” thus satisfying the prerequisite for the County to honor claims for refund under its refund ordinance.

  1. Wexler v. Wirtz, 211 Ill. 2d 18 (2004).
  2. 55 ILCS 5/5-1009
  3. Ill. S. Ct. R. 317 (eff. July 1, 2006)

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

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):

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.


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 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:

- 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.