Justia Tax Law Opinion Summaries

Articles Posted in Supreme Court of Illinois
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In 2016, nearly 80% of Illinois voters voted to amend the Illinois Constitution; section 11, titled “Transportation funds,” was added to the state revenue article and provides that money generated from taxes, fees, excises, and license taxes on transportation infrastructure or operations shall only be spent on transportation purposes. Plaintiffs, contracting firms in the public transportation construction and design industry, sought declaratory and injunctive relief, alleging that Cook County, a home-rule unit, was violating the Amendment by diverting “revenue from transportation-related taxes and fees to the County’s Public Safety Fund” and impermissibly spending the revenue on non-transportation related purposes.The circuit court dismissed the complaint, finding that the plaintiffs lacked standing and that the complaint failed to state a violation of the Amendment. The appellate court reversed on the issue of standing but affirmed that no violation of the Amendment had been stated. The Illinois Supreme Court reversed the dismissal. The plaintiffs have associational standing and the money derived from the Cook County Transportation Taxes is subject to the Amendment. The Amendment did not create an exemption for home-rule units, home-rule taxes, or home-rule expenditures. The court found no issue with the manner in which home-rule units have had their power limited in the transportation context. View "Illinois Road and Transportation Builders Association v. County of Cook" on Justia Law

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On February 15, 2018, GAN filed a petition for a tax deed to acquire property it purchased at Cook County’s 2016 annual tax sale for the tax year 2014. On April 24, 2018, GAN assigned its interest in the property to Blossom63. On May 6, 2018, Longmeadow, the owner of the property, transferred its interest in the property to Devonshire. On May 17, Devonshire sought to intervene in the tax deed proceedings and moved to vacate Blossom63’s tax deed on the ground Blossom63 failed to strictly comply with the notice requirements of the Property Tax Code, 35 ILCS 200/22-5.On May 18, the circuit court granted the petition for a tax deed. The county clerk issued Blossom63 a tax deed. On June 19, 2019, the circuit court granted Devonshire’s motion to vacate the order issuing a tax deed to Blossom63. The appellate court reversed, finding Blossom63’s notice strictly complied with the Tax Code. The Illinois Supreme Court affirmed. Blossom63 strictly complied with section 22-5 by listing the delinquent tax year for which the sale was held without listing the additional delinquent tax years for which it paid taxes to complete the sale. View "In re Application of the County Collector" on Justia Law

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The 2012 Cook County Firearm Tax Ordinance imposed a $25 tax on the retail purchase of a firearm within Cook County. A 2015 amendment to the County Code included a tax on the retail purchase of firearm ammunition at the rate of $0.05 per cartridge for centerfire ammunition and $0.01 per cartridge for rimfire ammunition. The taxes levied on the retail purchaser are imposed in addition to all other taxes imposed by the County, Illinois, or any municipal corporation or political subdivision. The revenue generated from the tax on ammunition is directed to the Public Safety Fund; the revenue generated from the tax on firearms is not directed to any specified fund or program.Plaintiffs alleged that the taxes facially violate the Second Amendment to the U.S. Constitution and the Illinois Constitution concerning the right to bear arms and the uniformity clause, and are preempted by the Firearm Owners Identification Card Act and the Firearm Concealed Carry Act. The trial court rejected the suit on summary judgment. The appellate court affirmed.The Illinois Supreme Court reversed. To satisfy scrutiny under a uniformity challenge, where a tax classification directly bears on a fundamental right, the government must establish that the tax classification is substantially related to the object of the legislation. Under that level of scrutiny, the firearm and ammunition tax ordinances violate the uniformity clause. View "Guns Save Life, Inc. v. Ali" on Justia Law

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The School Board sought equitable relief from Crest Hill ordinances creating a real property tax increment financing (TIF) district and attendant redevelopment plan and project, pursuant to the Tax Increment Allocation Redevelopment Act (65 ILCS 5/11-74.4-1). The Board complained that Crest Hill violated the TIF Act by including parcels of realty in the redevelopment project area that were not contiguous. An excluded parcel is owned by the utility company, is located outside the incorporated boundaries of the municipality and the boundaries of the redevelopment project area, and physically separates the parcels the municipality found to be contiguous for purposes of including them in the redevelopment project area.The circuit court granted Crest Hill summary judgment. The Appellate Court reversed. The Illinois Supreme Court affirmed the reversal. A public-utility-right-of-way exception to the contiguity requirement for annexation, found in the Municipal Code (65 ILCS 5/7-1-1), does not apply as an exception to contiguity required by the TIF Act. This case does not involve contiguous properties running parallel and adjacent to each other in a reasonably substantial physical sense, wherein a public utility owns a right-of-way, or easement, to pass through one or both of the physically adjacent properties. View "Board of Education of Richland School District No. 88A v. City of Crest Hill" on Justia Law

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The real estate taxes on Brown’s mineral rights were not paid. In 2013, the Hamilton County collector sold the delinquent taxes. Castleman extended the taxes’ redemption date to October 10, 2015, and filed a petition for a tax deed on June 22, 2015. An October 2015 order under Property Tax Code (35 ILCS 200/22-40(a)) directed the clerk to issue a tax deed to Castleman. Castleman assigned the tax sale certificate to Groome. Brown sold the mineral rights to SI by quitclaim deed. In November 2015, SI moved to vacate the section 22-40(a) order. The trial court dismissed for lack of standing. Meanwhile, Groome recorded a tax deed in February 2016. In June 2017, SI sought a writ of mandamus against the Hamilton County clerk who conceded that the 2016 Groome deed did not comport with the underlying section 22-40(a) order, which directed the deed to be issued to Castleman. The court granted SI’s requests. Castleman and Groome were not parties in the mandamus proceedings.The appellate court found the motion to vacate the section 22-40(a) order "a nullity.” The Hamilton County clerk issued Castleman a “Corrective Tax Deed” in October 2017, in compliance with the original section 22-40(a) order. SI filed a “Section 22-85 Motion to Void Tax Deed” and a “[Section] 2-1401/22-45 Petition to Vacate the October 2015 Order Directing Issuance of Tax Deed.” The appellate court affirmed the dismissal of both counts.The Illinois Supreme Court affirmed. A tax deed issued and was recorded within the mandatory time limit. The deed’s failure to name the proper party created a conflict between the deed and the section 22-40(a) order. While timely filing may result in the tax deed becoming “absolutely void,” 35 ILCS 200/22-85, the conflict with the order does not. The court’s mandamus order is properly viewed as reforming and correcting the 2016 tax deed to comport with the section 22-40(a) order. View "In re Application for a Tax Deed" on Justia Law

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In filing mortgage foreclosure cases, the plaintiffs each paid a $50 “add on” filing fee under section 15-1504.1 of the Code of Civil Procedure. The plaintiffs challenged the constitutionality of section 15-1504.1 and of sections 7.30 and 7.31 of the Illinois Housing Development Act, 20 ILCS 3805/7.30, 7.31, which created foreclosure prevention and property rehabilitation programs funded by the fee.The trial court, following a remand, held that the fee violated the equal protection, due process, and uniformity clauses of the Illinois Constitution of 1970. The Illinois Supreme Court affirmed, finding that the fee violates the constitutional right to obtain justice freely. The $50 filing charge established under section 15-1504.1, although called a “fee,” is, in fact, a litigation tax; it has no direct relation to expenses of a petitioner’s litigation and no relation to the services rendered. The court determined that the plaintiffs paid the fee under duress; the voluntary payment doctrine did not apply. View "Walker v. Chasteen" on Justia Law

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Tillman filed a petition for leave to file a taxpayer action under 735 ILCS 5/11-303, to enjoin the disbursement of public funds, alleging that certain general obligation bonds issued by the state in 2003 and 2017 were unconstitutional. He claimed the bonds violated article IX, section 9(b), of the Illinois Constitution on the ground that they were not issued for qualifying “specific purposes,” which, he argued, refers exclusively to “specific projects in the nature of capital improvements, such as roads, buildings, and bridges.” The 2003 “State pension funding” law authorized $10 billion in bonds to be issued “for the purpose of making contributions to the designated retirement systems.” The 2017 law authorized “Income Tax Proceed Bonds,” ($6 billion) “for the purpose of paying vouchers incurred by the State prior to July 1, 2017.”The circuit court denied the petition. The appellate court reversed. The Illinois Supreme Court reinstated the judgment of the circuit court. the necessary elements for laches have been met in this case: “lack of due diligence by the party asserting the claim” and “prejudice to the opposing party.” There is no reasonable ground under section 11-303 of the Code for filing the petitioner’s proposed complaint View "Tillman v. Pritzker" on Justia Law

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In 2016, Chicago imposed a municipal tax on units of noncigarette “other tobacco products” purchased in the city. Entities with interests in tobacco products sought injunctive relief, arguing that the ordinance was preempted by the Illinois Municipal Code (65 ILCS 5/8-11-6a). The Illinois Supreme Court ruled in favor of the plaintiffs. Section 8-11-6a contains seven specific exemptions to its otherwise broad restrictions on a home rule unit’s power to tax, allowing those units to impose certain taxes on alcoholic beverages, cigarettes, or other tobacco products; motel or hotel rooms; sale or transfer of real property; lease receipts; food prepared for immediate consumption and alcohol sold by businesses that make food for immediate consumption on-site; and other taxes not based on the selling or purchase price or gross receipts from the use, sale, or purchase of tangible personal property. The tobacco products exemption refers to “a tax based on the number of units of cigarettes or tobacco products (provided, however, that a home rule municipality that has not imposed a tax based on the number of units of cigarettes or tobacco products before July 1, 1993, shall not impose such a tax after that date).” The statute allows only those municipal taxes on cigarettes or other tobacco products enacted prior to July 1, 1993. The city’s public policy arguments are better directed to the General Assembly, which has rejected prior requests to amend the statute. View "Iwan Ries & Co. v. City of Chicago" on Justia Law

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Horsehead is a Delaware corporation, with its primary place of business in Pennsylvania, that has an Illinois manufacturing facility. Tax liability notices were issued due to Horsehead’s failure to pay Illinois use tax (35 ILCS 105/1) on its out-of-state purchases of metallurgical coke in 2007-2011. Horsehead argued that it was exempt from paying use tax on the coke under section 3-5(18) of the Use Tax Act for machinery and equipment used primarily in the manufacturing of tangible personal property, specifically citing the “chemical exemption.” The Illinois Independent Tax Tribunal affirmed the notices and the imposition of use tax, interest, late filing penalties, and late payment penalties totaling $1,521,041. The appellate court affirmed. The Illinois Supreme Court affirmed in part. Based upon the plain language of section 3-50(4), the legislature chose to limit the exemption to only those chemicals that cause a “direct and immediate change” on the final manufactured product. At no time in the described chemical processes and reactions does the coke have a direct and immediate effect on the zinc or iron being manufactured. The broad interpretation of the use tax chemical exemption urged by Horsehead would result in virtually any chemical used in the manufacturing process qualifying for the exemption. View "Horsehead Corp. v. Department of Revenue" on Justia Law

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Plaintiff’s class action complaint alleged that Walgreens violated the Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1, by unlawfully collecting a municipal tax imposed by Chicago on purchases of bottled water that were exempt from taxation under the ordinance. The circuit court dismissed the action, citing the voluntary payment doctrine, which provides that money voluntarily paid with full knowledge of the facts cannot be recovered on the ground that the claim for payment was illegal. The appellate court reversed, reasoning that the complaint pleaded that the unlawful collection of the bottled water tax was a deceptive act under the Consumer Fraud Act. The Illinois Supreme Court reinstated the dismissal, first holding that claims under the Consumer Fraud Act are not categorically exempt from the voluntary payment doctrine. The court rejected an argument that the receipt issued by Walgreens constituted a representation that the tax was required by the ordinance. Misrepresentations or mistakes of law cannot form the basis of a claim for fraud. View "McIntosh v. Walgreens Boots Alliance, Inc." on Justia Law