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July 31, 2020
State and Local Tax
This Week
Illinois General Assembly
T
he General Assembly
is adjourned until the fall veto session.
Rulemaking
The July 31 edition of the Illinois Register did not contain any proposed or adopted rulemakings by the Illinois Department of Commerce and Economic Opportunity or the Illinois Department of Revenue.
Court cases
Sigler v. Geico Casualty Co. This decision was recently issued by the U.S. Court of Appeals. An individual totaled his car and filed a claim against his insurer. The insurer paid the claim. The insured claimed he was entitled to payment for sales tax and title and tag transfer fees for a replacement vehicle. He filed a proposed class action against Geico.
The court of appeals upheld the dismissal of the case by the district court. The district court dismissed the case holding that neither the Geico policy nor Illinoi alw requires payment of these costs when the insured doesn't incur them.
This is more of an insurance law case, but I thought I would alert you to the case because it involves sales tax.
The Board of Education of Richland School District No. 88! v. The City of Crest Hill The School District filed a complaint challenging TIF ordinances approved by the City to establish a TIF District. The School District contended that the TIF ordinances approved by the City were invalid due to noncompliance with the TIF Act. The School District alleged that the northwestern portion and the remainder of the TIF were not contiguous and the City failed to comply with certain procedural requirements of the Act.
The decision contains a discussion of the the definition of the statutory definition of "contiguous and the concept of contiguity as it applies to TIFs. The court concluded that the General Assembly did not intend that the term "contiguous" as used in the TIF statute to include parcels separated by a public utility right-of-way.
The court reversed the circuit court's ruling in favor of the City.
Tax Tribunal
No new decisions were issued by the Tribunal this week.
The following new case may be of interest:
Robert Riesbeck v. Illinois Department of Revenue This case is a protest of an assessment of the personal liability penalty for sales and use taxes allegedly owed by Gregg Appliances, Inc. The petitioner was the CEO of hhgregg from February 2016 through his termination on June 6, 2017. According to the petition, the tax periods at issue were the periods ending June 30, 2016 and April and May 2017.
The company filed bankruptcy and it appears that the audits were conducted after the bankruptcy filing. The Department filed proof of claims for the audit assessments.
The petition states that the tax returns for the months at issue were timely filed and the amounts reported on the original returns were paid timely.
The impact of the bankruptcy is a complication in this case. As stated in the petition, the Department filed proof of claims for the taxes at issue and the Department is a priority claim and hhgregg as a Chapter 11 debtor is prohibited from paying pre-petition claims absent a specific order from the Bankruptcy court.
The petitioner, among other things, contends that collection of the taxes at issue from the petitioner is preempted by the bankruptcy filing - which apparently is ongoing. The petitioner contends that there can be no willful failure to pay when the company is precluded from paying the tax due to the federal bankruptcy code.
In addition, there is also the question of whether there was any willful non-payment of taxes in this instance and whether the former CEO of hhgregg can be held personally liable in this instance.
Publications
I wasn't aware that the centralized administrative hearing bureau was still in existence, but apparently it is. It appears that the Bureau has done little over the past year.
There is no authority for the Bureau to be involved in tax cases. You may recall, that under the prior administration that at one point Department of Revenue ALJs were utilized to handle hearings for other state agencies.
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