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Multistate Tax Alert: Circuit Court Enjoins Cook County from Imposing and Enforcing Use Tax on Non-Titled Personal Property


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Overview

Effective April 1, 2013, Cook County Illinois imposes a use tax upon non-titled personal property purchased outside of the county when first used in the county.1 Effective June 1, 2013 the tax is imposed at the rate of .75% of the non-titled personal property’s value.2

On June 21, 2013, the Chicagoland Chamber of Commerce filed a lawsuit against the Cook County Department of Revenue to block the County from imposing the use tax on non-titled personal property. The Chamber argued that the tax is illegal on the grounds that the County does not have the authority under Illinois state statute to implement a non-titled use tax, the tax violates the Illinois Constitution’s prohibition of ad valorem taxes, and the tax collected by the County using a differential in tax rates for purchases made outside of the county prior to the County’s amendment of the ordinance on June 19th violates the US Constitution’s Commerce Clause.3 The Chamber’s suit requested an injunction on the future collection of the tax and for the County to issue refunds for all businesses that paid the tax since its effective date on April 1st.4

On July 24, 2013, Circuit Court Judge Robert Lopez Cepero agreed to the Chamber’s request to issue a preliminary injunction of Cook County’s use tax on non-titled personal property. Judge Lopez issued the order on August 1, 2013, enjoining the county from imposing the tax or cashing any checks received related to the tax following the July 20th return due date.5 The County has appealed. Taxpayers need to monitor the status of the appeal of the stay as future return due dates approach, beginning August 20, 2013, and thereafter.

Contacts

If you have questions regarding these Cook County Ordinance changes or pertaining to other Illinois or Cook County tax matters, please contact any of the following Deloitte Tax professionals.

Dominic Greco
Director
Deloitte Tax LLP, Chicago
dgreco@deloitte.com
(312) 486-9721
Mary Pat Kohberger
Director
Deloitte Tax LLP, Chicago
mkohberger@deloitte.com
(312) 486-3825

Anna Marie Alberti Hearn
Manager
Deloitte Tax LLP, Chicago
aalbertihearn@deloitte.com
(312) 486-2754
 


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1 Our earlier alert is accessible at: https://www.deloitte.com/assets/Dcom-UnitedStates/Local Assets/Documents/Tax/us_tax_multistate_IL_alert_11-26-12.pdf.
2 Cook County Use Tax Ordinance Section 74-652(d) as amended.
3 The County amended its ordinance on June 19, 2013, potentially eliminating this argument in post-amendment periods. See our previous Alert at http://www.deloitte.com/assets/Dcom-UnitedStates/Local Assets/Documents/Tax/us_tax_multistate_IL_062513.pdf.
4 See Legislative Update June 21, 2013, http://chicagolandchamber.org/wdk_cc/programs_and_advocacy/2013_legislative_updates/legislative_update_
june_21__2013.jsp.
5 Chicagoland Chamber of Commerce v. Ali, 2013 L 050454, issued on Aug. 1, 2013.

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