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RTA v. United complaint

RTA v. United complaint

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Published by Daily Chronicle
RTA v. United complaint
RTA v. United complaint

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Published by: Daily Chronicle on Jan 14, 2013
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08/05/2014

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IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOISCOUNTY DEPARTMENT – CHANCERY DIVISION
The REGIONAL TRANSPORTATION AUTHORITY, )an Illinois special purpose unit of government )and municipal corporation, ))Plaintiff, ))vs. ) No.)UNITED AVIATION FUELS CORPORATION, )UNITED AIRLINES, INC., and THE CITY )of SYCAMORE, an Illinois home rule )municipality, ))Defendants. )
COMPLAINT FOR DECLARATORY JUDGMENT AND INJUNCTIVE RELIEF
NOW COMES the REGIONAL TRANSPORTATION AUTHORITY, an Illinois special purposeunit of government and municipal corporation (“RTA” or “Plaintiff”), and for its causes of actionagainst Defendants UNITED AVIATION FUELS CORPORATION (“United Fuels”), UNITED AIRLINES,INC. (“United Airlines”), and the City of Sycamore (“Sycamore”), states as follows:
Introduction
1. This case is filed to redress the improper tax siting by Defendants of retail saletaxes on enormous sales of jet fuel. This practice, which has been ongoing since approximately2001, has diverted tax monies from Plaintiff and other municipalities to Defendants.2. Plaintiff seeks a declaratory judgment finding this practice improper, equitablerelief enjoining this practice, a declaration that the Defendants’ various agreements allowing thispractice are void, a constructive trust upon any monies held by Defendants which were obtainedfrom this practice, and for the recovery of appropriate damages.
 
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Parties, Venue and Jurisdiction
3. RTA is a special purpose unit of local government and municipal corporationrecognized under Illinois law. RTA’s primary responsibility is the financial and budget oversightof the Chicago Transit Authority (CTA), the Commuter Rail Division of RTA (Metra), the SuburbanBus Division of RTA (Pace), and regional transit planning issues. RTA is the third largest publictransportation system in North America, providing more than two million rides a day, and itssystem covers 7,200 route miles in a six-county region that currently has a population of approximately eight million people. Those counties are Cook, DuPage, Kane, Lake, McHenry,and Will. CTA, Metra, and Pace depend upon tax revenues to support their operations.4. United Fuels is a foreign corporation with its primary place of business inChicago, Illinois. United Fuels is a wholly-owned subsidiary of United Airlines.5. United Airlines is a foreign corporation which transacts business in Illinois. Itscorporate headquarters and operations center are located in Chicago.6. Sycamore is a home rule municipality of the State of Illinois.7. Jurisdiction therefore exists under 735 ILCS 5/2-209 because the Defendants areresidents of, and/or transact business within, the State of Illinois.8. Venue is proper in the Circuit Court of Cook County pursuant to 735 ILCS 5/2-101, 5/2-102, and 5/2-103 because at least one Defendant resides in Cook County, because it isthe County where Defendants’ activity described herein has inflicted damage, and because it isthe County in which the transaction or some part thereof occurred out of which the causes of action arose.
 
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Background FactsUnited Airlines
9. United Airlines claims the most comprehensive global route network on theplanet. Its corporate headquarters and operations center are in Chicago, Illinois. United Airlinesalso has subsidiary regional carriers, including United Express. Their combined operationsrequire large purchases of jet fuel.10. United Airlines’ jet fuel purchases in Illinois are subject to retail sales taxes. Thissuit concerns United Airlines’ use of its subsidiary, United Fuels, to improperly claim jet fuel salesas taking place in Sycamore as opposed to Chicago, thus lowering United Airlines’ sales tax billbased on the lower tax rate in Sycamore and the large amount rebated to United Fuels bySycamore of Sycamore’s local share of the sales tax.
Illinois Retail Sales Taxes
11. In Illinois, the “sales tax” is actually a combination of the companion Retailers’Occupation and Use Taxes. 35 ILCS 120/1,
et seq.
12. Illinois levies upon all retailers in the state a 6.25% sales tax pursuant to theRetailers’ Occupation Tax Act. 35 ILCS 120. This tax is computed as a percentage of retail sales,and, depending on where the sale takes place, local taxes in addition to the statewide tax maybe imposed (65 ILCS 5/8-11-1). These taxes may vary by local jurisdiction.13. The Illinois Department of Revenue (“IDOR”) collects all of these taxes, and remitsto local government units their respective shares. In addition to the municipal tax that somemunicipalities impose on sales, municipalities are entitled to a “Local Share” of the statewide6.25% tax, which presently amounts to 1.0% of the sale price (35 ILCS 120/3).

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