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Channahon hires lobbyist for sales tax rebate issue

Published: Thursday, Jan. 9, 2014 5:30 a.m. CDT

CHANNAHON – Channahon village trustees approved the hiring of a Springfield lobbying group Monday to assist the village with changes in sales tax laws legislators may consider this term.

For an amount not to exceed $18,000, Governmental Consulting Solutions was hired by Channahon for a six-month period to keep the village informed on legislation and to give advice on issues that involve the sales tax rebate issue. The firm also will meet with elected officials and other representatives of the government on the subject.

Since 1999, according to Channahon Village Administrator Joe Pena, the village has been involved in a sales tax rebate program where several businesses use Channahon as their point of sale location. This location is when a business accepts sales only in a location.

In 2011, the city of Chicago, Cook County and the Regional Transportation Authority filed lawsuits against Channahon, as well as Kankakee, and later against other villages, alleging that the villages were luring Chicago and Cook County companies there so they could take advantage of what some call tax loopholes.

Channahon, which has a much lower sales tax than Chicago, would give partial rebates of the state retail occupational tax dollars, with Channahon keeping a portion of the dollars for itself.

Pena said the village earmarked those funds it received for capital improvements. The Channahon village hall and police department, for example, were funded largely from the special fund.

Channahon Village President Joe Cook and Pena have asserted that the method of bringing in revenue is perfectly legal and above board, and Pena said a recent Illinois Supreme Court ruling regarding a similar case proves it.

In the ruling, found in the Illinois Official Reports of the Supreme Court, www.state.il.us, the decision in Hartney Oil versus the Illinois Department of Revenue states the oil company, which made use of a similar rebate procedure used by businesses through Channahon, “structured its affairs in accordance with the regulations,” meaning the rebate program was not an unlawful tax shelter or a sham but a lawful way for the company to operate.

Pena said the ruling means Channahon was following the law, as well.

“The Supreme Court said [Hartney’s decision] was not a sham operation,” Pena said. “We feel vindicated that we followed the rules.”

Pena added the village is asking for all charges filed by Chicago, Cook County and the RTA be dropped as a result of the ruling. Channahon administrators and the board believe the consulting firm hired this week will help them with legislation that will keep the village’s still-active sales tax rebate program going.

The village’s program has not changed since the time of the lawsuits, Pena added, and brings in an average of around $1.5 million a year.

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