News pickup: Airlines dodging taxes, RTA says; transit benefit "tax shelter" grows

Here are some CTA  news stories of note from the last few days.

Airlines are dodging taxes, RTA claims. United and American Airlines are running “sham business operations” that are depriving the Regional Transportation Authority of about $300 million in tax revenue over the last seven, the transit agency charged today. The airlines buy jet fuel from small offices in Sycamore, Ill., and thus avoid paying higher taxes if the offices were in the Chicago area. Both airlines say what they are doing is allowed under Illinois. Read the Tribune report for more details.

Congress increases transit benefit “tax shelter.” The last-minute tax law passed by Congress to avoid running over the “fiscal cliff” included a little cookie for public transit users — an increase in the transit benefit that can be sheltered from taxes. As of Jan. 1, the pre-tax amount from the commuter transit benefit increased to $240 from $125. For all practical purposes, this will really help Metra customers more than CTA customers, since $100, the new cost of a monthly CTA pass, is the most a CTA rider could spend in one month as part of the program.

However, Metra riders will benefit greatly since their monthly passes can cost well over $125. And those who use the Metra CTA Link-up pass also will benefit. The $240 benefit now matches what Congress provided as a tax-free parking benefit for drivers – which is only fair. In 2012 the commuter benift dropped to $125 from $230, while the parking benefit remained $240. Also, the newly increased commuter benefit is retroactive to Jan. 1, 2012. But you have to work with your employer to figure out how that’s going to be implemented retroactively.

Filed under: CTA in the news


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  • I discussed #1 with Mike Ciric on Chicago Political Commentary a year ago. The RTA is right on this, and, as usual, the state has its head up its posterior.

    It is one thing if Bill Beavers takes a trip to Indiana to avoid the sales taxes he imposed. At least he is making the trip. However, it is clear that the fuel is being delivered somewhere near O'Hare and the petroleum company has a distribution facility there, so that's where the sale should be taxed, which is clearly in Cook or DuPage County.Yet, some idiot legislator from the south suburbs wanted to write the "place of acceptance" into law. Obviously, no fuel is being delivered in Sycamore.

    This has come up before; for instance, I wondered why Plass Appliances moves a store from the north side of Lake Cook Road to the south, but it turned out that it was not paying either Lake or Cook County sales tax (technically retailer occupation tax).

    As I implied above, the state legislature could have straightened this out quite simply, but, like most things, would rather do the wrong thing.

  • In reply to jack:

    The RTA is by no means "right" -- it just has an overdeveloped entitlement complex. This is extortion, plain and simple, and I hope the airlines pound them into the ground over it.

    And don't come crying to me the next time you think airfares are too high.

  • In reply to darkwing:

    If airfares were only low to begin because of avoiding taxes they should rightfully be paying, then they were artificially low to begin with and just padding the bottom line of the airlines. I wonder how the other airlines who are paying this tax feel about it.

    You provided no evidence why you think "The RTA is by no means "right"". It seems there is no evidence that the fuel is arriving in Sycamore, then being transmitted to O'Hare. I'm sure the Tribune would have been able to find some trucks if that were the case.

  • In reply to chris:

    You already have all the evidence you need -- state law, and multiple court decisions. It's both uncontroversial and easily understood. That's really all there is to it.

    But let's be honest for a minute. What you and "jack" are really arguing for here, in typical blue-state fashion, is that mass transit is both of critical social importance and inconsequential enough that you two can't be bothered to pay for it yourselves. I'll leave it to the reader to decide whether that's because you're greedy, or merely lazy.

  • In reply to darkwing:

    From what the articles say, only a couple of downstate small town judges have upheld the localities' right to collect the taxes. Like most things of this nature, I'll wait for it to get to the Illinois Supreme Court.

    Maybe, though Anonymous Thug will pay you to research the legal issue, and then you can post that analysis here. Otherwise, I don't think you have it.

  • In reply to jack:

    I guess you don't know what "appellate" means, then. But no matter -- judges don't count unless they live in the city (or rule in your favor, presumably), and the law means whatever you think it should.

    What a boorish, ill-informed, dependent clod you're turning out to be. (In other words, a rank and file Machine voter.)

  • In reply to darkwing:

    Appellate judges ruled that Rahm Emanuel was not a resident of Chicago and that the liquor tax was unconstitutional. Those didn't hold up in the Illinois Supreme Court.

    And, no, I am not part of Romney's 47%. There is no cause for name calling here.

    On the other hand, a fair inference from this and your prior "everyone has a smartphone" thread indicates that you are an elitist. I only derive that from what you post.

    In any event:

    1. While throwing out questions to me (which I answered) you won't answer any.

    2. You haven't posted the legal research you don't have, but make assertions of law.

    3. You still don't comprehend that this is not a matter of static constitutional law, nor my initial point that the legislature could clean up this mess if it wanted to. Maybe we can assume that the reason is corporate corruption. This is Illinois, after all.

    So, basically, you have nothing to add to the conversation except insults. Good day.

  • In reply to jack:

    "Gimme" is neither a rational argument nor sufficient justification for taxation. I'm sorry to have to be the one to break it to you.

    It's telling, though, that your reaction to being told "no" is not dissimilar to a small child being deprived of his favorite toy.

  • In reply to darkwing:

    No, it isn't. I'm not going to give the reason that will set Anonymous thug off, but the obvious one that it is a retailer's occupational tax, but the retailer is not delivering any goods, or in fact does not have any operations in Sycamore.

    Do you run a business like that and not pass the savings on to the customers, as Chris suggests? Do you live in Illinois but refuse to pay Illinois income tax because you say you are a Florida domiciliary? Are you like the guy in Lake Forest who put a cross on your house to exempt it as a church?

    In any event, it is tax evasion, plain and simple. If I have to pay sales tax at the pump, United should too,

  • In reply to jack:

    You're aware that there are other taxes on jet fuel, right? This is solely about the bullsh*t RTA tax, not taxes in general. Besides, despite your histrionics, the law disagrees with you. Full stop. I'm unclear on why you think whining about "fairness" and "tax evasion" is going to change what's already been written.

    But, before you call someone else a cheat, let's make sure your own house is in order. Do you pay use tax on *every* online purchase you make? When you buy something outside the county and bring it home, do you cut a check to cover the taxes you avoided? Evidence, please. (And feel free to black out your name, "jack", so you can stay anonymous.)

  • In reply to darkwing:

    I don't buy online. I believe in brick and mortar stores,

    I often buy gasoline in Lake County, but that's still subject to RTA tax. And like I said, it is one thing for Bill Beavers to go to Indiana to buy stuff; it is another to set up a shell corporation to evade taxes.

    If the RTA shouldn't have a right to tax, ask the legislature to repeal that law. And as for piling on taxes, I'm sure I pay federal and state gas taxes and state, county, local, and RTA taxes at the pump. I don't have a shell corporation in Nevada to buy my gas for me while I still fill up in Illinois.

    BTW, if you want me to answer stuff, you can answer whether you engage in this business practice or have converted your house to a church.

  • In reply to jack:

    He asked tons of questions of you, while answering none of yours and providing no reasoning why setting up a shell corporation that does not do what it claims to do (receive fuel at its location) should be able to get around paying RTA taxes.

    I can understand not liking RTA taxes, but openly supporting tax evasion by airlines is a whole other thing. As Mitt Romney said, Corporations are people my friend. Maybe darkwing is actually a corporation and loves these types of tax shelters.

  • In reply to chris:

    I'm sure that's the case.

    And apparently he has plenty of time to share his lack of insight on his smart phone.

  • In reply to chris:

    It's kind of sad, but also kind of hilarious, that the only way you two can defend yourselves is by nonsensically invoking Mitt Romney. You know it's not November anymore, right?

    Again, this is all very simple, and perfectly legal -- in Illinois, you're taxed on where your purchase orders are received, and in this case that's in Sycamore. Reread the article if that point continues to escape you.

    And besides, isn't claiming residency in your office a long-standing Chicago political tradition? If it was good enough for Harold Washington, why isn't it good enough for United?

  • In reply to darkwing:

    No you're not.
    If you buy a car, you're taxed where it's registered. If you buy a car out of state, you need a Certificate of Origin from the dealer & you pay the sales tax when you register the car in Illinois.

    What you don't know about sales taxes would fill a library!

  • In reply to darkwing:

    The question is about (a) fuel, not cars, which are treated differently due to registration, as you suggest; and (b) transactions that take place entirely within Illinois, so your example is irrelevant.

    Also, as I recall, you only have to pay sales tax on an out-of-state vehicle purchase if you've owned it for less than a year. A minor point, to be sure, but if you're going to condescend, do at least bother to have your facts straight...

  • In reply to darkwing:

    No, you also are required to pay Illinois taxes on big ticket items.

  • In reply to darkwing:

    Nope. From publication VSD271, "Vehicle Title and License Plates for New Illinois Residents":

    "Vehicles titled and registered in another jurisdiction three months prior to moving to Illinois are exempt from Illinois tax. Tax form RUT-50 or RUT-25 must be submitted showing exempt status."

    Let's fill that library!

  • In reply to darkwing:

    That's NEW Illinois residents, not current residents!
    So if you move into Illinois with a 3 month old car, you don't pay tax to Illinois, but if you're an Illinois resident as I assume anyone commenting on the CTA is, you would pay the sales tax.

    You're lack of reading comprehension & use of disingenuous material is not surprising for a troll!

  • In reply to darkwing:

    Also, in that it was reported that United raised fares last week and had to pull back, it is not passing on the savings, unless one can establish that every airline is using this scam. American was named, but no one else.

  • In reply to jack:

    I think that the point is that we don't know if the RTA is right on this or not. It will be up to a judge to decide. The risk is that if the airlines are found to be right, other businesses might start doing the same thing.

  • In reply to eBob:

    As a matter of principle, the RTA is right; as a matter of what a judge will rule, you are correct. As you may note from my first post, the legislature would rather leave this fouled up.

    And as far as other businesses doing it, they didn't need United to blaze the trail. Note my reference to Plass above; other suits pending in places like Channahon and Kankakee, and Siegel's, to name a few.

  • I never understood why there was a tax benefit for driving to work and using a parking lot.

  • In reply to chris:

    It probably gets down to the usual answer to this type of question that most of Congress does not come from New York, Boston, Chicago, or San Francisco. So, if transit riders get something, their constituents do, too. Remember all the "I don't understands" about the transportation bill last year (and I am not saying that you were the one who posted them).

  • In reply to chris:

    It's big government perpetuating itself -- the more tax breaks there are, the more valuable the politicians who hand them out become, and the more jobs there are for appointees and functionaries to administer them.

    When taxes are low and breaks are nonexistent, nobody wins -- well, except the citizenry, and who cares what they think?

  • In reply to darkwing:

    So, I guess that's you excuse for evading them.

  • In reply to jack:

    Nothing to add except insults, huh? Hmm...where have I heard that before...

    You suck at trolling, "jack". Either go read some 4chan and try harder, or do what you promised and *actually* disappear.

  • In reply to darkwing:

    Obviously, you didn't read anything in this thread, self absorbed.................................

    Don't tell me what to do.


  • In reply to jack:

    I've seen lots worse "commenter battles" here. But I do think this one has run its course.

    So how about we cease and desist on this particular topic?

    Thank you.

  • They ought to get rid of the parking benefit, and stick it to the airlines for not paying their taxes. I personally do not care if airfares increase as a result. I don't fly. Ever.

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