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Local News

Appellate court reinstates tax suit against Channahon

CHANNAHON – A state appellate court has reinstated a lawsuit seeking to recover online sales tax revenues that plaintiffs contend never should have gone to the village of Channahon.

The lawsuit brought by the city of Chicago and village of Skokie is over a point-of-sale tax system that has been in litigation since 2011.

A Cook County court had dismissed the lawsuit. But a state appellate court last week reversed that decision, allowing the litigation to proceed.

The lawsuit also names the city of Kankakee, which operated a similar point-of-sale tax operation, and five brokers as defendants. The brokers served as go-betweens for retailers whose identities were not disclosed.

Channahon in 2014 settled a similar lawsuit brought by the Regional Transportation Authority by agreeing to pay the agency $377,500 from point-of-sale tax revenue the village had collected.

Plaintiffs have contended that the system was a scheme to divert sales tax revenue to Channahon and Kankakee, which offered tax rebates to brokers that set up alleged sham offices in those towns.

Channahon and Kankakee would allow retailers to claim sales occurred there rather than outside the state, according to the lawsuit. The two towns provided rebates that reduced the tax impact on the retailers while allowing Channahon and Kankakee to get the revenue.

Channahon Village Administrator Thomas Durkin did not return calls for comment on Thursday.

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