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Local News

Channahon likely to challenge court decision on tax lawsuit

CHANNAHON – The reinstatement of a lawsuit over point-of-sale tax operations should not have much impact on Channahon, Village Attorney James Murphy said.

A state appellate court recently reinstated the lawsuit brought by the city of Chicago and village of Skokie. The lawsuit, previously dismissed in Cook County Circuit Court, seeks to recover taxes from Internet sales that the plaintiffs contend they should have received but instead went to allegedly sham offices set up in Channahon and Kankakee.

"It does not have the impact on Channahon than it does on Kankakee," Murphy said Friday.

Murphy said the lawsuit goes after transactions that were processed differently than what is believed to have been common in Channahon.

Even so, the reinstatement of the lawsuit, which is part of litigation going back to 2011 and was once dismissed by a Cook County court, is likely to be challenged, he said

"I am fairly certain that we're going to ask the Illinois Supreme Court to take a look at it," Murphy said. "We think the appellate court was wrong on significant matters.".

The litigation, which has included lawsuits brought by Cook County and the Regional Transportation Authority, has been over point-of-sale tax offices set up in Channahon, Kankakee and other communities. Plaintiffs contend they lost out on tax revenue that was diverted to other towns where offices were set up to serve as point-of-sale sites for Internet transactions.

Brokers, encouraged by offers of rebates, set up offices in towns that became the points of sale used as the basis for taxes collected on Internet transactions.

Channahon in 2014 paid $377,500 to settle a similar lawsuit brought by the Regional Transportation Authority.

Murphy said he does not believe the brokers operating in Channahon conducted the type of transactions targeted in the Chicago lawsuit. However, he said, the litigation has never proceeded to the point of depositions that would verify how many Internet sales done in Channahon would be challenged in the lawsuit.

Point-of-sale brokerage business is no longer conducted in Channahon, since state regulators have made them illegal since the litigation began, Murphy said. But the village has retained revenue collected from the operations as a reserve fund to cover claims against the village.

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