Rosemont loses tax battle with county
Wednesday, July 13, 2005
by Michael Higgins
A judge ruled Tuesday that Rosemont owes Cook County for more than eight years of unpaid taxes on tickets to concerts, plays and sporting events--a sum a lawyer for the county estimates at "significantly more" than $5 million.
The county imposed an amusement tax in 1997. But Rosemont, which owns facilities such as the Allstate Arena and Rosemont Theatre, refused to comply, arguing that the county could not force another unit of government to act as its tax collector.
In a long-awaited ruling, Cook County Judge Alexander White rejected Rosemont's position, saying it would "eviscerate" the county's power to tax.
"The county has no realistic means to collect its amusement tax from patrons of the Rosemont facilities without Rosemont's cooperation," White wrote in a 51-page opinion. "Rosemont is not entitled to special treatment simply because it is a village--as opposed to a private concern."
White heard oral arguments on the dispute in September 2003 and originally expected to rule within a few months. Lawyers for both sides filed additional briefs in 2004 in response to an Illinois Supreme Court decision on a similar case and have been awaiting a ruling since then.
In his decision, White declared unconstitutional a Rosemont ordinance spelling out the village's refusal to collect the tax, and he ordered officials to provide an accounting to determine how much tax is owed.
The accounting will be discussed at a future hearing, but no date is set, said Patrick Driscoll, chief of the civil actions bureau in State's Atty. Dick Devine's office.
County auditors who viewed Rosemont's records informally in 2000 estimated that the village owed more than $5 million, Driscoll said. He said the current amount would be "significantly more than $5 million."
The county's amusement tax on venues with more than 5,000 seats dropped from 3 percent to 1.5 percent in 1999, but Driscoll said the amount owed "is increasing, obviously, even if the tax [rate] was cut in half."
He said the county also would seek interest and penalties.
Rosemont officials were disappointed with the ruling but had not decided whether to appeal, said village attorney Peter Rosenthal.
Paul Castiglione, an assistant state's attorney who argued the case for the county, said it is important to establish a level playing field for venues that compete against Rosemont.
"It was unfair [for Rosemont] to be able to operate without following the same rules," he said.
Rosemont has been fighting the tax almost since it was imposed. The village passed an ordinance in 1997 declaring that ticket buyers at its facilities were exempt from the tax. In 1999 the state Appellate Court struck down the ordinance but did not decide whether the county could compel Rosemont officials to collect the tax.
In 2000 the Rosemont Village Board voted again not to collect the tax.
Rosemont officials argued that the county was free to contact concert promoters individually and demand that they pay the tax. They noted that the county does collect the tax on some Rosemont events, such as Chicago Wolves hockey games.
But the county's lawyers said that Rosemont controls the box office and that it is impractical for anyone else to collect the tax. They argued that though the Wolves were easy to contact, the county cannot track down every promoter who brings an event to Rosemont.
In his opinion, White said Rosemont's intent was to prevent the tax from being collected and, as result, to give promoters an economic incentive to hold events in Rosemont.