RTA Demands Channahon Pay Fair Share of Taxes to DuPage County and RTA
April 2, 2013
The Regional Transportation Authority (RTA) today demands that the Village of Channahon pay the RTA immediately for accepting sales tax revenue generated from Communication Supply Corporation (“CSC”) sales that the Village was not entitled to. The RTA recently learned that a “Confidential Settlement Agreement and Release” was signed by Channahon and Carol Stream in 2009. As part of the agreement, Channahon agreed to pay $460,000 to Carol Stream regarding a tax dispute over the sales tax revenue generated by CSC.
According to documents obtained by the RTA through a Freedom of Information Request, the Village of Channahon entered into an “economic incentive agreement” that allowed Carol Stream-based CSC to avoid paying Carol Stream, DuPage County and RTA sales taxes and instead claim their sales were conducted in Channahon. As part of the incentive agreement, Channahon kicked back to CSC and its tax consultant 85% of the municipal taxes as an incentive for CSC to claim they operated in Channahon.
CSC is among dozens of companies in Illinois that have entered into agreements with towns like Channahon, Kankakee and Sycamore in an attempt to avoid paying the appropriate tax which in many cases is also at a higher rate. The agreements allow companies to funnel purchases through sham offices or middlemen and take advantage of a lower tax rate and then receive a kickback from the municipality.
“Having just learned about this settlement that Channahon reached with Carol Stream reinforces our position that companies should not be allowed to avoid paying the appropriate sales taxes by operating sham offices,” said RTA Executive Director Joe Costello. “CTA, Metra and Pace riders rely on funding from sales taxes, and without this revenue our budget problems worsen.”
Learn more about the RTA’s sales tax litigation and view supporting documentation.